Earnings Call Transcript - QFIN Q3 2025

Operator, Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Qfin Holdings Third Quarter 2025 Earnings Conference Call. Please also note today's event is being recorded. At this time, I'd like to turn the conference over to Ms. Karen Ji, Senior Director of Capital Markets. Please go ahead, Karen.

Karen Ji, Senior Director of Capital Markets

Thank you, Ken. Hello, everyone, and welcome to Qfin Holdings Third Quarter 2025 Earnings Conference Call. Our earnings release was distributed earlier today and is available on our IR website. Joining me today are Mr. Wu Haisheng, our CEO; Mr. Alex Xu, our CFO; and Mr. Zheng Yan, our CRO. Before we start, I would like to refer you to our safe harbor statement in the earnings press release, which applies to this call as we will make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP financial measures to GAAP financial measures. Also, please note that unless otherwise stated, all figures mentioned in this call are in RMB terms. In addition, today's prepared remarks from our CEO will be delivered in English using an AI-generated voice. Now I will turn the call over to Mr. Wu Haisheng. Please go ahead.

Haisheng Wu, CEO

Hello, everyone. Thank you for joining us today. In the first nine months of this year, China's economy and the consumer finance sector have both faced persistent challenges. The outstanding balance of short-term consumer loans has decreased for three consecutive quarters on both a year-over-year and quarter-over-quarter basis. As we entered Q3, the industry is experiencing a series of regulatory-driven adjustments aimed at improving consumer financial inclusion. We believe these changes will enhance the sector's long-term prospects and sustainability, creating a healthier and more structured competitive landscape. Therefore, we see these adjustments as both a challenge and an opportunity for Qfin. As a leading credit tech platform in China, we have continued to focus on risk management, enhance our AI capabilities, and deepen collaborations with financial institutions. We believe these efforts will help us better meet inclusive finance needs and reinforce our leadership in the industry. Now, I'll take you through the progress we made in Q3. By the end of the quarter, our AI-powered credit decision engine and asset distribution platform served 167 financial institutions, providing efficient, intelligent digital credit services to over 62 million credit line users cumulatively. To adapt to the changing regulatory environment, we adjusted our risk strategies to strike a healthy balance between risk and growth. Consequently, total loan facilitation and origination volume on our platform reached RMB 83.3 billion in the quarter, closely matching Q2 figures. Despite macro challenges, we achieved steady financial results. Non-GAAP net income reached RMB 1.51 billion, while non-GAAP EPADS on a fully diluted basis was RMB 11.36, showcasing our solid profitability and operational resilience. On the risk side, funding liquidity in the high-price segment continued to tighten in Q3, resulting in an increase in overall delinquency risk across the industry. To stay aligned with the evolving market, we tightened our credit standards further and optimized our customer mix by increasing the share of high-quality borrowers. Additionally, we actively refined our risk models and completed 611 iterations, implementing differentiated risk management and distribution strategies. In collections, we enhanced efficiency through smarter resource allocation and deeper technology integration. For instance, we allocated more resources to high-performing collection partners to ensure they had sufficient capacity and improved productivity. For customers willing to repay but experiencing temporary financial challenges, we provided measured concessions and flexible repayment options. Additionally, we were able to evaluate repayment intent and capacity in real-time using large language model algorithms, enabling more precise segmentation and agile resource deployment. These measures helped us maintain steady progress, even as the industry faced increasing collection pressures. Our FPD 7, a leading risk indicator for new loans, decreased in September compared to August. Starting in October, with the new regulations and heightened industry self-discipline initiatives, we anticipate risk indicators to remain volatile in the short term, currently at levels above historical averages. However, having navigated multiple industry adjustment cycles with swift and effective responses in the past, we remain confident in our ability to bring risk levels back to a manageable range in a timely manner. In terms of funding, we have been white-listed by all our active financial institution partners, ensuring stable and smooth partnerships moving forward. Despite a relatively tight funding environment influenced by liquidity conditions and policy factors, we maintained industry-leading pricing power and secured a stable funding supply at consistent costs. Our average funding cost for Q3 remained steady from the previous quarter, sustaining historical lows. In the ABS market, we issued RMB 4.5 billion during the quarter, up 29% from the previous year, with issuance costs reduced by another 10 basis points. For the first nine months of 2025, total ABS issuance increased by 41% year-over-year to RMB 18.9 billion, further optimizing our funding structure. Looking ahead, we expect our funding costs to stay largely stable in the upcoming quarters. Regarding user acquisition, we continue diversifying our channels, enhancing targeted operations, and improving efficiency compared to last quarter. The number of new credit line users grew by 9% to 1.95 million, while the average cost per credit line user decreased by 8%. The number of new borrowers also increased sequentially by 10% to 1.35 million. We have seamlessly integrated convenient and efficient credit services into diverse channels and scenarios, including short-form videos, e-commerce, mobility, food delivery, and financial services. In Q3, we further broadened our embedded finance network, adding seven new strategic partners and expanding our presence across Internet and financial institution platforms. Consequently, the number of new credit line users from embedded finance channels increased by 13% sequentially, with loan volume up by 11%. For placement strategies, we remain focused on bringing on high-quality users and optimizing our overall user mix. Therefore, our long-term strategic priority will lean more towards our high-quality customers. With the help of AI-driven data models, we expect to gain deeper insights into user needs and behaviors, allowing us to refine products and services further. This approach will enhance the user experience and improve our unit economics and user lifetime value. We believe this focus is essential to strengthening our long-term competitive advantage and affirming our leadership position in the industry. In our Technology Solutions business, we continue to advance our AI plus banking strategy, assisting financial institutions in their digital and intelligent transformations. During the quarter, loan volume from this business saw exponential growth, increasing by approximately 218% on a sequential basis. Our collaboration with banks is deepening, expanding from their proprietary channels to a broader range of Internet scenarios, where we provide end-to-end technology support in customer acquisition and risk management. Our FocusPRO credit tech platform, our proprietary solution for SME lending built on a three-tiered credit assessment system, was adopted by several new banking partners, receiving positive feedback for its industry-leading performance. As part of our AI plus banking initiative, our two proprietary AI agents, the AI Credit Officer and AI Loan Officer, began pilot testing with our first bank client. The engagement rate among the activated user base has reached around 50%, providing early validation for the practical effectiveness of the AI agents in core credit scenarios. Moving forward, we will concentrate on enhancing our capabilities in multimodal recognition, voice data collection, lead management, and feedback loops while expanding pilot programs and increasing user engagement. Concurrently, we are experiencing rising interest from financial institutions, laying a solid foundation for broader commercial rollout and scaled adoption in the forthcoming phase. On October 1, the new rules officially came into effect. As a leading player in the industry, we have always upheld the highest compliance standards without exception this time. Collaborating closely with our financial institution partners, we quickly optimized our business structure and product experience. While these measures may temporarily impact our loan volume and profitability, we are confident that prioritizing value for users will eventually enhance their trust and help us maintain more sustainable growth in the long run. Meanwhile, certain new industry-wide regulatory measures may affect industry dynamics. However, we believe our diversified business model and robust funding capacity will help us navigate these changes with minimal disruption. Given the current phase of industry-wide adjustment, we will prioritize risk management over short-term growth, aiming to enhance user quality and collection efficiency. Since mid-October, we have already detected encouraging early signs of stabilization in asset quality. Over the years, we have successfully emerged stronger from past challenges, including numerous industry-wide adjustments, and we are confident that we will do so again this time. Looking ahead, we will continue to advance our One Body, Two Wings strategy, further strengthen our AI capabilities, and empower financial institutions in their digital transformation, driving efficient, healthy, and sustainable development of our core business. Internationally, we are actively exploring opportunities in multiple overseas markets. After thorough research, we are even more convinced that our fintech capabilities rank among the best globally. We see international expansion as a challenging yet strategically sound path. Quality arises from careful execution, and we are confident in our ability to deliver results. In closing, short-term industry challenges will not change our long-term direction or our dedication to rewarding our shareholders. Moving forward, we will continue to pursue efficient capital allocation and create value for our shareholders through attractive returns. With that, I will now turn the call over to Alex.

Zuoli Xu, CFO

Thank you, Haisheng. Good morning, and good evening, everyone. Welcome to our third quarter earnings call. Unexpected events in China over the last few months put significant pressure on our operations, and such headwinds may persist through the next couple of quarters as the consumer finance industry faces a new round of regulatory scrutiny and the participants try to settle in the vastly different environment. Total net revenue for Q3 was CNY 5.21 billion versus CNY 5.22 billion in Q2 and CNY 4.37 billion a year ago. Revenue from credit-driven service capital-heavy was CNY 3.87 billion in Q3 compared to CNY 3.57 billion in Q2 and CNY 2.9 billion a year ago. The sequential and year-on-year increase was mainly driven by a higher capital-heavy loan balance. Overall funding costs remained stable quarter-over-quarter despite some liquidity shortage later in the quarter. In the first 3 quarters, we issued a record-breaking CNY 18.9 billion ABS, an increase of over 40% year-on-year. Revenue from platform service capital-light was CNY 1.34 billion in Q3 compared to CNY 1.65 billion in Q2 and CNY 1.47 billion a year ago. The year-on-year and sequential decline was mainly driven by lower capital-light facilitation and ICE volume. Platform service accounts for roughly 48% of our quarter-ending loan balance. We will continue to make timely adjustments to the business mix through the rest of the year to reflect the changing market dynamics and regulatory guidelines. During the quarter, the average IRR of the loans we originated and/or facilitated was 20.9% compared to 21.4% in Q2. Looking forward, we may see further pricing decline as the new regulatory environment requirements are fully implemented across the industry, although the pace of the decline should be modest. Sales and marketing expenses remained stable quarter-over-quarter, but unit cost declined by about 8% sequentially. We added approximately 1.95 million new credit line users in Q3 versus 1.79 million in Q2. We will likely have to adjust the pace of the new user acquisition in the coming months given the volatile macro condition and further optimize our user acquisition channels, and improve user engagement and retention. The 90-day delinquency rate was 2.09% in Q3 compared to 1.97% in Q2. The Day 1 delinquency rate was 5.5% in Q3 versus 5.1% in Q2. The 30-day collection rate was 85.7% in Q3 versus 87.3% in Q2. C-M2, which represents the outstanding delinquency rate after 30 days of collection, increased quarter-over-quarter to 0.79% from 0.64%. As overall portfolio risk continued to increase in the last few months, we took additional measures to tighten the risk standards in September and October. While it's still a bit too early to reverse the trend, we are starting to see marginal improvement in new loans' quality. It may take a few more months to see overall portfolio risk improve as the mix of the loans becomes more favorable. In such a challenging backdrop, we took an even more conservative approach to book provisions against potential credit loss. Total new provisions for risk-bearing loans in Q3 were approximately CNY 2.58 billion versus CNY 2.5 billion in Q2 despite lower risk-bearing loan volume quarter-over-quarter. The provision booking ratio hit another historical high. Write-backs of previous provisions were approximately CNY 785 million in Q3 versus CNY 1.18 billion in Q2. The provision coverage ratio, which is defined as total outstanding provisions divided by total outstanding delinquent risk-bearing loan balance between 90 and 180 days, remained near historical high at 613% in Q3. Non-GAAP net profit was CNY 1.51 billion in Q3 compared to CNY 1.85 billion. Non-GAAP net income per fully diluted ADS was RMB 11.36 in Q3 compared to RMB 13.63 in Q2 and RMB 12.35 a year ago. At the end of Q3, total outstanding ADS share count was approximately 130.2 million compared to 132.4 million at the end of Q2 and 144.2 million a year ago. Effective tax rate for Q3 was 20.9% compared to our typical ETR of approximately 15%. The higher-than-normal ETR was mainly due to withholding tax provisions related to the cash distribution from onshore to offshore. With higher contribution from the capital-heavy model, our leverage ratio, which is defined as a risk-bearing loan balance divided by shareholders' equity, was 3.0x in Q3, still near the low end of the historical range. We expect to see leverage ratio fluctuate around this level in the near term. We generated approximately CNY 2.5 billion cash from operations in Q3 compared to CNY 2.62 billion in Q2. Total cash and cash equivalents and short-term investments were CNY 14.35 billion in Q3 compared to CNY 13.34 billion in Q2. Our strong cash flow and financial position should give us sufficient resources to navigate through the challenging environment and allow us to satisfy our commitments and obligations to the market. We started to execute the $450 million share repurchase program on January 1. As of November 18, 2025, we had in aggregate purchased approximately 7.3 million ADS in the open market for a total amount of approximately CNY 281 million, inclusive of commissions at the average price of USD 38.7 per ADS. We intend to resume the repurchase program after the window opens after this earnings call. Finally, regarding our business outlook. Given the persistent economic uncertainty and fast-changing market dynamics, we will continue to take a cautious approach in business planning for the next couple of quarters, focusing on risk control of our operation. For the fourth quarter of 2025, the company expects to generate non-GAAP net income between CNY 1 billion and CNY 1.2 billion. This outlook reflects the company's current and preliminary view, which is subject to material changes. With that, I would like to conclude our prepared remarks. Operator, we can now take some questions.

Operator, Operator

For those who can speak Chinese, please start your question in Chinese, followed by English translation. Your first question today comes from Chiyao Huang from Morgan Stanley.

Chiyao Huang, Analyst

I have two questions. First, after the new loan facilitation takes effect in October, how should management approach the changes to the business model or profit model of the loans? What are the expectations for the take rate in 2026? Additionally, how should we consider the loan economics in the long run as they normalize? Second, how does management view the competitive landscape once the loan facilitation rule is implemented?

Zuoli Xu, CFO

Thank you, Zheong. And in terms of regulation and take rate, with the new rules in place, both the loan facilitation space and the broader consumer finance industry will need some time to adjust. In the near term, the rules will have some impact on market size, risk levels, and profitability. This is for sure. But in the long run, we believe the competitive environment will become more sustainable and healthier, which is good for our industry. As for the near-term impact, let me talk about what we are seeing right now. First, as the entire industry is lifting the risk bar, funding capacity for our ICE and referral businesses will come down. This means some users will no longer be served, and this will have some impact on our loan volume. For the rest of the ICE business, as we adjust pricing, the take rates will decline. Also on the positive side, we expect to see better conversion, higher loan amounts, and less early repayment. This will help reduce some of the pressure on the net take rate. Second, the liquidity pressure in the market is pushing overall risk higher for the broader consumer finance space. Our C2M2 was up to 0.79% in Q3 from 0.64% in Q2, and the net provisions were up about 36% compared to Q2. We expect this trend to continue at least in the next 1 or 2 quarters. Based on our Q4 guidance, we are roughly talking about a take rate of 3% to 4% because of pricing and the risk impact. Over the next 2 quarters, we expect the industry to remain volatile, and we are trying to understand our take rate for the new loans better. For 2026 and beyond, the take rates will depend on how things evolve from the Q4 baseline. Specifically, our focus will be on a few things. First, we will continue to optimize our risk strategies and improve collection efficiency to enhance our risk performance. Second, we will further optimize costs in user acquisition and operations to improve overall efficiency. Third, we will also explore some new service offerings to further improve user conversion and retention. We hope these efforts could help improve our take rate over time. And for your second question, regarding the competitive landscape, since the new rules came out in April, we have seen a major shakeup in the high pricing segment. New loan volumes in that market have decreased significantly. Some smaller platforms may not survive in the future. The rest of the platforms are also shrinking their loan books. So entering Q4, we are actually seeing less competition for traffic. Looking ahead, some of the platforms currently operating in the high pricing segment may also try to move into the 18% to 24% range, but it is very difficult for them to be profitable in that band, given their disadvantage in funding risk management and operational efficiency. So in the longer term, we think some of these players will eventually leave the market. We believe that the market consolidation will benefit us in a few ways. With fewer smaller platforms competing for traffic, our marketing efforts will be more effective. We can acquire higher-value users more accurately with lower acquisition costs. In the new market environment, the users' multi-borrowing situation improves. We should be able to expect lower credit risk and better conversion rates. As such, the users' lifetime value will improve in the longer term. So overall, we think the longer-term competitive environment will become more in our favor, and we see room to gain more market shares over time. Thank you.

Operator, Operator

Your next question comes from Lincoln Yu at JPMorgan.

Lihan Yu, Analyst

I will translate my question. My question is about shareholder return. Given the recent share price volatility and regulatory uncertainties, will there be any changes to the company's execution of the existing buyback plans? As I see it, there is still about 170 million remaining from the plan announced last November. Additionally, in the longer term, what is the company's stance on shareholder return?

Zuoli Xu, CFO

Okay. Lincoln, I will take this question then. So just like you said, as of now, we still have about 170 million left under our 450 million program designed for this year. We took a temporary pause during the third quarter just given the incoming regulatory update and all the risks associated with that. Now after today's earnings call, the new window will open in terms of repurchase. We will resume the execution of this program to fulfill our commitment for the rest of the year. And then regarding the dividend, we have stated that our goal is to gradually increase the dividend per ADS through each semiannual kind of dividend payout. And right now, the Board-approved dividend payout ratio is 20% to 30%, which still gives us enough room to maintain that kind of progressive dividend trend, even with the volatile earnings movement for the next few quarters. Eventually, we still aim to achieve that progressive dividend target for the foreseeable future. In the long run, we still put shareholder return as one of the top priorities for this company, although the mix between the buyback and dividend payout may change from time to time depending on the situation we are facing at any given time. Thank you.

Operator, Operator

Your next question comes from Alex Ye at UBS.

Xiaoxiong Ye, Analyst

So my question is regarding the asset quality trend. I would like to know how the monthly trends for October, September, and November have been. Have we seen any rate deterioration compared to Q3? Also, assuming there are no further changes in the regulatory framework, when does management expect the equity to stabilize and improve? What are the potential upsides we should be aware of?

Haisheng Wu, CEO

Thank you. Your next question comes from Alex Ye at UBS. So my question is regarding the asset quality trend. I'm wondering how the monthly trends have been for October, September, and November. Have we seen any deterioration compared to Q3? Assuming there are no further changes in the regulatory framework, when does management expect equity to stabilize and improve? What upsides should we be aware of?

Karen Ji, Senior Director of Capital Markets

Since the new rules took effect on October 1, high-cost funding has become tighter. Meanwhile, industry risk levels have increased in Q3. Consequently, all platforms, irrespective of their pricing, have prioritized risk management and tightened their risk policies. This has further restricted liquidity and elevated overall risk levels. However, we are noticing some positive trends in November. The early risk indicators for new loans indicate signs of stabilization and slight improvement. The FPD7 delinquency rate for new loans in September fell by 8% compared to July. Regarding the risk performance of the entire loan portfolio, the 7-day delinquency rate in November has remained relatively unchanged from October, showing no further upward trend.

Haisheng Wu, CEO

We are observing some positive signs in November. The early risk indicators for new loans are showing stabilization and slight improvement. The delinquency rate for new loans in September decreased by 8% compared to July. Regarding the overall loan portfolio's risk performance, the delinquency rate in November has remained flat compared to October, with no further upward trend.

Karen Ji, Senior Director of Capital Markets

Currently, we are primarily focusing on two areas to reduce rates. In our loan processes, we are modestly increasing the proportion of high-quality users to optimize the overall rate structure. Additionally, we are enhancing operational resources for low-risk users and utilizing large language model algorithms to refine our pricing strategy. By offering more personalized pricing, exclusive benefits, and a streamlined user journey, we aim to boost user conversion and retention. For collections, we are expanding our in-house capacity and providing more support to our partner agencies. We are also refining our user profiling and case matching so that each case can be directed to the appropriate team. Leveraging large language algorithms, we can better assess borrowers' ability and willingness to repay, allowing us to tailor our approach for improved outcomes.

Haisheng Wu, CEO

To enhance user conversion and retention, we plan to offer exclusive benefits and streamline the user experience. In our collections efforts, we are expanding our internal capabilities and enhancing support for our partner agencies. Additionally, we are refining our user profiling and case matching processes to ensure that each case is directed to the appropriate team. Utilizing advanced language algorithms, we can more accurately assess borrowers' ability and willingness to repay, allowing us to customize our strategies for improved results.

Karen Ji, Senior Director of Capital Markets

Looking ahead, while we have noticed some early signs of stabilization, it’s still only been about two weeks into November, so we need more time to determine if this trend will persist. Our typical loan tenure ranges from 9 to 10 months, meaning that when we tighten risk strategies for new loans, it usually takes 2 to 3 quarters for improvements to reflect in the overall portfolio. The market dynamics are still changing, and key risk indicators for new loans haven't yet reached our preferred levels, indicating that this adjustment period might take longer than we anticipated. On the financial front, our provisions and profit buffers are quite strong, providing us ample capacity to navigate the short-term challenges in the industry. We have faced numerous challenges in the past and have always managed to respond effectively. Therefore, we are confident in our ability to bring risk levels back to a reasonable range once again.

Operator, Operator

Your next question comes from Emma Xu of BofA Securities.

Emma Xu, Analyst

According to recent media reports, regulators are implementing new regulations for consumer finance companies, which will reduce the APR of newly issued loans to 20%. Although these regulations won't apply to loan facilitation firms, has the management assessed the potential effects if the average APR drops below 20%? Could this result in a slowdown in loan growth and a rise in credit costs? In this situation, does the company have any strategies in place to mitigate the impact on profitability?

Zuoli Xu, CFO

Emma, let me take this one. Yes, on the pricing guidance for consumer finance companies, there's no formal document at this point, just informal communication. As we understand, consumer finance companies are required to keep their average pricing below 20%. We think the logic behind this is quite close to the new rules on the loan facilitation sector, as the regulators' intention is also to reduce the borrowing costs for consumers and make credit more accessible. In the near term, yes, it will have some impact on market size, risk levels, and profitability. But over time, we think it will help create healthier competition and improve asset quality. In terms of funding, our direct exposure to consumer finance companies is small, so the direct impact on us is limited. First, the consumer finance companies source their business from diverse channels. Industry-wide, about 40% of their loans are self-operated and about 60% from API channels, mostly platforms under other Internet companies. Our cooperation with them accounts for a very small part. In terms of funding, they only account for about 15% of our loan mix. Most of our funding comes from banks, so we are flexible to shift our funding structure if needed. As such, we think the direct impact on us is quite limited, but there is an indirect impact. As consumer finance companies adjust their pricing, we may expect further pressure on liquidity in the short term, leading to risk volatility. In that case, we may continue to lift our bar to mitigate the risk. Our average APR in Q3 was 20.9%. Going forward, we need to strengthen our ability to serve higher-quality users. With a broader user base and a better mix, we should be able to optimize pricing and keep our risk well balanced. In the meantime, we will maintain our operations to improve overall profitability. The point is we care more about our users' long-term value than certain profitability. Thank you.

Operator, Operator

Your next question comes from Cindy Wang at China Renaissance.

Yun-Yin Wang, Analyst

I have two questions. First, during the opening remarks, the CEO mentioned that Technology Solutions loan volume increased by over 200% quarter-over-quarter in Q3. What is the main factor driving this growth? And what is the outlook for this segment? Second, in Q3, capital light loans made up 42% of the new loan volume, which is similar to Q2, but it decreased by 3 percentage points from 48% of the loan balance. How do you anticipate the ratio of capital-heavy versus capital-light loans will change for new loan volume and loan balance in Q4 and 2026?

Haisheng Wu, CEO

Thank you, Cindy. I can take the first one, and Alex, you can take the second one. So far, our Technology Solutions business has partnered with over 20 financial institutions. In Q3, we facilitated around RMB 5.4 billion in loan volume through this model, up 218% quarter-on-quarter. And the outstanding balance has exceeded RMB 10 billion lately. Two main factors are driving this growth. First, loan volume with our same partners is steadily ramping up. Second, we are expanding the way we collaborate with financial institutions. Not only can we facilitate credit business within their ecosystem, but also across a broader set of online scenarios. This really highlights the value we bring in customer acquisition and risk management across diverse channels. We are also seeing strong demand from financial institutions for AI agents. Because of that, our solution is more than just technology infrastructure. We are currently upgrading our FocusPRO product into our super credit AI agent. Take our AI Credit Officer as an example. Traditional offline credit products in banks have long complicated processes. Powered by large language model capabilities, AI Credit Officer can use a single model to handle all kinds of document processing tasks during due diligence and credit approval stages. This will streamline the process by removing overlapping models running in parallel. As a result, users do not need to resubmit their materials. The whole process can be accelerated, and the approvals can be completed within the same day. On the risk assessment side, by leveraging our trillion-level risk decision data sets and multi-model large language model technology, the agent can identify risk in seconds, generate more precise user profiles within minutes, and keep iterating based on feedback. In the pilot run with our bank partners, our AI agents are already making an impact in key areas like customer acquisition and approvals. The market feedback has also been very positive. We are also seeing interest from several other financial institutions in their products. We believe the future upside of our super credit AI agent is enormous. Thank you.

Zuoli Xu, CFO

Cindy, to your second question regarding the mix between capital-heavy and capital-light. In the short term, as we are facing a very volatile market condition that we discussed earlier, we may need to make some flexible adjustments to the mix. On one hand, for example, in this generally higher risk environment, we intend to do more capital-light versus capital-heavy. But on the other hand, the price cap on the '24 also limits our capability to do the ICE side of the business. So those 2 forces probably will work together in the fourth quarter in particular. But directionally, I would say you probably will see a little bit more on the capital-light side in the fourth quarter. As we intend to reduce the risk exposure. And then in the longer term, I think we still need to make from quarter to quarter or from time to time, we still need to make timely adjustments based on the conditions we are facing, the risk level the market presents, and also the funding sources we are getting to decide what's the best solution or best mix for us in terms of mix. So I don't think there will be any directional movement toward the light or towards the heavy; most likely, we'll be bouncing around the sort of the 50-50 line throughout the next year. Thank you.

Operator, Operator

Thank you. That concludes our question-and-answer session for today. I'd like to hand back for closing remarks. Thank you.

Zuoli Xu, CFO

Thank you again for everyone to join us for the call. If you have additional questions, please feel free to contact us offline. Thank you. Have a good day.

Operator, Operator

Thank you. That does conclude our call for today. You may now disconnect your lines. Thank you.