Jiayin Group Inc. (NASDAQ:JFIN) Q4 2024 Earnings Call Transcript

Jiayin Group Inc. (NASDAQ:JFIN) Q4 2024 Earnings Call Transcript March 27, 2025

Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to Jiayin Group Fourth Quarter 2024 Earnings Conference Call. Currently all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, we are recording today’s call. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. Shawn Zhang from Investor Relations of Jiayin Group. Please go ahead.

Shawn Zhang: 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 and full year of 2024. 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, 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 translations. Please go ahead, Mr. Yan.

Yan Dinggui: [Foreign Language] In 2024, China’s macroeconomic demonstrated steady growth with consumer credit demand rising steadily, supported by consumer stimulus policies. Overall for the year, consumer credit grew by RMB1.24 trillion, reflecting a 6.2% year-over-year increase. The year also marked a significant milestone for Jiayin as it strengthened its strategic positioning and achieved high-quality development. The company pursued a strategy of steady progress driven by technology expanding incrementally while carefully managing risks. In Q4 2024, the company facilitated loan transactions totaling RMB27.7 billion, a 37.8% year-over-year increase, with loan facilitation service revenue reaching RMB1.1 billion, up 46.3% year-over-year.

The company’s business goal grew steadily each quarter, consistently setting new records. The total loan facilitation volume for the year exceeded RMB100 billion, marking an important business milestone. [Foreign Language] Thanks to diverse borrower acquisition channels and flexible marketing strategies, the company has significantly improved its borrower acquisition efficiency. In 2024, the company added 2.774 million new borrowers, representing a year-over-year growth of 45.1%. Regarding borrowing retention, we implemented a refined stratification mechanism, applying differentiated credit growth strategies. The company’s annual retention rate increased by approximately 7%. We paid particular attention to potential churn users and effectively improve their retention rate nearly 75%.

Additionally, we continue to expand a high-quality and sustainable network of institutional partnerships. During 2024, we maintained our in-depth cooperative relationships with a total of 73 financial institutions. We also actively explored innovative and diverse business models in areas such as auto backed loans and loans for small and macro businesses. We remain committed to achieving win-win collaborations with financial institutions, fostering the diversification of consumer credit products and scenarios. [Foreign Language] In response to the rapid growth of new borrower groups and strong credit demand, the company has consistently adhered to a prudent risk control strategy. While adjusting credit limits as needed, we closely monitor changes in risk data and implement more flexible transaction strategies.

By integrating new external data sources and combining them with deep analysis of internal borrower behavior, we continuously iterate and enhance our risk control models. In Q4, the delinquency rate for loans overdue from 61 to 90 days dropped to 0.53%, representing a significant improvement compared with the same period a year earlier. Furthermore, through our AI-powered self-developed risk control platform, we have established a comprehensive digital anti-fraud defense system. Through the year, we identified and intercepted more than 540,000 high-risk habitual fraud applications and blocked 468,000 malicious attacks from illicit activities. These results demonstrate that we are collectively building a full process digital and collaborated risk control network for Jiayin Technology.

[Foreign Language] With the internal development of technology and the effective progress of external large models, we continue to expand the application and empowerment of AI in business areas such as customer services, risk control and marketing. For instance, our NUA agent assistant system provides real-time tech reminders and script recommendations for customer services staff, achieving an accuracy rate of 90% and reducing the quality inspection error rate by more than 5% after empowering their system. We have also integrated an AI-based image recognition system into the risk control process, quickly enhancing the efficiency and accuracy of document and credential recognition. In marketing, we have implemented a multi-model based on speech and images to ensure an AI intelligent review of marketing graphics, text and video content.

Additionally, we have completed the primary deployment of the advanced large language model, DeepSeek-R1. In 2025, we expect to accelerate its application in core business areas, such as risk management, data science and customer services, driving structural breakthroughs in enterprise efficiency. [Foreign Language] Overseas business expansion has always been a key strategic focus for us. In Q4 2024, our business partners in Indonesia saw a 74% year-over-year increase in loan volume. At the same time, the number of registered users grew by 131% year-over-year, maintaining strong growth momentum. We also established a partnership with leading local financial institutions and are in discussions with five other potential partners. In the Mexican market, we continue to work closely with local regulatory authorities.

As a result, we have significantly optimized risk indicators and improved profitability. With ongoing improvements in operational capabilities and market penetration, we aim to strengthen our competitive position in the overseas market. [Foreign Language] In 2024, the company actively advanced industry – academy research collaboration, working with institutions such as Shanghai Jiao Tong University, Xi’an Jiaotong University and Jilin University to explore the application of cutting-edge AI technologies in the financial sector. In partnership with Shanghai Financial Information Industry Association, we also published the Shanghai Financial Information Industry Development Report, highlighting industry development trends and pathways. Additionally, the company’s youth mental health care initiative reached over 1,500 schools across eight provinces and municipalities nationwide, providing technological assessment and consulting to more than 50,000 teachers and students.

This project was awarded as an annual Public Welfare Innovation Typical Case by China National Reviewing Network. Looking ahead, we will continue to drive industry development through technological innovation and give back to society with concrete actions reaffirming the trust placed in us. [Foreign Language] Regarding shareholder returns, the company distributed a total dividend of US$0.5 per ADS in 2024, totaling US$26.6 million. In appreciation of the strong support and trust from our investors, the company will further enhance shareholder returns. Starting in 2025, we plan to declare and distribute a cash dividend once per fiscal year, with the total amount increasing 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 this way, we intend to continue sharing the long-term benefits from the company’s high-quality development. [Foreign Language] Looking ahead to 2025, macroeconomic policies are expected to provide stronger support for consumer credit. Recently, the National Financial Regulatory Administration issued the notice on developing consumer finance to boost consumption, which includes several key areas such as increasing the supply of consumer credit, diversifying consumer credit products and optimizing loan repayment methods. We believe these robust policy measures will instill confidence and drive momentum in the development of consumer credit industry. In line with the company’s current growth trajectory, we remain optimistic about the company’s business expansion and profitability in 2025 and have set the loan facilitation volume target range at RMB137 billion to RMB142 billion for the year.

In the first quarter, our loan facilitation volume target is RMB35 billion and the non-GAAP income from operation target is set at RMB0.57 billion to RMB0.63 billion. [Foreign Language] With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead.

Fan Chunlin: 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, building on our strong momentum, we kept the year with a record-breaking loan facilitation volume. Notably, loan facilitation volume in Q4 was RMB27.7 billion, representing an increase of 37.8% from the same period of 2023. Our net revenue was RMB1,404.5 million, representing a decrease of 12.2% from the same period of 2023. As we mentioned a few times during our earnings release call earlier, the company has been focusing on the loan facilitation services and deliberately downsize the financial guarantee service.

If we dive deeper into the breakdown of the revenue, revenue from our loan facilitation services was RMB1,124 million, representing an increase of 46.3% from the same period of 2023. The decline of the total revenue was primarily due to the significant decrease in revenue from releasing of guaranteed liabilities as a result of the company’s strategic focus throughout year 2024. Moving on to costs, facilitation and servicing expense was RMB339.3 million, representing a decrease of 59.5% from the same period of 2023. This was primarily due to decreased expenses related to financial guaranteed services. Allowance for uncollectible receivables, contract assets, loan receivable and other was RMB1.2 million, primarily due to the net impact of current period provisions and the reversal of allowance for receivables arising from a lower expected credit loss rate.

Sales and marketing expense was RMB517.2 million, representing an increase of 57% from the same period of 2023, primarily due to an increase in borrower acquisition expenses. G&A expense was RMB53.7 million, representing a decrease of 17.6% from the same period of 2023, primarily driven by a decrease in employee costs. R&D expense was RMB100.4 million, representing an increase of 8.1% from the same period of 2023, primarily due to the increase in the number of our research and development personnel. Non-GAAP income from operations was RMB402.4 million, representing an increase of 67.9% from RMB239.7 million in the same period of 2023. Consequently, our net income for the fourth quarter was RMB275.5 million, representing a decrease of 25.1%.

This was primarily due to the higher base resulting from a one-off non-operational income in the same period of 2023. Our basic and diluted net income per share was RMB1.3 compared with RMB1.72 in the fourth quarter of 2023. Basic and diluted net income per ADS was RMB5.2, compared with RMB6.88 in the fourth quarter of 2023. We ended this quarter with RMB514.5 million in cash and cash equivalents, compared with RMB741.2 million at the end of the previous quarter. With that, we can open the call for questions. Ms. Xu, our Chief Risk Officer, and I will answer your questions. Operator, please proceed.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Yong Zhao from Haitong Securities. Please go ahead.

Yong Zhao: [Foreign Language] So I have noticed a significant slowdown in the company’s revenue growth in 2024. Is this a short-term adjustment or long-term trend? Could the management share the business expansion plans and performance outlook for 2025? Thank you.

Fan Chunlin: [Foreign Language]

Shawn Zhang: This is Shawn Zhang, and I will do the translations for the management. So our current revenue structure primarily consists of two major components, which is – which are loan facilitation revenue and guaranteed service revenue. The company’s strategy for the year of 2024 focuses on the high-quality growth of facilitation service revenue, which represents our core competency and maintains a stable take rate. Revenue related to guarantee services has lower profit margins, and we have been strategically reducing its proportion over the past few quarters. In terms of revenue contribution, the share of facilitation service revenue increased from 48% in Q4 2023 to 80% in Q4 2024, while the share of the revenue related to guarantee business decreased from 41.8% in Q4 2023 to 11% in Q4 2024. This shift in revenue structure aligns with our strategic goal of high-quality growth.

Fan Chunlin: [Foreign Language]

Shawn Zhang: So based on this strategic focus, although the overall revenue in the year of 2024 slows down and the revenue for the fourth quarter even slightly declined year-over-year, mainly due to the decrease in revenue related to guarantee business, however, if we focus on our core business, which is facilitation service revenue, it reached RMB1.124 billion in the fourth quarter, representing a year-over-year growth of 46.3%, which is even slightly higher than the growth rate of the facilitation volume. For the full year, facilitation revenue totaled RMB4.01 billion, reflecting a year-over-year increase of 15%, which also aligns with the annual growth rate of our facilitation volume.

Fan Chunlin: [Foreign Language]

Shawn Zhang: If we compare with the performance in the past few years, the year of 2024 does have a year of relatively slow performance growth for our company. In particular, during the first half of 2024, we adopted a prudent operation strategy that began in Q4 2023 due to macroeconomic considerations. However, starting from the second quarter of 2024, especially in the second half of the year, with the gradual improvement in risk data and positive macroeconomic changes, we gradually resumed a faster growth pace. Our operational data shows that facilitation volume continued to grow sequentially each quarter. Notably, both the third quarter and fourth quarter achieved record-high facilitation volumes for two consecutive quarters. We also implemented an aggressive strategy for acquiring new borrowers, laying a solid foundation for accelerated growth in the coming years.

Fan Chunlin: [Foreign Language]

Shawn Zhang: In the year of 2025, we will continue to pursue a high-quality growth strategy. And just as Mr. Yan said, we expected the facilitation volume guidance in the first quarter to be around RMB35 billion, representing a year-over-year increase of about 55%. And for the full year, we project a facilitation volume of RMB137 billion to RMB142 billion, reflecting a year-over-year growth of about 36% to 41%.

Fan Chunlin: [Foreign Language]

Shawn Zhang: That will be my answer to your question, Zhao.

Yong Zhao: [Foreign Language] So what plans and investments this company currently have in technology, and talent cultivation? And how does the company ensure it maintains a leading position in technology? Thank you.

Xu Yifang: [Foreign Language]

Shawn Zhang: Okay. I’m Xu Yifang, and I will answer your question in Chinese and Shawn will do the translation in English.

Xu Yifang: [Foreign Language]

Shawn Zhang: Okay. So I will do the translation for this part first. So as a technology company, we have always been committed to leveraging technologies and data to connect end consumers and licensed financial institutions through mobile internet, driving refined operations and risk management. And since the beginning of 2025, we have seen that DeepSeek is leading the AI revolution and accelerating the industry’s AI transformation.

Xu Yifang: [Foreign Language]

Shawn Zhang: Okay. So just as what I said before is that we have increased investment and deployment in the AI transformation direction. So first part of that is we have increased the investment in big data and artificial intelligence. So at the end of the last year, we completed a comprehensive upgrade of our corporate architecture and strategic positioning. We conducted a thorough review of both our front-end and middle-office operations and initiated the deployment of multi-node AI agent, advancing unified one-stop intelligent solutions.

Xu Yifang: [Foreign Language]

Shawn Zhang: So through our organizational support and increased investment, we are strengthening the automation capabilities across the entire data life cycle, from the production and mining to application, monitoring and iteration, we are empowering all data and technology personnel with AI-driven tools.

Xu Yifang: [Foreign Language]

Shawn Zhang: Okay. We are also exploring lightweight AI application in this controlled process, and we are actively researching and deploying AI solutions in risk management, integrating artificial intelligence with accumulated professional expertise. This dual approach reinforce our competitive advantage and builds a robust professional moat in the increasingly competitive consumer credit market. And that will conclude my answer for your question.

Operator: [Foreign Language] Thank you for the questions. One moment for the next question. Next question comes from the line of Hua Rong [Jinyu Asset]. Please go ahead.

Hua Rong: [Foreign Language] Hello, management. This is Hua Rong from Jinyu Asset. I have two questions. The first one is we have noticed a decline in the company’s net income in 2024. What are the main reasons for this? Does the management believe there are issues with cost control? And are there any plans for improvement in the future? My next question is, in 2025, how does the company plan to optimize borrower experience to increase their loyalty? Additionally, does the company have plans to attract new borrower groups? Thank you.

Chunlin Fan: [Foreign Language]

Shawn Zhang: Okay. So I will answer your first question about our net income and cost. So in the year of 2024, the company’s net income was RMB1.056 billion with a net margin of about 18.2%. And it has a decrease of RMB240 million compared with the RMB1.297 billion in 2023. And so I think there are – so the year-over-year decline in our net income is mainly due to three reasons. The first reason is our one-time non-operating income, which happened in the fourth quarter of 2023. So in the fourth quarter of 2023, our company recorded approximately RMB280 million in the one-time non-operating income from a business disposal, which is the main reason for that decrease.

Chunlin Fan: [Foreign Language]

Shawn Zhang: So the second reason is about our increased borrower acquisition efforts in the year of 2024. Jiayin significantly increased our borrower acquisition activities in 2024, leading to a higher related costs, including borrower acquisition and credit report expenses. Marketing expenses rose by RMB375 million compared to 2023. As a result, our new borrowers accounted for 33.2% of the total borrower base with 2.774 million new borrowers added throughout the year, which has a year-over-year increase of over 45%. And the third reason I want to share is about the higher R&D expenses. In the year of 2024, R&D expenses increased by more than RMB76 million, which has a 25.7% rise year-over-year. And this increase was driven by the company’s strategic focus on recruiting AI professionals and developing new systems and applications to improve operational efficiency and enhance our user experience.

So our strategic investments in the borrower acquisition and technology and also R&D sector are designed to strengthen our long-term growth momentum. And so going forward, with rapid growth in facilitation volumes, effective control of the revenue share from guarantee services and further implementation of AI applications, our company expects continuous improvements in borrower conversion and retention rates, which will significantly enhance our profitability.

Fan Chunlin: [Foreign Language]

Shawn Zhang: You probably also noticed from what Mr. Yan just said before that, starting in the year of 2025, so in addition to providing facilitation volume guidance, we will also offer a profit guidance metric. During each earnings release, we will provide a forecast for the next quarter’s non-GAAP income from operations, which could reflect the – our company’s core business profitability most accurately.

Fan Chunlin: [Foreign Language]

Shawn Zhang: So our company’s fourth quarter performance has already provided preliminary validation of this strategy. So in the fourth quarter, our non-GAAP income from operations reached RMB402 million, showing significant growth both year-over-year and quarter-over-quarter. We expect non-GAAP income from operations for the first quarter of 2025 to be in the range of RMB570 million to RMB630 million, representing a year-over-year increase of – from 80% to 99%.

Fan Chunlin: [Foreign Language]

Shawn Zhang: So our performance guidance sends two clear signals. First, in terms of our business goal, we are returning to a path of high quality and rapid growth. And second, in terms of profitability, we are highly confident in achieving significant improvements in the year of 2025.

Fan Chunlin: [Foreign Language]

Shawn Zhang: So I want to recall that we are increasing our – so we are increasing our dividend policy 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. So in this way, we are – we would like to continue to share – the long-term profit benefits of the company’s high-quality development.

Fan Chunlin: [Foreign Language]

Shawn Zhang: Okay. So that will be my answer to your first question. I will give the second question to Ms. Xu.

Xu Yifang: [Foreign Language]

Shawn Zhang: Okay. So thank you, Mr. Fan. So usually, people focus heavily on the financial attributes of the consumer credit, emphasizing the professionalism and capability of risk management, which is very important for our industry. But while overlooking the consumer product aspect of consumer credit, ultimately, the borrower needs to be willing to pay and recognize the value, which strengthens our borrower retention. So in this regard, we focus on the entire industry chain and product process to enhance borrower stickiness. For example…

Xu Yifang: [Foreign Language]

Shawn Zhang: Okay. So I will give four examples – on this case. First is that we are strengthening cooperation with some popular traffic platforms. We could provide borrowers who have experienced our products before with better offerings and experience. Second is to improve the – so internally improve the seamless connection between the marketing and risk control approval process. And third is we would like to enhance the customer service, membership benefits and repayment reminders to improve the experience and privileges from our premium borrowers. And fourth, we would like to implement one-stop credit services to allow our borrowers to access multiple funding sources and even experiencing multi-platform credit solutions.

Xu Yifang: [Foreign Language]

Shawn Zhang: Another very important point is that we would like to integrate the whole industry ecosystem through innovative business models focusing on our core borrowers and driving the borrower base towards better pricing structures.

Xu Yifang: [Foreign Language]

Shawn Zhang: So lastly about our new borrower groups, we continue to adhere to our existing market positioning. We are constantly pursuing the acquisition and retention of our high-quality borrowers. So this approach enabled us to achieve a diversified layout across products, borrowers and a financial institutions.

Xu Yifang: [Foreign Language]

Shawn Zhang: Okay. Thank you, Hua. That will conclude my answer to your question.

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

Shawn Zhang: Thank you, operator and thank you all for participating on today’s call, and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

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