X Financial Q2 2025 Earnings Report

X Financial EPS Results

• Actual EPS: $1.85
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

X Financial Revenue Results

• Actual Revenue: $317.32 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

X Financial Announcement Details

• Quarter: Q2 2025
• Date: 8/18/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, August 19, 2025
• Conference Call Time: 8:30AM ET

X Financial (NYSE:XYF) provides personal finance services in the People's Republic of China. The company offers services as an online marketplace connecting borrowers and investors or institutional funding partners. Its loan products include Xiaoying credit loan, which consists of Xiaoying card loan; and Xiaoying preferred loan to small business owners. The company also offers Xiaoying housing loan, a home equity loan product for property owners; investment products through Xiaoying wealth management platform, such as funds, money market, and insurance products; and loan facilitation services to other platforms. In addition, it engages in the technology development, service, and sale of products; and provision of guarantee and consulting services. The company was incorporated in 2014 and is headquartered in Shenzhen, the People's Republic of China.

X Financial Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: The company facilitated RMB 38.99 billion in loan originations in Q2, marking a 10.9% sequential and 71.4% year-over-year increase.
• Positive Sentiment: Total revenue reached RMB 2.27 billion in Q2, up 17.3% sequentially and 65.6% year-over-year.
• Positive Sentiment: Asset quality improved significantly, with the 31–60 day delinquency rate falling to 1.16% and the 91–180 day rate to 2.91%, down 10% and 33% year-over-year, respectively.
• Neutral Sentiment: X Financial expects full-year 2025 loan origination volume of RMB 32–34 billion, reflecting a deliberate shift toward maintaining asset quality over pure volume growth.
• Positive Sentiment: The share repurchase program deployed approximately US$47.7 million so far, with US$68.2 million remaining, and the Board approved a semi-annual dividend of US$0.28 per ADS.

Presentation

[Operator]

Hello and welcome to the X Financial Second Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Victoria Yu. Please go ahead.

[Victoria Yu, Investor Relations Manager at X Financial]

Thank you, operator. Hello, everyone, and thank you for joining today's call. The company's financial results were released earlier today and are available on our Investor Relations website at ir.xiaoyinggroup.com. On the call today from X Financial are Mr. Ken Li, President Mr. Frank Huya Zheng, Chief Financial Officer and Mr. Noah Kaufman, Chief Financial Strategy Officer. Mr. Li will start with a brief overview of our business progress and financial performance. Then Mr. Kaufman will go over some key Q2 metrics and highlights. After that, Mr. Zhen will share updates on financials, regulatory insights and our 2025 outlook. Afterwards, Mr. Li, Mr. Zhen and Mr. Kaufman will be available to answer your questions during the Q and A session. I remind you that this call may contain forward looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and involve known or unknown risks, uncertainties and other factors. These factors are difficult to predict and many are beyond the company's control, which may cause actual results, performance and achievements to differ materially from those described in these statements.

[Victoria Yu, Investor Relations Manager at X Financial]

Further information on these and other risks can be found in our SEC filings. The company undertakes no obligation to update any forward looking statements as a result of new information, future events or otherwise, except as required by law. It is now my pleasure to introduce Mr. Ken Li.

[Kan Li, President & Director at X Financial]

Thank you, Victoria, and hello, everyone. We are very pleased with our continued momentum in 2025. In the second quarter, we facilitated RMB38.99 billion in loans, a 10.9% sequential increase and a strong 71.4% growth year over year. This was another standout quarter for originations, supported by robust borrower demand and continued advance in risk management. Our team remains committed to expanding market opportunities through both new partnerships and the deepening of existing relationships, further strengthening our technology platform and underwriting models to drive profitability and scalability, carefully balancing growth opportunities with prudent risk management as we increase access to qualified borrowers.

[Kan Li, President & Director at X Financial]

We also continue improving borrower experience by speeding up decision making, streamline applications and enhancing transparency. Simultaneously, we have made meaningful enhancements to platform reliability and borrower facing tools, empowering users to make informed credit decisions and managing repayments confidently. Despite the ongoing regulatory environment and macroeconomic uncertainty, we delivered significant sequential growth in loan volume and revenue. Total revenue reached RMB2.27 billion, up 17.3% sequentially and notably higher at 65.6% growth year over year. These results reflected disciplined execution and ongoing expansion of our platform and capabilities.

[Kan Li, President & Director at X Financial]

Operational and credit quality update. We also continued making positive strides in asset quality. As of June 30, our thirty one sixty day delinquency rate improved to 1.16%, down from 1.29% a year ago, reflecting nearly a 10% improvement year over year. The ninety one to one hundred and eighty days delinquency rate was 2.91%, substantially lower than the 4.38% in Q2 twenty twenty four, demonstrating a meaningful 33% reduction year over year. This improvement highlights our continued commitment to discipline the borrower screening and the rigorous underwriting practices.

[Kan Li, President & Director at X Financial]

We have also proactively improved borrower engagement, leveraging timely communication and customized repayment assistance programs. These initiatives continue to drive better borrower behavior, significantly contributing to the stability and the quality of our portfolio. With that, I'll now turn it over to Noah, who will walk through additional financial and operational highlights from the second quarter.

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

Great. Thank you. Hello, everyone. It's great to speak with you today. Let me highlight some key points from our Q2 operational and financial results.

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

On operational metrics, we facilitated approximately RMB38.99 billion in loan originations, up significantly by 71.4% year over year. Our total outstanding loan balance, excluding loans delinquent more than sixty days, reached RMB64.91 billion, representing an increase of 55.3% from Q2 twenty twenty four. Total number of loans facilitated increased substantially to approximately 3,720,000.00, reflecting a growth of 70.8% year over year with an average loan size of RMB 10,476. Our active borrower base grew meaningfully reaching approximately $2,850,000 a notable 73.7 percent increase year over year. On the financial highlights, our total net revenue reached RMB2.27 billion, reflecting strong sequential growth of 17.3% and impressive 65.6% year over year growth driven by increased loan origination volumes and continued expansion of our loan facilitation services.

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

Income from operations increased meaningfully to RMB675.1 million, rising by 45.8% year over year, underscoring our continued focus on operating leverage and disciplined expense management. We reported non GAAP adjusted net income of RMB593.2 million, reflecting robust year over year growth of 58.3, demonstrating continued profitability momentum as we scale our business. Importantly, we delivered this bottom line growth while maintaining operating margins near 30%, even as we increased borrower acquisition spending, reflecting strong unit economics and platform efficiency. In addition, the weighted average number of basic shares outstanding declined approximately 14.4% year over year, contributing to meaningful growth in earnings per ADS alongside strong net income performance. This reflects our ongoing commitment to capital return through our share repurchase program, which Frank will speak on more in a moment.

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

At the same time, with net income up 27% year over year and only modest growth in total equity, our implied return on equity expanded significantly, affirming the strength and efficiency of our earnings model and our ability to generate high returns on capital while maintaining a conservative balance sheet. Our strong Q2 results reflect consistent execution, improved operational efficiency and resilient asset quality amidst a challenging regulatory and market environment. I'll now hand it over to our CFO, Frank, who will dive deeper into these financial results, provide an update on our capital return strategy and share insights on regulation and growth outlook for the remainder of 2025. Thank you. Go ahead, Frank.

[Fuya Zheng, CFO at X Financial]

Thank you, Noah. It's great to speak with everyone today. Let me provide additional highlights of our profitability metrics, liquidity position, strategic capital allocation and the regulatory environment for the 2025. Financial and probability metrics, Non GAAP adjusted net income for Q2 reached RMB593.2 million, US82.8 dollars up significantly by 58.3% year over year, reflecting a strong core profitability driven by prudent expense control and high quality loan growth. Non GAAP adjusted net income per ADS basically improved significantly to RMB14.68, 1.98 representing 85.8% increase year over year, underscoring the effectiveness of operational leverage and the enhanced profitability per share.

[Fuya Zheng, CFO at X Financial]

Return on equity further improved to approximately 27.9% in Q2, increased both sequentially and year over year. As Noah mentioned, our improved ROE reflects both core earnings growth and the capital efficiency, supported by disciplined equity management and reinvestment. This demonstrates our continuous financial discipline and increased operation efficiency as we scale. Our liquidity remains robust, giving us the flexibility to fund strategic growth initiatives, invest in technology and borrow acquisition and return capital to shareholders, primarily through our ongoing share repurchase program. Share repurchase plan from 01/01/2025 through 08/15/2025, X Financial purchased an average of approximately 16,700,000 Class A ownerships, including approximately 2,300,000.0 ADS for a total consideration about approximately US47.7 million under its share repurchase plans.

[Fuya Zheng, CFO at X Financial]

The company's previous US50 million dollars repurchase authorization has been fully utilized. The company now has approximately US68.2 million dollars remaining under its new US100 million dollars share repurchase programs, which is effective through 11/30/2026. This ongoing share repurchase activity underscores our confidence in the company's long term growth perspectives and demonstrates our continued commitment to enhance shareholder value. Further repurchase and this program remains subject to market conditions and regulatory guidelines and our discretion regarding capital allocation priorities. Dividend update.

[Fuya Zheng, CFO at X Financial]

As part of our semi annual dividend policy, the Board has approved a cash dividend of US0.28 dollars per ADS, which is equivalent to approximately US0.0467 dollars per ordinary shares. Shareholders of record as of 09/26/2025 will be entitled to receive the dividend and the payments are expected to be distributed on and around 10/15/2025. ADS holders will receive their dividend payments through our depository, the Bank of New York, Maryland shortly thereafter with the timing subject to brokerage processing. Regulatory environment update. The regulatory environment in China continues evolve and we remain our fully committed to compliance and alignment with the government's policy goals.

[Fuya Zheng, CFO at X Financial]

Regulatory guidance from the National Financial Regulatory Administration emphasize responsible lending practice, consumer protection and financial stability, areas where we remain fully aligned. While involving regulations may introduce incremental compliance obligations for industry participants, we view these changes positively as they support a sustainable industry landscape and encourage responsible innovation. We will continue to proactively engage with regulatory authorities ensuring our operations adhere strictly to involving standards and we believe our platform is well positioned to navigate those changes while continue to create long term value. 2025 growth outlook based on current trends, ex financial expects the total return amount of facility and originate in the 2025 to be the range of 32,000,000,000 to RMB 34,000,000,000. This represents a deliberate moderation from a record of Q2 levels as management plays great emphasis on asset quality and the probability over pure volume growth.

[Fuya Zheng, CFO at X Financial]

The company remains attentive to the challenge and uncertain case from the evolving regulatory environment while maintaining confidence in the resilient order demand and the disciplined execution. With that, I will hand the call back to our President, Hen Li for closing remarks.

[Kan Li, President & Director at X Financial]

Thank you, Frank. As we move further into 2025, we remain confident in our strategic path, rooted in robust underwriting practices, prudent risk controls and continued operational enhancements. Our strong financial position and unwavering commitment to long term value creation give us confidence in our ability to deliver sustained and profitable growth.

[Victoria Yu, Investor Relations Manager at X Financial]

This concludes our prepared remarks. We will now open the call for questions. Operator, please go ahead.

[Operator]

We will now begin the question and answer session. The first question comes from Randy Vellachan with NPS Trading. Please go ahead.

[Analyst]

Hi there. Congratulations on a good quarter and thank you for the call. I do have two questions. The first one is, can you guys provide some light on the pivot that you've made on providing loan growth at the beginning of the year to switching to asset quality? And then the second question is, do you guys see opportunity to run the company leaner through artificial intelligence? Thank you.

[Kan Li, President & Director at X Financial]

Sorry, I didn't hear your first question clearly. Can you repeat that, please?

[Analyst]

Yes, yes. Can you provide some information or some color on the pivot that you guys have had from providing loan growth or going from loan growth at the beginning of the year and switching over to asset quality as your prioritization?

[Kan Li, President & Director at X Financial]

Okay. I think asset quality has always been our priority no matter what. So I think at the beginning of the year that we provide roughly 30% increase in our scale. I think we maintain our expectation on that. I don't see any significant change from our original expectation.

[Kan Li, President & Director at X Financial]

That being said, that asset quality of theirs has always been our top priority. So based on the environment that we are seeing right now, I think we are paying even more attention to making sure that our we are not growing our portfolio just for the sake of growth. But that being said, I still don't see we still maintain our expectation that we will likely finish out the whole year by finish by reaching that goal. I think that's your first question. The second one is about the AI application.

[Kan Li, President & Director at X Financial]

We have already been leveraged AI largely in our client management space, like the collections, like the customer service. So we have already been utilizing AI to replace some of the live agents before. This is this will be a continued growth and I don't see that we will sort of reach the end stage and this will be an ongoing development from our side. Obviously, are very interested in developing our AI capability in order to reduce the future cost. And this certainly align with our profitability goal.

[Fuya Zheng, CFO at X Financial]

I see.

[Analyst]

Thank you.

[Kan Li, President & Director at X Financial]

I think if

[Noah Kauffman, Chief Financial Strategy Officer at X Financial]

I just add one thing, Randy, we have a investor deck that's been released this last slide that highlights all the AI capabilities that we're testing internally.

[Analyst]

That may be helpful. Okay. Thank you.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Victoria Yu for any closing remarks.

[Victoria Yu, Investor Relations Manager at X Financial]

Thank you, everyone, for joining us today. If you have additional questions, please reach out to our Investor Relations team directly. We appreciate your interest and look forward to speaking with you again soon. Operator, back to you.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Victoria Yu, Investor Relations Manager
• Kan Li, President & Director
• Noah Kauffman, Chief Financial Strategy Officer
• Fuya Zheng, CFO

Analysts

• Analyst