FinVolution Group (“FinVolution,” or the “Company”) (NYSE: FINV), a leading fintech platform in China, today announced its unaudited financial results for the second quarter ended June 30, 2021.
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For the Three Months Ended |
YoY Change |
||
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June 30, 2020 |
June 30, 2021 |
||
|
Total No. of New Individual |
197 |
1,183 |
500.5% |
|
New Individual Borrowers China’s |
169 |
812 |
380.5% |
|
New Individual Borrowers |
28 |
371 |
1,225.0% |
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No. of Small Business Owners served |
31 |
408 |
1,216.1% |
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Total Transaction Volume[4] |
13.2 |
33.4 |
153.0% |
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Transaction Volume China’s Mainland |
13.1 |
32.5 |
148.1% |
|
Transaction Volume International |
0.05 |
0.94 |
1,780.0% |
Second Quarter 2021 Operational Highlights
Growing global user base with total no. of new borrowers reaching record high
- Total cumulative registered users[1] reached 130.8 million as of June 30, 2021.
- Total number of unique borrowers[2] was 3.7 million as of June 30, 2021.
- Total number of new borrowers[3] was 1.18 million, an increase of 500.5% compared to the same period of 2020.
Total transaction volume and outstanding loan balances both reaching new record highs
- Total transaction volume reached RMB33.4 billion, an increase of 153.0% compared to the same period of 2020.
- Transaction volume facilitated for total new borrowers[5] was RMB7.1 billion, an increase of 610.0% compared to the same period of 2020.
- Total outstanding principal of loans reached RMB39.4 billion, an increase of 86.7% compared to the same period of 2020.
Small business owner’s loans scaling up with steady growth
- Transaction volume facilitated for small business owners was RMB6.2 billion, representing 18.6% of total transaction volume.
- Numbers of small business owners served in the quarter exceeded 408.0 thousand, an increase of 1,216.1% compared to the same period of 2020.
International expansion continues to accelerate with new geographic presence
- Number of new borrowers acquired in the international markets reached 371.0 thousands, an increase of 1,225.0% compared to the same period of 2020.
- Transaction volume facilitated for the international markets was RMB940.0 million, an increase of 1,780.0% compared to the same period of 2020.
- Pilot testing operations took off in Vietnam.
More operational highlights
- 90 day+ delinquency ratio[6] reached a new historical low to 1.01% as of June 30, 2021, compared to 7.13% in the same period of 2020.
- Average loan size[7] was RMB4,403 for the second quarter of 2021, compared to RMB3,867 in the same period of 2020.
- Average loan tenor[8] was 8.1 months for the second quarter of 2021.
Second Quarter 2021 Financial Highlights
Sustainable growth with progressive improvement
- Net revenue was RMB2,384.1 million (US$369.3 million) for the second quarter of 2021, an increase of 31.7% from RMB1,810.5 million compared to the same period of 2020.
- Operating profit was RMB704.7 million (US$109.1million) for the second quarter of 2021, an increase of 24.2% from the same period of 2020.
- Non-GAAP adjusted operating income[9], which excludes share-based compensation expenses before tax, was RMB726.1 million (US$112.5million) for the second quarter of 2021, an increase of 26.1% from the same period of 2020.
- Diluted net profit per ADS was RMB2.11 (US$0.33) and diluted net profit per share was RMB0.42 (US$0.07), an increase of 40.7% in the same period of 2020. Non-GAAP diluted net profit per ADS was RMB2.17 (US$0.34) and Non-GAAP diluted net profit per share was RMB0.43 (US$0.07), an increase of 42.8% in the same period of 2020.
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[1] On a cumulative basis, total number of users registered on the Company’s platforms as of June 30, 2021. |
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[2] Represents the total number of borrowers whose transactions were facilitated on the Company’s platforms during the period presented. |
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[3] Represents the total number of new borrowers on the Company’s platforms during the period presented. |
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[4] Represents total transaction volume facilitated on the Company’s platforms during the period presented. |
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[5] Represents transaction volume facilitated for total number of new borrowers on the Company’s platforms during the period presented. |
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[6] “90 day+ delinquency ratio” refers to the outstanding principal balance of on- and-off balance sheet loans that were 90 to 179 calendar past due as a percentage of the total outstanding principal balance of on-off balance sheet loans on the Company’s platform as of a specific date. Loans that originated outside China’s Mainland is not included in the calculation. |
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[7] Represents the average loan size on the Company’s platform in China’s Mainland during the period presented. |
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[8] Represents the average loan tenor period on the Company’s platform in China’s Mainland during the period presented. |
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[9] Please refer to “UNAUDITED Reconciliation of GAAP And Non-GAAP Results” for reconciliation between GAAP and Non-GAAP adjusted operating income. |
Mr. Feng Zhang, the Chief Executive Officer of FinVolution, commented, “We are thrilled to be reporting another set of record-breaking operational and financial results in the second quarter. As we harness our technological capabilities effectively to acquire new better quality borrowers and constantly increase our acquisition channels, our total number of new better quality borrowers acquired globally once again crossed the one million mark to a new record high of 1.18 million this quarter, an increase of 500.5% year over year and 17.7% quarter over quarter.”
“Another clear indication that we are resuming high quality growth is our total transaction volume for the quarter reached a new record high to RMB33.4 billion , a 153.0% jump year over year and a sequential increase of 24.6%.”
“Growth momentum for our small business owners segment remained robust with transaction volume increasing 40.9% sequentially to RMB6.2 billion in the second quarter. Notably, the total number of small business owners served in the second quarter of 2021 exceeded 408 thousand, compared to just 220 thousand in total for the full year 2020.”
“Our pilot testing operations in Vietnam, marks the fourth country in our global roadmap in addition to our international presence in Indonesia, Philippines, and Singapore. Leveraging our technologies and digitization capabilities to create long term value for our stakeholders, we are confident in our ability to maintain our position as the leading fintech platform in China while capturing tremendous growth opportunities globally,” concluded Mr. Zhang.
Mr. Jiayuan Xu, the Chief Financial Officer of FinVolution, commented, “With continued improvement across multiple operating metrics in the second quarter, we delivered a non-GAAP operating profit of RMB726.1 million, an increase of 26.1% year-over-year and a sequential increase of 8.2%, further validating the viability of our business model. Our robust balance sheet with RMB4.9 billion in unrestricted cash and short term investments, coupled with strong technology capabilities positions us well to explore opportunities both in domestic and international markets,” concluded Mr. Xu.
Second Quarter 2021 Financial Results
Net revenue for the second quarter of 2021 increased by 31.7% to RMB2,384.1 million (US$369.3 million) from RMB1,810.5 million in the same period of 2020, primarily due to the increase in transaction volume and partially offset by the decrease in guarantee income as a result of improved asset quality.
Loan facilitation service fees increased by 135.3% to RMB952.4 million (US$147.5 million) for the second quarter of 2021 from RMB404.7 million in the same period of 2020, primarily due to the increase in transaction volume which was partially offset by the decrease in average rate of transaction fees.
Post-facilitation service fees increased by 95.6 % to RMB299.6 million (US$46.4 million) for the second quarter of 2021 from RMB153.2 million in the same period of 2020, primarily due to the increase in outstanding loans serviced by the Company and the rolling impact of deferred transaction fees.
Guarantee income was RMB665.7 million (US$103.1 million) for the second quarter of 2021 compared to RMB821.2 million in the same period of 2020, as a result of improved asset quality. The fair value of quality assurance commitment upon loan origination is released as guarantee income systematically over the term of the loans subject to quality assurance commitment. As we transitioned our business towards quality borrowers, the fair value of quality assurance commitment upon loan origination decreased due to better asset quality which results in the decrease in guarantee income.
Net interest income decreased by 7.4% to RMB308.5 million (US$47.8 million) for the second quarter of 2021, from RMB333.2 million in the same period of 2020, primarily due to the reduction in the outstanding loan balances of consolidated trusts partially offset by the higher transaction volume originated in the international markets.
Other revenue increased by 60.8% to RMB157.9 million (US$24.5 million) for the second quarter of 2021 from RMB98.2 million in the same period of 2020, primarily due to increase in customer referral fees to other third-party platforms.
Origination and servicing expenses increased by 67.1% to RMB455.0 million (US$70.5 million) for the second quarter of 2021 from RMB272.3 million in the same period of 2020, primarily due to the increase in employees expenditures and fees paid to third party service providers.
Sales and marketing expenses increased by 609.4% to RMB473.2 million (US$73.3 million) for the second quarter of 2021 from RMB66.7 million in the same period of 2020, primarily due to the increase in online customer acquisition expenses as a result of increased efforts in acquiring new borrowers on the Company’s platform.
Research and development expenses increased by 25.4% to RMB104.6 million (US$16.2 million) for the second quarter of 2021, compared to RMB83.4 million in the same period of 2020, due to increased investments in technology development.
General and administrative expenses increased by 23.6% to RMB126.1 million (US$19.5 million) for the second quarter of 2021 compared to RMB102.0 million in the same period of 2020, due to increased expenditures in employees benefits.
Provision for accounts receivables and other receivables increased by 104.3% to RMB47.4 million (US$7.3 million) for the second quarter of 2021, compared with RMB23.2 million in the same period of 2020 as a result of increase in outstanding loan balances partially offset by improved credit quality.
Provision for loans receivables was RMB81.9 million (US$12.7 million) for the second quarter of 2021, compared with RMB119.8 million in the same period of 2020, primarily due to improved asset quality as well as the decrease in loan receivables during the quarter.
Credit losses for quality assurance commitment were RMB391.1 million (US$60.6 million) for the second quarter of 2021 compared to RMB575.8 million in the same period of 2020, primarily due to improved asset quality partially offset by the increase in outstanding loan balances.
Operating profit increased by 24.2% to RMB704.7 million (US$109.1 million) for the second quarter of 2021 from RMB567.2 million in the same period of 2020.
Non-GAAP adjusted operating income, which excludes share-based compensation expenses before tax, was RMB726.1 million (US$112.5 million) for the second quarter of 2021, representing an increase of 26.1% from RMB575.9 million in the same period of 2020.
Other income decreased by 24.8% to RMB25.8 million (US$4.0 million) for the second quarter of 2021 from RMB34.3 million in the same period of 2020, mainly due to the decrease in government subsidies.
Income tax expenses were RMB110.1 million (US$17.0 million) for the second quarter of 2021, compared with RMB147.5 million in the same period of 2020, mainly due to change in preferential tax rate for certain qualified subsidiaries which is partially offset by the increase in pre-tax profit.
Net profit was RMB620.4 million (US$96.1 million) for the second quarter of 2021, compared with RMB454.0 million in the same period of 2020.
Net profit attributable to ordinary shareholders of the Company was RMB626.4 million (US$97.0 million) for the second quarter of 2021, compared with RMB456.7 million in the same period of 2020.
Diluted net profit per ADS was RMB2.11 (US$0.33) and diluted net profit per share was RMB0.42 (US$0.07), an increase of 40.7% year over year. Non-GAAP diluted net profit per ADS was RMB2.17 (US$0.34) and Non-GAAP diluted net profit per share was RMB0.43 (US$0.07), an increase of 42.8% year over year. Each ADS represents five ordinary shares of the Company.
As of June 30, 2021, the Company had cash and cash equivalents of RMB2,801.8 million (US$434.0 million) and short-term investments mainly in wealth management products of RMB2,056.0 million (US$318.4 million).
The following table provides the delinquency rates for all outstanding loans on the Company’s platform in China’s Mainland as of the respective dates indicated.
|
As of |
15-29 |
30-59 |
60-89 |
90-119 |
120-149 |
150-179 |
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March 31, 2019 |
0.80% |
1.61% |
1.45% |
1.29% |
1.31% |
1.20% |
|
June 30, 2019 |
0.86% |
1.42% |
1.37% |
1.19% |
1.26% |
1.21% |
|
September 30, 2019 |
0.90% |
1.50% |
1.35% |
1.31% |
1.17% |
1.20% |
|
December 31, 2019 |
1.34% |
2.40% |
1.86% |
1.76% |
1.62% |
1.53% |
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March 31, 2020 |
1.34% |
3.03% |
2.33% |
2.44% |
2.64% |
2.17% |
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June 30, 2020 |
0.71% |
1.36% |
1.70% |
2.00% |
2.75% |
2.38% |
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September 30,2020 |
0.46% |
0.72% |
0.74% |
0.90% |
1.07% |
1.43% |
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December 31, 2020 |
0.35% |
0.55% |
0.48% |
0.52% |
0.49% |
0.55% |
|
March 31, 2021 |
0.29% |
0.52% |
0.43% |
0.39% |
0.38% |
0.36% |
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June 30, 2021 |
0.30% |
0.45% |
0.39% |
0.32% |
0.36% |
0.33% |
The following chart and table display the historical cumulative 30-day plus past due delinquency rates by loan origination vintage in China’s Mainland for all loan products facilitated through the Company’s online platform as of June 30, 2021:
Click here to view the chart.
Business Outlook
With the COVID-19 recent resurgence in China and other regions around the world, the Company will continue to closely monitor the situation of the pandemic and remain vigilant in its business operations. As such, the Company holds a cautious view on its operations and anticipates steady growth in its transaction volume for the third quarter of 2021, which is expected to be in the range of RMB35.0 billion to RMB37.0 billion.
The above forecast is based on the current market conditions and reflects the Company’s current preliminary views and expectations on market and operational conditions, the regulatory and operating environment, as well as customer and institutional investor demands, all of which are subject to change.
Conference Call
The Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern Time on August 23, 2021 (8:00 PM Beijing/Hong Kong time on August 23, 2021).
Dial-in details for the earnings conference call are as follows:
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United States (toll free): |
1-888-346-8982 |
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Canada (toll free): |
1-855-669-9657 |
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International: |
1-412-902-4272 |
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Hong Kong, China (toll free): |
800-905-945 |
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Hong Kong, China: |
852-3018-4992 |
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Mainland, China: |
400-120-1203 |
Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for “FinVolution Group.”
Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at https://ir.finvgroup.com.
A replay of the conference call will be accessible approximately one hour after the conclusion of the live call until August 30, 2021, by dialing the following telephone numbers:
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United States (toll free): |
1-877-344-7529 |
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Canada (toll free): |
1-855-669-9658 |
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International: |
1-412-317-0088 |
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Replay Access Code: |
10159520 |
