Aug 25, 2026 earnings call — Liquidity squeeze and risk management focus
Company guided Q3 non-GAAP net income of RMB 400 million to RMB 500 million.
Revenue $0.5B (est $0.6B) · EPS $0.48 (est $0.96)
Key quotes
"Risk management underpins every business decision we make and is critical to our ability to navigate industry cycles and achieve sustainable growth."
"Our ABS issuance increased 90% sequentially to RMB 5.5 billion in the quarter, while issuance costs decreased by around 20 basis points."
"In Q2, loan volume enabled by our tech solutions business reached RMB 10.5 billion, up approximately 515% year-over-year, while outstanding loan balance reached around RMB 16.1 billion at quarter end, up 313%."
Analyst Q&A 6
risk and collections
Q (Richard Xu · Morgan Stanley): The analyst asked how much vintage losses may rise and whether provisions can cushion the impact. He also asked how collection tightening will affect recovery ratios and what measures the company has taken.
A: Management said both questions relate to risk management and collections and passed the detailed answers to the CRO. They acknowledged the issue and escalated the topic to the appropriate executive for a full response.
"I think both of the questions is regarding to risk management and collection issue." — Zuoli Xu (CFO)
risk increase, actions, and provisions
Q (Yan Zheng): The analyst wanted to know the expected vintage loss increases and whether provisions provide enough cushion. He also asked about expected recovery ratios and what steps the company took to mitigate collection problems.
A: Management said the risk uptick was triggered by a well-known industry incident and a nationwide crackdown on the collection industry, leading to funding shortages and lower collection capacity. They reported August early indicators (FPD 3 and FPD 7) rose about 20% month-over-month and expect C2M2 to increase roughly 25% sequentially, while tightening underwriting, increasing model updates from monthly to weekly, and stepping up post-loan collection efforts. The CFO added that new provision in Q2 was approximately 5.4% of risk-bearing loans and that current provision levels are more than sufficient even under extreme assumptions, with a normalized vintage loss target of 3% to 3.5%.
loan volume drop and causes
Q (Xiaoxiong Ye · UBS): The analyst asked for July and August loan volume run rates, how much they declined from Q2, and whether the decline was due to funding shortages or the company's own risk controls. He also asked if volumes should recover when funding normalizes.
A: Management said industry funding tightened starting in July and the ICE business was most affected, while on-balance-sheet and capital-heavy loans were less affected. They said liquidity caused about a 10% direct impact on July loan volume and combined with proactive risk tightening led to a 15% decline in July; they tightened further in August and expect to remain cautious through Q3, and they do not expect loan volume to return to Q2 levels soon because risk optimization typically takes 2 to 3 quarters.
"The liquidity issue caused about 10% direct impact on our loan volume in July." — Zuoli Xu (CFO)
shareholder return policy
Q (Emma Xu · BofA): The analyst asked whether the company will change its shareholder return policy given the deteriorating industry and tighter regulation.
A: Management said near-term profitability and cash flow are under pressure and capital allocation priorities are to safeguard the company's safety and long-term stability and to fund long-term strategic initiatives. They said in the long run they still intend to maintain a reasonable shareholder return policy and will continuously assess capital allocation based on sustainable normalized earnings and cash flows.
"Our first and foremost priority is to weather the storm and safeguard the safety of the company as well as the company's long-term operational stability." — Zuoli Xu (CFO)
Q3 guidance assumptions
Q (Yun-Yin Wang · China Renaissance): The analyst asked what assumptions underlie the Q3 guidance, what key factors drove changes, and how management sees long-term trends of these metrics.
A: Management said Q3 operates in a highly volatile market with very tight funding, new regulatory policies, and many small platforms exiting, so risk control and efficiency come first and growth takes a back seat. They assume a meaningful decline in loan volume from Q2, expect C-M2 to rise noticeably from Q2, will keep provisions prudent, and noted external funding costs increased by around 25 basis points in July and August so they expect funding costs to trend up in H2 while taking a conservative approach to customer acquisition.
"For Q3, in terms of loan volume, we are assuming a meaningful decline from Q2 as we have tightened our risk control measures significantly in this challenging market condition, okay?" — Zuoli Xu (CFO)
competition, growth, and overseas plans
Q (CICC): The analyst asked how the company views the current market and competitive landscape and its customer acquisition and growth strategy for H2. He also asked for the latest update and approach to overseas expansion.
A: Management said industry-wide acquisition spending fell nearly 50% month-over-month in July and another 20% in August, moderating competition; they are focusing on acquisition returns, prioritizing higher-value users, improving retention, reallocating API resources, and cutting low-quality channels, which improved API ROE by more than 1 percentage point. For overseas expansion, they said they have steady progress in Europe and Latin America with localized models and early encouraging results in Latin America, are advancing licensing and teams in Southeast Asia, are early with small teams and capital, and will seek external funding as capabilities are proven.
"Industry-wide spending fell nearly 50% month-over-month in July with another 20% in August." — Zuoli Xu (CFO)