Jiayin Group Inc. (JFIN) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Jiayin Group's First Quarter 2026 Earnings Conference Call. [Operator Instructions]. I will now turn the call over to Mr. [ Sam Lee ] from Investor Relations of Jiayin Group. Please proceed.

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 first quarter of 2026. 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, this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP financial measures to GAAP financial measures. 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 translation. Please go ahead, Mr. Yan.

[Foreign Language]

[Interpreted] Hello, everyone. Thank you for joining our first quarter 2026 earnings conference call.

[Foreign Language]

[Interpreted] During the first quarter of 2026, the consumer lending industry remained in an adjustment phase. The recovery in credit demand continued at a relatively gradual pace. and the industry as a whole remained under pressure. Against this backdrop, we focused on refining the operations of our high-quality existing borrower base and the structural enhancement of our business model. During the quarter, we achieved transaction volume of RMB 19.3 billion, representing a year-over-year decrease of 45.8%. Revenue was impacted by industry cyclicality and volume contraction, while temporary cost pressures persisted during the period. As a result, we recorded a net loss of approximately RMB 61.7 million for the quarter.

[Foreign Language]

[Interpreted] This quarter, we concentrated on the refined management and engagement of our high-quality existing borrower base. Through cross analysis of user risk scores and platform behavioral insights, we segmented our existing borrowers into groups and implemented differentiated engagement strategies and operating strategies tailored on each group's credit profile and borrower intent. Repeat borrowing contribution accounted for 76.3% of transaction volume during the quarter, representing an increase of 4.4 percentage points from the same period last year. These highly engaged users not only contributed to stable repeat borrowing demand, but also validated the initial effectiveness of our strategy to deepen engagement with existing borrowers.

[Foreign Language]

[Interpreted] The 90-plus day delinquency ratio was 2.25% as of the end of the first quarter, increasing sequentially. For higher-risk borrower segments, we continue to tighten underwriting criteria and credit limit controls to facilitate an orderly runoff of portfolio risk exposure. For high-quality borrowers, we further analyze borrower needs and work closely with our operations team to refine borrower management and engagement strategies with a focus on improving retention. Meanwhile, we are embedding AI capabilities into our operations to drive the productization of risk management and continuously refining and developing reusable standardized solutions.

[Foreign Language]

[Interpreted] On the business development front, we continue to execute the overall strategy established in the previous quarter and advance our structural upgrade through 3 key initiatives. The first initiative is the enhancement of our joint operations and tech empowerment model. During the quarter, we actively expanded our technology empowerment services for financial institutions. Under this model, the company acts as a technology and operation service provider, deeply integrating into the entire lending process of partner banks. We provide comprehensive solutions covering borrower engagement and operations, technology services and risk modeling capabilities. Leveraging our advanced data technologies and extensive operational experience, we empower our partners throughout the credit life cycle. In the first quarter, the transaction volume generated through our technology empowerment business reached RMB 1.52 billion, representing a sequential increase of approximately 67.6%. This business represents a natural extension of the technology service capabilities we have accumulated over many years, enabling us to deepen our collaboration with financial institutions. It also represents an important innovation initiative in the current operating environment. We remain optimistic about the long-term value of this model and expect its scale to continue expanding in the future.

[Foreign Language]

[Interpreted] The second initiative is the development of a diversified product portfolio, including auto-backed loans and digital intelligence micro loans, which enables us to serve specific scenarios and borrower segments. For our auto-backed loan business, the version 3.0 system launched earlier this year has achieved end-to-end fully digitalized operations. We remain focused on borrower engagement and operations, risk empowerment and matching, while specialized partners handle post loan servicing and vehicle disposal. This collaborative model allows us to concentrate resources on our core strength while creating complementary advantages with upstream and downstream partners. Since the beginning of this year, the auto-backed loan business has maintained strong growth momentum with overall user conversion rates ranking among the highest in the market under a full online operating model. The continued expansion of our diversified product portfolio helps us reach differentiated borrower groups while providing funding partners with broader asset options.

[Foreign Language]

[Interpreted] The third initiative is our international business. In Indonesia, loan volume increased by 20% quarter-over-quarter and more than doubled year-over-year in the first quarter. By deepening cooperation with local funding partners, we continue to expand our presence in the market. In Mexico, while currently small in scale, growth has been even faster. Our local partner loan volume increased by 35% sequentially during the first quarter and also delivered strong year-over-year growth. During the reporting period, revenue scale from overseas market continued to increase. We will continue to execute our globalization strategy, leveraging strategic investments as an entry point to explore our advanced technology capabilities and operational expertise and steadily build this segment into a growth engine for the company's future development.

[Foreign Language]

[Interpreted] In artificial intelligence, we continue to execute against a clear strategic road map by integrating AI technologies into our fintech ecosystem and accelerating the evolution of our technology service capabilities. In intelligent engineering, the feature iteration cycle for our risk management models has been reduced from several days to less than 1 hour, enabling strategies to respond rapidly to changes in market conditions. This capability has also become a core technology offering provided to our institutional partners. For R&D acceleration, AI agents now generate approximately 30% of all AI-assisted code improving development efficiency by around 20% and further strengthening the engineering foundation for large-scale AI deployment. In service assistance, our proprietary models have been fully deployed across customer service operations. Intent recognition accuracy improved from 78% to 93%, significantly enhancing service efficiency while reducing model inference costs by 90%. In addition, in workplace intelligence, we have completed enterprise-grade security enhancements for open cloud and deployed our proprietary AI agent, [indiscernible], across a wide range of daily work scenarios. These initiatives are gradually reshaping the way our organization operates, enabling AI to serve as a collaborative partner for every employee and continuously unlocking productivity gains. AI is steadily evolving from a supporting tool into an intrinsic driver of operational efficiency across the company.

[Foreign Language]

[Interpreted] We have always regarded security and responsibility as the lifeline of our business, leveraging the advantages of multimodal AI technologies, we continue to strengthen the protection of user interest. During the first quarter, we identified and blocked approximately 290,000 fraudulent borrowers and intercepted 113,000 malicious applications associated with organized fraud activities. We continue to advance our risk management strategy from a reactive defense model towards proactive prevention and preemptive interception. In particular, we have achieved substantial progress in multimodal large language model applications, including voice print recognition, image recognition technologies by integrating voice print analysis, graph algorithms, clustering technologies and other advanced techniques. We are transforming our anti-fraud framework from traditional structured rule-based detection into a comprehensive prevention and control system built upon multimodal perception, graph analytics and scalable engineering implementation. To date, our multimodal anti-fraud system has identified approximately 5 million suspicious audio and video samples associated with fraudulent and illicit activities with an accuracy rate exceeding 90%.

[Foreign Language]

[Interpreted] Turning to shareholder returns. We have extended our current share repurchase program through June 12, 2027, with approximately USD 49.6 million remaining available under the program. We will continue to evaluate market conditions and our operational performance and comprehensively evaluate and implement various shareholder return initiatives.

[Foreign Language]

[Interpreted] Given the continuing uncertainty in the macroeconomic environment, we remain prudent in our outlook. We currently expect transaction volume for the second quarter of 2026 to be between RMB 9.5 billion and RMB 10.5 billion. Looking ahead, we will continue to prioritize disciplined operations and sustainable development. Through deeper operational experience and enhanced organization resilience, we aim to build a durable competitive moat.

[Foreign Language]

[Interpreted] With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead.

Thank you, Mr. Yan, and hello, everyone. Thank you 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 noted earlier, we remain disciplined in our execution during the first quarter and delivered transaction volume in line with our previous guidance. Transaction volume was RMB 19.3 billion, representing a decrease of 45.8% from the same period of 2025. Our net revenue was RMB 756.7 million, representing a decrease of 57.4% from the same period of 2025. Moving on to costs. Facilitation and servicing expense was RMB 331.6 million, representing a decrease of 1.3% from the same period of 2025. Allowance for uncollectible receivables, contract assets, prepaid expenses and other current assets and others was RMB 1.1 million compared with RMB 17.5 million for the same period of 2025, primarily due to the decrease in allowance for overseas contingent guarantees. Sales and marketing expense was RMB 340.1 million, representing a decrease of 49.6% from the same period of 2025, primarily due to decreased borrower acquisition expenses. General and administrative expense was RMB 44.1 million, representing a decrease of 16.5% from the same period of 2025, primarily due to decreased professional service fees. R&D expense was RMB 109.8 million, representing an increase of 24.6% from the same period of 2025, primarily driven by an increase in technology infrastructure expenses and employee costs. Non-GAAP loss from operations was RMB 70.1 million compared with RMB 606.6 million non-GAAP income from operations in the same period of 2025. Consequently, our net loss for the first quarter was RMB 61.7 million compared with RMB 539.5 million net income in the same period of 2025. Our basic and diluted net loss per share were both RMB 0.29 compared with RMB 2.53 basic and diluted net income per share in the first quarter of 2025. Basic and diluted net loss per ADS were both RMB 1.16 compared with RMB 10.12 basic and diluted net income per ADS in the first quarter of 2025. Each ADS represents 4 Class A ordinary shares of the company. We ended this quarter with RMB 43.4 million in cash and cash equivalents compared with RMB 61.8 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.

[Operator Instructions] We will now begin with our first question. This is from [ Zhao Lee ] from [ CSC ].

[Foreign Language] I'm Jerry Li from China Securities. we have seen the company reported a net loss of almost RMB 62 million for the fourth quarter. It is fourth quarterly loss since listing. What are the primary drivers behind this performance? Any operational adjustments to improve profitabilities moving forward?

[Foreign Language]

[Interpreted] Jerry, I'm the CEO, Yan Dinggui, I will answer your question. So on the loss of RMB 61.7 million. So ever since the new regulation came out last year and implemented in October, where the lower rate cap was enforced from October to June, the overall market loan volume has reduced by RMB 500 million. And due to the significant lowering of the loan volume, there has been a liquidity crunch from the borrower side.

[Foreign Language]

[Interpreted] Ever since the new regulation and the liquidity crunch on the borrower side since the implementation on October 1, we tried many methods and to be highly efficient to resolve the credit risk brought on by the after effects of the implementation.

[Foreign Language]

[Interpreted] So ever since Chinese New Year, we've had a very difficult adjustment period combined with no cost reduction actions last year. So the slower -- there's a faster decrease in loan volume than the decrease in cost reduction. So that explains most of the difference in the loss.

[Foreign Language]

[Interpreted] So ever since Q2, we've implemented a lot of cost control and reduction. So the cash flow will be better next quarter. And from the volume and revenue perspective, we balanced out our cash flow and revenue and expenses. So we're better equipped to continue to have better cash flow and better liquidity for the upcoming quarter.

[Foreign Language]

[Interpreted] That's my response to your question.

Thank you. We will now take our next question. This is from [ Hua Wang ] from [indiscernible] Asset.

[Foreign Language] Hello management could you provide some color on the risk trends through the first quarter and into April and May? Are we seeing an improvement in the risk metrics?

[Foreign Language]

I would like to welcome Ms. Xu Yifang, our new Chief Risk Officer, to answer this question. She's from [ Tencent ] WeBank, and she used to be a risk in risk management over there. So I'd like to welcome her to answer this question.

[Foreign Language]

[Interpreted] So the deterioration in asset quality caused by the rise in credit risk last year has been improving. Credit risk among the new borrowers peaked in September last year, while the risk associated with new loans facilitated to existing borrowers peaked in November. Since then, both have trended downward and shown steady improvement.

[Foreign Language]

[Interpreted] For new borrowers since Q4 of last year, we proactively really adjusted our borrower acquisition mix and the channel mix and optimized our risk models while really controlling the overall volume of new acquisition -- borrower acquisition. As a result, the new borrower credit performance has continued to improve. So by March and April of this year, the new borrower metrics has already declined to the lowest levels recorded during the entire last year.

[Foreign Language]

[Interpreted] With respect to the newly facilitated loans for existing borrowers, the risk levels continue to decline throughout the first quarter. In April -- by April and May, the risk metrics has really fallen by approximately 25% to 30% from their peak levels, returning to levels seen in May and June of last year. So from a risk management perspective, we've really tightened our borrower selection criteria by focusing on borrowers with stronger financial and repayment capabilities as well as more stable asset and credit profiles. At the same time, for the higher risk borrowers, such as those with elevated leverage, significant multi-borrowing exposure, greater liquidity stress or weaker asset profiles for those borrowers, we have proactively shortened the loan tenures and reduced credit limits. So by adjusting the -- making these adjustments to the borrowing emission standards, credit limits and loan terms, we have really actively optimized our asset mix. So while this has resulted in a more measured pace of business growth, it has significantly improved the overall quality of our operations.

[Foreign Language]

[Interpreted] Yes, that's my answer to your question.

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

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

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