Lexin (LX) Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Loan Volume: RMB 55.43 billion, a 4.3% decrease quarter-over-quarter.

Revenue: RMB 3.19 billion, down 21.1% from the previous quarter.

Net Profit: RMB 101 million, a decline of 49.7% quarter-over-quarter.

Operating Expenses: Decreased by 17.6% to RMB 1.2 billion.

Cash Position: RMB 2.5 billion, providing a buffer against market volatility.

Day 1 Delinquency Ratio: Increased by 9.5% quarter-over-quarter; 90-day delinquency ratio rose from 3.5% to 3.6%.

2Strategic Updates and Business Highlights

Cost Efficiency Initiatives: Streamlined organizational structure and accelerated AI adoption, leading to a 17.6% reduction in operating expenses.

Risk Management: Tightened risk controls and scaled back loan origination to maintain asset quality.

Diversification Strategy: Continued growth in fintech empowerment business, which achieved profitability and contributed 45% to loan volume.

E-commerce Business: Maintained steady growth with a gross profit increase of 58.7%, indicating resilience amidst challenges.

3Forward Guidance and Outlook

Short-term Expectations: Anticipate continued pressure on revenue and potential net loss in Q3 due to ongoing industry headwinds and tightened funding supply.

Long-term Strategy: Focus on transitioning to a tech-empowered model and enhancing operational efficiency through AI.

Dividend Policy Change: Adjusted from semiannual to annual distribution to preserve liquidity and support business transformation.

4Bad News, Challenges, or Points of Concern

Industry Headwinds: Ongoing tightening of funding supply and increased regulatory scrutiny following risk events among peers have negatively impacted loan origination and market confidence.

Rising Delinquency Rates: Increased risk indicators and potential for further deterioration in asset quality due to sector-wide liquidity issues.

Profitability Pressures: Despite cost-cutting measures, the company expects to record a net loss in Q3 due to rising credit costs and one-time expenses related to organizational optimization.

5Notable Q&A Insights

Industry Risk Events: Management acknowledged that recent events have shaken market confidence, leading to a broader tightening of funding across the industry.

Future Risk Trends: Expectation of continued upward pressure on delinquency ratios and a decline in new loan originations in Q3.

Long-term Shareholder Value: Commitment to returning value to shareholders remains strong, with plans for potential buybacks and reassessment of dividend distribution as market conditions improve. This summary encapsulates the key points from Lexin's Q2 2026 earnings call, highlighting both the challenges faced and the strategic initiatives being implemented to navigate the current environment.