LX — LexinFintech Holdings Ltd.

Lexin (LX) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Loan Volume: RMB 50 billion in Q4; total for 2025 was RMB 205.3 billion.
• Revenue: RMB 3 billion in Q4; net revenue from credit business was RMB 1.4 billion, a decrease of RMB 586 million quarter-over-quarter.
• Net Income: RMB 214 million in Q4, down RMB 307 million from the previous quarter; full-year net profit increased 52.4% year-over-year to RMB 1.7 billion.
• Active Users: 4.53 million total, with 884,000 new active users in Q4.
• Average APR: 21.7% for new loans, down 140 basis points quarter-over-quarter.
• Operating Expenses: Decreased by 11% to RMB 1.2 billion, but did not decline proportionately to revenue.

2. Strategic Updates and Business Highlights

• Regulatory Compliance: Successfully aligned operations with new regulations, focusing on customer-centric strategies and risk management.
• Risk Management: Enhanced risk strategies led to improved indicators, with a notable decrease in the day 1 delinquency ratio by over 10% since October.
• E-commerce Integration: Continued growth in installment e-commerce, with successful marketing during major shopping events.
• AI Implementation: Advanced use of AI in customer service and risk management, achieving over 90% accuracy in responses and reducing human intervention in credit approvals to 3.4%.
• Diversified Ecosystem: Growth in off-line inclusive finance and tech empowerment businesses, contributing to overall stability.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipate stable loan origination levels in Q1 2026, with a focus on high-quality customer segments.
• Risk Management: Continued emphasis on managing and phasing out high-risk segments to maintain a downward trend in risk levels.
• Financial Performance: No full-year guidance provided due to macroeconomic uncertainties; however, management expects gradual improvement in asset quality and credit costs.

4. Bad News, Challenges, or Points of Concern

• Regulatory Impact: The new regulatory framework has created headwinds, leading to increased credit costs and a contraction in loan volume.
• Credit Risk: Elevated risk levels persisted in Q4, with the day 1 delinquency ratio increasing by 7% quarter-over-quarter before showing signs of stabilization.
• Revenue Compression: Pricing adjustments and a shift in business mix have negatively impacted revenue, with a significant decline in tech empowerment service income.

5. Notable Q&A Insights

• Development Strategy: Management emphasized a user-centric approach and compliance with regulations as key to resilience in the new environment.
• Risk Outlook: While risk indicators are stabilizing, it will take time to return to pre-2025 levels. Continued focus on high-quality assets is planned.
• Shareholder Returns: The company has increased its dividend payout ratio to 30% and completed 80% of its share repurchase program, reflecting management's confidence in long-term value.

Overall, Lexin demonstrated resilience amid regulatory challenges, with a focus on risk management and strategic growth initiatives, while facing headwinds in revenue and credit risk.