QFIN — Qfin Holdings, Inc.

QFIN Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total Net Revenue: RMB 3.91 billion, down from RMB 4.09 billion in Q4 and RMB 4.69 billion year-over-year.
• Revenue Breakdown:
  • Credit-Driven Services (Capital-Heavy): RMB 2.96 billion, down from RMB 3.43 billion in Q4.
  • Platform Services (Capital-Light): RMB 951.9 million, up from RMB 660 million in Q4.
• Non-GAAP Net Income: RMB 946 million, a decrease from RMB 1.07 billion in Q4 and RMB 1.93 billion year-over-year.
• Non-GAAP EPS: RMB 7.7, down from RMB 8.23 in Q4.
• 90-Day Delinquency Rate: Increased to 3.5% from 2.71% in Q4, while Day 1 delinquency improved to 5.7% from 6.1%.
• Cash from Operations: RMB 2.1 billion, down from RMB 3.15 billion in Q4.
• Total Cash and Short-Term Investments: RMB 10.79 billion, slightly up from RMB 10.72 billion in Q4.

2. Strategic Updates and Business Highlights:

• Risk Management Improvements: Enhanced risk indicators with a 20% decline in FPD7 and a 17% drop in the C2M2 ratio to 0.8%.
• Customer Acquisition Strategy: Focused on high-quality users, increasing spending on this segment by 40% while reducing costs for regular segments by 17%.
• Funding Strategy: Increased ABS issuance to RMB 2.9 billion, up 16% from the prior quarter, reducing funding costs by approximately 10 basis points.
• Tech Solutions Growth: Loan volumes from tech solutions reached RMB 9.96 billion, a 7-fold increase year-over-year.
• International Expansion: Launched operations in new markets, including the UK and a Latin American country, with a focus on localizing risk models.

3. Forward Guidance and Outlook:

• Q2 2026 Non-GAAP Net Income Guidance: Expected between RMB 900 million and RMB 980 million, indicating a year-over-year decline of 47% to 51%.
• Long-Term Strategy: Committed to a "1-core, 2-wings" strategy focusing on domestic credit as the core, with tech solutions and international expansion as growth drivers.

4. Bad News, Challenges, or Points of Concern:

• Declining Revenue and Profitability: Significant year-over-year declines in revenue and net income due to lower loan volumes and pricing pressures.
• Regulatory Environment: Ongoing regulatory scrutiny and market volatility present uncertainties that could impact future performance.
• Increased Delinquency Rates: The 90-day delinquency rate rose, reflecting elevated risk levels, although early indicators show some improvement.
• Market Conditions: Soft demand for consumer credit and liquidity pressures in the funding market continue to pose challenges.

5. Notable Q&A Insights:

• Loan Pricing Trends: Management noted a downward trend in average loan pricing, attributed to a strategic shift towards high-quality users and improved risk management.
• Risk Appetite: While asset quality is stabilizing, management indicated a cautious approach to increasing risk appetite, focusing on sustainable growth rather than volume.
• Customer Acquisition Costs: Emphasis on ROI and payback periods rather than just acquisition costs, with a commitment to optimizing channels for high-quality users.
• International Business Outlook: Management expressed confidence in long-term growth potential in overseas markets, despite the current early-stage investment focus and need for localized risk models.

This summary encapsulates the key points from QFIN's Q1 2026 earnings call, highlighting both the challenges faced and the strategic initiatives being undertaken to navigate the current market landscape.