QFIN Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Net Revenue: CNY 3.57 billion, down from CNY 3.91 billion in Q1 and CNY 5.22 billion year-over-year.

Revenue from Credit-Driven Services: CNY 2.6 billion, down from CNY 2.96 billion in Q1 and CNY 3.57 billion a year ago.

Revenue from Platform Services: CNY 969.8 million, slightly up from CNY 951.9 million in Q1 but down from CNY 1.65 billion year-over-year.

Non-GAAP Net Profit: CNY 455 million, significantly down from CNY 946 million in Q1 and CNY 1.85 billion a year ago.

90-Day Delinquency Rate: Improved to 2.83% from 3.5% in Q1.

30-Day Collection Rate: Increased to 88.1%, up from 85.8% in Q1.

New Provisions for Risk-Bearing Loans: CNY 1.72 billion, with a provision coverage ratio of 472%.

Cash from Operations: CNY 1.09 billion, down from CNY 2.1 billion in Q1.

Dividend: USD 0.23 per Class A ordinary share, reflecting a payout ratio of approximately 30%.

2Strategic Updates and Business Highlights

Operational Focus: Emphasis on compliance, risk management, and efficiency over growth due to tightening regulatory conditions and market liquidity.

Risk Management: Enhanced risk strategies led to improved risk metrics, with a C2M2 ratio of 0.66%, down 17% sequentially.

Customer Acquisition: Moderated spending led to a 13% decrease in customer acquisition expenses. New credit line users added were approximately 830,000, down from 1.19 million in Q1.

Tech Solutions Growth: Loan volume from tech solutions reached CNY 10.5 billion, up 515% year-over-year.

AI Initiatives: Progress in AI projects with banks aimed at improving credit assessment and operational efficiency.

3Forward Guidance and Outlook

Q3 Non-GAAP Net Income Guidance: Expected between CNY 400 million and CNY 500 million, reflecting a year-on-year decline of 67% to 73%.

Market Conditions: Anticipated continued tight funding conditions and increased funding costs in the second half of the year.

Long-Term Strategy: Focus on sustainable, high-quality growth through disciplined risk management and operational efficiency.

4Bad News, Challenges, or Points of Concern

Industry Liquidity Crisis: Triggered by a peer's crisis in late June, leading to tightened funding conditions and increased risk aversion among financial institutions.

Regulatory Pressures: New regulations impacting collection practices and operational execution, contributing to higher costs and operational challenges.

Declining Metrics: Significant year-over-year declines in revenue and profitability, with ongoing challenges in maintaining asset quality.

Market Volatility: Expected to persist, with potential for further tightening of liquidity and increased risk levels across the industry.

5Notable Q&A Insights

Risk Management: The company is closely monitoring early-stage risk indicators and adjusting risk strategies accordingly. Increased risk levels observed in August due to industry-wide tightening.

Customer Acquisition Strategy: Focus has shifted to enhancing the quality of customer acquisition rather than volume, with a disciplined approach to spending.

Overseas Expansion: Progress in Europe and Latin America, with a cautious approach to building local operations and understanding market dynamics.

Future Provisions: Management believes current provisions are sufficient to cover potential losses amid ongoing market volatility. Overall, QFIN is navigating a challenging environment marked by regulatory changes and liquidity pressures while emphasizing risk management and operational efficiency.