Summary of XYF Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Net Revenue: RMB 993.6 million (USD 146.4 million), down 56.3% year-over-year and 15.5% sequentially.

Net Income: RMB 47 million (USD 6.9 million), up 23.8% from Q1 2026 but down significantly from RMB 528 million a year ago.

Operating Margin: Improved to 19.6% from 12% in Q1 2026, but still below 29.7% in Q2 2025.

Return on Equity: 2.4%, reflecting a reduced earnings base.

Loan Origination: RMB 11.63 billion, a decline of 70.2% year-over-year and 20.5% sequentially.

Outstanding Loan Balance: RMB 24.97 billion, down 61.5% year-over-year and 29.2% from Q1 2026.

Delinquency Rates: 31-60 days at 1.73% (improved from 2.61% in Q1 2026) and 91-180 days at 9.09% (improved from 9.95% in Q1 2026).

2Strategic Updates and Business Highlights

The company is focusing on credit quality, liquidity, and balance sheet strength over origination volume.

Origination efforts are concentrated in internally operated channels to enhance borrower quality.

Automation in servicing and collections has been extended, and discretionary spending is tightly controlled.

The average loan amount per transaction increased to RMB 12,712, reflecting a shift towards higher-quality borrowers.

The company continues to repurchase shares, having bought back approximately 2.63 million ADSs for about USD 12.49 million.

3Forward Guidance and Outlook

The company has not provided quantitative guidance for Q3 2026 due to uncertainties in the operational environment.

Priorities include capital preservation, disciplined origination, rigorous cost control, and protecting the balance sheet.

Management will resume providing guidance when visibility improves.

4Bad News, Challenges, or Points of Concern

The significant decline in loan origination and outstanding loan balance indicates ongoing challenges in the market.

Despite improvements in delinquency rates, they remain elevated compared to prior year levels, particularly in the 91-180 day category.

The regulatory environment continues to evolve, adding uncertainty to future operations.

The company is cautious about declaring victory on credit quality improvements, emphasizing the need for sustained positive trends.

5Notable Q&A Insights

Management discussed the rationale for remaining a public company, noting that privatization could hinder future listing opportunities.

There is a focus on exploring new revenue sources beyond loan facilitation to enhance shareholder value.

A significant decrease in provisions for contingent guarantee liabilities was explained as a result of improved loss rate assumptions rather than a reduction in risk.

Concerns were raised about a substantial increase in provisions for credit losses related to deposits, attributed to one funding institution that has delayed returning guarantee money.

Management reiterated that they are maximizing buybacks under current circumstances but do not have immediate plans for additional capital returns beyond existing programs. Overall, while there are signs of sequential improvement in certain financial metrics, the company faces significant challenges in loan origination and credit quality, necessitating a cautious approach moving forward.