LexinFintech (LX) Q2 2024 earnings summary

Executive summary

• Operating revenue for Q2 2024 reached RMB 3.64 billion, up 12.3% quarter-over-quarter and 19.1% year-over-year, driven by higher take rates, tech-empowerment services, and prudent risk management amid a sluggish macroeconomic environment.

• Net profit for Q2 2024 was RMB 227 million, up 12.4% quarter-over-quarter but down 36.3% year-over-year; adjusted net income was RMB 250 million.

• Total loan origination GMV reached RMB 51.1 billion, with managed loan balance at RMB 115.2 billion, both declining due to tightened credit standards and soft consumer demand.

• Overseas business, especially in Mexico, saw rapid expansion and outpaced domestic growth, though it remains small and requires further investment.

• A semi-annual cash dividend of US$0.072 per ADS, about 20% of net income, was declared, with a dividend yield of 8.7%.

Financial highlights

• Revenue take rate rose to 2.91%, up 37 bps quarter-over-quarter and 54 bps year-over-year.

• Gross profit increased 12.6% quarter-over-quarter and 35.4% year-over-year to RMB 1.35 billion.

• Funding costs dropped to a record low of 5.26%, down 58 bps quarter-over-quarter and 131 bps year-over-year, with senior ABS tranche funding cost as low as 2.8%.

• E-commerce revenue surged 88.5% quarter-over-quarter to RMB 437 million, though down 17% year-over-year.

• Cash position strengthened to RMB 4.6 billion; shareholders' equity exceeded RMB 10 billion.

Outlook and guidance

• Q3 loan issuance and profit expected to remain at similar levels to Q2 amid continued macroeconomic uncertainty.

• Focus on premium customer acquisition, risk control, prudent operations, and expanding risk-free business models.

• Overseas expansion, especially in Mexico, will continue to impact operating expenses and require further investment before profitability.

• Management remains confident in sustainable growth in both Chinese and overseas markets for the remainder of 2024.