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 and growth in tech-empowerment services, despite a decline in loan originations and soft consumer demand.

• 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, down 39.0% year-over-year.

• Board approved a semi-annual cash dividend of US$0.072 per ADS, about 20% of net income, with an annualized yield of 8.7%.

• Overseas business, especially in Mexico, saw accelerated growth, outpacing domestic operations but remains small in scale.

• Adopted a prudent business strategy amid a sluggish macroeconomic environment, focusing on risk management, premium customer acquisition, and data analytics.

Financial highlights

• Loan origination GMV for Q2 2024 was RMB 51.1 billion, down 12.0% quarter-over-quarter and 20.1% year-over-year, with managed loan balance at RMB 115.2 billion.

• Revenue take rate increased 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 2.80%.

• E-commerce revenue surged 88.5% quarter-over-quarter to RMB 437 million, though down 17.0% year-over-year; tech-empowerment services revenue rose 47.9% quarter-over-quarter and 36.5% year-over-year to RMB 535 million.

Outlook and guidance

• Expect Q3 loan issuance and profit to remain at similar levels to Q2, with continued improvement in risk levels and profitability in the second half of the year.

• Plan to expand risk-free business model, increase ABS issuances, and focus on premium customer acquisition and international expansion.

• Strategic overseas market expansion is expected to continue impacting operating expenses.