X Financial (XYF) Q1 2026 Earnings Transcript

Motley Fool Transcribing, The Motley Fool

Mon, June 1, 2026 astatine 9:07 AM CDT 10 min read

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DATE

Thursday, May 28, 2026 astatine 7:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Kan Li

• Chief Financial Officer — Noah Kauffman

• Chief Operating Officer — Fuya Zheng

• Investor Relations — Victoria Yu

Full Conference Call Transcript

Kan Li: Thank you, Victoria, and hello, everyone. In the archetypal 4th of 2026, we proceed to run with a precocious grade of subject arsenic the operating situation remained challenging. Carrying guardant the much blimpish posture we adopted successful the 2nd fractional of 2025, we further reduced the gait of enactment successful Q1, keeping our concern intimately aligned with evolving supervisory expectations portion maintaining an unwavering absorption connected recognition prime and hazard management. During the quarter, we facilitated and originated RMB 14.63 cardinal successful loans, a diminution of 58.4% year-over-year and 35.8% sequentially from the 4th quarter. This pullback was deliberate arsenic we proceed to spot greater precedence connected portfolio integrity and semipermanent equilibrium expanse stableness implicit near-term origination volume.

Operationally, we made further advancement connected a fig of cardinal initiatives during the quarter. We continued shifting our origination premix toward internally operated channels to deepen borrower relationships and trim reliance connected higher outgo third-party traffic. Underwriting criteria were further tightened, compliance infrastructure was strengthened and we continued rolling retired process automation crossed servicing and collections, each with the extremity of improving operational ratio portion keeping our outgo basal lean. From a measurement standpoint, borrower enactment continued to declaration successful the archetypal quarter. We served astir 956,520 progressive borrowers, down 60.6% year-over-year and 43.5% from the anterior quarter. We facilitated astir 1.25 cardinal loans during the play with an mean indebtedness size of RMB 11,741 per transaction.

Outstanding indebtedness equilibrium astatine the 4th extremity stood astatine RMB 35.3 billion, a diminution of 39.6% from the aforesaid play of 2025. Credit quality. Credit conditions remained nether unit successful the archetypal quarter, accordant with the broader accent we and different crossed the manufacture person been observing. As of March 31, our 31- to 60-day delinquency complaint was 2.61% compared with 2.9% astatine the extremity of Q4 2025 and 1.25% arsenic of the aforesaid play of 2025. Our 91- to 180-day delinquency complaint accrued to 9.95% compared with 6.31% astatine the extremity of Q4 2025 and 2.73% arsenic of the aforesaid play of 2025.

The information reflects a borrower basal nether continued fiscal strain, accordant with what we are seeing crossed the broader user recognition industry. We person addressed this by further narrowing our support criteria, deploying much resources into collections and pulling backmost connected our origination successful segments wherever repayment hazard has risen astir sharply. Higher recognition costs weighed connected quarter's fiscal results, and we accepted that trade-off knowingly. Protecting the integrity of the portfolio matters much to america than defending short-term earnings. Looking ahead, our absorption is connected keeping recognition prime stable, managing liquidity cautiously and moving the concern with the aforesaid level of subject we person maintained passim this period.