Operator: Good day, ladies and gentlemen. Thank you for standing by and welcome to the Jiayin Group's First Quarter 2024 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. Shawn Zhang from Investor Relations of Jiayin Group. Please proceed.

Shawn Zhang: Thank you, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the first quarter of 2024. We released our earnings results earlier today. The press release is available on the company's website as well as from newswire services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer; Mr. Fan Chunlin, Chief Financial Officer; and Ms. Xu Yifang, Chief Risk Officer. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required on our applicable law. Also please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. With that let me now turn the call over to our CEO, Mr. Yan Dinggui, Mr. Yan will deliver his remarks in Chinese and I will follow up with corresponding English translation. Please go ahead, Mr. Yan.

Dinggui Yan: [Foreign Language] Hello, everyone. Thank you for joining our first quarter 2024 earnings conference call. [Foreign Language] For our company, 2024 is a year dedicated to comprehensively strengthen development that is both led by technology and driven by new momentum. Chinese economy is currently showing signs of gradual recovery, but there are challenges on the demand side. And risk factors such as the stage of recovery in residents' willingness to take up loans for consumption still need to be considered. Against the backdrop of these risks and opportunities, we successfully achieved our strategic goals in the first quarter. Through its own remitting efforts, the company made solid achievements in financial performance and business expansion, enhancing the confidence we have in the operation for the whole year of 2024. [Foreign Language] In the first quarter, we focused on a number of important market factors, such as the fluctuation of the market risk levels emerged last year. The decrease in market interest rates and changes in overseas regulatory requirements. We continue to enhance the company's ability to empower partners with big data and artificial intelligence, which continuously improve the company's core competitiveness. Both refinements in internal management and external business expansion contributed to our strong results. Our loan facilitation volume for the three months ended March 31st reached RMB22.5 billion, a year-over-year increase of 13.6%, exceeding the previously set target guidance. During this period, we achieved net revenue of RMB1.475 billion, a year-over-year increase of 31.5% continued a trend of healthy growth. [Foreign Language] From the beginning of 2024, we comprehensively implemented technology empowerment, deepened the development and application of AI technology and continuously improve the level of business intelligence. These technological achievements are constantly emerging. In the relatively mature field of AI commercial services, the company has fully integrated and apply core capabilities in various business scenarios and unify the design implementation and delivery of AI technology applications. At the same time, the company's technical team is gradually maturing in terms of the validation management and application capabilities of popular large language models in the market. The application scenarios of large language models are also gradually expanding from task-intensive scenarios such as telemarketing, customer services and post loan impairments to expert knowledge intensive scenarios, including intelligent search and intelligent recommendation. The extensive and in-depth application of AI technology has significantly improved the company's operational efficiency, and we are full of confidence in further achieving data-driven developments in the future. [Foreign Language] We have gradually formed a diverse and long-term stable network of institutional partnerships, as of the end of the first quarter, we have established partnerships with 70 financial institutions and are in discussions with additional 32 financial institutions. At the same time, we are beginning to explore cooperation with foreign banks as our overseas business development is under progress. In addition, we have deepened our cooperation with financial institutions in operations, technology, risk management and consumer rights protection. These comprehensive collaborations are further empowering the financial institutions business processes through technology, leading to a complementary win-win outcomes for our company and our institutional partners. Further, we are also exploring core operations on borrower acquisition to further optimize costs. [Foreign Language] Continuously optimizing the risk performance of borrowers is the cornerstone for the company's long-term and stable development. Although we have observed some improvements among some early risk indicators in the first quarter, we will still continue to prioritize risk factors while pursuing growth to balance the speed and quality of development and achieve sustainable development of scale and efficiency. The 61 to 90 days delinquency rate remaining at 0.68% meeting expectations. Thanks for our ability to identify high quality borrower groups and our more refined risk control strategy. The proportion of new borrowers reached 27% in this quarter, maintaining a relatively stable level. In addition, the average borrowing amount per borrowing in the first quarter was RMB10,570 representing a year-on-year increase of 60.6%. In addition to deepening our original borrower acquisition channel metrics, we have also continuously increased the proportion of borrower acquisition through the mini apps on leading Internet platforms. We focus on the innovative model with good risk performance and continuously optimize cost striving to raise more target users and maintain growth of vitality. [Foreign Language] Our overseas business achieved favorable results in the first quarter. In the Indonesian market, the number of newly registered users through our partner local business entity increased 37% quarter-on-quarter. Well actively optimizing product structure in response to new local regulatory requirements. We have learned that our Indonesian business partner was in discussion with five local licensed financial institutions in the first quarter, aiming to further expand the volume of loan facilitation business in Indonesia in the future. The business performance in Nigeria showed steady progress with an increase in the amount of borrowing loan volume and new borrowers. At the same time, the local exchange rates gradually stabilized towards the end of this quarter, providing favorable conditions for our further market expansions in the region. In the Mexican market, the lending scale of the local business entity we invested in also grew rapidly in this quarter. In addition, we are actively exploring opportunities to expand to more overseas regions and overseas business will also be one of the key focuses of the group's future development. We will further increase our investments in overseas businesses. [Foreign Language] We always place great emphasis on consumer rights protection and anti-fraud efforts in finance services. Our white paper on consumer rights protection in 2023, released at the beginning of this year, elaborates on the company's achievements in the systematic and responding operation of consumer protection, including building anti-fraud firewalls, improving customer service quality and efficiency, strengthening external cooperation and innovating consumer protection education. In terms of anti-fraud, the company's fraud prevention and control report for the first quarter reveals that we have cumulatively identified and blocked 65,000 malicious attacks from illicit industry and manually investigated and disposed of 20,400 applications from potentially high-risk borrowers in the first quarter. In addition, the company has jointly conducted anti-fraud lectures with law enforcement departments and collaborated to establish a cooperation mechanism, effectively combating financial gray and black industries as well as illegal intermediaries. Leveraging technological innovation the company has built a solid anti-fraud defense line to safeguard the financial security of borrowers and continuously contribute to profiling the financial market environment. [Foreign Language] Based on our confidence in the company's sustained future growth and the company's ample cash reserves, I am pleased to announce the company's plan of the first tranche of dividend distribution for 2024. The company plans to distribute a cash dividend of US$0.5 per ADS. Further details and relevant dates regarding these dividend payout will be announced separately after further confirmation by the Board of Directors. With regard to share repurchase plan, in the previous quarter, the Board of Directors approved raising the upper limit of the current share repurchase plan to US$30 million and recently further approved extending the validity period of the repurchase plan to June 12, 2025. In the future, we will continue to reward our shareholders, enhance the sense of gain among investors and boost their long-term confidence in the company's development. Finally, considering the level of market risk and the demand for business growth, we have decided to set the guidance of loan facilitation volume for the second quarter of 2024 at RMB23 billion. [Foreign Language] With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead. Thank you.

Chunlin Fan: Thank you, Mr. Yan, and hello, everyone, for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMB and all percentage changes refer to year-over-year comparisons, unless otherwise noted. As Mr. Yan mentioned earlier, our company successfully achieved its strategic targets in the first quarter. We have also recorded solid financial results. Notably, our loan facilitation volume grew by 13.6% to RMB22.5 billion. Our net revenue was about RMB1.48 billion, up 31.5%, as our other revenue dropped to RMB119.8 million from RMB126.9 million in the same period last year. Moving on to costs. Facilitation and service expenses were RMB667 million, representing an increase of 143.3% from the same period of 2023, primarily due to the increase of guarantee costs incurred and increased loan facilitation volume. Allowance for uncollectible receivables, contract assets, loans receivable and others was RMB2.6 million, compared with RMB6.7 million in the first quarter of 2023. Sales and marketing expense was RMB359.8 million, representing a decrease of 5.5% from the same period of 2023, primarily due to lower commission expenses. G&A expense was RMB46.2 million, compared with RMB46.4 million in the first quarter of 2023. R&D expense was RMB83.3 million, representing an increase of 28.5% from the same period of 2023, primarily due to higher employee compensation benefits as the number of our research and development employees increased. Consequently, our net income for the first quarter was RMB273.1 million, representing a decrease of 2.4% from RMB279.7 million in the same period of 2023. Our basic and diluted net income per share was RMB1.29 compared to RMB1.31 in the first quarter of 2023. Basic and diluted net income per ADS were both RMB5.16 compared to RMB5.24 in the first quarter of 2023. We are pleased to report a significant improvement in our cash position this quarter. As of March 31st, 2024, our cash and cash equivalents reached RMB568.2 million, a substantial increase from RMB370.2 million at the end of December 31st, 2023. This growth highlights our strong financial discipline and operational efficiency. With that we can open the call for questions. Ms. Xu, our Chief Risk Officer and I will answer your questions. Operator, please proceed.

Operator: [Operator Instructions] Thank you. We will now take our first question. Please standby. [Foreign Language] First question is from the line of Hua Rong from Jinyu Asset. Please go ahead.

Rong Hua: [Foreign Language] Hello management. I'm Hua Rong from Jinyu Asset and I have two questions. The first one is compared to the previous period of the rapid growth, the company's loan facilitation volume in the first quarter of this year increased by 13.6%. Could you please explain the main reasons for the slowdown in growth? Which borrower acquisition channels will be the primary focus in the future? My second question is the revenue in the first quarter of this year decreased compared to the fourth quarter of 2023. The cash position increased by nearly RMB200 million by the end of the fourth quarter. Could you please explain the reason for this? That's all. Thank you.

Yifang Xu: [Foreign Language] Hello Hua Rong. I'm Xu Yifang. Thank you for your question and thank you for your long-term support on us and I will answer about your first question. [Foreign Language] Okay. So since 2019 our exclusive growth in recent years after the -- our transformation is attributed to over a decade of dedication in the industry includes two reasons. First is the accumulation of the operational and risk management capabilities. And second is the accumulation of market clients, the users, borrowers through the in-depth industry development and growth. [Foreign Language] With the steady advancement of the industry's regulatory framework, orderly market development and a competitive landscape that remains dynamically stable. We have also still achieved a relatively solid performance for this quarter with a 13.6% growth. [Foreign Language] So the growth we observed are from cautious and systematic business operations that consider the market and credit risk assessments. While the macroeconomic environment remains positive trend, we maintained a cautiously optimistic outlook regarding its level. [Foreign Language] So the growth from -- so one thing is that the growth was from our borrower acquisitions. We continue to actively acquire upstream force in the market, particularly focused on the expansion and development of high-quality borrower segments. And on the other hand, we pursue prudent and rational risk management in the operation of our current borrower base. We are currently exploring the development of differentiated and diverse products and services that incorporate risk considerations, aiming for further breakthroughs in attracting and retaining high-quality borrower groups. [Foreign Language] So just as important as the new borrowers, our current boards are also very important. So we will -- so in the future we will look for the potential growth considering both risk and profit. [Foreign Language] So as we talk about the risk we are -- just like we have talked before that we are exploring differentiated products and services that aiming for our high-quality borrower groups. And also this is in line with our ongoing strategy to enhance our capability in managing high-quality borrower operations. [Foreign Language] This is my answer for your first question. And your second question, Mr. Fan can you answer for that?

Chunlin Fan: [Foreign Language] Okay. So in the first quarter of 2024, the revenue was RMB1.475 billion, which has a decrease from RMB1.6 billion in the Q4 2023. There are some reasons for that. The first reason is that the revenue structure has changed with a higher proportion coming from loan origination services and lower proportion from guarantee services. And this trend is expected to continue. As I have mentioned before, the profit margin for guarantee income is lower. So the optimization of the revenue structure has improved the company's operating profit margin. And Jiayin's income from operations in the first quarter was about RMB316 million, which is an increase of more than 36% compared to the RMB232 million in the fourth quarter of the previous year. And the operating cash flow has significantly increased. That's the first reason. [Foreign Language] So the second reason is that our accounts receivable recovery is performing very well. And the funds tied up in the margins are being continuously released. [Foreign Language] So these are the two main reasons, but other than that, remember, in the first quarter, we had also picked out cash dividends with the total amount of about RMB152 million. So if you're counting in this part of cash, the company's cash balance will be even higher. [Foreign Language] Okay. So the continuous optimization of the company's cash flow will lay a solid foundation for the company's long-term sustainable development and better returns for shareholders in the future. Just like what Mr. Yan, our Chairman just said before, we will continue to pay out the dividends and to continue to commit in our dividend policy. And also you can see that we have the Board of Directors recently further approved the extending of the valid period of the share repurchase plan to June 12, 2025. So in the future, we will continue to reward our shareholders, better reward our shareholders. Okay. Thank you, Hua Rong

Operator: Thank you. We will now take our next question. This is from the line of Yuxuan Chen from Huatai Securities. Please go ahead.

Yuxuan Chen: [Foreign Language] Okay. Let me do the translation. This is Yuxuan Chen from Huatai Securities. And I got two questions. The first one is, our facilitation volume and revenue both increased year-over-year in the first quarter 2024. But net income slightly declined. Could you please explain the reason for that? And could the management provide more color on the future trend of the company's net margin? The second question is, I have noticed that the Indonesian market is one of the key target for the company's overseas business. What are the company's view on the Indonesian regulatory requirements for the interest rate reduction? Does the company have any effective contract measures for that? Thank you.

Chunlin Fan: [Foreign Language] Okay. So in the first quarter of 2024, our loan facilitation volume increased by 13.6% year-over-year and the revenue increased by 31.5% year-over-year. However, the net profit decreased slightly by 2.4% year-over-year. I think there are some main reasons are as follows. So the first reason that is about the change in our revenue structure throughout the year of 2023 especially in the second half. The company's revenue from guarantee services increased rapidly. And so the profit margin from this revenue, this kind of revenue is lower compared to our loan facilitation services. If we exclude this factor, both our S&M and G&A expenses slightly decreased in absolute amounts year-over-year due to our improved operational efficiency. And R&D expenses increased year-over-year, reflecting our continued investment in technology and research development. That's the first reason. [Foreign Language] So the second reason is about the decline of our take rate. So although the loan facilitation volume increased year-over-year in the first quarter of 2024, the overall take rate of the company's loan facilitation services actually decreased year-over-year. [Foreign Language] Okay. So talking about the future trend of our profit margins, I want to talk some more information. So firstly, within the downward interest rate cycle, our pricing and take rate will be relatively steady, but there will be some decrease to benefit our borrowers. That's the first one. [Foreign Language] The second is about decreasing proportion of our guarantee service revenue. Just as what I mentioned before, the proportion of the revenue from guarantee services will continue to decline, which will positively impacting overall profit margins. [Foreign Language] The third one is about a stable growth and operational efficiency. So with robust growth in scale and continuous improvement in operational efficiency, cost effectiveness will further improve, which will also positively impact our profit margins. [Foreign Language] So our focus in the future is that we will balance our growth and also the risk factors to ensure a healthy development in the future. [Foreign Language] Yuxuan, your second question is about our overseas business. I will let Ms. Xu to answer your second question.

Yifang Xu: [Foreign Language] Okay. Thank you, Mr. Fan. So talking about the Indonesian market. Although the reduction in interest rate poses a challenge for the industry operators. We also see it as a recognition from the regulators upon the industry's potential for long-term development. And additionally it reflects their management approach and the strength of policies designed to continuously explore and safeguard the industry's long-term development. [Foreign Language] With the rapid development of the Fintech industry, regulatory policies and the frameworks are becoming more systematic and iterations and adjustments are within our expectations. This also reflects the industry's various aspects, especially from the clients' perspective in their demand for the high-quality products and services. [Foreign Language] Okay. So regarding the challenges you just mentioned, the reduction on interest rates will give two types of firms and advantage in meeting these challenges. The first kind of companies are the platforms that have been dedicated in the market for a long time, which has more room for adjustments and [indiscernible] error due to their data and also the accumulation of users. The second is the companies with outstanding risk management and refined operational capabilities that they can accelerate their adjustment and iteration pace through technical capabilities to adapt to new market requirements. [Foreign Language] So talking about Jiayin Group, we have been operating in Indonesia for some time, although it cannot be considered as a very long time, but we have already gained some understanding, knowledge and experience. Our long-term experience in risk management and refined operations allows us to respond and adjust quickly to new requirements upon the interest rates. [Foreign Language] So in the first half of this year, we have seen rapid and positive improvements in various indicators of our business in Indonesian market under the new interest rate requirements. So next, for the next step, we look forward to breakthrough and further development in the scale of our business in this market. And overall, we are committed to long-term development in the Indonesian market. [Foreign Language] That's our opinion about our business in the Indonesian market, and that's all for me.

Operator: Thank you. Seeing no more questions, I will return the call to Shawn for closing remarks. Please go ahead.

Shawn Zhang: Thank you, operator, and thank you all for participating on today's call and thank you for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.