Qfin Q2 Earnings Call Highlights

Second-quarter results weakened sharply: Revenue fell to RMB 3.57 billion and non-GAAP net profit dropped to RMB 455 million, pressured by lower loan balances, pricing and a one-time RMB 500 million tax expense. Industry conditions remain challenging: Tighter regulation and liquidity constraints led Qfin to reduce loan growth and strengthen underwriting, while early August indicators pointed to a renewed increase in credit risk despite improved second-quarter delinquency metrics. Management expects continued pressure: Third-quarter non-GAAP net income is forecast at RMB 400 million to RMB 500 million, with loan volume expected to decline meaningfully; Qfin is focusing on cost control, diversified funding and expanding its technology-solutions business.

Qfin NASDAQ: QFIN reported lower second-quarter revenue and profit as China’s consumer finance sector faced tighter regulation, reduced liquidity and heightened credit-risk concerns. Management said it is prioritizing risk controls, cost reductions and operational resilience over near-term loan growth. CEO Haisheng Wu said China’s consumer finance market remained under pressure through the first half of 2026. He cited a decline of more than RMB 660 billion in outstanding short-term household consumer loans from the beginning of the year through the end of the second quarter, according to the People’s Bank of China. Regulatory measures targeting loan pricing, marketing, funding, collections and payments also became more stringent, he said.

In late June, an industry event triggered a crisis of confidence in the loan-facilitation sector and sharply tightened market liquidity, according to management. Wu said Qfin’s diversified funding sources, risk performance and pricing aligned with regulatory guidance helped its funding supply hold up better than that of many peers, though the company expects conditions to remain tight during the second half.

Second-Quarter Financial Results CFO Alex Xu said second-quarter total net revenue was RMB 3.57 billion, down from RMB 3.91 billion in the first quarter and RMB 5.22 billion a year earlier. Revenue from credit-driven, capital-heavy services fell to RMB 2.60 billion from RMB 2.96 billion in the prior quarter, which Xu attributed to lower risk-bearing loan balances and lower average loan pricing. Platform-service, capital-light revenue was RMB 969.8 million, compared with RMB 951.9 million in the first quarter and RMB 1.65 billion a year earlier. Xu said the year-over-year decline reflected a substantially lower contribution from the company’s ICE business amid changing market conditions. Total loan facilitation and origination volume reached approximately RMB 63.4 billion, down 2.5% sequentially. Average annualized loan pricing, or IRR, declined to 18.2% from 18.7% in the first quarter. Sales and marketing expense fell 13% sequentially and 40% year over year. Qfin added about 830,000 new credit-line users, compared with 1.19 million in the prior quarter. Non-GAAP net profit was RMB 455 million, versus RMB 946 million in the first quarter and RMB 1.85 billion a year earlier. The company generated RMB 1.09 billion in operating cash flow during the quarter, down from RMB 2.1 billion in the first quarter. Cash, cash equivalents and short-term investments totaled RMB 10.63 billion at quarter-end, compared with RMB 10.79 billion three months earlier. Xu also said Qfin recorded approximately RMB 500 million in one-time tax-related expense following an updated interpretation of tax regulations.