Lexinfintech released its unaudited financial performance for the first quarter of 2024. Lexinfintech adheres to the dual driving force of risk and data, operates cautiously, balances scale and quality, and achieves steady development. In the first quarter, the company's revenue was 3.24 billion yuan, an 8.7% increase year-on-year.

On May 24th, Beijing time, Lexinfintech, China's leading digital technology service provider for new consumer consumption (NASDAQ: LX), released its unaudited financial performance for the first quarter of 2024. Lexinfintech adheres to the dual driving force of risk and data, operates cautiously, balances scale and quality, and achieves steady development. In the first quarter, the company's revenue was 3.24 billion yuan, an 8.7% increase year-on-year.

In terms of scale, the transaction volume was 58 billion yuan, the on-loan balance was 121.51 billion yuan, a 13.5% increase year-on-year, and the number of users was 0.215 billion, a 10.8% increase year-on-year.

In terms of asset quality, the Low&Grow new customer risk management system was launched, efforts were made to strengthen the disposal and recovery of stock risk assets, and the impact of macroeconomic and industry risk cycles was reduced. In the quarter, the asset quality of new customers gradually improved, the credit approval rate for new customers increased by more than 30%, the concentration of good customers using credit increased from 24% in January to 40% in March, and the early risk indicator FPD30 for new customer assets continued to decline.

In terms of funding cooperation, Lexinfintech introduced several national large-scale financial institutions during the quarter, further increasing the proportion of funds and driving down funding costs by 34 basis points (bp), reaching a new historical low. With the reduction of funding costs, the company's profit (Non-GAAP EBIT) in the first quarter was 0.282 billion yuan. In May, the company issued its first international 3A-rated ABS, which will further promote the continuous reduction of funding costs.

Shi Wenzhuo, CEO of Lexinfintech, said, 'In the first quarter, through four measures: strict risk control, refined operation for different customer groups, strengthening ecological business, and reducing funding costs, we achieved stable development under the background of macroeconomic and industry challenges. Looking ahead to the second quarter, we will continue to adhere to the principle of cautious operation, prioritize risk management, continuously improve profitability, and achieve higher quality development.'

In the first quarter, Lexin's ecological businesses such as FenqiLe Shop and Lexin Inclusive Finance stable development, collectively helping to drive consumption growth and promote inclusive finance.

During the quarter, FenqiLe Shop saw a year-on-year increase of over 50% in sales revenue for more than 450 brands. In response to the needs of high-quality and high-growth consumer groups such as post-90s and post-95s, FenqiLe Shop optimized its supply chain for goods, focusing on introducing merchants and operating categories to create a trendy installment experience, stimulating the consumption potential of young consumers. In advantageous categories such as 3C electronics, FenqiLe Shop maintained the highest level of authorization for Apple T1 and Huawei L1, maintaining the advantage of scarce and first-batch supplies. During the May 1st holiday, the newly launched Huawei Pura 70 had a 534% increase in sales compared to the previous generation product Huawei P60. In addition to advantageous categories, FenqiLe Shop improved the category construction of outdoor, camping, and cycling to meet the demand for city walks and urban micro-traveling, achieving a year-on-year increase of 108% and 554% in sales revenue for outdoor footwear and clothing and sports and athletic competition categories respectively. In response to the fashion trends favored by young people such as Guochao and new Chinese style, FenqiLe Shop further expanded the introduction of high-quality domestic brands, launching series of operational activities such as "Guochao is Now" and achieving doubled sales revenue for several new trendy domestic brands during the quarter.

During the quarter, Lexin Inclusive Finance deepened its business in lower-tier cities and strengthened the management of high-quality customer groups. The company launched a product called 'Le Zhouzhuan' to serve high-quality small and micro customers, providing larger credit limits and lower fees for the needs of these customers with lower risks and stronger demand for fund turnover. Compared to first and second-tier cities, financial services in lower-tier cities are still insufficient, and more financial innovative formats are needed to bridge the last mile of financial services. Lexin Inclusive Finance has covered 30 provinces, municipalities, and autonomous regions and has more than 2000 offline teams dedicated to acquiring customers. It has deepened its presence in lower-tier city industrial belts and focused on serving industries, small and micro enterprises, self-employed individuals, and quality salaried individuals. During the quarter, Lexin Inclusive Finance provided loans amounting to nearly 4 billion yuan to various customer groups, contributing to local economic and inclusive financial development.

In April of this year, with the opportunity of becoming the official partner of the Chinese National Fencing Team, Lexin launched the 'Believe in Excellence, Empower the Strive' plan to continue strengthening inclusive finance, driving consumption, and other areas: the plan aims to link more than 20 billion yuan in funds to support the development of local characteristic industries, small and micro enterprises; launch the 'One Billion Interest-Free Dream Fund' to support young graduates in pursuing their dreams; collaborate with merchants on FenqiLe Shop to create multiple product categories with monthly sales exceeding tens of millions, tapping into the potential consumption demand of young consumers and driving consumption growth.

According to the financial report, Lexin invested 0.13 billion yuan in research and development in the first quarter. During the quarter, Lexin further strengthened its underlying capabilities in data, risk control, and other areas, applied new technologies such as big models and AI in the full chain of digital finance to build new financial productivity, and drove the company's development towards data-driven and intelligent decision-making.

In terms of data capabilities, in the first quarter, Lexin applied in-house developed big models to improve work efficiency and customer experience. At the business interaction level, the company introduced real-time intent recognition technology based on big models, leveraging the years of accumulated customer service and sales scenario data to train and improve the accuracy of the big model for customer intent recognition. This has enabled the customization of personalized solutions for customers in customer service and telesales scenarios, greatly improving customer satisfaction. In terms of productivity improvement, big models have been deeply applied in code development assistance scenarios, resulting in over 0.04 million code improvement suggestions, boosting R&D efficiency by 40%. In terms of risk control, through continuous training, the big model's automatic analysis and identification capabilities for user industries and repayment intentions have been improved, with an accuracy rate exceeding 70%, effectively supporting precision marketing to different customer groups.

In terms of risk control capabilities, during the quarter, we have developed automated negative disposal tools to shorten the strategy output efficiency from a weekly level to an hourly level and the strategy iteration efficiency from a monthly level to a weekly level, significantly improving the efficiency and quality of disposal of tail assets. For new assets, we have implemented the Low&Grow new customer risk management system, conducted pricing experiments, and established causal inference models to enhance the competitiveness of our target customers. For high-quality potential customers who have been lost or not converted, we have conducted targeted re-offer recalls to increase the proportion of high-quality assets. Through risk control measures for existing and new assets, Lexinfintech's asset quality of new customers has gradually improved in the first quarter, with a credit approval rate for new customers increasing by more than 30% and a concentration of good customers in credit utilization increasing from 24% in January to 40% in March; the early risk indicator FPD30 for new customer assets has shown a continuous downward trend.

In terms of consumer rights protection, Lexinfintech has continuously improved customer service quality through various company-level projects during the quarter: strengthening the construction and implementation of consumer protection systems, improving the consumer protection review mechanism, and enhancing end-to-end control capabilities for consumer protection in the pre, during, and post processes; leveraging big data and AI technology to dig deep into customer service pain points, and working together with the business system to improve service quality; integrating underlying data, reconstructing the customer service system, and improving customer service efficiency and experience. During the quarter, Lexinfintech cooperated with the police to assist in cracking down on cases of anti-collection organizations in multiple regions, combating financial black markets. Recently, the China Banking and Insurance Regulatory Commission issued a warning about the risks of financial black markets involved in "agent rights protection" in the financial field, once again stating that illegal agent rights protection and other financial black markets cause serious damage to financial security and social stability. In the future, Lexinfintech will continue to cooperate with regulatory agencies, the police, and others to continuously combat financial black markets and protect the rights and interests of financial consumers.