Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Jiayin Group's First Quarter of 2021 Earnings Conference Call. Currently, all participants are in a 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 Ms. Julia Qian, Managing Director of The Blueshirt Group, Asia. Ms. Qian, proceed.

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 2021. We released the results early today. The press release is available on the company's website as well as on newswire services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer; Ms. Shelley Bai and Ms. Julia Chen, Co-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 Provision of the U.S. 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 under applicable law. Also, please note that unless otherwise stated, all the figures mentioned during the conference call are in Chinese RMB. With that, let me now turn the call over to our CEO, Yan Dinggui. Mr. Yan will speak in Chinese and then our Co-CFO, Shelley Bai, will translate his comments to English. Go ahead, Mr. Yan.

[Foreign Language] Hello, everyone. Thank you for joining our first quarter 2021 earnings conference call. We delivered solid business growth this quarter, leading us on a great start to the year. [Foreign Language] Loan growth, driven by our successful integration and the rapidly growing loans from institutional partners reached RMB4.2 billion, up 44% in year-over-year growth. Notably, net income come in at RMB93.7 million, 137% year-over-year increase compared to RMB39.5 million from the same period of 2020. This solid business and financial results are valid indicators of our strong business strategy and execution capabilities. [Foreign Language] Now allow me to share our key strategies for 2021. First, we will continue to drive organic growth in China, deepening partnerships with financial institutions by leveraging our sophisticated risk of management systems and providing individual customized solutions. Thanks to our early development in process automation and stimulus [ph] system integration, our funding partners increased to 28 in Q1. We are in discussion with another 46 institutions, aiming to further broaden partnership. [Foreign Language] Our sophisticated credit assessment system produces behavioral drive analytics that steer our customer acquisition and rotation strategies, leading us to have the ability to select high quality borrowers, while maintaining current customers. This drove up our higher repeat boring rates of 74% in the first quarter of 2021 compared to the 70% in Q4 2020. [Foreign Language] We also published our sustainability report [ph] this quarter, which have shown satisfactory improvement and maintained a good trend. We will continue to invest in technology, improve efficiency factor, as well as maintain asset quality at a good level for the rest of 2021. [Foreign Language] Secondly, we are making prudent overseas expansions, analyzing and entering markets where our technology has a competitive edge and it can make significant difference. For Southeast Asia,…

Thank you, Mr. Yan and Shelley, and thank you everyone for joining our call today. As Mr. Yan just mentioned, we kicked off 2021 on a strong note, with impressive financial growth and meaningful business progress, placing us firmly on track to achieve our growth target. Now, let me go through our financial highlights for the quarter. Before I go into details, please note that all numbers presented are in RMB and are for the first quarter of 2021 unless stated otherwise. All percentage terms are on a year-over-year basis, unless otherwise specified. In the interest of time, I will not walk through each item by line on this call. I will just highlight some of the key points here. Loan origination volume was RMB4.2 billion, up 44.1% year-over-year, and the 35.1% sequentially. This was remarkable and it was also the strongest growth since our IPO. This demonstrated the success of our rapid business transformation, which laying the good foundation for us to continue to achieve robust the growth in the coming future. Net revenue was RMB343.1 million, up 9.4%. This increase was primarily due to the increase of revenue from loan facilitation services, which grew by 24.7% year-over-year to RMB320.9 million. Other business grew by 8.3% to RMB22.2 million. The increase was primarily due to the development of our overseas business. Moving on to cost. We continue to optimize our cost structure to further improve operating efficiencies. In Q1, total operating expenses were RMB229.3 million, down 12.6% from RMB262.4 million last year. Origination and servicing expense was RMB64.1 million, up 0.3%, primarily due to the increase in credit assessment expense resulting from higher loan origination volume, partially offset by reduced collection costs as the company no longer provides such services under its new business model. Allowance for uncollectible receivables,…

Certainly. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We have the first question, this is coming from the line of Andrew Scutt from ROTH Capital. Please go ahead.

Hello, congrats on the strong results. And thanks for taking my questions. So the first question here that I have, the model is really showing the successful execution you guys are making with the transition to institutional partners, especially shown in the stronger gross margins you had in the quarter. Can you just maybe talk about the efficiencies you're realizing and you discussed on the call that are helping driving the strong results?

Yes. So, this is Julia and I will take this question. So, yes, - Andrew, hi. Hi, Andrew. As you have mentioned, we have successfully exited the P2P business. So to the loan facilitation models, so in the first quarter, we have seen very strong increase in the loan facilitation volume. And also we have seen some cost savings under different expense items. So as we mentioned in the commentary, given the recovery of Chinese economy and fast growing consumer financial market, we actually have a very good confidence to grow and expand the book, as we did in the first quarter. So we expect that our loan origination volume will grow continuously in the remaining quarters of this year. And we will continue to improve our operation efficiency and to maintain the very profitable - very good profitability. Yes, so…

Great. Thanks very much. Sorry, I didn't want to cut you up there. Second question for me, if I may. R&D expenses look like they were down substantially in the quarter. Can you kind of talk about your expectations there going forward?

Okay. So yes, the R&D expenses was down 22.7% year-over-year, because we have successfully exited the P2P business. So we actually made some efforts to streamline our technology departments. And we optimized the personnel scheduling, and related human resources. So in that way, we have a more streamlined team in technology. So going forward, so we see some savings in the related salaries and compensations. And also the share – yeah, share-based compensation. So going forward, we plan to improve our R&D investment, to continuously improve our technological capabilities and efficiency to propel further growth for the company. And if you look at the absolute number, I think it's very good indicator for the remaining quarters of this year. So I think we are going from this level and we plan to improve the R&D investment level from here. Hope that – yeah…

Yeah. Thank you. That was that was very helpful. Next one, if I may. I was very excited to see the credit quality numbers and disclosed in the release this morning. And it definitely reflects the shift in institutional funding. So can you just kind of provide maybe some commentary on the numbers there and expectations going forward?

So thanks Andrew you the question. This is Xu Yifang taking on your questions on the credit results - the risk results. Yeah, as we are shifting our business towards institution funding portfolio, and so we are facing a stronger desire from our partners to seek for better quality customers, as this has been going on what our strategic intent, starting from the early last year 2020, if you recall. We're trying to position ourselves towards higher quality customers in anticipating us from partnering with institution funding partners. So as you can see the credit number – the risk numbers continue to improve over time. We are we are attacking on multiple fronts. One is from customer acquisitions, so we are trying to targeting better customers just from the sort of risk point of view. And ultimately in addition, our existing portfolio customer strategy, we are focusing on the satisfactions of our long term customers. As in fact, as we learn more about our own customers, and we are able to really focusing on the customers who have longer and better credit outlook, risk outlook. Just coupled with that, we also are – on loan [ph] collection capabilities also improved. So as our overall external risk environment, as we have seen from our peer companies has been improving over time, we are less – our 30 day collection rate has pretty much reached all time highs and had been able to stable for almost over two quarters now. So that's something that I'd be happy to report. So just about – with all things are going in place, we are expecting our overall risk is going even better, especially with our existing customers, repeat customer book continue to grow in a significant way - at a significant pace, we are expecting our portfolio risk is going to be even better. That will be all.

Great, thanks. That was extremely helpful. Also appreciate the update on the Bweenet acquisition that you provided on the call. Can you maybe just talk through some of the next steps you guys have moving forward, integrate the company and anything else that needs to be done over the next few quarters?

Yes. This is Julia. So currently we are in the middle of integrating the function of finance, operations and other supporting functions. So we expect to complete this consolidation within this month by the end of June. So, in the next or for the full year, we estimate that Bweenet would contribute additional 20% of net income, if we can stick to the current business strategy. And as we have been highlighting in the commentary earlier, Bweenet is primary focused on cryptocurrency related technology, mining hardware, design and distributing to mining management. So actually, Bweenet doesn't directly engage in cryptocurrency issuance, mining or exchange something like that. So from that point of view, currently, we are operating this business fully compliant with the regulatory requirements. And we will - we will observe and watch very closely and make sure to adjust our business if necessary, and equip our operations within the regulatory framework. So that is basically - yeah, the status of our M&A deal.

Thank you very much. And then last one, if I may, the 30% to 40% sequential loan origination growth was great here, that's very exciting for 2Q. Can you just talk through your expectations for year end? And if you have a – it look like you acquired some new customers this quarter, so any commentary you could provide on adding people to the platform as well would be great?

This is Xu Yifang. Andrew, I am going to take on your question. Can you repeat the second half of your question again?

Yeah, so the repeat borrower percentage was down sequentially, it looks like you successfully added new customers to the platform. So any commentary you have there would be great.

Sure. So we are disclosing our next quarter's outlook, which is at a range from 30 - 40 plus range from quarter-to-quarter growth, which is even better than what we have seen this quarter. So I don't - we don't have a number for the overall yet, but I'm definitely expecting a stronger growth for the second half of this year. So we just want to take the numbers out a little bit, just looking at the Q1 of our growth. So the growth primarily coming from two sides. One is, as we are transitioning – really closed our P2P book in November last year, we are seeing our institution partners have gained significant confidence and interest on our portfolio just because of our – also given our past performance on the risk metrics. So we are seeing more traction from our institution partners who are coming on board. And we're seeing typically growth from our number institutions that we are planning today and the healthy pipeline going in place. So with a strong funding supply that we are seeing, our loan originations are doing the similar traction as well. So in Q1, we are in full speed in terms of our repeat customers portfolio, as you can see our repeated - percentage of our repeated - percentage of the loans from the repeated customers have grown compared to last quarter. And similarly we are starting – expanding our new acquisition portfolio in the middle of Q1. It's very likely that in Q2 we are going to see higher percentage from the book are coming from our new origination customers mostly because that we have - that's a decision driven by the growth. I'm going to talk about risk a little bit. So we are fully [indiscernible] while our new…

Thank you very much. And once again, congratulations on the strong quarter.

Thank you. [Operator Instructions] Seeing no more questions, I will return the call to Ms. Chen. Please go ahead.

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

Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for your participation. You may disconnect now.