Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Jiayin Group First Quarter 2023 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'll now turn the call over to Mr. Shawn Zhang from Investor Relations of Jiayin Group. Please proceed.

Thank you, operator. Good day, everyone, and welcome to Jiayin Group's 2023 first quarter earnings conference call. We released our earnings results earlier today via Newswire services. You may check the press release and sign up for the company's e-mail alerts by visiting our IR webpage. 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 U.S. Public 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 public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Finally, we will post a slide presentation on our Investor Relations webpage soon, providing details of our results for the quarter. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. Let me now turn the call over to CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese and I will follow-up with corresponding English translations. Please go ahead, Mr. Yan.

[Foreign Language] [Interpreted] Hello, everyone. Thank you for joining our first quarter 2023 earnings conference call. I'm delighted to share with you today the exceptional performance of Jiayin in the first quarter of 2023. Our robust results this quarter are a testament to the steady recovery of the domestic economy and the solid foundation we have built through the consistent improvement of our operational efficiency. In the quarter, we achieved a record loan origination volume of RMB19.8 billion, surpassing our previous projections. Additionally, our net revenue for the quarter reached RMB1.12 billion, marking a year-over-year increase of approximately 119.5%. Our profit margins also remained strong, maintain our robust growth trajectory. Looking at the first quarter from a broader perspective, the National Bureau of Statistics of China has reported a promising start to the year with a 4.5% year-over-year growth in China's GDP. This represents an increase of 1.6 percentage points from the fourth quarter of last year, marking an encouraging beginning to China's macro recovery in 2023. Particularly consumption contributed to 66.6% of economic growth with online consumption maintaining a strong momentum. The simultaneous recovery of urban and rural markets has led to a rapid release of consumer potential, indicating a swift recovery trend. Additionally, the People's Bank of China's financial statistics for the first quarter revealed a cumulative increase in the scale of social financing of RMB14.53 trillion, an increase of RMB2.47 trillion from the same period last year. Industry experts attribute this to the efforts of policies aimed at the stabilizing growth and promoting development, which have significantly boosted market confidence, accelerated the recovery of effective financing demand and solidified the trend of macroeconomic recovery. Amidst this macroeconomic environment, we have seen an abundant supply of funding and substantial market liquidity. As of March 31, 2023, we have…

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, we delivered exceptional results in the first quarter. Our loan origination volume surged 142.9% to RMB19.8 billion, exceeding our forecast made last quarter. Our net revenue was RMB1.12 billion, up 119.5%, driven by a 94.1% increase in our revenue from loan facilitation services. Other revenue grew significantly to RMB255.7 million from RMB64.7 million in the same period last year, mainly driven by the revenue from individual investor referral services and the guarantee income from financial guarantee services. Moving on to costs. Origination and servicing expenses were RMB274.2 million, up 193.6%, driven by the increased loan origination volume and post loan services related expenses. Allowance for receivables and contract assets grew by 67.5% to RMB6.7 million, primarily due to the increased loan volume from overseas markets. Sales and marketing expenses increased by 155.9% to RMB380.8 million, mainly reflecting an increase in borrower acquisition expenses and commission fees for partnership referrals. As a percentage of net revenue, S&M expenses increased to 33.9% from 29.1% in the same period last year as we continued our investments to attract and retain high-quality borrowers. G&A expenses were RMB46.4 million, up 14%, primarily driven by higher staff costs in the quarter. As a percentage of net revenue, G&A expenses reduced to 4.1% from 8% in the same period last year. R&D expenses were RMB64.8 million, up 55% from RMB41.8 million, mainly due to increased employee compensation benefits expenses and professional service fees. As a percentage of net revenue, R&D expenses reduced to 5.8% from 8.2% in the same period last…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We have a question from the line of [Martin Chen] (ph) from Ten Asset. Please proceed.

[Foreign Language]

[Foreign Language] [Interpreted] Yes, we can.

[Foreign Language] Let me do the translate first. Hi, management team. Congratulations on the very strong results. This is Martin from Ten Asset. I have two questions. The first one is regarding the guidance. The loan volume guidance in the second quarter is about RMB23 billion, combined with RMB20 billion in the first quarter, account around 60% of RMB70 billion for the full year guidance. Does this imply that the volume in the second half of the year will slow down compared to the first half?

[Foreign Language] [Interpreted] Okay. This is Shawn from the IR team of Jiayin Group, and I will do the corresponding translation for Ms. Xu. So, thank you for your question. And so, generally, we believe that the loan volume we've facilitated in the second half of 2023 will not be simply limited by the whole year guidance we just expressed before. As you have mentioned that we maintain our whole year guidance as the same without any change, but we are very confident to complete the guidance in this year. We know that there are probably going to be some risk fluctuations during the year, but we still see generally the economic environment is stable. So, I think the volume would mainly depend on two things. So, firstly, it will depend on the total volume supply from our partners. And secondly, it will depend on the requirement we have on the asset and our goal to strike a balance between risk metrics and our sustainable growth in the second half year.

[Foreign Language] You mentioned refining your borrower base and focusing on high-quality borrowers. How do you define high quality? And what strategy are you using to attract and [return] (ph) these borrowers in the future?

[Foreign Language] [Interpreted] Okay. So, to reach the better quality borrowers, our -- one of the strategic goal of Jiayin Group from -- when we finish our business transformation that our funding sources just changed from former individual funding sources to the financial institutions. So, high-quality borrowers is also a requirement from our funding partners. So, in brief, high-quality we call represents the borrowers with better credit standing. We may find many similarity among those borrowers, such as they are younger in their age, they may care more about their credit standing and they have rational use of the loan, et cetera. Those characteristics made them without over-borrowing from too many sources and had a better personal balance sheet position. So, to reach those more high-quality borrowers we just, we are now selectively choosing borrower acquisition channels just like other platforms and we are providing more competitive products to those high-quality borrowers when they need and focusing on the borrowers with good credit who may grow up with us in the long run. Jiayin is a platform who has the business for over 10 years. And so, we are also trying to track those borrowers through our service during the loans such as providing them with better products and lower rates. Thank you.

Thank you for the questions. One moment for the next question. Next question, we have the line from [Lin Yang from Huafu Securities] (ph). Please proceed.

[Foreign Language] I will do the translation for myself. I'm Lin Yang from Huafu Securities. My first question is about the sales and marketing expense. Can you share some details on your sales and marketing expense increase in this quarter? Thanks.

[Foreign Language] [Interpreted] So, the sales and marketing expenses in the first quarter of 2023 reached RMB380 million, with a year-over-year increase of more than 150%, and it's also a slight increase from the previous quarter. The S&M expenses mainly include borrower acquisition expenses, employees' conversations and other related expenses. So, the main reason for the substantial year-over-year increase was the increase in our -- the volume of loan we just facilitated. So, after we just transform our business model from -- I mean, the funding sources from the individuals to our funding partners from institutions, so in line with the company's strategy on the rapid growth, we have adopted a very active borrower acquisition strategy and spending more on the acquisition process to ensure that we can achieve those high-quality assets efficiently. So, the proportion of new borrowers of our platform has remained higher. And we plan to increase our spending on the high-quality borrower acquisition channels to ensure the LTV of our borrowers and to continuously optimize our borrower base where our business is developing rapidly. So, from the perspective of our operation and finance, we will also carry out a top-level planning on the ratio of S&M expenses to our revenue and also some budget control to ensure the accuracy and effectiveness of our sales and marketing. In the first quarter of 2023, you can see our -- the S&M expenses accounted for above 33.9% of our revenue, basically at the same level as 33.1% in the whole fiscal year of 2022. And if you compare it with 35.5% in the fourth quarter of 2022, you can also see slight down. So, just because we have a strong control and process on our sales and marketing, we are keeping our development at a very high quality, and we are confident that we will develop at a very sustainable way in the future as well.

[Foreign Language] Again, will do the translation for myself. Thanks for your answer. My second question is about account receivable. We noticed that account receivable account for large proportion of the total assets of the company right now and [indiscernible] about RMB200 million. Can you -- from the end of 2022. Can you explain the main reasons?

[Foreign Language] [Interpreted] Okay. So, you are right, Ms. Lin. At the end of the first quarter of 2023, the company's balance of account receivable was RMB1.93 billion, which accounted for about 45% of our total assets. And you can see it has been steadily increasing at the end of each quarter. So, the vast majority of accounts receivable we have are acquisition and risk control service fees for our loan facilitation services, at the -- so under the currently accounting principles. At the same time, as the loan is issued, the rights and obligations under our facilitation services have been fully met. So, the corresponding accounts receivable and income are recognized immediately when the loan is issued to the borrower. And you can see that as our loan facilitation volume continues to increase and projects we recently signed will be usually collected within 12 months during the whole the whole loan term, so you may observe that our balance of receivables also continue to increase. So, under our currently -- business model, as our volume -- the volume we facilitate continues to increase, the absolute value of our AR balance would surely increase accordingly. I want to mention that the collection of our accounts receivable is very good. And after our -- we just completed the transformation from personal funds to institutional funds in 2022, there have been almost no bad debts in the domestic loan facilitation business and no bad debt loss has been accrued so far either. And our management team and our auditors will pay very close attention to the recovery of account receivable. So, generally speaking, the company's profitability is satisfying and our balance sheet also continues to improve. It has laid a very solid foundation for the healthy development of our business in the future. Hope that will answer your question, Lin Yang.

Thank you for the questions. We have no more questions at this time. I will return the call back to Shawn for closing remarks. Please go ahead.

Thank you, operator, and thank you all for joining our call today. If you have further questions, please feel free to contact our Investor Relations team. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.