LexinFintech Holdings Ltd. Reports Second Quarter 2021 Unaudited Financial Results

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SHENZHEN, China, Aug. 25, 2021 (GLOBE NEWSWIRE) — LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (NASDAQ: LX), a leading online consumption and finance platform for new generation consumers and users in China, today announced its unaudited financial results for the quarter ended June 30, 2021.

“We are pleased to announce a quarter where key financial metrics1 scaled new highs. Number of active users rose 24% year over year to 8.4 million, driving up loan origination by 47.6% to RMB60.6 billion. Total loan outstanding also achieved an all-time record, rising 46.2% year over year to RMB90.5 billion,” said Mr. Jay Wenjie Xiao, Lexin’s chairman and chief executive officer. “But it’s no time to stay content and complacent. Recent regulatory changes have sought to reshape the operating environment of financial institutions and their technology partners. We have decided therefore to lower full year guidance on total loan originations to RMB230 billion from RMB240-250 billion.”

“We will slow down our pace, and step up the focus on asset quality and profitability of our business model. We have been making adjustments to our business, to ensure compliance as well as to further strengthen customer acquisition, funding structure, operations and risk management. Any impact will be transitory and manageable,” continued Mr. Xiao. “At the same time, we will also continue to build up Lexin’s capability in serving China’s new generation consumers and tapping into new growth opportunities.”

“Our credit quality has remained stable for new loan originations,” said Mr. Jayden Yang Qiao, Lexin’s chief risk officer. “Our vintage charge-off rates2 for the loans originated during the latest 12 months were estimated to be around 3.5% and 90 day+ delinquency ratio3 was 1.85% as of June 2021. In addition, as you can see from the graphs disclosed with our latest earnings release, our first payment default rate (30 day+)4 for new loan originations have stayed well under 1%.”

“We are proud of our performance in the second quarter,” said Kris Qian Qiao, Lexin’s acting chief financial officer. “Total operating revenue rose 10.5% to RMB3.3 billion, setting a record level. Net income reached an all-time high as well, increasing by 87.7% to RMB787 million. The results reflect our prudent risk management and cost management. Refining risk strategy and improving operational efficiency remain our top goals. They will steer Lexin through any market uncertainties.”

1   Our key financial metrics refer to loan originations, total outstanding principal balance, revenue, non-GAAP EBIT, net income, adjusted net income and adjusted earnings per ADS.

2   Vintage charge-off rate refers to, with respect to on- and off-balance sheet loans originated during a specified time period, which we refer to as a vintage, the total outstanding principal balance of the loans that are charged off during a specified period, divided by the total initial principal of the loans originated in such vintage. Please refer to vintage curve at the end of “Second Quarter 2021 Financial Results” of this press release.

3   90 day+ delinquency ratio refers to outstanding principal balance of on- and off-balance sheet loans that were 90 to 179 calendar days past due as a percentage of the total outstanding principal balance of on- and off-balance sheet loans on our platform as of a specific date. On-balance sheet loans that were over 179 calendar days past due and charged off are not included in the delinquency rate calculation. Off-balance sheet loans that were over 179 calendar days past due are assumed charged off and not included in the delinquency rate calculation. The Company does not distinguish on the basis of the on- or off-balance sheet treatment in monitoring the credit risks of borrowers and the delinquency status of loans.

4   Loan balance with first payment day past due 30+ over total loan origination.

Second Quarter 2021 Operational Highlights:

User base continues to grow with active user numbers in the quarter hitting a new record high.

  • Total number of registered users reached 144 million as of June 30, 2021, representing an increase of 50.9% from 95.3 million as of June 30, 2020; and users with credit line reached 32.9 million as of June 30, 2021, up by 45.2% from 22.7 million as of June 30, 2020.
  • Number of active users5 who used our loan products in the second quarter of 2021 reached 8.4 million, representing an increase of 24.0% from 6.8 million in the second quarter of 2020.
  • Number of new active users who used our loan products in the second quarter of 2021 was 1.7 million, representing an increase of 22.7% from 1.4 million in the second quarter of 2020.

Loan facilitation business sees both loan originations and outstanding principal balance of loans hitting record highs.

  • Total loan originations6 in the second quarter of 2021 reached RMB60.6 billion, representing an increase of 47.6% from RMB41.1 billion in the second quarter of 2020.
  • Total outstanding principal balance of loans6 reached RMB90.5 billion as of June 30, 2021, representing an increase of 46.2% from RMB61.9 billion as of June 30, 2020.
  • In additional to new generation consumers, Lexin has started to expand financing services for small and micro business owners. In the second quarter, loan originations for small and micro business owners reached RMB4.0 billion.
  • Number of orders placed on our platform in the second quarter of 2021 was 81.2 million, representing an increase of 8.9% from 74.6 million in the second quarter of 2020.

New Consumption efforts rapidly scaling up at an accelerating pace, in particular the buy-now pay-later service Maiya.

  • Maiya recorded GMV of RMB349 million in the second quarter.
  • Maiya has served over 618,000 users and 1,084 merchants, 84.8% of which were brick-and-mortar vendors, in the second quarter.

Credit performance and credit quality remain stable.

  • 90 day+ delinquency ratio was 1.85% as of June 30, 2021.
  • First payment default rate (30 day+) for new loan originations was below 1% as of June 30, 2021.
  • Vintage charge-off rates for the loans originated during the latest 12 months were estimated to be around 3.5% as of June 30, 2021.

Other operational highlights.

  • The weighted average tenor of loans originated on our platform in the second quarter of 2021 was approximately 11.6 months. The nominal APR7 was 15.5% for the loans originated during the second quarter of 2021.
  • The GMV8 of our e-commerce channel in the second quarter of 2021 amounted to RMB1.5 billion, representing an increase of 8.2% from RMB1.4 billion in the second quarter of 2020.

5   Active users refer to, for a specified period, users who made at least one transaction during that period through our platform or through our third-party partners’ platforms using credit line granted by us.

6   Originations of loans and outstanding principal balance represent the origination and outstanding principal balance of both on- and off-balance sheet loans.

7   Nominal APR refers to all-in interest costs and fees to the borrower over the net proceeds received by the borrower as a percentage of the total loan originations of both on- and off-balance sheet loans.

8   GMV refers to the total value of transactions completed for products purchased on the e-commerce channel, net of returns.

Second Quarter 2021 Financial Highlights

  • Total operating revenue reached RMB3.3 billion. Credit-oriented services income reached RMB2.2 billion, representing an increase of 12.1% from the second quarter of 2020. Platform-based services income reached RMB620 million, representing an increase of 47.9% from the second quarter of 2020.
  • Gross profit reached RMB1,661 million, representing an increase of 71.7% from the second quarter of 2020.
  • Net income was RMB787 million, representing an increase of 87.7% from the second quarter of 2020.
  • Non-GAAP EBIT9 was RMB1,001 million, representing an increase of 85.0% from the second quarter of 2020.
  • Adjusted net income9 attributable to ordinary shareholders of the Company reached an all-time high of RMB851 million, representing an increase of 87.9% from the second quarter of 2020. Adjusted net income per ADS9 attributable to ordinary shareholders of the Company was RMB4.08 on a fully diluted basis.

9   Non-GAAP EBIT, adjusted net income /(loss) attributable to ordinary shareholders of the Company, adjusted net income /(loss) per ordinary share and per ADS attributable to ordinary shareholders of the Company are non-GAAP financial measures. For more information on non-GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures Statement” and the tables captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

Second Quarter 2021 Financial Results

Operating revenue increased from RMB2,958 million in the second quarter of 2020 to RMB3,269 million in the second quarter of 2021. This increase in operating revenue was due to the increases in credit-oriented services income and platform-based services income for the quarter, driven by continuing increases in the number of active users on our platform, partially offset by a decrease in online direct sales and services income.

Online direct sales decreased by 21.6% from RMB522 million in the second quarter of 2020 to RMB409 million in the second quarter of 2021. This decrease was primarily due to the decrease in the number of e-commerce orders during the second quarter of 2021.

Credit-oriented services income increased by 12.1% from RMB1,969 million in the second quarter of 2020 to RMB2,208 million in the second quarter of 2021. The increase was primarily due to the increase of loan facilitation and servicing fees-credit oriented and the increase of interest and financial services income and other revenues, partially offset by the decrease in guarantee income.

Loan facilitation and servicing fees-credit oriented increased by 71.2% from RMB931 million in the second quarter of 2020 to RMB1,595 million in the second quarter of 2021. This increase was primarily due to the increase in off-balance sheet loans originated under credit-oriented model as a result of the continuing growth of our business, with the expansion of partnerships with institutional funding partners.

Guarantee income decreased by 71.2% from RMB706 million in the second quarter of 2020 to RMB204 million in the second quarter of 2021. The decrease was primarily due to the decrease of loan origination and outstanding balances of the off-balance sheet loans funded by certain Institutional Funding Partners, which are accounted for as guarantee liabilities under ASC 460, Guarantees.

Interest and financial services income and other revenues increased by 23.5% from RMB332 million in the second quarter of 2020 to RMB410 million in the second quarter of 2021, which was consistent with the increase in the origination of on-balance sheet loans in the second quarter of 2021.

Platform-based services income increased by 47.9% from RMB419 million in the second quarter of 2020 to RMB620 million in the second quarter of 2021. This increase was primarily contributed by an increase in the loan facilitation and servicing fees-performance based.

Loan facilitation and servicing fees-performance based increased by 38.0% from RMB394 million in the second quarter of 2020 to RMB543 million in the second quarter of 2021. This increase was primarily due to an increase in the origination of off-balance sheet loans under the performance-based model within platform-based services, driven by continuing increases in the number of active users on our platform.

Cost of sales decreased by 17.8% from RMB520 million in the second quarter of 2020 to RMB427 million in the second quarter of 2021, which is consistent with the decrease of online direct sales revenue.

Funding cost decreased by 24.3% from RMB163 million in the second quarter of 2020 to RMB124 million in the second quarter of 2021, which was consistent with the decrease of the funding debts to fund the on-balance sheet loans. The decrease in funding debts was mainly due to the shortened weighted average tenor for on-balance sheet loans.

Processing and servicing cost increased by 31.8% from RMB356 million in the second quarter of 2020 to RMB470 million in the second quarter of 2021. This increase was primarily due to an increase in risk management and collection expenses, an increase in credit assessment cost, and an increase in fees to third-party payment platforms, partially offset by a decrease in fees to third party insurance companies and guarantee companies.

Provision for credit losses of financing receivables decreased by 7.7% from RMB121 million in the second quarter of 2020 to RMB112 million in the second quarter of 2021. The credit losses have reflected the most recent performance in relation to the Company’s on-balance sheet loans and the Company has continued to implement prudent credit assessment and risk management policies and procedures.

Provision for credit losses of contract assets and receivables increased by 130% from RMB60.8 million in the second quarter of 2020 to RMB140 million in the second quarter of 2021. This increase was mainly due to the significant increase in off-balance sheet loans originated as a result of the continuing growth of our business.

Provision for credit losses of contingent liabilities of guarantee decreased by 56.4% from RMB769 million in the second quarter of 2020 to RMB335 million in the second quarter of 2021. The decrease was primarily due to the decrease of loan origination of the off-balance sheet loans funded by certain Institutional Funding Partners, which are accounted for as guarantee liabilities under ASC 460, Guarantees.

Gross profit increased by 71.7% from RMB968 million in the second quarter of 2020 to RMB1,661 million in the second quarter of 2021. The increase in the gross profit is primarily due to the significant increase in platform-based services income and credit-oriented services income, the decrease in funding cost and provision for credit losses of contingent liabilities of guarantee, partially offset by the increase in processing and servicing cost and provision for credit losses of contract assets and receivables.

Sales and marketing expenses increased by 51.1% from RMB327 million in the second quarter of 2020 to RMB495 million in the second quarter of 2021. This increase was primarily due to an increase in online advertising cost, and an increase in salaries and personnel related costs.

Research and development expenses decreased by 3.1% from RMB135 million in the second quarter of 2020 to RMB130 million in the second quarter of 2021. This decrease was primarily due to a decrease in salaries and personnel related costs.

General and administrative expenses increased by 6.2% from RMB114 million in the second quarter of 2020 to RMB121 million in the second quarter of 2021. This increase was primarily due to an increase in professional service fees.

Change in fair value of financial guarantee derivatives was a loss of RMB19.1 million in the second quarter of 2021, as compared to a gain of RMB79.2 million in the second quarter of 2020. The loss was primarily due to the re-measurement of the expected loss rates and changes in the balances of the underlying outstanding off-balance sheet loans at the balance sheet date.

Change in fair value of loans at fair value was a gain of RMB17.8 million in the second quarter of 2021. Starting from the second quarter of 2020, for the loans we acquired/purchased from the relevant funding partners during the period, we account for them using fair value option pursuant to ASC 825, Financial Instruments, and record them as “Loans at fair value”. Changes in fair value of these loans are reported net and recorded as “Change in fair value of loans at fair value”.

Income tax expense increased by 97% from RMB76.6 million in the second quarter of 2020 to RMB151 million in the second quarter of 2021. The increase was consistent with the increase of the taxable income from the same period of 2020.

Net income increased by 87.7% from RMB419 million in the second quarter of 2020 to RMB787 million in the second quarter of 2021.

Adjusted net income attributable to ordinary shareholders of the Company increased by 87.9% from RMB453 million in the second quarter of 2020 to RMB851 million in the second quarter of 2021.

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Regulatory Update

On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law of the People’s Republic of China, or the Personal Information Protection Law, which will take effect on November 1, 2021. The Personal Information Protection Law imposes additional compliance requirements on top of the existing laws and regulations on personal information protection with more significant legal responsibilities. As the Personal Information Protection Law was recently promulgated and has not yet taken effect, we cannot assure you that the personal information protection measures taken by us will be considered sufficient under the law due to factors including the uncertainties of the interpretation and implementation of the Personal Information Protection Law. To the extent our personal information protection measures may be considered insufficient, we may be required to make further adjustments to our business practices to ensure full compliance with the law, which may increase our compliance costs, subject us to heightened risks and challenges, and adversely affect our business, financial condition, and results of operations.

Outlook

Based on Lexin’s preliminary assessment of the current market conditions, the Company expects total loan originations for fiscal year 2021 to be around RMB230 billion, revised down from between RMB240 billion and RMB250 billion. This is Lexin’s current and preliminary view, which is subject to changes and uncertainties.

Conference Call

The Company’s management will host an earnings conference call at 7:00 AM U.S. Eastern time on August 25, 2021 (7:00 PM Beijing/Hong Kong time on August 25, 2021).

Participants who wish to join the conference call should register online at:

http://apac.directeventreg.com/registration/event/6393426

Please note the Conference ID number of 6393426.

Once registration is completed, participants will receive the dial-in information for the conference call, an event passcode, and a unique registrant ID number.

Participants joining the conference call should dial-in at least 10 minutes before the scheduled start time.

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.lexin.com.

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until September 1, 2021, by dialing the following telephone numbers:

United States: 1 855 452 5696 or 1 646 254 3697
International: 61 2 8199 0299
Replay Access Code: 6393426

About LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd. is a leading online consumption and finance platform for new generation consumers and users in China. The Company provides a comprehensive range of consumption, financial and business services including financial technology services, “buy now pay later” (“BNPL”) services, and membership benefits through its ecommerce platform Fenqile, BNPL product Maiya, and membership platform Le Card. The Company works with financial institutions and brands both online and offline to provide a comprehensive consumption ecosystem catering to the needs of young professionals in China. Lexin utilizes advanced technologies such as big data, cloud computing and artificial intelligence throughout the Company’s services and operations, which include risk management, loan facilitation, and the near-instantaneous matching of users’ funding requests with offers from the Company’s many funding partners, and other consumption and financial services.

For more information, please visit http://ir.lexin.com

To follow us on Twitter, please go to: https://twitter.com/LexinFintech.

Use of Non-GAAP Financial Measures Statement

In evaluating our business, we consider and use adjusted net income/(loss) attributable to ordinary shareholders of the Company, non-GAAP EBIT, adjusted net income/(loss) per ordinary share and per ADS attributable to ordinary shareholders of the Company, four non-GAAP measures, as supplemental measures to review and assess our operating performance. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define adjusted net income/(loss) attributable to ordinary shareholders of the Company as net income/(loss) attributable to ordinary shareholders of the Company excluding share-based compensation expenses, interest expense associated with convertible notes and investment income/(loss) and we define non-GAAP EBIT as net income/(loss) excluding income tax expense/(benefit), share-based compensation expenses, interest expense, net and investment income/(loss) .

We present these non-GAAP financial measures because it is used by our management to evaluate our operating performance and formulate business plans. Adjusted net income/(loss) attributable to ordinary shareholders of the Company enables our management to assess our operating results without considering the impact of share-based compensation expenses, interest expense associated with convertible notes, and investment income/(loss). Non-GAAP EBIT, on the other hand, enables our management to assess our operating results without considering the impact of income tax expense/(benefit), share-based compensation expenses, interest expense, net and investment income/(loss). We also believe that the use of these non-GAAP financial measures facilitates investors’ assessment of our operating performance. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP.

These non-GAAP financial measures have limitations as an analytical tool. One of the key limitations of using adjusted net income/(loss) attributable to ordinary shareholders of the Company and non-GAAP EBIT is that they do not reflect all items of income and expense that affect our operations. Share-based compensation expenses, interest expense associated with convertible notes, income tax expense/(benefit), interest expense, net and investment income/(loss) have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted net income/(loss) attributable to ordinary shareholders of the Company and non-GAAP EBIT. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling the non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure, which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information Statement

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.4566 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 30, 2021. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Lexin’s beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as “will,” expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the expectation of its collection efficiency and delinquency, business outlook and quotations from management in this announcement, contain forward-looking statements. Lexin may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Lexin’s goal and strategies; Lexin’s expansion plans; Lexin’s future business development, financial condition and results of operations; Lexin’s expectation regarding demand for, and market acceptance of, its credit and investment management products; Lexin’s expectations regarding keeping and strengthening its relationship with borrowers, institutional funding partners, merchandise suppliers and other parties it collaborates with; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Lexin’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Lexin does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

LexinFintech Holdings Ltd.

IR inquiries:
Patricia Cheng
Tel: +86 (755) 3637-8888 ext. 8135
E-mail: patriciacheng@lexin.com

Media inquiries:
Limin Chen
Tel: +86 (755) 3637-8888 ext. 6993
E-mail: liminchen@lexin.com

SOURCE LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd.
Unaudited Condensed Consolidated Balance Sheets

      As of  
(In thousands)   December 31, 2020   June 30, 2021  
      RMB   RMB   US$  
ASSETS                    
Current assets                    
Cash and cash equivalents     1,563,755     2,383,754     369,196  
Restricted cash     1,112,152     991,752     153,603  
Restricted time deposits     1,779,458     1,688,553     261,524  
Short-term financing receivables, net of allowance for credit losses of RMB508,013 and RMB587,650 as of December 31, 2020 and June 30, 2021, respectively     4,918,548     3,481,588     539,229  
Loans at fair value     381,393     192,389     29,797  
Accrued interest receivable, net of allowance for credit losses of RMB1,681 and RMB1,280 as of December 31, 2020 and June 30, 2021, respectively     79,793     57,289     8,873  
Prepaid expenses and other current assets     1,004,845     943,708     146,162  
Amounts due from related parties     941     6,243     967  
Deposits to insurance companies and guarantee companies     1,066,281     1,431,751     221,750  
Short-term guarantee receivables, net of allowance for credit losses of RMB58,771 and RMB56,707 as of December 31, 2020 and June 30, 2021, respectively     756,197     531,177     82,269  
Short-term contract assets and service fees receivable, net of allowance for credit losses of RMB65,607 and RMB208,037 as of December 31, 2020 and June 30, 2021, respectively     3,707,649     4,264,576     660,499  
Inventories, net     47,170     46,565     7,212  
Total current assets     16,418,182     16,019,345     2,481,081  
Non‑current assets                    
Restricted cash     163,999     163,570     25,334  
Long‑term financing receivables, net of allowance for credit losses of RMB21,149 and RMB22,406 as of December 31, 2020 and June 30, 2021 respectively     204,761     134,596     20,846  
Long-term guarantee receivables, net of allowance for credit losses of RMB16,994 and RMB15,001 as of December 31, 2020 and June 30, 2021, respectively     218,654     142,529     22,075  
Long-term contract assets and service fees receivable, net of allowance for credit losses of RMB18,970 and RMB55,032 as of December 31, 2020 and June 30, 2021, respectively     481,989     542,186     83,974  
Property, equipment and software, net     125,694     132,099     20,460  
Land use rights, net     1,000,467     983,267     152,289  
Long‑term investments     521,802     472,919     73,246  
Deferred tax assets     747,332     804,785     124,645  
Other assets     462,285     729,601     113,001  
Total non‑current assets     3,926,983     4,105,552     635,870  
TOTAL ASSETS     20,345,165     20,124,897     3,116,951  
                       
LIABILITIES                    
Current liabilities                    
Accounts payable     42,961     37,536     5,814  
Amounts due to related parties     67,514     55,785     8,640  
Short‑term borrowings     1,827,063     1,884,459     291,866  
Short‑term funding debts     4,685,935     3,432,747     531,665  
Accrued interest payable     36,484     44,437     6,882  
Deferred guarantee income     694,582     413,734     64,079  
Contingent guarantee liabilities     1,738,787     1,416,870     219,445  
Accrued expenses and other current liabilities     2,926,347     3,128,980     484,617  
Total current liabilities     12,019,673     10,414,548     1,613,008  
Non‑current liabilities                    
Long‑term funding debts     825,814     617,913     95,703  
Deferred tax liabilities     21,046     36,518     5,656  
Convertible notes     1,920,227     1,904,358     294,947  
Other long-term liabilities     27,667     21,016     3,255  
Total non‑current liabilities     2,794,754     2,579,805     399,561  
TOTAL LIABILITIES     14,814,427     12,994,353     2,012,569  
SHAREHOLDERS’ EQUITY:                    
Class A Ordinary Shares     176     179     28  
Class B Ordinary Shares     58     57     9  
Additional paid‑in capital     2,724,006     2,822,834     437,201  
Statutory reserves     649,234     649,234     100,554  
Accumulated other comprehensive income     3,308     6,541     1,013  
Retained earnings     2,113,956     3,611,194     559,303  
Non-controlling interests     40,000     40,505     6,274  
TOTAL SHAREHOLDERS’ EQUITY     5,530,738     7,130,544     1,104,382  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY     20,345,165     20,124,897     3,116,951  
                     

LexinFintech Holdings Ltd.
Unaudited Condensed Consolidated Statements of Operations

  For the Three Months Ended June 30,     For the Six Months Ended June 30,  
(In thousands, except for share and per share data) 2020   2021     2020   2021  
  RMB   RMB   US$     RMB   RMB   US$  
Operating revenue:                                      
Online direct sales   521,592     408,841     63,321       1,011,116     835,168     129,351  
Membership services   24,205     12,599     1,951       48,496     35,322     5,471  
Other services   24,154     19,582     3,032       37,360     41,172     6,377  
Online direct sales and services income   569,951     441,022     68,304       1,096,972     911,662     141,199  
Loan facilitation and servicing fees-credit oriented   931,295     1,594,835     247,008       1,694,263     2,655,255     411,247  
Interest and financial services income and other revenues   331,593     409,663     63,449       577,522     951,300     147,338  
Guarantee income   706,271     203,595     31,533       1,383,571     438,644     67,937  
Credit-oriented services income   1,969,159     2,208,093     341,990       3,655,356     4,045,199     626,522  
Loan facilitation and servicing fees-performance based   393,595     543,225     84,135       670,983     1,116,174     172,873  
Loan facilitation and servicing fees-volume based   25,301     76,496     11,848       34,729     139,484     21,603  
Platform-based services income   418,896     619,721     95,983       705,712     1,255,658     194,476  
Total operating revenue   2,958,006     3,268,836     506,277       5,458,040     6,212,519     962,197  
Operating cost:                                      
Cost of sales   (519,713 )   (426,991 )   (66,132 )     (999,880 )   (860,460 )   (133,268 )
Funding cost   (163,363 )   (123,620 )   (19,146 )     (306,444 )   (253,380 )   (39,244 )
Processing and servicing cost   (356,439 )   (469,917 )   (72,781 )     (669,409 )   (866,633 )   (134,224 )
Provision for credit losses of financing receivables   (120,913 )   (111,635 )   (17,290 )     (411,162 )   (283,633 )   (43,929 )
Provision for credit losses of contract assets and receivables   (60,786 )   (139,698 )   (21,636 )     (150,126 )   (358,635 )   (55,545 )
Provision for credit losses of contingent liabilities of guarantee   (768,922 )   (335,499 )   (51,962 )     (1,786,165 )   (559,284 )   (86,622 )
Total operating cost   (1,990,136 )   (1,607,360 )   (248,947 )     (4,323,186 )   (3,182,025 )   (492,832 )
Gross profit   967,870     1,661,476     257,330       1,134,854     3,030,494     469,365  
Operating expenses:                                      
Sales and marketing expenses   (327,430 )   (494,814 )   (76,637 )     (571,302 )   (840,318 )   (130,149 )
Research and development expenses   (134,605 )   (130,447 )   (20,204 )     (260,816 )   (254,654 )   (39,441 )
General and administrative expenses   (113,793 )   (120,849 )   (18,717 )     (223,319 )   (251,950 )   (39,022 )
Total operating expenses   (575,828 )   (746,110 )   (115,558 )     (1,055,437 )   (1,346,922 )   (208,612 )
Change in fair value of financial guarantee derivatives, net   79,223     (19,138 )   (2,964 )     (359,761 )   134,434     20,821  
Change in fair value of loans at fair value       17,776     2,753           (60,035 )   (9,298 )
Interest expense, net   (23,713 )   (16,661 )   (2,580 )     (36,018 )   (36,350 )   (5,630 )
Investment income/(loss)   26,880     (2,208 )   (342 )     10,614     (2,397 )   (371 )
Others, net   21,248     42,586     6,596       (1,946 )   60,835     9,422  
Income/(loss) before income tax expense   495,680     937,721     145,235       (307,694 )   1,780,059     275,697  
Income tax (expense)/benefit   (76,644 )   (151,059 )   (23,396 )     48,303     (282,316 )   (43,725 )
Net income/(loss)   419,036     786,662     121,839       (259,391 )   1,497,743     231,972  
Less: Net income attributable to non-controlling interests       505     78           47     7  
Net income/(loss) attributable to ordinary shareholders of the Company   419,036     786,157     121,761       (259,391 )   1,497,696     231,965  
                                       
Net income/(loss) per ordinary share attributable to ordinary shareholders of the Company                                      
Basic   1.15     2.13     0.33       (0.71 )   4.07     0.63  
Diluted   1.05     1.91     0.30       (0.71 )   3.65     0.57  
                                       
Net income/(loss) per ADS attributable to ordinary shareholders of the Company                                      
Basic   2.30     4.27     0.66       (1.43 )   8.13     1.26  
Diluted   2.10     3.82     0.59       (1.43 )   7.30     1.13  
                                       
Weighted average ordinary shares outstanding                                      
Basic   364,483,393     368,245,622     368,245,622       363,992,775     368,257,243     368,257,243  
Diluted   410,340,418     417,056,948     417,056,948       363,992,775     416,277,840     416,277,840  
                                       

LexinFintech Holdings Ltd.
Unaudited Condensed Consolidated Statements of Comprehensive Income/(loss)

  For the Three Months Ended June 30,     For the Six Months Ended June 30,  
(In thousands) 2020   2021     2020   2021  
  RMB   RMB   US$     RMB   RMB   US$  
Net income/(loss)   419,036     786,662     121,839       (259,391 )   1,497,743     231,972  
Other comprehensive income/(loss)                                      
Foreign currency translation adjustment, net of nil tax   (908 )   5,304     824       399     3,233     501  
Total comprehensive income/(loss)   418,128     791,966     122,663       (258,992 )   1,500,976     232,473  
Less: Net income attributable to non-controlling interests       505     78           47     7  
Total comprehensive income/(loss) attributable to ordinary shareholders of the Company   418,128     791,461     122,585       (258,992 )   1,500,929     232,466  
                                       

LexinFintech Holdings Ltd.
Unaudited Reconciliations of GAAP and Non-GAAP Results

  For the Three Months Ended June 30,     For the Six Months Ended June 30,  
(In thousands, except for share and per share data) 2020   2021     2020   2021  
  RMB   RMB   US$     RMB   RMB   US$  
Reconciliation of Adjusted net income/(loss) attributable to ordinary shareholders of the Company to Net income/(loss) attributable to ordinary shareholders of the Company                                      
Net income/(loss) attributable to ordinary shareholders of the Company   419,036     786,157     121,761       (259,391 )   1,497,696     231,965  
Add: Share-based compensation expenses   48,265     43,969     6,810       102,999     92,482     14,323  
Interest expense associated with convertible notes   12,206     11,166     1,729       24,119     22,300     3,454  
Investment (income)/loss   (26,880 )   2,208     342       (10,614 )   2,397     371  
Tax effects on Non-GAAP adjustments(1)       7,151     1,108           7,151     1,108  
Adjusted net income/(loss) attributable to ordinary shareholders of the Company   452,627     850,652     131,750       (142,887 )   1,622,026     251,221  
                                       
Adjusted net income/(loss) per ordinary share attributable to ordinary shareholders of the Company                                      
Basic   1.24     2.31     0.36       (0.39 )   4.40     0.68  
Diluted   1.10     2.04     0.32       (0.39 )   3.90     0.60  
                                       
Adjusted net income/(loss) per ADS attributable to ordinary shareholders of the Company                                      
Basic   2.48     4.62     0.72       (0.79 )   8.81     1.36  
Diluted   2.21     4.08     0.63       (0.79 )   7.79     1.21  
                                       
Weighted average number of ordinary shares outstanding                                      
Basic   364,483,393     368,245,622     368,245,622       363,992,775     368,257,243     368,257,243  
Diluted   410,340,418     417,056,948     417,056,948       363,992,775     416,277,840     416,277,840  

(1)     To exclude the tax effects related to the investment (income)/loss.

LexinFintech Holdings Ltd.
Unaudited Reconciliations of GAAP and Non-GAAP Results

  For the Three Months Ended June 30,     For the Six Months Ended June 30,  
(In thousands) 2020   2021     2020   2021  
  RMB   RMB   US$     RMB   RMB   US$  
Reconciliations of Non-GAAP EBIT to Net income/(loss)                                      
Net income/(loss)   419,036     786,662     121,839       (259,391 )   1,497,743     231,972  
Add: Income tax expense/(benefit)   76,644     151,059     23,396       (48,303 )   282,316     43,725  
Share-based compensation expenses   48,265     43,969     6,810       102,999     92,482     14,323  
Interest expense, net   23,713     16,661     2,580       36,018     36,350     5,630  
Investment (income)/loss   (26,880 )   2,208     342       (10,614 )   2,397     371  
Non-GAAP EBIT   540,778     1,000,559     154,967       (179,291 )   1,911,288     296,021  
                                       

 

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