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360 Finance Announces Third Quarter 2019 Unaudited Financial Results

November 27, 2019

SHANGHAI, China, Nov. 27, 2019 (GLOBE NEWSWIRE) -- 360 Finance, Inc. (QFIN) (“360 Finance” or the “Company”), a leading digital consumer finance platform, today announced its unaudited financial results for the third quarter ended September 30, 2019.

Third Quarter Operational Highlights

-- Loan origination volume*1 was RMB55,965 million, an increase of 108% from RMB26,925 million in the same period of 2018, and an increase of 16% from RMB48,378 million in the second quarter of 2019. -- Outstanding loan balance*2 was RMB70,568 million as of September 30, 2019, an increase of 106% from RMB34,338 million as of September 30, 2018, and an increase of 15% from RMB61,289 million as of June 30, 2019. -- The weighted average tenor of loans originated was approximately 7.90 months, compared with 8.57 months in the same period of 2018, and 7.76 months in the second quarter of 2019. -- Cumulative registered users was 126.00 million, an increase of 90% from 66.35 million as of September 30, 2018, and an increase of 15% from 109.28 million as of June 30, 2019. -- Users with approved credit lines*3 was 22.83 million as of September 30, 2019, an increase of 137% from 9.64 million as of September 30, 2018, and an increase of 19% from 19.23 million as of June 30, 2019. -- Cumulative borrowers with successful drawdown, including repeat borrowers was 14.73 million as of September 30, 2019, an increase of 129% from 6.44 million as of September 30, 2018, and an increase of 17% from 12.54 million as of June 30, 2019. -- 90 day+ delinquency ratio*4 was 1.07% as of September 30, 2019. -- The percentage of funding from financial institutions*5 was 93% -- Repeat borrower contribution*6 was 70.3%.

1 “Loan origination volume” refers to the total principal amount of loans originated through the Company’s platform during the given period.2 “Outstanding loan balance” refers to the total amount of principal outstanding for loans originated through the Company’s platform at the end of each period, excluding loans delinquent for more than 180 days.3 “Users with approved credit lines” refers to the total number of users who had submitted their credit applications and were approved with a credit line by the Company at the end of each period.4 “90 day+ delinquency ratio” refers to the 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. Loans that are charged-off are not included in the delinquency rate calculation.5 “The percentage of funding from financial institutions” is based on cumulative loan origination during the given period.6 “Repeat borrower contribution” for a given period refers to (i) the principal amount of loans borrowed during that period by borrowers who had historically made at least one successful drawdown, divided by (ii) the total loan origination volume through our platform during that period.

Third Quarter 2019 Financial Highlights

-- Total net revenue was RMB2,583.0 million (US$361.4 million), an increase of 98% from RMB1,302.7 million in the same period of 2018. -- Income from operations was RMB942.4 million (US$131.8 million), an increase of 21% from 777.4 million in the same period of 2018. -- Non-GAAP*7 income from operations was RMB 964.7 million (US$135.0 million), an increase of 15% from RMB841.4 million in the same period of 2018. -- Operating margin was 36.5%. Non-GAAP operating margin was 37.3%, compared with 64.6% in the same period of 2018. -- Net income was RMB733.5 million (US$102.6 million), an increase of 27% from RMB 577.4 million in the same period of 2018. -- Non-GAAP net income was RMB755.8 million (US$105.7 million), an increase of 18% from RMB641.5 million in the same period of 2018. -- Net income margin was 28.4%. Non-GAAP net income margin was 29.3%, compared with 49.2% in the same period of 2018.

7 Non-GAAP income from operations and Non-GAAP net income are non-GAAP financial measures. For more information on this non-GAAP financial measure, please see the section of “Use of Non-GAAP Financial Measures Statement” and the table captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

Mr. Haisheng Wu, Chief Executive Officer and Director of 360 Finance, commented, “We continued to achieve healthy and solid growth as we remain committed to executing our strategies in place. We have firmly implemented our strategic transition from a traditional loan facilitator to a technology enabler through the ‘capital light’ model. This transition allows us to serve more financial institutions and steadily reduce overall operational risk. Recently, we have observed regulatory tightening and market volatilities. We have always prided ourselves on our market leading position and ability to maintain high regulatory compliance standards. We have been actively working with regulators, industry associations and other leading companies to advocate for operating in regulatory compliance and protecting customer privacy. For example, we jointed efforts with National Internet Finance Association of China to appeal for the establishment of an industry-wide anti-scam alliance. In response to the short-term market uncertainties, we expect to adopt a relatively conservative measure of customer acquisition, yet remain confident in meeting our full year guidance. In the long-run, we will continue to focus on the quality of growth and safety of operations, while maintaining a reasonable growth rate. We are committed to delivering greater value to all of our stakeholders. ”

Mr. Jiang Wu, Chief Financial Officer of 360 Finance, stated, “Our solid operating performance in the third quarter continued to generate healthy financial results. In this quarter, loans originated under the ‘capital light’ model accounted for 20% of total loan originations, a significant increase from 8% in the previous quarter. It not only frees up more cash to support our daily operations and pilot projects, but also provides us with more of a cushion against industry headwinds down the road. Meanwhile, our customer acquisition has become more efficient to offset, to some extent, a decrease in margin as a result of our strategic transition. We remain committed to originating more on-balance sheet loans to better match revenue with cash flow as long as the costs of consolidated trusts are reasonable. In addition, we have been trimming down overall funding costs through strengthening long term relationship with our financial institution partners and diversifying our fund sources, such as domestic ABS market. For example, in July, we successfully issued RMB 1 billion of ABS with an attractive comprehensive cost at about 5.6%, despite the challenging domestic ABS market. More importantly, we maintained our prudent attitude towards risk management to ensure sufficient provisions for estimated credit risks.”

Mr. Yan Zheng, Vice President of 360 Finance, added, “We maintained our market leading risk performance with 90 day+ delinquency ratio stood at 1.07%. We have implemented proactive measures in all stages of our operations to ensure full control over credit risk management in the long-run. These measures include raising requirement thresholds for loan applicants, offering loans with more flexible repayment schedules to increase the transaction volume of high quality borrowers, and recording additional provisions related to credit risk. In addition, we have received approval from People’s Bank of China to connect to its credit system, which will allow us to download and submit data on borrower’s credit profile. We believe this will enhance our risk management capabilities by increasing the effectiveness of credit underwriting and a borrower’s cost of default. Furthermore, we have adopted a stringent collection policy to ensure full regulatory compliance. With these measures in place, we are confident to elevate our overall business resilience and achieve more sustainable development.”

Third Quarter 2019 Financial Results

Total net revenues increased 98% to RMB2,583.0 million (US$361.4 million) from RMB1,302.7 million in the same period of 2018, primarily due to an increase in loan facilitation service fees, post origination service fees and financing income associated with an increase in loan origination volume.

Revenue from loan facilitation services increased 40% to RMB1,318.2 million (US$184.4 million) from RMB943.8 million in the same period of 2018, primarily due to an increase in loan origination volume through the Company’s platform.

Revenue from post-origination services increased 180% to RMB573.2 million (US$80.2 million) from RMB204.5 million in the same period of 2018, primarily due to an increase in loan origination volume and the cumulative effect of loans originated during prior periods through the Company’s platform.

Financing income*8 increased 439% to RMB409.8 million (US$57.3 million) from RMB76.0 million in the same period of 2018, primarily due to an increase in loan origination funded by our consolidated trusts. Financing income was recognized over the lifetime of the loans, therefore its growth rate lagged the growth rate of on-balance sheet loans.

Other service fee revenues increased 260% to RMB281.9 million (US$39.4 million) from RMB78.4 million in the same period of 2018, primarily due to an increase in revenue from referring borrowers to other platforms and an increase in release of guarantee liabilities upon expiry of the underlying loans and late fees from borrowers.

Total operating costs and expenses increased 212% to RMB1,640.7 million (US$229.5 million) from RMB525.3 million in the same period of 2018.

Origination and servicing expenses increased 114% to RMB374.3 million (US$52.4 million) from RMB174.8 million in the same period of 2018, primarily due to an increase in loan origination volume and the associated costs incurred to originate and service loans through the Company’s platform.

Sales and marketing expenses increased 274% to RMB902.9 million (US$126.3 million) from RMB241.4 million in the same period of 2018, primarily due to an increase in advertising expenses to promote the Company’s brand and attract users to the platform.

General and administrative expenses increased 84% to RMB113.7 million (US$15.9 million) from RMB61.7 million in the same period of 2018, primarily due to an increase in salaries and benefit and related expenses for employees engaged in general corporate functions.

Provision for loans receivable increased 1268% to RMB151.0 million (US$21.1 million) from RMB11.0 million in the same period of 2018, primarily due to an increase in loan origination funded by consolidated trusts and the company’s proactive increase of provisions related to credit risk.

Provision for financial assets receivable increased 243% to RMB44.6 million (US$6.2 million) from RMB13.0 million in the same period of 2018, primarily due to an increase in loan origination volume.

Provision for accounts receivable and contract assets increased 133% to RMB54.2 million (US$7.6 million) from RMB23.3 million in the same period of 2018, primarily due to an increase in loan origination volume.

Income from operations increased 21% to RMB942.4 million (US$131.8 million) from RMB777.4 million in the same period of 2018.

Non-GAAP income from operations increased 15% to RMB964.7 million (US$135.0 million) from RMB841.4 million in the same period of 2018.

Operating margin was 36.5%. Non-GAAP operating margin was 37.3%, compared with non-GAAP operating margin of 64.6% in the same period of 2018.

Income before income tax expense increased 18% to RMB922.4 million (US$129.1 million) from RMB783.2 in the same period of 2018.

Income tax expense was RMB189.0 million (US$26.4 million), compared with RMB205.7 million in the same period of 2018.

Net income increased 27% to RMB733.5 million (US$102.6 million) from RMB577.4 million in the same period of 2018.

Non-GAAP net income increased 18% to RMB755.8 million (US$105.7 million) from RMB641.5 million in the same period of 2018.

Net income margin was 28.4%. Non-GAAP net income margin was 29.3%, compared with non-GAAP net income margin of 49.2% in the same period of 2018.

8 “Financing income” is generated from loans originated through the Company’s platform funded by the consolidated trusts and Fuzhou Microcredit, which charge fees and interests from borrowers.

M6+ Delinquency Rate by Vintage

The following chart displays the historical cumulative M6+ delinquency rates by loan origination vintage for all loans originated through the Company’s platform:

http://ml.globenewswire.com/Resource/Download/70cdf60b-e72c-4667-98de-79d940f7a93c

Recent Development

-- On November 27, 2019, FountainVest Partners (“FountainVest”), through its investment arm Ruby Finance Investment Ltd., acquired an aggregate of 11,521,266 ADSs of the Company from certain holders of the Company’s ADSs, upon the completion of which, FountainVest became a significant shareholder of the Company and a person designated by FountainVest was appointed as a director of the Company. -- In August, 2019, Fuzhou 360 Online Microcredit Co., Ltd., one of our wholly owned PRC subsidiaries, received approval from the People’s Bank of China to connect to its Financial Credit Information Basic Database.

Business Outlook

360 Finance currently expects total net revenue for fiscal year 2019 to be in the range of RMB 8,000 million to RMB 8,500 million. This forecast reflects the Company’s current and preliminary views, which are subject to change.

Conference Call

360 Finance’s management team will host an earnings conference call at 8:00 AM U.S. Eastern Time on Wednesday, November 27, 2019 (9:00 PM Beijing Time on November 27, 2019).

Dial-in details for the earnings conference call are as follows:

United States: 1-888-346-8982 Hong Kong: 852-3018-4992 China: 4001-201-203 International: 1-412-902-4272 Passcode: 360 Finance

Please dial in 15 minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone one hour after the end of the conference call until 7:59 AM ET on December 4, 2019 at the following numbers:

United States: 1-877-344-7529 International: 1-412-317-0088 Passcode: 10137194

Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of the Company’s website at ir.360jinrong.net.

About 360 Finance

360 Finance, Inc. (NASDAQ: QFIN) (“360 Finance” or the “Company”) is a leading digital consumer finance platform and the finance partner of the 360 Group. The Company provides tailored online consumer finance products to prime, underserved borrowers funded primarily by its funding partners. The Company’s proprietary technology platform enables a unique user experience supported by resolute risk management. When coupled with its partnership with 360 Group, the Company’s technology translates to a meaningful borrower acquisition, borrower retention and funding advantage, supporting the rapid growth and scaling of its business.

For more information, please visit: ir.360jinrong.net

Use of Non-GAAP Financial Measures Statement

To supplement our financial results presented in accordance with U.S. GAAP, we use non-GAAP financial measure, which is adjusted from results based on U.S. GAAP to exclude share-based compensation expenses. Reconciliations of our non-GAAP financial measures to our U.S. GAAP financial measures are set forth in tables at the end of this earnings release, which provide more details on the non-GAAP financial measures.

We use non-GAAP income from operation and non-GAAP net income in evaluating our operating results and for financial and operational decision-making purposes. Non-GAAP income from operation represents income from operation excluding share-based compensation expenses, and non-GAAP net income represents net income excluding share-based compensation expenses. Such adjustments have no impact on income tax. We believe that non-GAAP income from operation and non-GAAP net income help identify underlying trends in our business that could otherwise be distorted by the effect of certain expenses that we include in results based on U.S. GAAP. We believe that non-GAAP income from operation and non-GAAP net income provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. Our non-GAAP financial information should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for or superior to U.S. GAAP results. In addition, our calculation of non-GAAP financial information may be different from the calculation used by other companies, and therefore comparability may be limited.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB7.1477 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of September 30, 2019.

Safe Harbor Statement

Any forward-looking statements contained in this announcement are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. 360 Finance may also make written or oral forward-looking statements in its reports to the U.S. Securities and Exchange Commission (“SEC”) on Forms 20-F and 6-K, 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. Statements that are not historical facts, including the Company’s business outlook for 2019, are forward-looking statements. 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. Further information regarding such risks and uncertainties is included in 360 Finance’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 360 Finance does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For more information, please contact:

360 FinanceE-mail: ir@360jinrong.net

Christensen

In ChinaMr. Christian ArnellPhone: +86-10-5900-1548 E-mail: carnell@christensenir.com

In US Ms. Linda BergkampPhone: +1-480-614-3004Email: lbergkamp@christensenir.com

360 Finance, Inc Unaudited Condensed Consolidated Balance Sheets (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”) except for number of shares and per share data, or otherwise noted) December Sep 30, Sep 30, 31, 2018 2019 2019 --------- - ---------- --------- RMB RMB USD ASSETS Current assets: Cash and cash equivalents 1,445,802 1,844,413 258,043 Restricted cash 567,794 1,429,251 199,960 Security deposit prepaid to third-party guarantee companies 795,700 1,078,862 150,938 Funds receivable from third party payment service providers 142,622 149,762 20,952 Accounts receivable and contract assets, net 1,791,745 2,740,005 383,341 Financial assets receivable, net 1,193,621 1,802,780 252,218 Amounts due from related parties 484,286 763,943 106,880 Loans receivable, net 811,433 7,969,621 1,114,991 Prepaid expenses and other assets 109,016 685,258 95,871 Total current assets 7,342,019 18,463,895 2,583,194 Non-current assets: Accounts receivable and contract assets, net-non current - 424 59 Financial assets receivable, net-non current - 29,660 4,150 Property and equipment, net 6,869 16,769 2,346 Intangible assets 847 3,794 531 Deferred tax assets - 163,132 22,823 Total non-current assets 7,716 213,779 29,909 TOTAL ASSETS 7,349,735 18,677,674 2,613,103 LIABILITIES AND EQUITY LIABILITIES Current liabilities: Payable to investors of the consolidated trusts-current 300,341 3,839,285 537,136 Accrued expenses and other current liabilities 518,955 921,741 128,956 Amounts due to related parties 78,767 54,393 7,610 Short term loans - 1,535,000 214,754 Guarantee liabilities 1,399,174 2,338,719 327,199 Income tax payable 432,066 806,312 112,807 Other tax payable 164,478 244,194 34,164 Total current liabilities 2,893,781 9,739,644 1,362,626 Non-current liabilities: Deferred tax liabilities 15,758 - - Payable to investors of the consolidated trusts-noncurrent - 2,194,000 306,952 Total non-current liabilities 15,758 2,194,000 306,952 TOTAL LIABILITIES 2,909,539 11,933,644 1,669,578 Ordinary shares 20 21 3 Additional paid-in capital 4,866,756 5,031,458 703,927 Accumulated (deficit)/retained earnings (430,263 ) 1,641,416 229,643 Other comprehensive income 3,683 69,629 9,741 TOTAL 360 FINANCE INC EQUITY 4,440,196 6,742,524 943,314 Noncontroling interests - 1,506 211 TOTAL EQUITY 4,440,196 6,744,030 943,525 TOTAL LIABILITIES AND EQUITY 7,349,735 18,677,674 2,613,103

360 Finance, Inc Unaudited Condensed Consolidated Statements of Operations (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”) except for number of shares and per share data, or otherwise noted) Three months ended September 30, Nine months ended September 30, ----------------------------------------- ----------------------------------------- 2018 2019 2019 2018 2019 2019 ----------- - ----------- - ----------- - ----------- - ----------- - ----------- - RMB RMB USD RMB RMB USD Revenue from loan 943,812 1,318,164 184,418 2,039,075 3,965,335 554,771 facilitation services Revenue from post-origination 204,473 573,194 80,193 396,850 1,494,353 209,068 services Financing income 76,036 409,763 57,328 232,047 724,223 101,323 Other service fee 78,368 281,918 39,442 212,582 635,055 88,847 revenues Total net revenue 1,302,689 2,583,039 361,381 2,880,554 6,818,966 954,009 Origination and 174,838 374,311 52,368 503,487 906,402 126,810 servicing Sales and marketing 241,434 902,869 126,316 844,668 2,432,804 340,362 General and 61,731 113,716 15,909 460,080 357,909 50,073 administrative Provision for loans 11,038 151,010 21,127 35,693 205,808 28,794 receivable Provision for financial 12,996 44,607 6,241 32,454 101,517 14,203 assets receivable Provision for accounts receivable and contract 23,261 54,156 7,577 54,685 183,149 25,623 assets Total operating costs 525,298 1,640,669 229,538 1,931,067 4,187,589 585,865 and expenses Income from operations 777,391 942,370 131,843 949,487 2,631,377 368,144 Interest income 2,886 (25,546 ) (3,574 ) 6,470 (27,478 ) (3,844 ) (expense), net Foreign exchange loss (3,145 ) (64,793 ) (9,065 ) (3,145 ) (67,521 ) (9,447 ) Other income, net 6,019 70,409 9,851 7,695 94,305 13,194 Income before income 783,151 922,440 129,055 960,507 2,630,683 368,047 tax expense Income tax expense (205,707 ) (188,952 ) (26,435 ) (361,927 ) (559,077 ) (78,218 ) Net income 577,444 733,488 102,620 598,580 2,071,606 289,829 Net (loss) attributable to noncontrolling - (73 ) (10 ) - (73 ) (10 ) interests Deemed dividend (3,097,733 ) - - (3,097,733 ) - - Net (loss) income attributable to (2,520,289 ) 733,561 102,630 (2,499,153 ) 2,071,679 289,839 ordinary shareholders of the Company Net (loss) income per ordinary share attributable to ordinary shareholders of 360 Finance, Inc. Basic (12.71 ) 2.55 0.36 (12.60 ) 7.20 1.01 Diluted (12.71 ) 2.45 0.34 (12.60 ) 6.88 0.96 Weighted average shares used in calculating net income per ordinary share Basic 198,347,168 288,054,825 288,054,825 198,347,168 287,788,219 287,788,219 Diluted 198,347,168 299,107,729 299,107,729 198,347,168 301,306,666 301,306,666

360 Finance, Inc Unaudited Condensed Consolidated Statements of Comprehensive (Loss)/Income (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”) except for number of shares and per share data, or otherwise noted) Three months ended September 30, ---------------------------------- 2018 2019 2019 ---------- - --------- - ------- - RMB RMB USD Net income 577,444 733,488 102,620 Other comprehensive income, net of tax of nil: Foreign currency translation adjustment 3,741 68,476 9,580 Other comprehensive loss 3,741 68,476 9,580 Total comprehensive income 581,185 801,964 112,200 Net (loss) attributable to noncontrolling interests - (73 ) (10 ) Deemed dividend (3,097,733 ) - - Comprehensive (loss) income attributable to ordinary shareholders (2,516,548 ) 802,037 112,210 Nine months ended September 30, ---------------------------------- 2018 2019 2019 ---------- - --------- - ------- - RMB RMB USD Net income 598,580 2,071,606 289,829 Other comprehensive income, net of tax of nil: Foreign currency translation adjustment 3,741 65,946 9,226 Other comprehensive loss 3,741 65,946 9,226 Total comprehensive income 602,321 2,137,552 299,055 Net (loss) attributable to noncontrolling interests - (73 ) (10 ) Deemed dividend (3,097,733 ) - - Comprehensive (loss) income attributable to ordinary shareholders (2,495,412 ) 2,137,625 299,065

360 Finance, Inc Unaudited Reconciliations of GAAP and Non-GAAP Results (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”) except for number of shares and per share data, or otherwise noted) Three months ended September 30, ------------------------------- 2018 2019 2019 --------- - --------- - ------- RMB RMB USD Reconciliation of Non-GAAP Net Income to Net Income Net income 577,444 733,488 102,620 Add: Share-based compensation expenses 64,016 22,320 3,123 Non-GAAP net income 641,460 755,808 105,743 --------- - --------- - ------- Non-GAAP net income margin 49.2 % 29.3 % Reconciliation of Non-GAAP Income from operations to Income from operations Income from operations 777,391 942,370 131,843 Add: Share-based compensation expenses 64,016 22,320 3,123 Non-GAAP Income from operations 841,407 964,690 134,966 --------- - --------- - ------- Non-GAAP operating margin 64.6 % 37.3 % Nine months ended September 30, ------------------------------- 2018 2019 2019 --------- - --------- - ------- RMB RMB USD Reconciliation of Non-GAAP Net Income to Net Income Net income 598,580 2,071,606 289,829 Add: Share-based compensation expenses 530,024 164,702 23,043 Non-GAAP net income 1,128,604 2,236,308 312,872 --------- - --------- - ------- Non-GAAP net income margin 39.2 % 32.8 % Reconciliation of Non-GAAP Income from operations to Income from operations Income from operations 949,487 2,631,377 368,144 Add: Share-based compensation expenses 530,024 164,702 23,043 Non-GAAP Income from operations 1,479,511 2,796,079 391,187 --------- - --------- - ------- Non-GAAP operating margin 51.4 % 41.0 %