Jiayin Group’s 2024 Results: Growth Amid Profitability Challenges

Jiayin Group Inc., a leading Chinese online consumer finance platform, has filed its annual report on Form 20-F for the fiscal year ended December 31, 2024, revealing a complex mix of operational progress and financial headwinds. While the company achieved robust growth in loan facilitation volumes, its profitability came under pressure due to rising costs and shifting business dynamics.

Loan Volume Growth Outpaces Profitability

The standout achievement in Jiayin’s 2024 performance was its 37.8% year-over-year surge in Q4 loan facilitation volume to RMB27.7 billion (US$3.8 billion), driving full-year volume up 14.4% to RMB100.8 billion. This expansion reflects the company’s success in attracting institutional funding partners and broadening its customer base. However, this growth came at a cost: the average borrowing amount per loan fell 21.5% in Q4 to RMB7,807, signaling a pivot toward smaller loans or a shift toward riskier, less profitable borrowers.

This strategy also impacted retention: the repeat borrowing rate dropped to 69.9% in Q4, down from 72.9% in 2023, suggesting challenges in sustaining long-term customer engagement.

Revenue Growth Stalls Amid Margin Pressures

Despite rising loan volumes, net revenue declined 12.2% in Q4 to RMB1.4 billion, dragged down by a 76.6% plunge in revenue from releasing guarantee liabilities due to lower outstanding loan balances requiring guarantees. Meanwhile, loan facilitation services revenue rose 46.3%, benefiting from increased institutional partnerships. Full-year net revenue grew only modestly by 6.1% to RMB5.8 billion, as a 26.2% drop in other revenue—linked to reduced overseas lending and investor referral services—offset gains elsewhere.

Profitability faltered further. Net income fell 25.1% in Q4 to RMB275.5 million, with full-year net income down 18.6% to RMB1.056 billion. Operating income declined 6.3% to RMB1.248 billion, while non-GAAP operating income dropped 5.7% to RMB1.307 billion. A key culprit was the 24.4% annual surge in sales and marketing costs to RMB1.914 billion, indicating heightened competition or aggressive customer acquisition efforts.

Balance Sheet and Capital Allocation: Growth vs. Liquidity Risks

Jiayin’s balance sheet highlights a tension between strategic investments and liquidity management. The company spent RMB1.35 billion (US$185 million) on a new Shanghai headquarters, a move that signals confidence in long-term growth but drains cash reserves. Cash and equivalents fell to RMB540.5 million by year-end, down from RMB741.2 million in Q3.

To balance shareholder returns, Jiayin revised its dividend policy, pledging to distribute ~30% of annual net income starting in 2025 (up from 15% previously). A US$30 million share repurchase program has already deployed US$16.8 million through March 2025, reflecting optimism about undervalued stock. However, the cash outflow for the headquarters—equivalent to 128% of 2024 net income—raises questions about future liquidity needs.

Risk Metrics and Outlook

While Jiayin’s M3+ delinquency rate (loans overdue >90 days) dipped to 1.16% by year-end from 1.32% in Q3, the slight improvement follows a trend of manageable risk. For 2025, the company aims to grow loan facilitation volume by 36-41% to RMB137-142 billion, with Q1 projected at RMB35 billion.

Strategic priorities include global expansion, diversification of funding sources, and AI-driven efficiency gains to reduce costs and improve risk management. However, these ambitions hinge on resolving the disconnect between loan volume growth and margin contraction.

Conclusion: A Story of Trade-offs

Jiayin Group’s 2024 results underscore a company navigating two competing forces: aggressive growth in loan origination and the struggle to maintain profitability. On one hand, its ability to secure institutional funding and expand its customer base—despite declining average loan sizes—points to operational resilience. On the other, rising costs and stagnant margins suggest inefficiencies that could undermine long-term sustainability.

The 36-41% 2025 loan volume growth target is ambitious but achievable if Jiayin can stabilize its repeat borrowing rates and curb marketing expenses. Meanwhile, the RMB1.35 billion headquarters investment and increased dividend payouts reflect confidence in future cash flows, though they require careful management of liquidity.

Investors should monitor key metrics: whether the repeat borrowing rate rebounds, if non-GAAP operating margins improve, and how the company manages its cash reserves amid capital expenditures. For now, Jiayin’s story remains one of growth potential tempered by execution risks—a balancing act that will determine its path forward.