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FinVolution (FINV) Q2 Earnings call transcript Aug 21, 2024

AInvestThursday, Aug 22, 2024 12:01 pm ET
2min read

FinVolution Group, a leading fintech player in China and beyond, recently held its second quarter 2024 earnings call, showcasing a solid performance in the face of macro challenges. The call, led by CEO Tiezheng Li and CFO Jiayuan Xu, provided valuable insights into the company's strategic initiatives, financial health, and growth prospects.

Strong Performance Across Markets

FinVolution Group reported a robust performance in the first half of 2024, with transaction volume in China reaching RMB 92.5 billion, up 6% year-over-year. The international market also saw significant growth, with transaction volume soaring to RMB 4.5 billion, up 32% year-over-year. The company's outstanding balance in China reached RMB 64.2 billion, while the international market balance increased to RMB 1.4 billion, up 3% and 27%, respectively. These figures underscore the company's effective execution of its local excellence, global outlook strategy, or L-E-G-O legal strategy.

Customer Acquisition and Innovation

A key element of FinVolution's strategy is customer acquisition, which the company views as an ongoing investment for sustainable growth. During the second quarter, the company served approximately 415,000 small business owners and facilitated RMB 14.2 billion of loans. Notably, the number of total new borrowers reached 823,000, up 22% year-over-year and 15% sequentially, with new international borrowers surpassing new China borrowers. This trend reflects the company's successful transition towards better quality borrowers and its ability to diversify its business model.

FinVolution also showcased its commitment to innovation, hosting an internal tech competition and leveraging AIGC to improve operational efficiency. The company's focus on technology, coupled with its effective social media strategy in international markets, has led to a strong brand presence and customer awareness. As of the end of the second quarter, FinVolution's followers on leading social media platforms had risen to approximately 1.3 million, 850,000, and 240,000 for Facebook, TikTok, and Instagram, respectively.

ESG Initiatives and Future Vision

FinVolution Group also highlighted its commitment to Environmental, Social, and Governance (ESG) initiatives. The company's 2023 ESG report underscores its dedication to transparency, sustainability, and leveraging innovative technologies to make financial services better. FinVolution's focus on integrity and compliance, low carbon development, and harmonious relationships with employees, partners, and communities is a testament to its long-term vision. The company's 17th anniversary celebration and vision for 2030, aiming to become an international fintech platform, further underscores its commitment to sustainable growth and innovation.

Financial Health and Growth Outlook

FinVolution's financial health and growth outlook were also discussed during the call. Despite challenges in China's macro environment, the company remains optimistic about resuming faster growth and delivering consistent returns across multiple metrics for all stakeholders. The company's operational expenses led to better-than-expected financial results, with net revenue reaching RMB 3.17 billion, up 3% year-over-year. Net income was RMB 551 million, a 4% increase quarter-over-quarter. The company's leverage ratio adjusted to 3.5x, indicating opportunities for significant growth when the economy recovers further.

Looking Ahead

FinVolution Group's second quarter earnings call provided a comprehensive overview of its performance, strategic initiatives, and future outlook. The company's solid financial results, focus on innovation, and commitment to ESG initiatives underscore its position as a leading player in the fintech sector. With a robust presence in China and strategic expansion in international markets, FinVolution Group is well-positioned to capitalize on the opportunities in the global fintech landscape and deliver sustainable growth for its stakeholders.

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