Qifu Technology: A Masterclass in Margin Control and Revenue Acceleration

In the ever-shifting landscape of fintech, Qifu Technology (QFIN) has emerged as a rare exemplar of disciplined execution and strategic foresight. The company's second-quarter 2025 results, marked by a non-GAAP earnings per adjusted diluted share (EPADS) of $1.90 and revenue of $728.1 million (a 11.4% year-over-year increase in user base and 16.1% growth in loan facilitation volume), underscore its ability to navigate macroeconomic turbulence while outpacing peers. For investors, this performance is not merely a quarterly anomaly but a testament to a business model that balances aggressive growth with operational rigor.

The Engine of Efficiency: Capital-Light Models and AI-Driven Risk Management

Qifu's strategic pivot toward capital-light models, such as its Intelligence Credit Engine (ICE), has been pivotal. These models now account for 41.4% of total loan volume and 51% of the outstanding loan balance, a shift that reduces exposure to liquidity risks while maintaining high margins. The company's operating margin of 41.0% and non-GAAP operating margin of 43.2% reflect this efficiency, outperforming many traditional lenders.

The integration of AI into credit underwriting and asset distribution has further amplified this edge. By automating risk assessments and optimizing loan pricing, Qifu has achieved a 90-day+ delinquency rate of 1.97%, a figure that remains stable despite rising macroeconomic uncertainties. This is no small feat in a sector where defaults often spike during downturns. The repeat borrower contribution of 93.8% also highlights customer loyalty, a critical metric for recurring revenue streams.

Revenue Growth: Quality Over Quantity

While Qifu's revenue growth is impressive, its quality is what sets it apart. The company's $728.1 million in net revenue for Q2 2025 includes $497.7 million from credit-driven services and $230.4 million from platform services, demonstrating a diversified revenue base. This contrasts with many fintechs that rely heavily on volatile lending volumes.

The capital-heavy segment, though smaller, remains a strategic lever. Qifu's ability to reduce funding costs by 30 basis points sequentially and maintain a C2M2 (Combined Credit and Management) metric of 0.6%—a proxy for asset quality—shows its mastery of cost discipline. These metrics are critical for sustaining margins in a tightening credit environment.

Shareholder Returns and Strategic Allocation

Qifu's commitment to shareholder value is equally compelling. The semi-annual dividend of $0.76 per ADS and $277 million in share repurchases as of August 14, 2025, signal confidence in its cash-generating capabilities. With a $680 million share repurchase target for 2025, the company is effectively reducing its share count by 11%, a move that should boost EPS growth and reward long-term investors.

The Investment Case: Momentum Before Recognition

For investors, Qifu presents a compelling case. Its non-GAAP EPADS of $1.90 and $728.1 million revenue reflect not just short-term execution but a long-term strategy of AI-driven efficiency and capital-light scalability. The company's guidance for Q3 2025—projecting $1.52–1.72 billion in net income (a 2–13% year-on-year decline, but a $258.1 million non-GAAP net income in Q2 suggests resilience)—indicates a business that prioritizes stability over aggressive growth in uncertain times.

The key risk lies in macroeconomic headwinds, such as trade tensions and regulatory shifts. However, Qifu's prudent risk management—evidenced by its 5.1% Day-1 delinquency rate and 87.3% 30-day collection rate—mitigates these concerns. Moreover, its embedded finance partnerships (which now account for over half of new credit line users) diversify its growth channels, reducing reliance on any single market segment.

Conclusion: A Fintech with a Plan

Qifu Technology's recent performance is a masterclass in margin control, operational efficiency, and strategic reinvention. While the broader market may yet recognize its full potential, the company's disciplined approach to capital allocation, AI integration, and risk management positions it as a long-term winner in the credit-tech space. For investors seeking exposure to a fintech with both growth and durability, QFIN offers a rare combination of momentum and margin resilience—a compelling case to act before the broader market catches up.