Qifu Technology’s Q1 2025 Results: A Recipe for Growth in China’s Credit-Tech Sector

Qifu Technology (NASDAQ: QFIN) is set to release its first-quarter 2025 financial results on May 19, 2025, a milestone that could reinforce its position as a leader in AI-driven credit-tech. With a track record of strategic pivots and robust cash flow, investors are watching closely to see if the company can sustain its momentum amid ongoing macroeconomic challenges. Let’s dive into the numbers and what they mean for shareholders.

The Q1 2025 Outlook: A Barometer of Resilience

Qifu has guided for Q1 net income of RMB1.75–1.85 billion, a figure that, if met, would represent a 72.8% surge compared to Q1 2023’s RMB1.11 billion. This optimism stems from structural shifts in its business model, particularly the expansion of its capital-light Intelligence Credit Engine (ICE) and technology solutions, which now account for 58% of total outstanding loan balances. These segments carry lower risk and higher margins, shielding the company from volatile lending cycles.

Key Drivers of Growth: AI, Capital Efficiency, and User Loyalty

1. AI Integration: Qifu’s platform processed RMB89.9 billion in loans in Q4 2024, with 53.2% originating from its ICE and SaaS offerings. This trend is expected to accelerate in 2025 as the company allocates more resources to AI-driven risk management and customer retention tools.
2. Repeat Borrowers: In 2024, 93.1% of total loan volume came from repeat borrowers—a 1.5% increase from 2023—highlighting the platform’s sticky user base.
3. Funding Cost Management: The company’s operating cash flow hit a record RMB9.34 billion in 2024, enabling aggressive dividend hikes (e.g., a US$0.70/ADS semi-annual payout) and share repurchases.

The Risks: Delinquency Rates and Macroeconomic Headwinds

Despite its strengths, Qifu isn’t immune to China’s economic slowdown. The 90-day+ delinquency rate rose to 2.09% in late 2024, though management attributes this to stricter risk controls. Investors will scrutinize whether this metric stabilizes in Q1 2025. Additionally, the total loan facilitation volume fell 12.8% year-over-year in 2024, underscoring lingering caution among borrowers and financial partners.

Why This Quarter Matters

• Market Sentiment: Qifu’s stock has underperformed peers in recent quarters, but a strong Q1 report could rekindle investor confidence.
• Valuation: With a forward P/E ratio of 12.5x (vs. industry averages of 15–20x), the stock offers a discount if fundamentals improve.
• Dividend Policy: The shift to a semi-annual dividend structure (20–30% payout ratio) signals management’s confidence in cash flow stability.

Conclusion: A Buy for the Long Game?

Qifu Technology’s Q1 2025 results are a critical test of its ability to navigate a challenging environment while capitalizing on its AI-driven moat. With 93.1% repeat borrower contribution, record cash flow, and a dividend yield of 3.3% (post-2024 hikes), the stock presents a compelling value proposition.

If the company meets its net income guidance and shows further improvements in delinquency rates, investors may see this as a buy signal. However, caution remains warranted until macroeconomic clouds lift.

In short, Qifu’s Q1 results could be the catalyst for a rebound—or a reminder that China’s credit-tech sector remains a high-wire act. Stay tuned for May 19.