360 DigiTech Announces Fourth Quarter and Full Year 2020 Unaudited Financial Results
SHANGHAI, China, March 15, 2021 (GLOBE NEWSWIRE) -- 360 DigiTech, Inc. (QFIN) (“360 DigiTech” or the “Company”), a data driven, technology empowered digital platform, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Operational Highlights
- Total loan facilitation and origination volume*1 was RMB69,045 million, representing an increase of 29.0% from RMB53,526 million in the same period of 2019. Loan facilitation volume under capital-light model within Platform Services was RMB21,935 million, an increase of 87.4% from RMB11,707 million in the same period of 2019.
- Total outstanding loan balance*2 was RMB92,075 million as of December 31, 2020, an increase of 27.0% from RMB72,513 million as of December 31, 2019. Outstanding loan balance under capital-light model within Platform Services was RMB27,346 million as of December 31, 2020, an increase of 94.4% from RMB14,069 million as of December 31, 2019.
- The weighted average contractual tenor of loans facilitated and originated in the fourth quarter of 2020 was approximately 10.41 months, compared with 7.94 months in the same period of 2019, and 9.72 months in the third quarter of 2020.
- Cumulative registered users was 162.57 million, an increase of 20.4% from 135.01 million as of December 31, 2019, and an increase of 4.2% from 155.96 million as of September 30, 2020.
- Users with approved credit lines*3 was 30.86 million as of December 31, 2020, an increase of 24.8% from 24.72 million as of December 31, 2019, and an increase of 5.4% from 29.28 million as of September 30, 2020.
- Cumulative borrowers with successful drawdown, including repeat borrowers was 19.70 million as of December 31, 2020, an increase of 23.8% from 15.91 million as of December 31, 2019, and an increase of 5.3% from 18.71 million as of September 30, 2020.
- 90 day+ delinquency ratio*4 was 1.48% as of December 31, 2020.
- The percentage of funding from financial institutions*5 in the fourth quarter of 2020 was 100%.
- Repeat borrower contribution*6 for the fourth quarter of 2020 was 87.5%.
1 “Total loan facilitation and origination volume” refers to the total principal amount of loans facilitated and originated through the Company’s platform during the given period, including loans volume facilitated through Intelligence Credit Engine (“ICE”). “ICE” is an open platform on our “360 Jietiao” APP, we match borrowers and financial institutions through big data and cloud computing technology on “ICE”, and provide pre-loan investigation report of borrowers. For loans facilitated through “ICE”, the Company do not provide post-loan risk management nor bear principal risk.
2 “Total outstanding loan balance” refers to the total amount of principal outstanding for loans facilitated and originated through the Company’s platform at the end of each period, including loan balance for “ICE”, 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 and loans under “ICE” are not included in the delinquency rate calculation.
5 “The percentage of funding from financial institutions” is based on cumulative loan facilitation during the given period, excluding loans originated by our own funds.
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 facilitation and origination volume through our platform during that period.
Fourth Quarter 2020 Financial Highlights
- Total net revenue increased by 39.0% to RMB3,337.5 million (US$511.5 million) from RMB2,400.9 million in the same period of 2019.
- Income from operations increased by 373.4% to RMB1,241.3 million (US$190.2 million) from RMB262.2 million in the same period of 2019.
- Non-GAAP*7 income from operations increased by 287.8% to RMB1,349.1 million (US$206.8 million) from RMB347.9 million in the same period of 2019.
- Operating margin was 37.2%. Non-GAAP operating margin was 40.4%.
- Net income increased by 180.3% to RMB1,204.4 million (US$184.6 million) from RMB429.7 million in the same period of 2019.
- Non-GAAP net income increased by 154.6% to RMB1,312.1 million (US$201.1 million) from RMB515.4 million in the same period of 2019.
- Net income margin was 36.1%. Non-GAAP net income margin was 39.3%.
7 Non-GAAP income from operations (Adjusted Income from operations) and Non-GAAP net income (Adjusted 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.
Full Year 2020 Operational Highlights
- Total loan facilitation and origination volume in 2020 was RMB246,758 million, representing an increase of 24.0% from RMB199,071 million in 2019. Loan facilitation volume under capital-light model within Platform Services was RMB64,362 million, an increase of 136.2% from RMB27,244 million in 2019.
- The weighted average contractual tenor of loans facilitated and originated was 9.72 months in full year 2020, compared with 7.90 months in 2019.
- Repeat borrower contribution was 86.5% in full year 2020, compared with 71.8% in 2019.
Full Year 2020 Financial Highlights
- Total net revenue increased by 47.1% to RMB13,564.0 million (US$2,078.8 million) from RMB9,219.8 million in 2019.
- Income from operations increased by 31.0% to RMB3,790.2 million (US$580.9 million) from RMB2,893.6 million in 2019.
- Non-GAAP income from operations increased by 30.1% to RMB4,091.3 million (US$627.0 million) from RMB3,144.0 million in 2019.
- Operating margin was 27.9%. Non-GAAP operating margin was 30.2%.
- Net income increased by 39.8% to RMB3,495.7 million (US$535.7 million) from RMB2,501.3 million in 2019.
- Non-GAAP net income increased by 38.0% to RMB3,796.9 million (US$581.9 million) from RMB2,751.7 million in 2019.
- Net income margin was 25.8%. Non-GAAP net income margin was 28.0%.
Mr. Haisheng Wu, Chief Executive Officer and Director of 360 DigiTech, commented, “We are very pleased to report robust fourth quarter and full year results. During the quarter, loans facilitated through our digital platform grew 29% year-on-year to reach RMB69.0 billion despite some market uncertainties related to regulatory changes in the quarter. For the full year, total loan facilitation reached RMB246.8 billion, up 24% year-on-year, exceeding our upward revised guidance, despite the challenging macro environment early in the year and regulatory headwinds in the second half. Exiting the year, approximately 35% of the loan facilitation was under the capital-light model and other technology solutions *8, for which we bear no or limited principal risk. We have accelerated the growth of those platform solutions so far in 2021 as we continue to pursue our long-term strategy to build a leading data driven, technology empowered digital platform.
Throughout the second half of 2020, we have witnessed continued recovery in consumer demand for credit and further improvement in asset quality. Some key leading indicators of asset quality are at the best levels ever and improving. Robust risk management system and solid overall execution should enable us to further strengthen our leadership position in the industry and benefit from a more favorable macro trend.
For 2021, we are expecting growth acceleration in our businesses, driven by macro recovery empowered strong demand, as well as key initiatives we are implementing. Our industry leading risk management capability has already been embedded into more than a dozen leading internet platforms’ offerings, reaching tens of millions of potential users in variety of consumption scenarios, such as online shopping, transportation, food delivery, etc. With our strategic partnership with KCB deepening, we are gaining access of lower cost funding that enable us to expand into the much larger prime and super-prime market, serving high quality user base. In addition, we have made meaningful inroad into SME financing so far this year through combined online and offline channels. This may provide an extra leg of growth for 2021.
2020 was marked by intense regulatory activities and we view such changes as long term positive to the industry and to our operations. Overall, we believe these new rules offer regulatory clarity for the industry and should benefit industry leaders with strong risk management capability and solid execution track record. We also note that some of the recent regulatory changes set more favorable environment for the industry. For example, the Supreme Court’s ruling in late December essentially exempted institution lending from the 4xLPR rate cap, which lifted a major overhang to the industry. We intend to seize the opportunities to continue expanding the service scope and depth of our data driven technology empowered digital platform to reach our long-term strategic goals.”
“We are very excited to report another quarter of record profitability. During the quarter, total revenue was RMB3.34 billion and non-GAAP net income reached RMB1.31 billion. The robust financial performance was driven by noticeable improvement in macro environment and continued optimization of our operations,” Mr. Alex Xu, Chief Financial Officer, commented. “While net revenue for the quarter was negatively impacted by the latest interest rate cap, we are pleased to see continued improvement in operating margins as overall asset quality continued to improve. At the end of the quarter we had approximately RMB7.7 billion in cash and cash equivalent on the balance sheet, of which approximately RMB4.4 billion was non-restricted. While there are still some uncertainties concerning our industry, we are highly confident to accelerate our growth in 2021.”
Mr. Yan Zheng, Chief Risk Officer, added, “Our key risk management metrics continued to set new record during the quarter as overall asset quality continued to improve. Among the key leading indicators, Day-1 delinquency*9 decreased to approximately 5.2% in the fourth quarter, a new low in our corporate history. Meanwhile the 30-day collection rate *10 also improved to over 90% in the fourth quarter. More importantly, we are encouraged to see some of these metrics continue to improve into 2021. While we will continue to take prudent approach in overall risk management operations, the effectiveness of our systems should enable us to support a strong growth of business without materially impacting overall asset quality in 2021.”
8 "We've used mainly data technology tools and AI risk management systems in the process of providing such services as loan facilitation, post-facilitation and borrowers' referral to our customers. Revenue from these technology powered services amount to 49% of our total net revenue. "
9 "D1 delinquency rate" is defined as (i) the total amount of principal that became overdue as a specified date, divided by (ii) the total amount of principal that was due for repayment as of such date.
10 "M1 collection rate" is defined as (i) the amount of principal that was repaid in one month among the total amount of principal that became overdue as a specified date, divided by (ii) the total amount of principal that became overdue as a specified date.
Fourth Quarter 2020 Financial Results
Total net revenues was RMB3,337.5 million (US$511.5 million), compared to RMB2,400.9 million in the same period of 2019, and RMB3,703.5 million in the prior quarter.
Net revenue from Credit Driven Services was RMB2,557.1 million (US$391.9 million), compared to RMB1,978.8 million in the same period of 2019, and RMB2,955.4 million in the prior quarter.
Loan facilitation and servicing fees-capital heavy were RMB854.8 million (US$131.0 million), compared to RMB1,278.5 million in the same period of 2019 and RMB1,220.7 million in the prior quarter. The year-over-year decrease was primarily due to a decline in average interest rates of the loans and the impact from early repayment and the sequential decline was mainly due to lower interest rates and the reassessment of impact from early repayments.
Financing income*11 was RMB415.9 million (US$63.7 million), compared to RMB585.4 million in the same period of 2019 and RMB530.8 million in the prior quarter. The year-over-year and sequential declines were primarily due to decrease in volume of on-balance sheet loans and lower interest rates.
Revenue from releasing of guarantee liabilities was RMB1,251.6 million (US$191.8 million), compared to RMB81.1 million in the same period of 2019, and RMB1,172.6 million in the prior quarter. The year-over-year increase was mainly due to the change of accounting standard, and the sequential growth was due to increase in facilitation volume.
Other services fees were RMB34.8 million (US$5.3 million), compared to RMB33.8 million in the same period of 2019, and RMB31.2 million in the prior quarter. The year-over-year and sequential changes were primarily due to fluctuation of late payment fees.
Net revenue from Platform Services was RMB780.4 million (US$119.6 million), compared to RMB422.1 million in the same period of 2019 and RMB748.1 million in the prior quarter.
Loan facilitation and servicing fees-capital light were RMB681.1 million (US$104.4 million), compared to RMB349.6 million in the same period of 2019 and RMB663.4 million in the prior quarter. The year-over-year and sequential growth was primarily due to growth in loan facilitation volume under capital-light model.
Referral services fees were RMB78.2 million (US$12.0 million), compared to RMB62.8 million in the same period of 2019 and RMB68.1 million in the prior quarter. The year-over-year and sequential increases were in part due to the facilitation volume growth through ICE.
Other services fees were RMB21.1 million (US$3.2 million), compared to RMB9.7 million in the same period of 2019 and RMB16.7 million in the prior quarter. The year-over-year and sequential increases were mainly due to growth in late payment fees as loan facilitation volume under capital-light model increased.
Total operating costs and expenses were RMB2,096.1 million (US$321.2 million), compared to RMB2,138.7 million in the same period of 2019 and RMB2,332.1 million in the prior quarter.
Facilitation, origination and servicing expenses were RMB444.5 million (US$68.1 million), compared to RMB329.6 million in the same period of 2019 and RMB408.7 million in the prior quarter. The year-over-year and sequential increase was primarily due to growth in loan facilitation and origination volume, partially offset by improvement in operational efficiency.
Funding costs were RMB131.4 million (US$20.1 million), compared to RMB135.9 million in the same period of 2019 and RMB144.6 million in the prior quarter. The year-over-year and sequential decline was mainly due to decrease in volume of loans funded by ABS and trust, and lower ABS interest rates.
Sales and marketing expenses were RMB316.4 million (US$48.5 million), compared to RMB426.6 million in the same period of 2019 and RMB271.1 million in the prior quarter. The year-over-year decline was primarily due to a more conservative customer acquisition strategy and more effective customer acquisition operations. The sequential increase mainly reflected higher online user acquisition costs as overall business activities continued to expand in China.
General and administrative expenses were RMB135.3 million (US$20.7 million), compared to RMB119.0 million in the same period of 2019 and RMB102.4 million in the prior quarter. The year-over-year and sequential increase was due to expanded business operations, partially offset by our continued effort to improve operational efficiency. Increases in share based compensations also contributed to the sequential increase.
Provision for loans receivable was RMB105.5 million (US$16.2 million), compared to RMB281.2 million in the same period of 2019 and RMB67.4 million in the prior quarter. The year-over-year decline was mainly due to lower volume of on balance sheet loans and the reversal of provision for previous quarters’ on balance sheet loans as actual performance of the loans was better than projected improved. The sequential increase reflects the Company’s consistently prudent approach in assessing provisions.
Provision for financial assets receivable was RMB57.5 million (US$8.8 million), compared to RMB64.7 million in the same period of 2019 and RMB81.6 million in the prior quarter. The year-over-year and sequential declines were in part due to continued improvement in asset quality.
Provision for accounts receivable and contract assets was RMB23.3 million (US$3.6 million), compared to RMB47.1 million in the same period of 2019 and RMB66.2 million in the prior quarter. The year-over-year and sequential decreases were in part due to improvement in asset quality of loans under capital light.
Provision for contingent liability was RMB882.3 million (US$135.2 million), compared to RMB1,190.2 million in the prior quarter. The sequential decline was mainly due a large reversal of provision for loans facilitated in prior quarters as those loans performed better than initially expected.
Income from operations was RMB1,241.3 million (US$190.2 million), compared to RMB262.2 million in the same period of 2019 and RMB1,371.4 million in the prior quarter.
Non-GAAP income from operations was RMB1,349.1 million (US$206.8 million), compared to RMB347.9 million in the same period of 2019 and RMB1,427.8 million in the prior quarter.
Operating margin was 37.2%. Non-GAAP operating margin was 40.4%.
Income before income tax expense was RMB1,351.9 million (US$207.2 million), compared to RMB336.6 million in the same period of 2019 and RMB1,459.0 million in the prior quarter.
Net income attributed to the Company was RMB1,204.8 million (US$184.6 million), compared to RMB429.9 million in the same period of 2019 and RMB1,231.9 million in the prior quarter.
Non-GAAP net income attributed to the Company was RMB1,312.5 million (US$201.2 million), compared to RMB515.6 million in the same period of 2019 and RMB1,288.3 million in the prior quarter.
Net income margin was 36.1%. Non-GAAP net income margin was 39.3%.
Net income per fully diluted ADS was RMB7.72 (US$1.18).
Non-GAAP net income per fully diluted ADS was RMB8.40 (US$1.29).
Weighted average basic ADS used in calculating GAAP and non-GAAP net income per ADS was 151.65 million.
Weighted average diluted ADS used in calculating GAAP and non-GAAP net income per ADS was 156.21 million.
11 “Financing income” is generated from loans facilitated through the Company’s platform funded by the consolidated trusts and Fuzhou Microcredit, which charge fees and interests from borrowers.
Full Year 2020 Financial Results
Total net revenues was RMB13,564.0 million (US$2,078.8 million), compared to RMB9,219.8 million in 2019.
Net revenue from Credit Driven Services was RMB11,403.7 million (US$1,747.7 million), compared to RMB8,013.4 million in 2019.
Loan facilitation and servicing fees-capital heavy were RMB4,596.6 million (US$704.5 million), compared to RMB6,273.1 million in 2019. The year-over-year decrease was primarily due to lower average interest rates of the loans, a decrease in facilitation volume under capital heavy model, and the impact from early repayment discount since late 2019.
Financing income was RMB2,184.2 million (US$334.7 million), compared to RMB1,309.6 million in 2019. The year-over-year growth was primarily due to the increase in on-balance sheet loans.
Revenue from releasing of guarantee liabilities was RMB4,506.9 million (US$690.7 million), compared to RMB285.4 million in 2019. The year-over-year increase was mainly due to the change of accounting standard at the beginning of 2020.
Other services fees were RMB116.0 million (US$17.8 million), compared to RMB145.2 million in 2019. The year-over-year decline was primarily due to regulatory changes related to late payment fees.
Net revenue from Platform Services was RMB2,160.2 million (US$331.1 million), compared to RMB1,206.5 million in 2019.
Loan facilitation and servicing fees-capital light were RMB1,826.7 million (US$279.9 million), compared to RMB814.6 million in 2019. The year-over-year increase was primarily due to growth in loan facilitation volume under capital-light model.
Referral services fees were RMB265.3 million (US$40.7 million), compared to RMB375.6 million in 2019. The year-over-year decline was primarily due to a decrease in volume of referral business, partially offset by increasing contribution from ICE in late 2020.
Other services fees were RMB68.3 million (US$10.5 million), compared to RMB16.3 million in 2019. The year-over-year increase was mainly due to growth in late payment fees as loan facilitation volume under capital-light model increased.
Total operating costs and expenses were RMB9,773.8 million (US$1,497.9 million), compared to RMB6,326.3 million in 2019.
Facilitation, origination and servicing expenses were RMB1,600.6 million (US$245.3 million), compared to RMB1,083.4 million in 2019. The year-over-year increase was primarily due to growth in loan facilitation volume and an increase in collection fees as we proactively expanded our collection operations early in 2020.
Funding costs were RMB595.6 million (US$91.3 million), compared to RMB345.0 million in 2019. The year-over-year increase was mainly driven by growth in on balance sheet loans funded by ABS and trust.
Sales and marketing expenses were RMB1,079.5 million (US$165.4 million), compared to RMB2,851.5 million in 2019. The year-over-year decline was primarily due to a more conservative customer acquisition strategy and more effective customer acquisition operations.
General and administrative expenses were RMB456.0 million (US$69.9 million), compared to RMB428.2 million in 2019. The year-over-year increase was due to expanded business operations, partially offset by our continued effort to improve operational efficiency.
Provision for loans receivable was RMB698.7 million (US$107.1 million), compared to RMB487.0 million in 2019. The year-over-year increase was mainly due to growth in on balance sheet loans.
Provision for financial assets receivable was RMB312.1 million (US$47.8 million), compared to RMB166.2 million in 2019. The year-over-year increase was primarily due to higher projected default rates in 2020 with COVID-19 impact early in the year.
Provision for accounts receivable and contract assets was RMB237.3 million (US$36.4 million), compared to RMB230.3 million in 2019. The year-over-year increase was mainly due to growth in loan facilitation volume under capital-light, partially offset by improving asset quality.
Provision for contingent liability was RMB4,794.1 million (US$734.7 million), compared to nil in 2019. The change is a result of the new accounting standard taking effect in 2020.
Income from operations was RMB3,790.2 million (US$580.9 million), compared to RMB2,893.6 million in 2019.
Non-GAAP income from operations was RMB4,091.3 million (US$627.0 million), compared to RMB3,144.0 million in 2019.
Operating margin was 27.9%. Non-GAAP operating margin was 30.2%.
Income before income tax expense was RMB4,081.7 million (US$625.6 million), compared to RMB2,967.3 million in 2019.
Income taxes expense was RMB586.0 million (US$89.8 million). Effective tax rate was 13.4%, compared to 14.5% in 2019.
Net income attributed to the Company was RMB3,496.6 million (US$535.9 million), compared to RMB2,501.6 million in 2019.
Non-GAAP net income attributed to the Company was RMB3,797.8 million (US$582.0 million), compared to RMB2,752.0 million in 2019.
Net income margin was 25.8%. Non-GAAP net income margin was 28.0%.
Net income per fully diluted ADS was RMB22.80 (US$3.50).
Non-GAAP net income per fully diluted ADS was RMB24.77 (US$3.80).
Weighted average basic ADS used in calculating GAAP and non-GAAP net income per ADS was 149.11 million.
Weighted average diluted ADS used in calculating GAAP and non-GAAP net income per ADS was 153.33 million.
M1+ Delinquency Rate by Vintage and M6+ Delinquency Rate by Vintage
The following charts and tables display the historical cumulative M1+ delinquency rates by loan facilitation and origination vintage and M6+ delinquency rates by loan facilitation and origination vintage for all loans facilitated and originated through the company’s platform:
http://ml.globenewswire.com/Resource/Download/e4e4b162-2e27-4e82-987b-088ba0525e10
http://ml.globenewswire.com/Resource/Download/f0e54588-e170-4fda-9c36-bd18f7557474
Recent Developments
Establishment of entity to development industrial park in Shanghai, China
In October 2020, we established a joint venture company in Shanghai, China through our variable interest entity, Shanghai Qiyu Information Technology Co., Ltd., together with Shanghai Changfeng Investment (Group) Co., Ltd. (“Changfeng”), an independent third party, and Shanghai Jiehu Internet Technology Co., Ltd., an entity controlled by 360 Group (the “Shanghai Jiehu”), to develop and build our 360 East-China regional headquarter and the affiliated industrial park. Changfeng, Shanghai Jiehu and we hold 30%, 30% and 40% of the equity interests of the entity, respectively. Since November 2020 and up to March 2021, shareholders of the joint venture company have invested a total of RMB1 billion to acquire land use rights of the parcel of land on which our regional headquarters and affiliated industrial park will stand, of which investment RMB0.4 billion was funded by us. Pursuant to the joint venture agreement among the shareholders of the joint venture company, funds required for its subsequent developments will be financed by external financings of the entity, and any remaining shortfall will be funded by the shareholders ratably in proportion to their respective equity interest ownership.
Change to board of directors
Mr. Alex Xu, our Chief Financial Officer, has been appointed as a member of our board of directors (the “Board”), effective from March 15, 2021. Mr. Jiang Wu has resigned from the Board and Chief Strategy Officer of the Company for personal reasons, effective from March 15, 2021.
Mr. Alex Xu has been serving as our Chief Financial Officer since July 2020 and as our Senior Advisor since October 2019. Mr. Xu has extensive experiences in capital market, corporate finance and business management. Prior to joining us, Mr. Xu served as the Chief Financial Officer of Dashu Financial Services Co., Ltd. from September 2018. He was a Co-Chief Financial Officer of Qihoo 360 (NYSE:QIHU) from February 2011 to August 2016. Prior to that, Mr. Xu was a Managing Director at Cowen & Company, LLC. He also served as the Chief Financial Officer of Yeecare Holdings in 2010, and from May 2008 to March 2010, as the Chief Strategy Officer of China Finance Online Co., Ltd. Mr. Xu was a Senior Vice President at Brean Murray, Carret & Co from 2007 to 2008. He was part of a top-ranked research team at Banc of America Securities, LLC from 2003 to 2007, and worked at investment research department of UBS AG from 2002 to 2003. Mr. Xu received his bachelor’s degree in Applied Physics from Beijing University of Posts and Telecommunications and an M.B.A. degree from Cornell University. Mr. Xu is a CFA charter holder.
Mr. Hongyi Zhou, the chairman of the Board, commented, “On behalf of the Board, I would like to thank Mr. Jiang Wu for his services and contributions to 360 DigiTech. We wish him the best in his future endeavors. At the same time, we warmly welcome Mr. Xu to our Board. Mr. Xu has rich experience in capital market, corporate finance and business management. We believe that he will continue to play a positive role in the future development of 360 DigiTech and deliver long-term shareholder value.”
Business Outlook
While we intend to keep our tradition of prudent decision making and business planning, we are encouraged to see continued strong business momentum so far in 2021, as macro economy continues on a stable growth path along with some regulatory clarity emerges. As such we now expect total loan facilitation and origination volume for 2021 to be between RMB310 billion and RMB330 billion, representing year-on-year growth of 26% to 34%. This forecast reflects the Company’s current and preliminary views, which is subject to change.
Recently Adopted Accounting Guidance
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which has subsequently been amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11 and ASU 2020-03. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2019, including final periods within those fiscal years.
We have adopted the new standard effective January 1, 2020, using the modified retrospective transition method. The new guidance requires the recognition of credit losses to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). ASC 326 establishes a new accounting principle which requires gross accounting for guarantee liability. That is, to record both a guarantee obligation and an allowance for credit losses, calculated using the CECL impairment model, in addition to the guarantee obligation under ASC 460. As a result, at inception of the guarantee, we have recognized both a stand-ready guarantee liability under ASC 460 with an associated financial assets receivable, and a contingent guarantee liability with an allowance for credit losses under CECL model. Subsequent to the initial recognition, the ASC 460 stand-ready guarantee is recognized into guarantee revenue over the term of the guarantee, while the contingent guarantee is reduced by the payouts made by the company to compensate the investors upon borrowers' default. Upon adoption, we recognized the cumulative effect of approximately RMB1.43 billion after tax as a decrease to the opening balance of retained earnings and RMB1.9 billion as an increase to the opening balance of guarantee liabilities as of January 1, 2020.
Move from Nasdaq Global Market to Nasdaq Global Select Market
The Company’s application to move the listing of its ADSs from The Nasdaq Global Market to the higher tier of The Nasdaq Global Select Market has been approved by Nasdaq, and its ADSs has begun trading on The Nasdaq Global Select Market from November 19, 2020.
Conference Call
360 DigiTech’s management team will host an earnings conference call at 9:00 PM U.S. Eastern Time on Monday, March 15, 2021 (9:00 AM Beijing Time on March 16).
| United States: | +1-646-722-4977 |
| Hong Kong: | +852-3027-6500 |
| Mainland China: | 400-821-0637 |
| International: | +65-6408-5782 |
| PIN: | 80701635# |
Please dial in 15 minutes before the call is scheduled to begin and provide the PIN to join the call.
A telephone replay of the call will be available after the conclusion of the conference call until March 23, 2021:
| United States: | +1-646-982-0473 |
| International: | +65-6408-5781 |
| Access code: | 319339808# |
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.360shuke.com.
About 360 DigiTech
360 DigiTech, Inc. (NASDAQ: QFIN) (“360 DigiTech” or the “Company”) is a data driven, technology empowered digital platform. Through its platform the Company enables financial institutions to provide better and targeted products and services to a broader consumer base. The Company also offers standardized risk management service, in the form of SaaS modules to institutional clients. When coupled with its partnership with 360 Group, the Company’s solutions created noticeable advantages in customer acquisition, funding optimization, risk assessment and post-lending management.
For more information, please visit: ir.360shuke.com
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, non-GAAP operation margin, non-GAAP net income and non-GAAP net income margin 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 RMB6.5250 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 December 31, 2020.
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 DigiTech
E-mail: ir@360shuke.com
Christensen
In China
Mr. Eric Yuan
Phone: +86-138-0111-0739
E-mail: Eyuan@christensenir.com
In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@christensenir.com
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 31, | December 31, | December 31, | |||
| 2019 | 2020 | 2020 | |||
| RMB | RMB | USD | |||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 2,108,123 | 4,418,416 | 677,152 | ||
| Restricted cash | 1,727,727 | 2,355,850 | 361,050 | ||
| Security deposit prepaid to third-party guarantee companies | 932,983 | 915,144 | 140,252 | ||
| Funds receivable from third party payment service providers | 118,860 | 131,464 | 20,148 | ||
| Accounts receivable and contract assets, net | 2,332,364 | 2,394,528 | 366,977 | ||
| Financial assets receivable, net | 1,912,554 | 3,565,482 | 546,434 | ||
| Amounts due from related parties | 478,767 | 193,305 | 29,625 | ||
| Loans receivable, net | 9,239,565 | 7,500,629 | 1,149,522 | ||
| Prepaid expenses and other assets | 652,545 | 401,224 | 61,490 | ||
| Total current assets | 19,503,488 | 21,876,042 | 3,352,650 | ||
| Non-current assets: | |||||
| Accounts receivable and contract assets, net-non current | 19,508 | 307,937 | 47,193 | ||
| Financial assets receivable, net-non current | 59,270 | 645,326 | 98,901 | ||
| Loans receivable, net-non current | - | 87,685 | 13,438 | ||
| Property and equipment, net | 17,113 | 19,360 | 2,967 | ||
| Intangible assets | 3,512 | 3,403 | 522 | ||
| Deferred tax assets | 697,348 | 1,398,562 | 214,339 | ||
| Other non-current assets | 55,362 | 48,990 | 7,508 | ||
| Total non-current assets | 852,113 | 2,511,263 | 384,868 | ||
| TOTAL ASSETS | 20,355,601 | 24,387,305 | 3,737,518 | ||
| LIABILITIES AND EQUITY LIABILITIES | |||||
| Current liabilities: | |||||
| Payable to investors of the consolidated trusts-current | 4,423,717 | 3,117,634 | 477,798 | ||
| Accrued expenses and other current liabilities | 720,918 | 809,761 | 124,103 | ||
| Amounts due to related parties | 55,622 | 71,562 | 10,967 | ||
| Short term loans | 200,000 | 186,800 | 28,628 | ||
| Guarantee liabilities-stand ready | 2,212,125 | 4,173,497 | 639,616 | ||
| Guarantee liabilities-contingent | 734,730 | 3,543,454 | 543,058 | ||
| Income tax payable | 1,056,219 | 1,227,314 | 188,094 | ||
| Other tax payable | 263,856 | 254,486 | 39,002 | ||
| Total current liabilities | 9,667,187 | 13,384,508 | 2,051,266 | ||
| Non-current liabilities: | |||||
| Deferred tax liabilities | - | 37,843 | 5,800 | ||
| Payable to investors of the consolidated trusts-noncurrent | 3,442,500 | 1,468,890 | 225,117 | ||
| Other long-term liabilities | 31,184 | 14,974 | 2,295 | ||
| Total non-current liabilities | 3,473,684 | 1,521,707 | 233,212 | ||
| TOTAL LIABILITIES | 13,140,871 | 14,906,215 | 2,284,478 | ||
| Ordinary shares | 20 | 21 | 3 | ||
| Additional paid-in capital | 5,117,184 | 5,417,406 | 830,254 | ||
| Retained earnings | 2,071,332 | 4,137,542 | 634,106 | ||
| Other comprehensive income (loss) | 24,906 | (74,391 | ) | (11,401 | ) |
| TOTAL 360 DIGITECH INC EQUITY | 7,213,442 | 9,480,578 | 1,452,962 | ||
| Noncontroling interests | 1,288 | 512 | 78 | ||
| TOTAL EQUITY | 7,214,730 | 9,481,090 | 1,453,040 | ||
| TOTAL LIABILITIES AND EQUITY | 20,355,601 | 24,387,305 | 3,737,518 | ||
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 December 31, | Year ended December 31, | ||||||||||||
| 2019 | 2020 | 2020 | 2019 | 2020 | 2020 | ||||||||
| RMB | RMB | USD | RMB | RMB | USD | ||||||||
| Credit driven services | 1,978,824 | 2,557,129 | 391,898 | 8,013,391 | 11,403,675 | 1,747,690 | |||||||
| Loan facilitation and servicing fees-capital heavy | 1,278,450 | 854,817 | 131,006 | 6,273,131 | 4,596,555 | 704,453 | |||||||
| Financing income | 585,393 | 415,901 | 63,740 | 1,309,616 | 2,184,180 | 334,740 | |||||||
| Revenue from releasing of guarantee liabilities | 81,146 | 1,251,564 | 191,811 | 285,407 | 4,506,935 | 690,718 | |||||||
| Other services fees | 33,835 | 34,847 | 5,341 | 145,237 | 116,005 | 17,779 | |||||||
| Platform services | 422,057 | 780,356 | 119,595 | 1,206,456 | 2,160,279 | 331,077 | |||||||
| Loan facilitation and servicing fees-capital light | 349,574 | 681,090 | 104,382 | 814,581 | 1,826,654 | 279,947 | |||||||
| Referral services fees | 62,831 | 78,151 | 11,977 | 375,551 | 265,300 | 40,659 | |||||||
| Other services fees | 9,652 | 21,115 | 3,236 | 16,324 | 68,325 | 10,471 | |||||||
| Total net revenue | 2,400,881 | 3,337,485 | 511,493 | 9,219,847 | 13,563,954 | 2,078,767 | |||||||
| Facilitation, origination and servicing | 329,583 | 444,452 | 68,115 | 1,083,372 | 1,600,564 | 245,297 | |||||||
| Funding costs | 135,851 | 131,351 | 20,130 | 344,999 | 595,623 | 91,283 | |||||||
| Sales and marketing | 426,571 | 316,350 | 48,483 | 2,851,519 | 1,079,494 | 165,440 | |||||||
| General and administrative | 118,959 | 135,346 | 20,743 | 428,189 | 455,952 | 69,878 | |||||||
| Provision for loans receivable | 281,183 | 105,490 | 16,167 | 486,991 | 698,701 | 107,081 | |||||||
| Provision for financial assets receivable | 64,659 | 57,493 | 8,811 | 166,176 | 312,058 | 47,825 | |||||||
| Provision for accounts receivable and contract assets | 47,131 | 23,327 | 3,575 | 230,280 | 237,277 | 36,364 | |||||||
| Provision for contingent liabilities | - | 882,334 | 135,224 | - | 4,794,127 | 734,732 | |||||||
| Expense on guarantee liabilities | 734,730 | - | - | 734,730 | - | - | |||||||
| Total operating costs and expenses | 2,138,667 | 2,096,143 | 321,248 | 6,326,256 | 9,773,796 | 1,497,900 | |||||||
| Income from operations | 262,214 | 1,241,342 | 190,245 | 2,893,591 | 3,790,158 | 580,867 | |||||||
| Interest (expense) income, net | (14,229 | ) | 32,568 | 4,991 | (41,707 | ) | 77,169 | 11,827 | |||||
| Foreign exchange gain (loss) | 42,646 | 62,013 | 9,504 | (24,875 | ) | 101,534 | 15,561 | ||||||
| Other income, net | 45,973 | 15,985 | 2,450 | 140,278 | 112,884 | 17,300 | |||||||
| Income before income tax expense | 336,604 | 1,351,908 | 207,190 | 2,967,287 | 4,081,745 | 625,555 | |||||||
| Income taxes benefit (expense) | 93,094 | (147,544 | ) | (22,612 | ) | (465,983 | ) | (586,036 | ) | (89,814 | ) | ||
| Net income | 429,698 | 1,204,364 | 184,578 | 2,501,304 | 3,495,709 | 535,741 | |||||||
| Net loss attributable to noncontrolling interests | 218 | 444 | 68 | 291 | 897 | 137 | |||||||
| Net income attributable to ordinary shareholders of the Company | 429,916 | 1,204,808 | 184,646 | 2,501,595 | 3,496,606 | 535,878 | |||||||
| Net income per ordinary share attributable to ordinary shareholders of 360 DigiTech, Inc. | |||||||||||||
| Basic | 1.47 | 3.97 | 0.61 | 8.66 | 11.72 | 1.80 | |||||||
| Diluted | 1.43 | 3.86 | 0.59 | 8.31 | 11.40 | 1.75 | |||||||
| Net income per ADS attributable to ordinary shareholders of 360 DigiTech, Inc. | |||||||||||||
| Basic | 2.94 | 7.94 | 1.22 | 17.32 | 23.44 | 3.60 | |||||||
| Diluted | 2.86 | 7.72 | 1.18 | 16.62 | 22.80 | 3.50 | |||||||
| Weighted average shares used in calculating net income per ordinary share | |||||||||||||
| Basic | 291,911,903 | 303,298,903 | 303,298,903 | 288,827,604 | 298,222,207 | 298,222,207 | |||||||
| Diluted | 299,691,958 | 312,423,549 | 312,423,549 | 300,938,470 | 306,665,099 | 306,665,099 | |||||||
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 December 31, | ||||||
| 2019 | 2020 | 2020 | ||||
| RMB | RMB | USD | ||||
| Net income | 429,698 | 1,204,364 | 184,578 | |||
| Other comprehensive income, net of tax of nil: | ||||||
| Foreign currency translation adjustment | (44,723 | ) | (61,851 | ) | (9,479 | ) |
| Other comprehensive income (loss) | (44,723 | ) | (61,851 | ) | (9,479 | ) |
| Total comprehensive income | 384,975 | 1,142,513 | 175,099 | |||
| Net loss attributable to noncontrolling interests | 218 | 444 | 68 | |||
| Comprehensive income attributable to ordinary shareholders | 385,193 | 1,142,957 | 175,167 | |||
| Year ended December 31, | ||||||
| 2019 | 2020 | 2020 | ||||
| RMB | RMB | USD | ||||
| Net income | 2,501,304 | 3,495,709 | 535,741 | |||
| Other comprehensive income, net of tax of nil: | ||||||
| Foreign currency translation adjustment | 21,223 | (99,296 | ) | (15,218 | ) | |
| Other comprehensive income (loss) | 21,223 | (99,296 | ) | (15,218 | ) | |
| Total comprehensive income | 2,522,527 | 3,396,413 | 520,523 | |||
| Net loss attributable to noncontrolling interests | 291 | 897 | 137 | |||
| Comprehensive income attributable to ordinary shareholders | 2,522,818 | 3,397,310 | 520,660 | |||
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 December 31, | ||||||
| 2019 | 2020 | 2020 | ||||
| RMB | RMB | USD | ||||
| Reconciliation of Non-GAAP Net Income to Net Income | ||||||
| Net income | 429,698 | 1,204,364 | 184,578 | |||
| Add: Share-based compensation expenses | 85,727 | 107,714 | 16,508 | |||
| Non-GAAP net income | 515,425 | 1,312,078 | 201,086 | |||
| Non-GAAP net income margin | 21.5 | % | 39.3 | % | ||
| GAAP net income margin | 17.9 | % | 36.1 | % | ||
| Net income attributable to shareholders of 360 DigiTech, Inc | 429,916 | 1,204,808 | 184,646 | |||
| Add: Share-based compensation expenses | 85,727 | 107,714 | 16,508 | |||
| Non-GAAP net income attributable to shareholders of 360 DigiTech, Inc | 515,643 | 1,312,522 | 201,154 | |||
| Weighted average ADS used in calculating net income per ordinary share for both GAAP and non-GAAP EPS | 149,845,979 | 156,211,775 | 156,211,775 | |||
| Net income per ADS attributable to ordinary shareholders of 360 DigiTech, Inc. -diluted | 2.86 | 7.72 | 1.18 | |||
| Non-GAAP net income per ADS attributable to ordinary shareholders of 360 DigiTech, Inc. -diluted | 3.44 | 8.40 | 1.29 | |||
| Reconciliation of Non-GAAP Income from operations to Income from operations | ||||||
| Income from operations | 262,214 | 1,241,342 | 190,245 | |||
| Add: Share-based compensation expenses | 85,727 | 107,714 | 16,508 | |||
| Non-GAAP Income from operations | 347,941 | 1,349,056 | 206,753 | |||
| Non-GAAP operating margin | 14.5 | % | 40.4 | % | ||
| GAAP operating margin | 10.9 | % | 37.2 | % | ||
| Year ended December 31, | ||||||
| 2019 | 2020 | 2020 | ||||
| RMB | RMB | USD | ||||
| Reconciliation of Non-GAAP Net Income to Net Income | ||||||
| Net income | 2,501,304 | 3,495,709 | 535,741 | |||
| Add: Share-based compensation expenses | 250,428 | 301,161 | 46,155 | |||
| Non-GAAP net income | 2,751,732 | 3,796,870 | 581,896 | |||
| Non-GAAP net income margin | 29.8 | % | 28.0 | % | ||
| GAAP net income margin | 27.1 | % | 25.8 | % | ||
| Net income attributable to shareholders of 360 DigiTech, Inc | 2,501,595 | 3,496,606 | 535,878 | |||
| Add: Share-based compensation expenses | 250,428 | 301,161 | 46,155 | |||
| Non-GAAP net income attributable to shareholders of 360 DigiTech, Inc | 2,752,023 | 3,797,767 | 582,033 | |||
| Weighted average ADS used in calculating net income per ordinary share for both GAAP and non-GAAP EPS | 150,469,235 | 153,332,550 | 153,332,550 | |||
| Net income per ADS attributable to ordinary shareholders of 360 DigiTech, Inc. -diluted | 16.62 | 22.80 | 3.50 | |||
| Non-GAAP net income per ADS attributable to ordinary shareholders of 360 DigiTech, Inc. -diluted | 18.29 | 24.77 | 3.80 | |||
| Reconciliation of Non-GAAP Income from operations to Income from operations | ||||||
| Income from operations | 2,893,591 | 3,790,158 | 580,867 | |||
| Add: Share-based compensation expenses | 250,428 | 301,161 | 46,155 | |||
| Non-GAAP Income from operations | 3,144,019 | 4,091,319 | 627,022 | |||
| Non-GAAP operating margin | 34.1 | % | 30.2 | % | ||
| GAAP operating margin | 31.4 | % | 27.9 | % | ||