0001741530FYfalsetruehttp://fasb.org/us-gaap/2021-01-31#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2021-01-31#AccruedLiabilitiesAndOtherLiabilitieshttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesNoncurrentP1YP12M0.030000P3Yhttp://fasb.org/us-gaap/2021-01-31#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2021-01-31#AccruedLiabilitiesAndOtherLiabilitieshttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesNoncurrent0001741530dei:AdrMember2021-08-310001741530us-gaap:CommonStockMember2021-01-012021-12-310001741530dei:AdrMemberus-gaap:IPOMember2020-01-012020-12-310001741530us-gaap:CommonStockMember2020-01-012020-12-310001741530us-gaap:CommonStockMember2019-01-012019-12-310001741530us-gaap:RetainedEarningsMember2021-12-310001741530us-gaap:NoncontrollingInterestMember2021-12-310001741530us-gaap:AdditionalPaidInCapitalMember2021-12-310001741530us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001741530srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2020-12-310001741530us-gaap:RetainedEarningsMember2020-12-310001741530us-gaap:NoncontrollingInterestMember2020-12-310001741530us-gaap:AdditionalPaidInCapitalMember2020-12-310001741530us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001741530us-gaap:RetainedEarningsMember2019-12-310001741530us-gaap:NoncontrollingInterestMember2019-12-310001741530us-gaap:AdditionalPaidInCapitalMember2019-12-310001741530us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001741530us-gaap:RetainedEarningsMember2018-12-310001741530us-gaap:AdditionalPaidInCapitalMember2018-12-310001741530us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001741530qfin:ShortTermBankBorrowingsOneMember2021-12-3100017415302021-11-202021-11-2000017415302020-05-202020-05-2000017415302018-11-202018-11-2000017415302018-05-202018-05-200001741530us-gaap:EmployeeStockOptionMemberqfin:ShareIncentive2019PlanMember2020-08-310001741530us-gaap:EmployeeStockOptionMemberqfin:ShareIncentivePlanMember2018-05-310001741530us-gaap:RestrictedStockMember2020-12-310001741530srt:MinimumMemberus-gaap:RestrictedStockMember2021-01-012021-12-310001741530srt:MaximumMemberus-gaap:RestrictedStockMember2021-01-012021-12-310001741530qfin:EmployeesMemberus-gaap:EmployeeStockOptionMember2021-01-012021-12-310001741530srt:MaximumMemberus-gaap:EmployeeStockOptionMember2020-05-202020-05-200001741530srt:MaximumMemberus-gaap:EmployeeStockOptionMember2018-11-202018-11-200001741530srt:MaximumMemberus-gaap:EmployeeStockOptionMember2018-05-202018-05-2000017415302021-01-012021-12-3100017415302022-01-012020-12-3100017415302022-01-012021-12-3100017415302021-01-012020-12-310001741530qfin:PostFacilitationServicesMemberqfin:KinchengMember2021-01-012021-12-310001741530qfin:PostFacilitationServicesMemberqfin:JinshangMember2021-01-012021-12-310001741530qfin:PostFacilitationServicesMemberqfin:BeijingZixuanMember2021-01-012021-12-310001741530qfin:LoanFacilitationServiceMemberqfin:KinchengMember2021-01-012021-12-310001741530qfin:LoanFacilitationServiceMemberqfin:JinshangMember2021-01-012021-12-310001741530qfin:LoanFacilitationServiceMemberqfin:BeijingZixuanMember2021-01-012021-12-310001741530qfin:ReferralServiceFeeMemberqfin:QicaitianxiaMember2020-01-012020-12-310001741530qfin:PostFacilitationServicesMemberqfin:KinchengMember2020-01-012020-12-310001741530qfin:PostFacilitationServicesMemberqfin:JinshangMember2020-01-012020-12-310001741530qfin:PostFacilitationServicesMemberqfin:BeijingZixuanMember2020-01-012020-12-310001741530qfin:LoanFacilitationServiceMemberqfin:KinchengMember2020-01-012020-12-310001741530qfin:LoanFacilitationServiceMemberqfin:JinshangMember2020-01-012020-12-310001741530qfin:LoanFacilitationServiceMemberqfin:BeijingZixuanMember2020-01-012020-12-310001741530qfin:ReferralServiceFeeMemberqfin:QicaitianxiaMember2019-01-012019-12-310001741530qfin:PostFacilitationServicesMemberqfin:JinshangMember2019-01-012019-12-310001741530qfin:PostFacilitationServicesMemberqfin:BeijingZixuanMember2019-01-012019-12-310001741530qfin:LoanFacilitationServiceMemberqfin:JinshangMember2019-01-012019-12-310001741530qfin:LoanFacilitationServiceMemberqfin:BeijingZixuanMember2019-01-012019-12-310001741530us-gaap:FinancialServiceMember2021-01-012021-12-310001741530qfin:RevenueFromPostOriginationServicesUnderFeesRiskTakingMember2021-01-012021-12-310001741530qfin:RevenueFromPostOriginationServicesUnderFeesCapitalLightMember2021-01-012021-12-310001741530qfin:RevenueFromLoanFacilitationServicesUnderFeesRiskTakingMember2021-01-012021-12-310001741530qfin:RevenueFromLoanFacilitationServicesUnderFeesCapitalLightMember2021-01-012021-12-310001741530qfin:ReleasingOfGuaranteeLiabilitiesMember2021-01-012021-12-310001741530qfin:PlatformServiceMember2021-01-012021-12-310001741530qfin:OtherServicesRiskTakingMember2021-01-012021-12-310001741530qfin:OtherServicesRiskFreeModelMember2021-01-012021-12-310001741530qfin:LoanFacilitationAndServicingFeesRiskTakingMember2021-01-012021-12-310001741530qfin:LoanFacilitationAndServicingFeesCapitalLightMember2021-01-012021-12-310001741530qfin:CreditRiskTakingModelMember2021-01-012021-12-310001741530us-gaap:FinancialServiceMember2020-01-012020-12-310001741530qfin:RevenueFromPostOriginationServicesUnderFeesRiskTakingMember2020-01-012020-12-310001741530qfin:RevenueFromPostOriginationServicesUnderFeesCapitalLightMember2020-01-012020-12-310001741530qfin:RevenueFromLoanFacilitationServicesUnderFeesRiskTakingMember2020-01-012020-12-310001741530qfin:RevenueFromLoanFacilitationServicesUnderFeesCapitalLightMember2020-01-012020-12-310001741530qfin:ReleasingOfGuaranteeLiabilitiesMember2020-01-012020-12-310001741530qfin:PlatformServiceMember2020-01-012020-12-310001741530qfin:OtherServicesRiskTakingMember2020-01-012020-12-310001741530qfin:OtherServicesRiskFreeModelMember2020-01-012020-12-310001741530qfin:LoanFacilitationAndServicingFeesRiskTakingMember2020-01-012020-12-310001741530qfin:LoanFacilitationAndServicingFeesCapitalLightMember2020-01-012020-12-310001741530qfin:CreditRiskTakingModelMember2020-01-012020-12-310001741530us-gaap:FinancialServiceMember2019-01-012019-12-310001741530qfin:RevenueFromPostOriginationServicesUnderFeesRiskTakingMember2019-01-012019-12-310001741530qfin:RevenueFromPostOriginationServicesUnderFeesCapitalLightMember2019-01-012019-12-310001741530qfin:RevenueFromLoanFacilitationServicesUnderFeesRiskTakingMember2019-01-012019-12-310001741530qfin:RevenueFromLoanFacilitationServicesUnderFeesCapitalLightMember2019-01-012019-12-310001741530qfin:ReleasingOfGuaranteeLiabilitiesMember2019-01-012019-12-310001741530qfin:ReferralServicesMember2019-01-012019-12-310001741530qfin:PlatformServiceMember2019-01-012019-12-310001741530qfin:OtherServicesRiskTakingMember2019-01-012019-12-310001741530qfin:OtherServicesRiskFreeModelMember2019-01-012019-12-310001741530qfin:LoanFacilitationAndServicingFeesRiskTakingMember2019-01-012019-12-310001741530qfin:LoanFacilitationAndServicingFeesCapitalLightMember2019-01-012019-12-310001741530qfin:CreditRiskTakingModelMember2019-01-012019-12-310001741530srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate201613Member2020-01-010001741530qfin:RentalExpensesChargedMemberqfin:HongyingMember2021-01-012021-12-310001741530qfin:ReferralServiceFeeMemberqfin:TianjinYujieTechnologyCo.LtdMember2021-01-012021-12-310001741530qfin:ReferralServiceFeeMemberqfin:QihuMember2021-01-012021-12-310001741530qfin:CorporateExpensesMemberqfin:QibutianxiaMember2021-01-012021-12-310001741530qfin:BrandFeesChargedMemberqfin:QihuMember2021-01-012021-12-310001741530qfin:BandwidthServiceFeeMemberqfin:QihuMember2021-01-012021-12-310001741530qfin:OthersMember2021-01-012021-12-310001741530qfin:RentalExpensesChargedMemberqfin:BeijingQifeiMember2020-01-012020-12-310001741530qfin:ReferralServiceFeeMemberqfin:TianjinYujieTechnologyCo.LtdMember2020-01-012020-12-310001741530qfin:ReferralServiceFeeMemberqfin:QihuMember2020-01-012020-12-310001741530qfin:LaborCostMemberqfin:XixianMember2020-01-012020-12-310001741530qfin:CorporateExpensesMemberqfin:QibutianxiaMember2020-01-012020-12-310001741530qfin:BandwidthServiceFeeMemberqfin:QihuMember2020-01-012020-12-310001741530qfin:OthersMember2020-01-012020-12-310001741530qfin:RentalExpensesChargedMemberqfin:BeijingQifeiMember2019-01-012019-12-310001741530qfin:ReferralServiceFeeMemberqfin:QihuMember2019-01-012019-12-310001741530qfin:ReferralServiceFeeMemberqfin:QifutongMember2019-01-012019-12-310001741530qfin:LaborCostMemberqfin:XixianMember2019-01-012019-12-310001741530qfin:CorporateExpensesMemberqfin:QibutianxiaMember2019-01-012019-12-310001741530qfin:BandwidthServiceFeeMemberqfin:QihuMember2019-01-012019-12-310001741530qfin:OthersMember2019-01-012019-12-310001741530qfin:ReferralServicesMember2020-01-012020-12-310001741530qfin:FurnitureAndOfficeEquipmentMember2021-01-012021-12-310001741530qfin:ElectronicEquipmentMember2021-01-012021-12-310001741530us-gaap:RetainedEarningsMember2020-01-012020-12-310001741530us-gaap:RetainedEarningsMember2019-01-012019-12-310001741530us-gaap:RetainedEarningsMember2021-01-012021-12-310001741530qfin:BeijingQihuTechnologyCo.Ltd.Member2021-01-012021-12-310001741530us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310001741530us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310001741530us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310001741530us-gaap:FinancialAssetNotPastDueMember2021-12-310001741530us-gaap:FinancialAssetNotPastDueMember2020-12-310001741530srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-12-310001741530qfin:FinancialAsset30To60DaysPastDueMember2020-12-310001741530srt:MinimumMember2021-12-310001741530qfin:AmountDueFromRelatedPartiesMember2020-12-310001741530qfin:AmountDueFromRelatedPartiesMember2019-12-310001741530us-gaap:CorporateJointVentureMember2020-12-310001741530qfin:ShanghaiJiehuInternetTechnologyCo.Ltd.Member2021-12-310001741530qfin:ShanghaiQiyuInformationAndTechnologyCoLtdMember2020-10-310001741530qfin:ShanghaiJiehuInternetTechnologyCo.Ltd.Member2020-10-310001741530qfin:ShanghaiChangfengInvestmentGroupCo.Ltd.Member2020-10-310001741530qfin:BeijingQifeiMember2020-09-3000017415302020-09-300001741530qfin:EmployeesMemberus-gaap:EmployeeStockOptionMember2021-12-310001741530us-gaap:RestrictedStockMember2021-12-310001741530srt:SubsidiariesMember2019-08-012019-08-310001741530dei:AdrMember2020-01-012020-12-310001741530dei:AdrMember2019-01-012019-12-310001741530qfin:TianjinYujieTechnologyCo.LtdMember2021-12-310001741530qfin:QihuMember2021-12-310001741530qfin:TianjinYujieTechnologyCo.LtdMember2020-12-310001741530qfin:QihuMember2019-12-310001741530us-gaap:MajorityShareholderMember2021-12-310001741530qfin:OthersMember2021-12-310001741530qfin:KinchengMember2021-12-310001741530qfin:JinshangMember2021-12-310001741530us-gaap:MajorityShareholderMember2020-12-310001741530qfin:OthersMember2020-12-310001741530qfin:KinchengMember2020-12-310001741530qfin:JinshangMember2020-12-310001741530qfin:BeijingZixuanMember2020-12-310001741530us-gaap:SubordinatedDebtMember2021-01-012021-12-310001741530us-gaap:SeniorDebtObligationsMember2021-01-012021-12-310001741530qfin:ShortTermBankBorrowingsTwoMember2021-12-310001741530qfin:ShortTermBankBorrowingsTwoMember2020-12-310001741530qfin:ShortTermBankBorrowingsOneMember2021-01-012021-12-310001741530qfin:FinancialInstitutionPartnersMemberus-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2021-01-012021-12-310001741530qfin:CustomerbMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-12-310001741530qfin:CustomeraMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-12-310001741530qfin:FinancialInstitutionPartnersMemberus-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2020-01-012020-12-310001741530qfin:CustomerdMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001741530qfin:CustomercMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001741530qfin:FinancialInstitutionPartnersMemberus-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2019-01-012019-12-310001741530qfin:CustomereMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001741530qfin:CustomerdMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001741530qfin:CustomercMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001741530us-gaap:CommonClassBMember2020-12-310001741530us-gaap:CommonClassAMember2020-12-310001741530us-gaap:CommonStockMember2020-12-310001741530us-gaap:CommonStockMember2019-12-310001741530us-gaap:CommonStockMember2018-12-310001741530us-gaap:CommonStockMember2021-12-310001741530dei:AdrMemberus-gaap:IPOMember2020-12-310001741530dei:AdrMember2021-10-012021-12-3100017415302021-10-012021-12-310001741530dei:AdrMember2021-07-012021-09-3000017415302021-07-012021-09-300001741530srt:ParentCompanyMembersrt:ReportableLegalEntitiesMember2019-12-310001741530srt:ParentCompanyMembersrt:ReportableLegalEntitiesMember2018-12-310001741530qfin:ReferralServicesMember2021-01-012021-12-310001741530qfin:PostOriginationServiceMember2019-12-310001741530qfin:LoanFacilitationServiceMember2019-12-310001741530qfin:PostOriginationServiceMember2018-12-310001741530qfin:LoanFacilitationServiceMember2018-12-3100017415302018-12-310001741530us-gaap:SellingAndMarketingExpenseMember2021-01-012021-12-310001741530us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-12-310001741530us-gaap:CostOfSalesMember2021-01-012021-12-310001741530us-gaap:SellingAndMarketingExpenseMember2020-01-012020-12-310001741530us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-12-310001741530us-gaap:CostOfSalesMember2020-01-012020-12-310001741530us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310001741530us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310001741530qfin:ReferralServicesMember2020-12-310001741530qfin:PostOriginationServiceMember2020-12-310001741530qfin:LoanFacilitationServiceMember2020-12-310001741530qfin:OtherEntitiesMember2021-01-012021-12-3100017415302021-11-012021-11-300001741530qfin:AmountsDueFromRelatedPartiesMember2021-01-012021-12-310001741530qfin:QibutianxiaMember2021-12-310001741530qfin:QibutianxiaMember2020-12-310001741530srt:MaximumMember2021-12-310001741530srt:SubsidiariesMember2021-01-012021-12-310001741530qfin:ShanghaiQiyuInformationAndTechnologyCoLtdMember2021-01-012021-12-310001741530qfin:ShanghaiQiyuInformationAndTechnologyCoLtdMemberqfin:HighAndNewTechnologyEnterprisesMember2020-01-012022-12-310001741530qfin:WestDevelopmentMembersrt:SubsidiariesMember2019-08-012019-08-310001741530us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-01-012021-12-310001741530us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-01-012020-12-310001741530us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2019-01-012019-12-310001741530qfin:ConsolidatedTrustsMember2019-01-012019-12-310001741530us-gaap:EmployeeStockOptionMemberqfin:ShareIncentive2019PlanMember2020-08-012020-08-310001741530us-gaap:EmployeeStockOptionMemberqfin:ShareIncentivePlanMember2018-05-012018-05-310001741530qfin:LoanAgreementMember2021-01-012021-12-310001741530us-gaap:NoncontrollingInterestMember2020-01-012020-12-310001741530us-gaap:NoncontrollingInterestMember2019-01-012019-12-310001741530qfin:Origination2020Member2020-12-310001741530qfin:Origination2019Member2020-12-310001741530us-gaap:FinancialAssetPastDueMember2021-12-310001741530qfin:FinancialAsset31To60DaysPastDueMember2021-12-310001741530qfin:FinancialAsset0To30DaysPastDueMember2021-12-310001741530us-gaap:FinancialAssetPastDueMember2020-12-310001741530qfin:FinancialAsset31To60DaysPastDueMember2020-12-310001741530qfin:FinancialAsset0To30DaysPastDueMember2020-12-310001741530us-gaap:NoncontrollingInterestMember2021-01-012021-12-310001741530us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310001741530srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310001741530qfin:ContingentGuaranteeMember2021-01-012021-12-310001741530qfin:ContingentGuaranteeMember2020-01-012020-12-310001741530srt:MinimumMember2020-01-012020-12-310001741530srt:MaximumMember2020-01-012020-12-310001741530qfin:AmountDueFromRelatedPartiesMember2021-01-012021-12-310001741530qfin:AmountDueFromRelatedPartiesMember2020-01-012020-12-310001741530qfin:ExclusiveOptionAgreementMember2021-01-012021-12-310001741530qfin:ExclusiveConsultationAndServicesAgreementMember2021-01-012021-12-310001741530qfin:EquityPledgeAgreementMember2021-01-012021-12-310001741530us-gaap:RestrictedStockMember2021-01-012021-12-310001741530country:HK2021-01-012021-12-310001741530srt:MinimumMember2021-07-012021-09-300001741530srt:MaximumMember2021-07-012021-09-300001741530qfin:ConsolidatedTrustsMember2021-01-012021-12-310001741530qfin:ConsolidatedTrustsMember2020-01-012020-12-310001741530qfin:ConsolidatedTrustsMembersrt:MinimumMember2017-11-012017-11-300001741530qfin:ConsolidatedTrustsMembersrt:MaximumMember2017-11-012017-11-300001741530qfin:PostOriginationServiceMember2021-01-012021-12-310001741530qfin:LoanFacilitationServiceMember2021-01-012021-12-310001741530qfin:PostOriginationServiceMember2020-01-012020-12-310001741530qfin:LoanFacilitationServiceMember2020-01-012020-12-310001741530qfin:PostOriginationServiceMember2019-01-012019-12-310001741530qfin:LoanFacilitationServiceMember2019-01-012019-12-310001741530qfin:GuaranteeObligations61To90DaysPastDueMember2021-12-310001741530qfin:GuaranteeObligations31To60DaysPastDueMember2021-12-310001741530qfin:GuaranteeObligations0To30DaysPastDueMember2021-12-310001741530qfin:GuaranteeObligations61To90DaysPastDueMember2020-12-310001741530qfin:GuaranteeObligations31To60DaysPastDueMember2020-12-310001741530qfin:GuaranteeObligations0To30DaysPastDueMember2020-12-310001741530qfin:Origination2021Memberqfin:ReferralServicesMember2021-12-310001741530qfin:Origination2021Memberqfin:PostOriginationServiceMember2021-12-310001741530qfin:Origination2021Memberqfin:LoanFacilitationServiceMember2021-12-310001741530qfin:Origination2020Memberqfin:PostOriginationServiceMember2021-12-310001741530qfin:Origination2020Memberqfin:LoanFacilitationServiceMember2021-12-310001741530qfin:ReferralServicesMember2021-12-310001741530qfin:PostOriginationServiceMember2021-12-310001741530qfin:Origination2021Member2021-12-310001741530qfin:Origination2020Member2021-12-310001741530qfin:LoanFacilitationServiceMember2021-12-310001741530qfin:ContingentGuaranteeMember2021-12-310001741530qfin:ContingentGuaranteeMember2020-12-310001741530srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMemberus-gaap:AccountingStandardsUpdate201613Member2020-01-010001741530srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate201613Member2019-12-310001741530srt:CumulativeEffectPeriodOfAdoptionAdjustedBalanceMemberqfin:ContingentGuaranteeMember2019-12-310001741530qfin:ContingentGuaranteeMember2019-12-310001741530srt:ParentCompanyMembersrt:ReportableLegalEntitiesMember2021-01-012021-12-310001741530srt:ParentCompanyMembersrt:ReportableLegalEntitiesMember2020-01-012020-12-310001741530srt:ParentCompanyMembersrt:ReportableLegalEntitiesMember2019-01-012019-12-310001741530srt:MinimumMember2021-01-012021-12-310001741530srt:MaximumMember2021-01-012021-12-310001741530exch:XSHGqfin:ListingAndTransferringAssetsBasedSecuritiesMember2021-12-310001741530exch:XSHEqfin:ListingAndTransferringAssetsBasedSecuritiesMember2021-12-3100017415302021-12-300001741530qfin:ConsolidatedTrustsMember2021-12-310001741530qfin:ConsolidatedTrustsMember2020-12-3100017415302019-01-012019-12-310001741530qfin:PostOriginationServiceMemberqfin:ContractAssetsMember2021-01-012021-12-310001741530qfin:LoanFacilitationServiceMemberqfin:ContractAssetsMember2021-01-012021-12-310001741530qfin:PostOriginationServiceMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001741530qfin:PostOriginationServiceMemberqfin:ContractAssetsMember2020-01-012020-12-310001741530qfin:LoanFacilitationServiceMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001741530qfin:LoanFacilitationServiceMemberqfin:ContractAssetsMember2020-01-012020-12-3100017415302020-01-012020-12-310001741530qfin:PostOriginationServiceMemberus-gaap:AccountsReceivableMember2019-12-310001741530qfin:PostOriginationServiceMemberqfin:ContractAssetsMember2019-12-310001741530qfin:LoanFacilitationServiceMemberus-gaap:AccountsReceivableMember2019-12-310001741530qfin:LoanFacilitationServiceMemberqfin:ContractAssetsMember2019-12-3100017415302019-12-310001741530srt:ParentCompanyMembersrt:ReportableLegalEntitiesMember2021-12-310001741530srt:ParentCompanyMembersrt:ReportableLegalEntitiesMember2020-12-310001741530qfin:PostOriginationServiceMemberqfin:ContractAssetsMember2021-12-310001741530qfin:LoanFacilitationServiceMemberqfin:ContractAssetsMember2021-12-310001741530qfin:ReferralServicesMemberus-gaap:AccountsReceivableMember2020-12-310001741530qfin:PostOriginationServiceMemberqfin:ContractAssetsMember2020-12-310001741530qfin:LoanFacilitationServiceMemberqfin:ContractAssetsMember2020-12-310001741530us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-12-3100017415302021-12-310001741530us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-12-3100017415302020-12-310001741530dei:AdrMember2021-01-012021-12-310001741530us-gaap:CommonClassAMember2021-01-012021-12-310001741530us-gaap:CommonStockMember2021-12-310001741530us-gaap:CommonClassBMember2021-12-310001741530us-gaap:CommonClassAMember2021-12-310001741530dei:BusinessContactMember2021-01-012021-12-3100017415302021-01-012021-12-31xbrli:sharesiso4217:CNYiso4217:USDxbrli:pureiso4217:CNYxbrli:sharesqfin:itemiso4217:USDxbrli:sharesiso4217:USDiso4217:CNY

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2021.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

For the transition period from            to

Commission file number: 001-38752

360 DigiTech, Inc.

(Exact Name of Registrant as Specified in Its Charter)

N/A

(Translation of Registrant’s Name Into English)

Cayman Islands

(Jurisdiction of Incorporation or Organization)

7/F Lujiazui Finance Plaza

No. 1217 Dongfang Road

Pudong New Area, Shanghai 200122

People’s Republic of China

(Address of Principal Executive Offices)

Alex Xu, Chief Financial Officer

7/F Lujiazui Finance Plaza

No. 1217 Dongfang Road

Pudong New Area, Shanghai 200122

People’s Republic of China

Phone: +86 10 5244 7655

Email: alex_xu@360shuke.com

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol (s)

    

Name of each exchange on which registered

American depositary shares, each
representing two Class A ordinary shares

QFIN

The Nasdaq Global Select Market

Class A ordinary shares, par value
US$0.00001 per share*

The Nasdaq Global Select Market*

*Not for trading, but only in connection with the listing on the Nasdaq Global Select Market of American depositary shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Table of Contents

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

As of December 31, 2021, there were 310,486,975 ordinary shares issued and outstanding, par value US$0.00001 per share, being the sum of 270,666,389 class A ordinary shares (excluding 4,946,043 class A ordinary shares issued to the depositary bank and reserved for future exercise or vesting of share incentive awards) and 39,820,586 class B ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 Yes    No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

 Yes    No

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 Yes    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Emerging growth company

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 Yes    No

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP

International Financial Reporting Standards as issued
by the International Accounting Standards Board

Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

 Item 17    Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 Yes    No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 Yes    No

Table of Contents

TABLE OF CONTENTS

Page

INTRODUCTION

1

FORWARD-LOOKING STATEMENTS

3

PART I.

4

ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

4

ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE

4

ITEM 3 KEY INFORMATION

4

ITEM 4 INFORMATION ON THE COMPANY

71

ITEM 4A UNRESOLVED STAFF COMMENTS

103

ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

103

ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

125

ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

137

ITEM 8 FINANCIAL INFORMATION

140

ITEM 9 THE OFFER AND LISTING

141

ITEM 10 ADDITIONAL INFORMATION

142

ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

153

ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

154

PART II.

157

ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

157

ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

157

ITEM 15 CONTROLS AND PROCEDURES

157

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT

158

ITEM 16B CODE OF ETHICS

158

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

159

ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

159

ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

159

ITEM 16F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

159

ITEM 16G CORPORATE GOVERNANCE

160

ITEM 16H MINE SAFETY DISCLOSURE

160

ITEM 16I DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

160

PART III.

161

ITEM 17 FINANCIAL STATEMENTS

161

ITEM 18 FINANCIAL STATEMENTS

161

ITEM 19 EXHIBITS

161

SIGNATURES

163

Table of Contents

INTRODUCTION

Unless otherwise indicated and except where the context otherwise requires, references in this annual report to:

“360 DigiTech,” “we,” “us,” “our company” and “our” are to 360 DigiTech, Inc. and its subsidiaries, and, in the context of describing our operations and consolidated financial information, our VIEs in China and their respective subsidiaries;
“ADSs” are to our American depositary shares, each of which represents two class A ordinary shares;
“Shanghai Qibutianxia” are to Shanghai Qibutianxia Information Technology Co., Ltd., which was formerly known as Beijing Qibutianxia Technology Co., Ltd.;
“China” or the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan;
“class A ordinary shares” are to our class A ordinary shares, par value US$0.00001 per share;
“class B ordinary shares” are to our class B ordinary shares, par value US$0.00001 per share;
“inception” are to the date of our inception, July 25, 2016;
“Fuzhou Financing Guarantee” are to Fuzhou 360 Financing Guarantee Co., Ltd.;
“Fuzhou Microcredit” are to Fuzhou 360 Online Microcredit Co., Ltd.;
“ordinary shares” or “Ordinary Shares” are to our class A ordinary shares and class B ordinary shares, par value US$0.00001 per share;
“our VIEs” are to Shanghai Qiyu, Fuzhou Financing Guarantee and Shanghai Financing Guarantee;
“our WFOE” are to Shanghai Qiyue Information Technology Co., Ltd.;
“360 Group” are to 360 Security Technology Inc. and its controlled affiliates;
“RMB” and “Renminbi” are to the legal currency of China;
“Shanghai Financing Guarantee” are to Shanghai 360 Financing Guarantee Co., Ltd.;
“Shanghai Qiyu” are to Shanghai Qiyu Information Technology Co., Ltd.; and
“US$,” “U.S. dollars,” “$” and “dollars” are to the legal currency of the United States.

In addition, unless the context indicates otherwise, for the discussion of our business references in this annual report to:

“delinquency rate by vintage” are to (i) the total amount of principal for all loans in a vintage that become delinquent, less (ii) the total amount of recovered past due principal for all loans in the same vintage, and divided by (iii) the total initial principal amount of loans in such vintage;
“capital-light loans” are to loans facilitated under our capital-light loan facilitation model, for which we take no or limited credit risk;
“capital-heavy loans” are to loans originated or facilitated under credit-driven services, including off-balance-sheet capital heavy loans and on-balance-sheet loans, for which we take substantially all credit risk;

1

Table of Contents

“Credit-Tech” are to credit technology, which refers to advanced or innovative technologies, business models or operational solutions that empower and enhance credit services, such as loan facilitation services, by improving efficiency and quality.
“delinquent loan collection rate” are to a percentage, which is equal to the difference obtained by using one minus a fraction, the numerator of which is the ending balance of M2 loans of the given month and the denominator of which is the beginning balance of M1 loans of such month. M0, M1 and M2 loans here are defined as loans that are not delinquent, delinquent for one month and delinquent for two months, respectively;
“loan facilitation volume” or “loan origination volume” is to the total principal amount of loans facilitated or originated through our platform during the given period;
“90 day+ delinquency rate” is to the outstanding principal balance of on- and off-balance sheet loans that are 91 to 180 calendar days past due as a percentage of the total outstanding principal balance of on- and off-balance sheet loans across our platform as of a specific date. Loans that are charged-off and loans under “ICE” are not included in the delinquency rate calculation;
“outstanding loan balance” are to the total amount of principal outstanding for loans facilitated or originated through our platform at the end of each period, excluding loans delinquent for more than 180 days unless the content specifically provides otherwise;
“repeat borrower contribution” or “loan origination contributed by repeat borrowers” for a given period are 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 volume through our platform during that period; and
“users with approved credit lines” are to the total number of users who had submitted their credit applications and were approved with a credit line at the end of each period.

2

Table of Contents

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements that relate to our current expectations and views of future events. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigations Reform Act of 1995.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

our goals and strategies;
our future business development, financial conditions and results of operations;
the expected growth of the Credit-Tech industry in China;
our expectations regarding demand for and market acceptance of our Credit-Tech products;
our expectations regarding keeping and strengthening our relationships with borrowers, financial institution partners, data partners and other parties we collaborate with;
competition in our industry; and
relevant government policies and regulations relating to our industry.

You should read this annual report and the documents that we refer to in this annual report and have filed as exhibits to this annual report completely and with the understanding that our actual future results may be materially different from what we expect. Other sections of this annual report discuss factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

3

Table of Contents

PART I.

ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3 KEY INFORMATION

Our Holding Company Structure and Contractual Arrangements with our Consolidated Affiliated Entities

360 DigiTech, Inc. is not a Chinese operating company but rather a Cayman Islands holding company that does not conduct business directly and has no equity ownership in its consolidated affiliated entities. We conduct our operations in China through (i) our PRC subsidiaries and (ii) our VIEs with which we have maintained contractual arrangements. PRC laws and regulations restrict and impose conditions on foreign investment in internet-based businesses, such as the distribution of online information. For example, foreign investors are generally not allowed to own more than 50% of the equity interests in a value-added telecommunications service provider in accordance with the Special Management Measures for the Access of Foreign Investment (Negative List) and other applicable laws and regulations. We are a Cayman Islands company and our PRC subsidiaries are considered foreign-invested enterprises. Accordingly, we operate certain of our businesses in China through our VIEs, and rely on contractual arrangements among our PRC subsidiaries, our VIEs and the nominee shareholders of our VIEs to control the business operations of our VIEs. Revenues contributed by our VIEs accounted for 93%, 97% and 92% of our total net revenue for the years of 2019, 2020 and 2021, respectively. As used in this annual report, “we,” “us,” “our company,” “our,” or “360 DigiTech,” refers to 360 DigiTech, Inc., its subsidiaries, and, in the context of describing our operations and consolidated financial information, our VIEs and their subsidiaries in China, including but not limited to Shanghai Qiyu, Fuzhou Financing Guarantee and Shanghai Financing Guarantee. Investors in our ADSs are not purchasing equity interest in our VIEs in China but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands.

A series of contractual agreements, including (i) powers of attorney, equity pledge agreements and loan agreements, which provide us with effective control over our VIEs in China, (ii) exclusive consultation and service agreements, which allow us to receive economic benefits from our VIEs in China, and (iii) exclusive option agreements, which provide us with the option to purchase the equity interests in, and assets of, our VIEs. Terms contained in each set of contractual arrangements with our VIEs and their respective shareholders are substantially similar. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with our VIEs and Their Shareholder.”

However, the contractual arrangements may not be as effective as direct ownership in providing us with control over our VIEs and we may incur substantial costs to enforce the terms of the arrangements. All of these contractual arrangements are governed by and interpreted in accordance with PRC law, and disputes arising from these contractual arrangements between us and our VIEs will be resolved through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes arising from these contracts would be resolved in accordance with PRC legal procedures. These arrangements have not been tested in arbitral tribunals or courts. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States, and the uncertainties involved in it could limit our ability to enforce these contractual arrangements. Further, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC law. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We may rely on contractual arrangements with our VIEs and the shareholders of our VIEs for all of our business operations, which may not be as effective as direct ownership in providing operational control” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Any failure by our VIEs or the shareholders of our VIEs to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.”

4

Table of Contents

There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with our VIEs and its nominee shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of our VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. If the PRC government deems that our contractual arrangements with our VIEs do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries and VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with our VIEs and, consequently, significantly affect the financial performance of our consolidated affiliated entities and our company as a whole. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.”

We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, as well as the lack of inspection by the Public Company Accounting Oversight Board, or the PCAOB, on our auditors, which may impact our ability to conduct certain businesses, accept foreign investments, or list on a United States or other foreign exchange. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. The PCAOB identified our auditor as one of the registered public accounting firms that the PCAOB is unable to inspect or investigate completely. Under the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over the counter trading market in the U.S. In addition, on June 22, 2021, the U.S. Senate passed a bill which would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two. On February 4, 2022, the U.S. House of Representatives passed a bill which contained, among other things, an identical provision. If this provision is enacted into law, the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA would be reduced from three years to two. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For a detailed description of risks related to doing business in China, “Item 3.D. Key Information—Risk Factors—Risks Related to Doing Business in China.”

PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted offshore by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or become worthless. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.”

Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us.”

5

Table of Contents

Permissions Required from the PRC Government Authorities for Our Operations

We conduct our business primarily through our subsidiaries, our VIEs and their subsidiaries in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiaries, our VIEs or their subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company, our PRC subsidiaries and our VIEs in China, including, among others, financing guarantee business license owned by Fuzhou Financing Guarantee and Shanghai Financing Guarantee, value-added telecommunications license owned by Shanghai Qiyu, the incorporation approval of Fuzhou Microcredit. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.”

Furthermore, we and our VIEs may be required to obtain permissions from or complete the filing procedures with the China Securities Regulatory Commission, or the CSRC, and may be required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, in case of any future issuance of securities to foreign investors. Any failure to obtain or delay in obtaining such approval or completing such procedures would subject us to sanctions by the CSRC, CAC or other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs,” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required if we conduct offshore offerings in the future, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”

Cash and Asset Flows through Our Organization

360 DigiTech, Inc. is a holding company with no material operations of its own. We conduct our operations in China primarily through our subsidiaries and VIEs in China. As a result, although other means are available for us to obtain financing at the holding company level, 360 DigiTech, Inc.’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries and service fees paid by our VIEs.

If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to 360 DigiTech, Inc. In addition, our PRC subsidiaries are permitted to pay dividends to 360 DigiTech, Inc. only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries and consolidated variable interest entities are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. For more details, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Holding Company Structure.” For risks relating to the fund flows of our operations in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.”

6

Table of Contents

Under PRC laws and regulations, our PRC subsidiaries and consolidated variable interest entities are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the State Administration of Foreign Exchange, or the SAFE, and payment of withholding tax. As a result of these PRC laws and regulations, amounts restricted include paid-in capital, capital reserve and statutory reserves of the PRC entities of our company’s which is RMB2,615.9 million, RMB2,740.4 million and RMB8,283.6 million (US$1,299.9 million) as of December 31, 2019, 2020 and 2021, respectively. Our PRC subsidiaries, our VIEs and their subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us. In addition, under the Enterprise Income Tax Law of the PRC, or the EIT Law, and its implementation rules, profits of a FIE generated in or after 2008 that are distributed to its immediate holding company outside Mainland China are subject to withholding tax at a rate of 10%, unless the foreign holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax. For example, a holding company in Hong Kong, subject to approval of the PRC local tax authority, will be eligible to a 5% withholding tax rate under the Arrangement Between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital if such holding company is considered to be a non-PRC resident enterprise and holds at least 25% of the equity interests in the PRC FIE distributing the dividends. However, if the Hong Kong holding company is not considered to be the beneficial owner of such dividends under applicable PRC tax regulations, such dividend will remain subject to withholding tax at a rate of 10%. See also “Item 3. Key Information—D. Risk Factors— Risks Related to Doing Business in China— Governmental control of currency conversion may limit our ability to utilize our cash balance effectively and affect the value of your investment,” and “Item 5. Operating And Financial Review And Prospects—B. Liquidity and Capital Resources—Holding Company Structure.” Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until any of them generates accumulated profits and meets the requirements for statutory reserve funds.

Under PRC law, 360 DigiTech, Inc. may provide funding to our PRC subsidiaries only through capital contributions or loans, and to our VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements. 360 DigiTech, Inc. has extended loans to our PRC subsidiaries and VIEs since 2018. The related cash flows include: (i) a net repayment of RMB29.2 million and RMB67.2 million by PRC subsidiaries in 2019 and 2020, respectively, and a net funding of RMB51.7 million (US$8.1 million) to PRC subsidiaries in 2021; and (ii) a net repayment of RMB229.5 million, RMB3.6 million and RMB205.5 million (US$32.2 million) by VIEs in 2019, 2020 and 2021, respectively.

Our VIEs may transfer cash to our relevant WFOE by paying service fees according to the exclusive consultation and service agreements. Our VIEs agree to pay our WFOE service fees, the amount of which are subject to adjustment at our WFOE’s sole discretion taking into consideration of the complexity of the services, the actual cost that may be incurred for providing such services, as well as the value and comparable price on the market of the service provided, among others. Our WFOE would have the exclusive ownership of all the intellectual property rights created as a result of the performance of the exclusive consultation and service agreement, to the extent permitted by applicable PRC laws. In 2019, 2020 and 2021, service fees charged and paid to our WFOE by our VIEs in China amounted to RMB4.3 million, RMB89.7 million and RMB5,001.9 million (US$784.9 million), respectively. In 2019, 2020 and 2021, service fees charged and paid to our other PRC subsidiaries by our VIEs in China amounted to nil, RMB286.4 million and RMB616.5 million (US$96.7 million), respectively.

In 2019 and 2020, our VIEs in China extended loans to our PRC subsidiaries with a net cash outflow of RMB40.2 million and RMB20.0 million, respectively. In 2021, our PRC subsidiaries paid up the outstanding loans and started to extend loans to our VIEs in China with a net cash outflow of RMB3,658.3 million (US$574.0 million). In 2019, 2020 and 2021, the total amount of service fees charged and paid to our VIEs in China by our PRC subsidiaries under the shared service agreement was RMB4.6 million, RMB20.3 million and RMB258.2 million (US$40.5 million), respectively.

In 2019, 2020 and 2021, no assets other than cash flows discussed above were transferred through our organization.

7

Table of Contents

In November 2021, our board of directors approved a dividend of US$0.14 per ordinary share, or US$0.28 per ADS, for the third fiscal quarter of 2021, which has been paid on January 18, 2022 to shareholders of record as of the close of business on December 15, 2021. In March 2022, our board of directors approved a dividend of US$0.13 per ordinary share, or US$0.26 per ADS, for the fourth fiscal quarter of 2021, which will be paid on May 13, 2022 to shareholders of record as of the close of business on April 6, 2022. We intend to declare and distribute a recurring cash dividend every fiscal quarter, starting from the third fiscal quarter of 2021, at an amount equivalent to approximately 15% to 20% of our company’s net income after tax for such quarter based upon our operations and financial conditions, and other relevant factors, subject to adjustment and determination by the board of directors of 360 DigiTech, Inc. Since we currently have sufficient cash at 360 DigiTech, Inc. to pay dividends, we intend to reinvest undistributed profits of our subsidiaries in our operations in China. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.”

For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within Mainland China, assuming that we determine to pay a dividend from PRC subsidiaries to overseas entities in the future:

    

Taxation Scenario(1)

 

(Statutory Tax and Standard Rates)

 

Hypothetical pre-tax earnings(2)

 

100

%

Tax on earnings at statutory rate of 25%(3)  

 

(25)

%

Net earnings available for distribution

 

75

%

Withholding tax at standard rate of 10%  

 

(7.5)

%

Net distribution to Parent/Shareholders

 

67.5

%

Notes:

(1)For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering book to tax adjustment, is assumed to equal taxable income in China.
(2)Assume all the profits of VIEs could be distributed to the PRC subsidiaries in a tax free manner.
(3)Certain of our subsidiaries and VIEs and their subsidiaries qualifies for a 15% preferential income tax rate in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective.

A.          Selected Financial Data

Our Selected Combined and Consolidated Financial Data

The following selected consolidated statements of operations data for the years ended December 31, 2019, 2020 and 2021, selected consolidated balance sheet data as of December 31, 2020 and 2021 and selected consolidated cash flow data for the years ended December 31, 2019, 2020 and 2021 have been derived from our audited consolidated financial statements included elsewhere in this annual report. Our selected combined and consolidated balance sheets data as of December 31, 2017, 2018 and 2019 and the selected combined and consolidated statements of operations data and cash flow data for the year ended December 31, 2017 and 2018 have been derived from our audited combined and consolidated financial statements not included in this annual report. Our combined and consolidated financial statements are prepared and presented in accordance with U.S. GAAP.

8

Table of Contents

You should read the summary combined and consolidated financial information in conjunction with our combined and consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” included elsewhere in this annual report. Our historical results are not necessarily indicative of our results expected for future periods.

Years Ended December 31,

2017

2018

2019

2020

2021

    

RMB

    

RMB

    

RMB

    

RMB

    

RMB

    

US$

(in thousands, except for per share data)

Selected Combined and Consolidated Statements of Operations Data:

Net revenue

 

  

 

  

 

  

 

  

Credit driven services(1)

703,747

4,170,271

8,013,391

11,403,675

10,189,167

1,598,902

Loan facilitation and servicing fees-capital heavy

 

647,350

3,807,242

6,273,131

 

4,596,555

 

2,326,027

 

365,004

Financing income

 

50,966

267,844

1,309,616

 

2,184,180

 

2,184,128

 

342,737

Revenue from releasing of guarantee liabilities

 

331

25,169

285,407

 

4,506,935

 

5,583,135

 

876,116

Other services fees

 

5,100

70,016

145,237

 

116,005

 

95,877

 

15,045

Platform services(1)

84,397

276,747

1,206,456

2,160,279

6,446,478

1,011,593

Loan facilitation and servicing fees-capital light

58,348

814,581

1,826,654

5,677,941

890,993

Referral services fees

84,397

211,087

375,551

265,300

620,317

97,341

Other services fees

7,312

16,324

68,325

148,220

23,259

Total net revenue

 

788,144

4,447,018

9,219,847

 

13,563,954

 

16,635,645

 

2,610,495

Operating costs and expenses:(2)

 

 

 

 

Facilitation, origination and servicing

 

121,821

666,067

1,083,372

 

1,600,564

 

2,252,157

 

353,413

Funding costs

14,437

71,617

344,999

595,623

337,426

52,950

Sales and marketing

 

345,576

1,321,950

2,851,519

 

1,079,494

 

2,090,374

 

328,025

General and administrative

 

45,852

560,702

428,189

 

455,952

 

557,295

 

87,452

Provision for loans receivable

 

12,406

44,474

486,991

 

698,701

 

965,419

 

151,495

Provision for financial assets receivable

 

16,273

53,989

166,176

 

312,058

 

243,946

 

38,280

Provision for accounts receivable and contract assets

 

21,180

83,707

230,280

 

237,277

 

324,605

 

50,938

Provision for contingent liabilities

4,794,127

3,078,224

483,041

Expense on guarantee liabilities

734,730

Total operating costs and expenses

 

577,545

2,802,506

6,326,256

 

9,773,796

 

9,849,446

 

1,545,594

Income from operations

 

210,599

1,644,512

2,893,591

 

3,790,158

 

6,786,199

 

1,064,901

Interest income (expense), net

 

2,422

10,026

(41,707)

 

77,169

 

126,256

 

19,812

Foreign exchange (loss) gain

 

(2,563)

(24,875)

 

101,534

 

35,549

 

5,578

Investment income

10,115

1,587

Other income, net

 

22

7,696

140,278

 

112,884

 

64,590

 

10,136

Income before income tax expense

 

213,043

1,659,671

2,967,287

 

4,081,745

 

7,022,709

 

1,102,014

Income tax expense

 

(48,178)

(466,360)

(465,983)

 

(586,036)

 

(1,258,196)

 

(197,438)

Net income

 

164,865

1,193,311

2,501,304

 

3,495,709

 

5,764,513

 

904,576

Net loss attributable to non-controlling interests

 

291

 

897

 

17,212

 

2,701

Deemed dividend

 

(3,097,733)

 

 

 

Net income (loss) attributable to ordinary shareholders of the Company

164,865

(1,904,422)

2,501,595

3,496,606

5,781,725

907,277

Net income (loss) per ordinary share attributable to ordinary shareholders of 360 DigiTech, Inc.

 

 

 

 

Basic

 

0.83

(9.39)

8.66

 

11.72

 

18.82

 

2.95

Diluted

 

0.83

(9.39)

8.31

 

11.40

 

17.99

 

2.82

Net income (loss) per ADSs attributable to ordinary shareholders of 360 DigiTech, Inc.

Basic

1.66

(18.78)

17.32

23.44

37.64

5.90

Diluted

1.66

(18.78)

16.62

22.80

35.98

5.64

Weighted average shares used in calculating net income (loss) per ordinary share

 

 

 

 

Basic

 

198,347,168

202,751,277

288,827,604

 

298,222,207

 

307,265,600

 

307,265,600

Diluted

 

198,347,168

202,751,277

300,938,470

 

306,665,099

 

321,397,753

 

321,397,753

Notes:

(1)Starting from 2019, we report revenue streams in two categories—credit driven services and platform services, to provide more relevant information. We also revised the comparative period presentation to conform to current period classification.

9

Table of Contents

(2)Share-based compensation expenses were allocated as follows:

Years Ended December 31,

2017

2018

2019

2020

2021

    

RMB

    

RMB

    

RMB

    

RMB

    

RMB

    

US$

(in thousands, except for per share data)

Facilitation origination and servicing

150,177

55,601

72,192

75,209

11,802

Sales and marketing

15,700

6,805

 

8,164

 

12,340

 

1,936

General and administrative

441,504

188,022

 

220,805

 

166,373

 

26,108

Total

607,381

250,428

 

301,161

 

253,922

 

39,846

The following table presents our selected combined and consolidated balance sheet data as of the dates indicated.

Years Ended December 31,

2017

2018

2019

2020

2021

RMB

    

RMB

    

RMB

    

RMB

    

RMB

    

US$

(in thousands)

Selected Combined and Consolidated Balance Sheets Data:

Current assets:

 

  

 

  

 

  

 

  

Cash and cash equivalents

468,547

 

1,445,802

2,108,123

 

4,418,416

 

6,116,360

 

959,790

Restricted cash

487,882

 

567,794

1,727,727

 

2,355,850

 

2,643,587

 

414,836

Security deposit prepaid to third-party guarantee companies

 

795,700

932,983

 

915,144

 

874,886

 

137,289

Accounts receivable and contract assets, net

327,103

 

1,791,745

2,332,364

 

2,394,528

 

3,097,254

 

486,027

Financial assets receivable, net

270,122

 

1,193,621

1,912,554

 

3,565,482

 

3,806,243

 

597,283

Loans receivable, net

1,192,307

 

811,433

9,239,565

 

7,500,629

 

9,844,481

 

1,544,814

Total current assets

3,017,566

 

7,342,019

19,503,488

 

21,876,042

 

27,757,223

 

4,355,712

Land use rights, net

1,018,908

159,889

Total non-current assets

81,792

 

7,716

852,113

 

2,511,263

 

5,747,772

 

901,951

Total assets

3,099,358

 

7,349,735

20,355,601

 

24,387,305

 

33,504,995

 

5,257,663

Current liabilities:

  

 

  

 

 

 

Payable to investors of the consolidated trusts-current

536,906

 

300,341

4,423,717

 

3,117,634

 

2,304,518

 

361,629

Guarantee liabilities-stand ready

300,942

 

1,399,174

2,212,125

 

4,173,497

 

4,818,144

 

756,072

Guarantee liabilities-contingent

734,730

3,543,454

3,285,081

515,501

Income tax payable

115,325

432,066

1,056,219

1,227,314

624,112

97,937

Total current liabilities

2,365,209

 

2,893,781

9,667,187

 

13,384,508

 

14,143,186

 

2,219,374

Payable to investors of the consolidated trusts-noncurrent

3,442,500

1,468,890

4,010,597

629,350

Total non-current liabilities

15,758

3,473,684

1,521,707

4,145,200

650,472

Total shareholder’s equity

734,149

 

4,440,196

7,214,730

 

9,481,090

 

15,216,609

 

2,387,817

Total liabilities and equity

3,099,358

 

7,349,735

20,355,601

 

24,387,305

 

33,504,995

 

5,257,663

Note:

(1)We adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified ASC 606 on a full retrospective basis in 2018, and the related balances as of December 31, 2017 have been restated accordingly.

10

Table of Contents

The following table presents our selected combined and consolidated cash flow data for the years ended December 31, 2017, 2018, 2019, 2020 and 2021.

Years Ended December 31,

2017

2018

2019

2020

2021

    

RMB

    

RMB

    

RMB

    

RMB

    

RMB

    

US$

(in thousands, except for per share data)

Summary Combined and Consolidated Cash Flow Data:

Net cash (used in)/provided by operating activities

 

(110,974)

285,116

 

2,973,075

 

5,325,810

 

5,789,700

 

908,530

Net cash (used in)/provided by investing activities

 

(1,204,269)

327,649

 

(8,860,441)

 

892,770

 

(6,064,328)

 

(951,625)

Net cash provided/(used in) by financing activities

 

2,265,499

457,430

 

7,707,858

 

(3,282,400)

 

2,263,720

 

355,227

Net increase in cash and cash equivalents

 

950,256

1,057,167

 

1,822,254

 

2,938,416

 

1,985,681

 

311,596

Cash, cash equivalents, and restricted cash at the beginning of year

 

6,173

956,429

 

2,013,596

 

3,835,850

 

6,774,266

 

1,063,030

Cash, cash equivalents, and restricted cash at the end of year

 

956,429

2,013,596

 

3,835,850

 

6,774,266

 

8,759,947

 

1,374,626

We present our financial results in RMB. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The RPC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate of RMB6.3726 to US$1.00, the noon buying rate as of December 30, 2021.

Financial Information Related to Our Consolidated Variable Interest Entities

The following table presents the condensed consolidated schedule of financial position, results of operations and cash flow data for our Company, our consolidated VIEs and other subsidiaries as of the dates or for the periods presented, as the case may be.

Selected Condensed Consolidated Statements of Income Information

    

For the Year Ended December 31, 2021

VIEs

    

The Company

    

Subsidiaries

    

Eliminations

    

Consolidated Total

(RMB in thousands)

Total net revenues

 

15,657,693

 

 

6,646,999

 

(5,669,047)

 

16,635,645

Total operating costs and expenses

 

14,025,365

 

51,233

 

1,187,973

 

(5,415,125)

 

9,849,446

Income (loss) from operations

 

1,632,328

 

(51,233)

 

5,459,026

 

(253,922)

 

6,786,199

Income (loss) before income tax expense

 

1,821,437

 

(56,749)

 

5,511,943

 

(253,922)

 

7,022,709

Net income (loss)

 

1,314,343

 

(56,749)

 

4,760,841

 

(253,922)

 

5,764,513

Net income (loss) attributable to ordinary shareholders of the Company

 

1,331,597

 

(56,749)

 

4,760,799

 

(253,922)

 

5,781,725

For the Year Ended December 31, 2020

VIEs

The Company

Subsidiaries

Eliminations

Consolidated Total

    

(RMB in thousands)

Total net revenues

    

13,146,052

    

    

1,325,096

    

(907,194)

    

13,563,954

Total operating costs and expenses

 

10,080,665

 

16,453

 

282,711

 

(606,033)

 

9,773,796

Income (loss) from operations

 

3,065,387

 

(16,453)

 

1,042,385

 

(301,161)

 

3,790,158

Income (loss) before income tax expense

 

3,334,648

 

(4,030)

 

1,052,288

 

(301,161)

 

4,081,745

Net income (loss)

 

2,848,966

 

(4,030)

 

951,934

 

(301,161)

 

3,495,709

Net income (loss) attributable to ordinary shareholders of the Company

 

2,848,966

 

(4,030)

 

952,831

 

(301,161)

 

3,496,606

11

Table of Contents

    

For the Year Ended December 31, 2019

VIEs

    

The Company

    

Subsidiaries

    

Eliminations

    

Consolidated Total

(RMB in thousands)

Total net revenues

 

8,596,654

 

 

632,146

 

(8,953)

 

9,219,847

Total operating costs and expenses

 

5,810,090

 

12,922

 

261,770

 

241,474

 

6,326,256

Income (loss) from operations

 

2,786,564

 

(12,922)

 

370,376

 

(250,427)

 

2,893,591

Income (loss) before income tax expense

 

2,859,300

 

(12,248)

 

370,662

 

(250,427)

 

2,967,287

Net income (loss)

 

2,426,948

 

(12,248)

 

337,031

 

(250,427)

 

2,501,304

Net income (loss) attributable to ordinary shareholders of the Company

 

2,426,948

 

(12,248)

 

337,322

 

(250,427)

 

2,501,595

Selected Condensed Consolidated Balance Sheets Information

    

As of December 31, 2021

    

VIEs

    

The Company

    

Subsidiaries

    

Eliminations

    

Consolidated Total

(RMB in thousands)

Cash and cash equivalents

 

4,605,851

 

7,117

 

1,503,392

 

 

6,116,360

Restricted cash

 

2,643,587

 

 

 

 

2,643,587

Security deposit prepaid to third-party guarantee companies

 

874,886

 

 

 

 

874,886

Accounts receivable and contract assets, net

 

2,350,775

 

 

969,953

 

 

3,320,728

Financial assets receivable, net

 

4,404,208

 

 

 

 

4,404,208

Loans receivable, net

 

12,703,830

 

 

 

 

12,703,830

Land use rights, net

 

1,018,908

 

 

 

 

1,018,908

Intercompany receivables

 

2,493,660

 

1,711,633

 

4,823,879

 

(9,029,172)

 

Investments in subsidiaries and VIEs

 

 

14,032,928

 

1,399,998

 

(15,432,926)

 

Total assets

 

33,145,997

 

15,761,812

 

9,059,284

 

(24,462,098)

 

33,504,995

Payable to investors of the consolidated trusts-current

 

2,304,518

 

 

 

 

2,304,518

Guarantee liabilities-stand ready

 

4,818,144

 

 

 

 

4,818,144

Guarantee liabilities-contingent

 

3,285,081

 

3,285,081

 

  

 

  

 

  

Income tax payable

 

449,553

 

 

174,559

 

 

624,112

Payable to investors of the consolidated trusts-noncurrent

 

4,010,597

 

 

 

 

4,010,597

Intercompany payables

 

6,493,367

 

 

2,535,805

 

(9,029,172)

 

Total liabilities

 

23,790,132

 

557,949

 

2,969,477

 

(9,029,172)

 

18,288,386

Total equity

 

9,355,865

 

15,203,863

 

6,089,807

 

(15,432,926)

 

15,216,609

12

Table of Contents

    

As of December 31, 2020

    

VIEs

    

The Company

    

Subsidiaries

    

Eliminations

    

Consolidated Total

(RMB in thousands)

Cash and cash equivalents

3,709,740

 

19,560

 

689,116

 

 

4,418,416

Restricted cash

2,355,850

 

 

 

 

2,355,850

Security deposit prepaid to third-party guarantee companies

915,144

 

 

 

 

915,144

Accounts receivable and contract assets, net

2,624,294

 

 

78,171

 

 

2,702,465

Financial assets receivable, net

4,125,931

 

 

84,877

 

 

4,210,808

Loans receivable, net

7,553,042

 

 

35,272

 

 

7,588,314

Intercompany receivables

1,315,646

 

1,593,585

 

912,129

 

(3,821,360)

 

Investments in subsidiaries and VIEs

 

7,940,534

 

900,000

 

(8,840,534)

 

Total assets

24,615,835

 

9,564,894

 

2,868,470

 

(12,661,894)

 

24,387,305

Payable to investors of the consolidated trusts-current

3,117,634

 

 

 

 

3,117,634

Guarantee liabilities-stand ready

4,173,497

 

 

 

 

4,173,497

Guarantee liabilities-contingent

3,543,454

 

 

 

 

3,543,454

Income tax payable

1,151,275

 

 

76,039

 

 

1,227,314

Payable to investors of the consolidated trusts-noncurrent

1,468,890

 

 

 

 

1,468,890

Intercompany payables

2,411,185

 

 

1,410,175

 

(3,821,360)

 

Total liabilities

17,104,312

 

84,316

 

1,538,947

 

(3,821,360)

 

14,906,215

Total equity

7,511,523

 

9,480,578

 

1,329,523

 

(8,840,534)

 

9,481,090

    

As of December 31, 2019

VIEs

    

The Company

    

Subsidiaries

    

Eliminations

    

Consolidated Total

    

(RMB in thousands)

    

    

    

    

Cash and cash equivalents

 

1,829,395

 

6,905

 

271,823

 

 

2,108,123

Restricted cash

 

1,727,727

 

 

 

 

1,727,727

Security deposit prepaid to third-party guarantee companies

 

932,983

 

 

 

 

932,983

Accounts receivable and contract assets, net

 

2,133,339

 

 

218,533

 

 

2,351,872

Financial assets receivable, net

 

1,824,008

 

 

147,816

 

 

1,971,824

Loans receivable, net

 

9,238,242

 

 

1,323

 

 

9,239,565

Intercompany receivables

 

1,016,899

 

1,624,749

 

75,385

 

(2,717,033)

 

Investments in subsidiaries and VIEs

 

 

5,566,792

 

900,000

 

(6,466,792)

 

Total assets

 

20,755,954

 

7,219,025

 

1,564,447

 

(9,183,825)

 

20,355,601

Payable to investors of the consolidated trusts-current

 

4,423,717

 

 

 

 

4,423,717

Guarantee liabilities-stand ready

 

2,106,211

 

 

105,914

 

 

2,212,125

Guarantee liabilities-contingent

 

734,730

 

 

 

 

734,730

Income tax payable

 

1,035,887

 

 

20,332

 

 

1,056,219

Payable to investors of the consolidated trusts-noncurrent

 

3,442,500

 

 

 

 

3,442,500

Intercompany payables

 

1,670,984

 

 

1,046,049

 

(2,717,033)

 

Total liabilities

 

14,663,006

 

5,583

 

1,189,315

 

(2,717,033)

 

13,140,871

Total equity

 

6,092,948

 

7,213,442

 

375,132

 

(6,466,792)

 

7,214,730

Selected Condensed Consolidated Cash Flows Information

    

For the Year Ended December 31, 2021

VIEs

    

The Company

    

Subsidiaries

    

Eliminations

    

Consolidated Total

(RMB in thousands)

    

    

    

    

    

Net cash provided by (used in) operating activities

 

1,273,002

 

(25,552)

 

4,542,250

 

 

5,789,700

Net cash (used in) provided by investing activities

 

(6,047,434)

 

(153,778)

 

(3,675,260)

 

3,812,144

 

(6,064,328)

Net cash provided by (used in) financing activities

 

5,958,279

 

169,291

 

(51,706)

 

(3,812,144)

 

2,263,720

13

Table of Contents

    

For the Year Ended December 31, 2020

VIEs

    

The Company

    

Subsidiaries

    

Eliminations

    

Consolidated Total

(RMB in thousands)

    

    

    

    

    

Net cash provided by (used in) operating activities

 

4,935,904

 

(1,679)

 

391,585

 

 

5,325,810

Net cash provided by (used in) investing activities

 

932,141

 

(70,776)

 

(59,350)

 

90,755

 

892,770

Net cash (used in) provided by financing activities

 

(3,364,319)

 

86,305

 

86,369

 

(90,755)

 

(3,282,400)

    

For the Year Ended December 31, 2019

VIEs

    

The Company

    

Subsidiaries

    

Eliminations

    

Consolidated Total

(RMB in thousands)

    

    

    

    

    

Net cash provided by (used in) operating activities

 

2,839,085

 

(33,600)

 

167,590

 

 

2,973,075

Net cash (used in) provided by investing activities

 

(8,899,002)

 

(294,330)

 

(1,654)

 

334,545

 

(8,860,441)

Net cash provided by (used in) financing activities

 

7,940,466

 

(3,080)

 

105,017

 

(334,545)

 

7,707,858

B.          Capitalization and Indebtedness

Not applicable.

C.          Reasons for the Offer and Use of Proceeds

Not applicable.

D.          Risk Factors

Summary of Risk Factors

An investment in our ADSs involves significant risks. Below is a summary of material risks we face, organized under relevant headings. These risks are discussed more fully below in this Item 3. Key Information—D. Risk Factors.

Risks Related to Our Business and Industry

Risks and uncertainties related to our business include, but not limited to, the following:

The Credit-Tech industry is rapidly evolving, which makes it difficult to effectively assess our future prospects;
We are subject to uncertainties surrounding regulations and administrative measures of the loan facilitation business. If any of our business practices are deemed to be non-compliant, our business, financial condition and results of operations would be adversely affected;
We are subject to uncertainties surrounding regulations and administrative measures of microcredit business and financing guarantee business. If any of our business practices are deemed to be non-compliant, our business, financial condition and results of operations would be adversely affected;
We are subject to uncertainties surrounding regulations and administrative measures of credit reporting business. If any of our business practices are deemed to be non-compliant, our business, financial condition and results of operations would be materially and adversely affected;
The pricing of loans originated or facilitated through our platform may be deemed to exceed interest rate limits imposed by regulations;
Our transaction process may result in misunderstanding among our borrowers;
We are subject to credit cycles and the risk of deterioration of credit profiles of borrowers;
Fraudulent activity on our platform could negatively impact our operating results, brand and reputation and cause the use of our loan products and services to decrease;

14

Table of Contents

We rely on our proprietary risk management model in assessing the creditworthiness of our borrowers and the risks associated with loans. If our model is flawed or ineffective, or if we otherwise fail or are perceived to fail to manage the default risks of loans originated or facilitated through our platform, our reputation and market share would be materially and adversely affected, which would severely impact our business and results of operations;
We rely on our risk management team to establish and execute our risk management policies. If our risk management team or key members of such team were unable or unwilling to continue in their present positions, our business may be severely disrupted;
Our business is subject to complex and evolving PRC laws and regulations regarding data privacy and cybersecurity, many of which are subject to change and uncertain interpretation. Any changes in these laws and regulations have caused and could continue to cause changes to our business practices and increase costs of operations, and any security breaches or our actual or perceived failure to comply with such laws and regulations could result in claims, penalties, damages to our reputation and brand, declines in user growth or engagement, or otherwise harm our business, results of operations and financial condition;
If we are unable to maintain or increase the volume of loans originated or facilitated through our platform, our business and results of operations will be adversely affected; and
Our access to sufficient and sustainable funding at reasonable costs cannot be assured. If we fail to maintain collaboration with our financial institution partners or to maintain sufficient capacity to originate loans to our borrowers, our reputation, results of operations and financial condition may be materially and adversely affected.

Risks Related to Our Corporate Structure

Risks and uncertainties related to our corporate structure include, but not limited to, the following:

We are a Cayman Islands holding company with no equity ownership in our VIEs and we conduct our operations in China through (i) our PRC subsidiaries and (ii) our VIEs, with which we have maintained contractual arrangements. Investors in our ADSs thus are not purchasing equity interest in our VIEs in China but instead are purchasing equity interest in a Cayman Islands holding company. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC laws and regulations, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries, our VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with our VIEs and, consequently, significantly affect the financial performance of our VIEs and our company as a whole. The PRC regulatory authorities could disallow the VIEs structure pursuant to the new regulations promulgated by the PRC government, which would likely result in a material adverse change in our operations, and our Class A ordinary shares or our ADSs may decline significantly in value;
We rely on contractual arrangements with our VIEs and the shareholders of our VIEs for all of our business operations, which may not be as effective as direct ownership in providing operational control;
Any failure by our VIEs or the shareholders of our VIEs to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business;
The registered shareholders of our VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition;
Contractual arrangements in relation to our VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or our VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment; and
We may lose the ability to use and enjoy assets held by our VIEs that are material to the operation of our business if the entity goes bankrupt or becomes subject to a dissolution or liquidation proceeding.

15

Table of Contents

Risks Related to Doing Business in China

We are also subject to risks and uncertainties relating to doing business in China in general, including, but not limited to, the following:

The PCAOB is currently unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprives our investors with the benefits of such inspections;
Our ADSs will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or as early as 2023 if proposed changes to the law are enacted. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment;
The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs;
Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us;
Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations; and
The approval of and filing with the CSRC or other PRC government authorities may be required if we conduct offshore offerings in the future, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

Risks Related to our ADSs

In addition to the risks described above, we are subject to general risks relating to our ADSs and Class A ordinary shares, including, but not limited to, the following:

The market price for our ADSs may be volatile;
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price for our ADSs and trading volume could decline;
Although we adopted regular quarterly dividend policy in 2021, we cannot assure you that our existing dividend policy will not change in the future or the amount of dividends that you may receive, neither can we guarantee that we will have sufficient profits, reserves set aside from profits or otherwise funds to justify and enable dividend declaration and payment in compliance with laws for any fiscal quarter and, therefore, you may need to rely on price appreciation of our ADSs as the sole source for return on your investment; and
Our dual class share structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our class A ordinary shares and ADSs may view as beneficial.

16

Table of Contents

Risks Related to Our Business and Industry

The Credit-Tech industry is rapidly evolving, which makes it difficult to effectively assess our future prospects.

The Credit-Tech industry in the PRC is in a developing stage. The regulatory framework for this market is also evolving and may remain uncertain for the foreseeable future. In addition, the Credit-Tech industry in China has not witnessed a full credit cycle. The market players in the industry, including us, are inexperienced in responding to the change of market situations effectively and maintaining steady business growth when the industry enters a different stage. In addition, we cannot assure you that a contraction in the availability of funds will not happen at later stages of the credit cycle. As such, we may not be able to sustain our historical growth rate in the future.

You should consider our business and prospects in light of the risks and challenges we encounter or may encounter given the rapidly evolving market in which we operate, along with our limited operating history. These risks and challenges include our ability to, among other things:

offer competitive products and services;
broaden our prospective borrower base;
increase the utilization of our products by existing borrowers as well as new borrowers;
maintain and enhance our relationship and business collaboration with our partners;
maintain low delinquency rates of loans facilitated or originated by us;
develop and maintain cooperative relationships with financial institution partners to secure sufficient, diversified, cost-efficient funding to the drawdown requests;
continue to develop, maintain and scale our platform and sustain our historical growth rates;
continue to develop and improve the effectiveness, accuracy and efficiency of our proprietary credit assessment and risk management technology;
navigate a complex and evolving regulatory environment;
improve our operational efficiency and profitability;
attract, retain and motivate talented employees to support our business growth;
enhance our technology infrastructure to support the growth of our business and maintain the security of our system and the confidentiality of the information provided and utilized across our system;
navigate economic conditions and fluctuation; and
defend ourselves against legal and regulatory actions, such as actions involving intellectual property or privacy claims.

17

Table of Contents