X Financial’s Earnings Call: Growth Amid Challenges

X Financial ((XYF)) has held its Q3 earnings call. Read on for the main highlights of the call.TipRanks Black Friday Sale Claim 60% off TipRanks Premium for the data-backed insights and research tools you need to invest with confidence. Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off X Financial’s recent earnings call painted a mixed picture for investors, highlighting both achievements and challenges. The company reported solid year-over-year revenue growth and a robust balance sheet, but also faced significant hurdles such as a sequential revenue decline, increased delinquency rates, and reduced net income. In response to regulatory pressures, X Financial is adopting a cautious approach with a strong focus on asset quality and risk management. Year-over-Year Revenue Growth X Financial reported a total net revenue of RMB 1.96 billion, marking a 23.9% increase year-over-year. This growth underscores the company’s ability to maintain solid profitability despite a challenging operating environment. Loan Origination Growth The company facilitated and originated RMB 33.64 billion in loans, reflecting an 18.7% increase year-over-year. This resilience in loan origination demonstrates X Financial’s capacity to navigate regulatory challenges effectively. Strong Balance Sheet X Financial’s total assets reached RMB 14.69 billion, up 26.4% year-over-year, while total shareholders’ equity rose by 15% to RMB 7.93 billion. The company also reported a return on equity of 21.5%, highlighting its financial strength. Sequential Decline in Revenue Despite the year-over-year growth, X Financial experienced a 13.7% sequential decline in total net revenue from Q2. This decline reflects the company’s strategic decision to moderate its growth pace amid regulatory pressures. Increase in Delinquency Rates The earnings call revealed a rise in delinquency rates, with the 31- to 60-day rate increasing to 1.85% and the 91- to 180-day rate climbing to 3.52%. These figures indicate rising repayment stress among certain borrower segments. Reduced Net Income X Financial’s net income decreased by 20.2% sequentially to RMB 421.2 million. This reduction was primarily due to higher provisions for credit losses and a guarantee liability. Guidance for Lower Loan Origination Looking forward, X Financial expects to facilitate and originate loans in the range of RMB 21 billion to RMB 23 billion in Q4 2025. This guidance reflects a more measured pace following the sequential decline observed in Q3, with a continued emphasis on asset quality and risk management. In summary, X Financial’s earnings call provided a nuanced view of its current financial standing. While the company demonstrated solid year-over-year growth and maintained a strong balance sheet, it also faced challenges such as increased delinquency rates and reduced net income. The company’s cautious approach, focusing on asset quality and risk management, will be crucial as it navigates the regulatory landscape and aims to achieve its future targets.