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FinVolution Group

FinVolution GroupFINVEarnings & Financial Report

NYSE

Volution Group plc is a manufacturer of ventilation equipment for commercial and residential customers. Based in Crawley, West Sussex, the company is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

What changed in FinVolution Group's 20-F — 2023 vs 2024

Top changes in FinVolution Group's 2024 20-F

648 paragraphs added · 636 removed · 547 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

223 edited+49 added−43 removed628 unchanged
For more details, see “Item 3. Key Information—D.
For more details, see “Item 3. Key Information—D.
Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been 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 of our auditor in the past has deprived our investors with the benefits of such inspections” and “—Our ADSs may be prohibited from trading in the United States under the HFCA Act in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been 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 of our auditor in the past has deprived our investors with the benefits of such inspections” and “—Our ADSs may be prohibited from trading in the United States under the HFCA Act in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Risk Factors—Risks Related to Our Business—The laws and regulations governing online consumer finance industry in China are developing and evolving and subject to changes.
Risk Factors—Risks Related to Our Business—The laws and regulations governing online consumer finance industry in China are developing and evolving and subject to changes.
Under the Measures for Banning of Illegal Financial Institutions and Illegal Financial Business Operations, issued by the State Council on July 13, 1998, any entity engaging in financial activities without approval from the People’s Bank of China may be classified as an illegal financial institution.
Under the Measures for Banning of Illegal Financial Institutions and Illegal Financial Business Operations, issued by the State Council on July 13, 1998, any entity engaging in financial activities without approval from the People’s Bank of China may be classified as an illegal financial institution.
As a result of increasing consolidation and interdependence of technology systems, a technology failure, cyber-attack or other information or security breach that significantly compromises the systems of one entity could have a material impact on its counterparties.
As a result of increasing consolidation and interdependence of technology systems, a technology failure, cyber-attack or other information or security breach that significantly compromises the systems of one entity could have a material impact on its counterparties.
Although our agreements with third-party payment service providers provide that each party is responsible for the cybersecurity of its own systems, any cyber-attack, computer viruses, physical or electronic break-ins or similar disruptions of such third-party payment service providers could, among other things, adversely affect our ability to serve our users, and could even result in misappropriation of funds of our borrowers and institutional funding partners.
Although our agreements with third-party payment service providers provide that each party is responsible for the cybersecurity of its own systems, any cyber-attack, computer viruses, physical or electronic break-ins or similar disruptions of such third-party payment service providers could, among other things, adversely affect our ability to serve our users, and could even result in misappropriation of funds of our borrowers and institutional funding partners.
Holders of our ADSs hold equity interest in FinVolution Group, our Cayman Islands holding company, and do not have direct or indirect equity interest in the consolidated variable interest entities and their subsidiaries.
Holders of our ADSs hold equity interest in FinVolution Group, our Cayman Islands holding company, and do not have direct or indirect equity interest in the consolidated variable interest entities and their subsidiaries.
If the PRC government deems that our contractual arrangements with the consolidated variable interest entities 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.
If the PRC government deems that our contractual arrangements with the consolidated variable interest entities 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.
Risk Factors—Risks Related to Our Business—The laws and regulations governing online consumer finance industry in China are developing and evolving and subject to changes.
Risk Factors—Risks Related to Our Business—The laws and regulations governing online consumer finance industry in China are developing and evolving and subject to changes.
The PCAOB had historically been 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 of our auditor in the past has deprived our investors with the benefits of such inspections.
The PCAOB had historically been 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 of our auditor in the past has deprived our investors with the benefits of such inspections.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
As a result, it may be difficult or impossible for you to effect service of process within the United States upon these individuals, or to bring an action against us or against these individuals in the United States in the event that you believe your rights have been infringed under the U.S. federal securities laws or otherwise.
As a result, it may be difficult or impossible for you to effect service of process within the United States upon these individuals, or to bring an action against us or against these individuals in the United States in the event that you believe your rights have been infringed under the U.S. federal securities laws or otherwise.
PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions.
PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions.
If our business practices are deemed to violate any existing and future applicable laws, regulations or requirements of local regulatory authorities, our business, financial condition and results of operations would be materially and adversely affected.” Furthermore, as advised by Hui Ye Law Firm, our PRC counsel, in connection with our historical issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our PRC subsidiaries and the consolidated variable interest entities, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, and (iii) have not received or were denied such requisite permissions by any PRC authority.
If our business practices are deemed to violate any existing and future applicable laws, regulations or requirements of local regulatory authorities, our business, financial condition and results of operations would be materially and adversely affected.” 6 Furthermore, as advised by Hui Ye Law Firm, our PRC counsel, in connection with our historical issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our PRC subsidiaries and the consolidated variable interest entities, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, and (iii) have not received or were denied such requisite permissions by any PRC authority.
Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements with the consolidated variable interest entities may be subject to scrutiny by the PRC tax authorities and they may determine that we or the consolidated variable interest entities owe additional taxes, which could negatively affect our financial condition and the price of our ADSs.” Under PRC laws and regulations, our PRC subsidiaries, which are foreign-owned enterprises, may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations.
Risk Factors—Risks Related to Our Corporate Structure—Contractual arrangements with the consolidated variable interest entities may be subject to scrutiny by the PRC tax authorities and they may determine that we or the consolidated variable interest entities owe additional taxes, which could negatively affect our financial condition and the price of our ADSs.” 50 Under PRC laws and regulations, our PRC subsidiaries, which are foreign-owned enterprises, may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements regarding the consolidated variable interest entities 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 in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” Our corporate structure is subject to risks associated with our contractual arrangements with the consolidated variable interest entities.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements regarding the consolidated variable interest entities 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 in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” 4 Our corporate structure is subject to risks associated with our contractual arrangements with the consolidated variable interest entities.
Business Overview—Regulations in the PRC—Regulations Relating to Foreign Exchange—Regulations on employee stock incentive plans of overseas publicly-listed company.” If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
Business Overview—Regulations in the PRC—Regulations Relating to Foreign Exchange—Regulations on employee stock incentive plans of overseas publicly-listed company.” 55 If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
Taxation—People’s Republic of China Taxation.” However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” As the overwhelming majority of our management members are based in China, it remains unclear how the tax residency rule will apply to our case.
Taxation—People’s Republic of China Taxation.” However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” As the majority of our management members are based in China, it remains unclear how the tax residency rule will apply to our case.
The fee rates may vary among different business models and third-party guarantee companies or institutional funding partners. Any material reduction in our fee rates could have a significant adverse effect on our business, results of operations and financial condition. Fluctuations in interest rates could negatively affect transaction volume facilitated through our platforms.
The fee rates may vary among different business models and third-party guarantee companies or institutional funding partners. Any material reduction in our fee rates could have a significant adverse effect on our business, results of operations and financial condition. 32 Fluctuations in interest rates could negatively affect transaction volume facilitated through our platforms.
Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of required licenses, significantly limit or completely hinder our ability to continue to offer securities to investors, and cause the value of such securities to significantly decline or become worthless. For more detailed information, see “Item 3. Key Information—D.
Any such circumstance could subject us to penalties, including fines, injunctions, suspension of business and revocation of required licenses, significantly limit or completely hinder our ability to continue to offer securities to investors, and cause the value of such securities to significantly decline or become worthless. For more detailed information, see “Item 3. Key Information—D.
The regulatory framework for this industry is also evolving and may remain uncertain for the foreseeable future. China’s online consumer finance industry in general remains at a rather preliminary development stage and may not develop at the anticipated growth rate. It is possible that the PRC laws and regulations may change in ways that do not favor our development.
The regulatory framework for this industry is evolving and may remain uncertain for the foreseeable future. China’s online consumer finance industry in general remains at a rather preliminary development stage and may not develop at the anticipated growth rate. It is possible that the PRC laws and regulations may change in ways that do not favor our development.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. Risks Related to Our American Depositary Shares The market price for our ADSs may be volatile.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 59 Risks Related to Our American Depositary Shares The market price for our ADSs may be volatile.
See “—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.” The shareholders of the consolidated variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.
See “—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.” 46 The shareholders of the consolidated variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.
However, it would be difficult for foreign shareholders to establish sufficient nexus to the PRC by virtue only of holding our ADSs or ordinary shares. Cash and Asset Flows Through Our Organization FinVolution Group is a holding company with no operations of its own.
However, it would be difficult for foreign shareholders to establish sufficient nexus to the PRC by virtue only of holding our ADSs or ordinary shares. 8 Cash and Asset Flows Through Our Organization FinVolution Group is a holding company with no operations of its own.
Risks Related to Our Business • We generate the overwhelming majority of our revenues from China’s online consumer finance platform market, an emerging and evolving industry, which makes it difficult to evaluate our future prospects. • The laws and regulations governing online consumer finance industry in China are developing and evolving and subject to changes.
Risks Related to Our Business ● We generate the majority of our revenues from China’s online consumer finance platform market, an emerging and evolving industry, which makes it difficult to evaluate our future prospects. ● The laws and regulations governing online consumer finance industry in China are developing and evolving and subject to changes.
Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the price of our ADSs. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive the overwhelming majority of our net revenues in RMB.
Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the price of our ADSs. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive the majority of our net revenues in RMB.
If we are unable to effectively collect these delinquent loans, our liquidity, business operations, financial condition and results of operations would be materially and adversely affected. We rely on our proprietary credit-scoring model in assessing the creditworthiness of our borrowers and the risks associated with loans.
If we are unable to effectively collect these delinquent loans, our liquidity, business operations, financial condition and results of operations would be materially and adversely affected. 27 We rely on our proprietary credit-scoring model in assessing the creditworthiness of our borrowers and the risks associated with loans.
Conversely, a significant depreciation of Renminbi against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our ADSs. Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations.
Conversely, a significant depreciation of Renminbi against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our ADSs. 52 Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations.
Certain judgments obtained against us by our shareholders may not be enforceable. We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. We conduct the overwhelming majority of our operations in China and a significant portion of our assets are located in China.
Certain judgments obtained against us by our shareholders may not be enforceable. We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. We conduct the majority of our operations in China and a significant portion of our assets are located in China.
COVID-19 had a severe and negative impact on the Chinese and the global economy from 2020 through 2022, and the global macroeconomic environment still faces numerous challenges. The growth rate of the Chinese economy has been slowing since 2010 and the Chinese population began to decline in 2022.
Furthermore, COVID-19 had a severe and negative impact on the Chinese and the global economy from 2020 through 2022, and the global macroeconomic environment still faces numerous challenges. The growth rate of the Chinese economy has been slowing since 2010 and the Chinese population began to decline in 2022.
The overwhelming majority of our operations are located in China, which are governed by PRC laws and regulations. The PRC government has significant oversight and discretion over the conduct of our business, and may influence our operations as the government deems appropriate to advance regulatory and societal goals and policy positions.
The majority of our operations are located in China, which are governed by PRC laws and regulations. The PRC government has significant oversight and discretion over the conduct of our business, and may influence our operations as the government deems appropriate to advance regulatory and societal goals and policy positions.
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 and adverse effect on our ability to conduct our business” and “—Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the price of our ADSs.” For the years ended December 31, 2021, 2022 and 2023, no dividends or distributions were made to FinVolution Group, the parent company, by our subsidiaries.
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 and adverse effect on our ability to conduct our business” and “—Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the price of our ADSs.” For the years ended December 31, 2022, 2023 and 2024, no dividends or distributions were made to FinVolution Group, the parent company, by our subsidiaries.
(4) Represents the elimination of intercompany balances among FinVolution Group, equity subsidiaries, primary beneficiary of consolidated variable interest entities, consolidated variable interest entities and consolidated variable interest entities’ subsidiaries. (5) Represents the cash received and cash paid for intercompany services, including technical development services and technical support services. (6) Represents the capital contribution at intercompany level.
(4) Represents the elimination of intercompany balances among FinVolution Group, equity subsidiaries, primary beneficiary of consolidated variable interest entities, consolidated variable interest entities and consolidated variable interest entities’ subsidiaries. (5) Represents the cash received and cash paid for intercompany services, including technical development services and technical support services. 15 (6) Represents the capital contribution at intercompany level.
The overwhelming majority of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.
The majority of our operations are located in China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.
It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future. We receive the overwhelming majority of our net revenues in Renminbi.
It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future. We receive the majority of our net revenues in Renminbi.
Risk Factors—Risks Related to Our Corporate Structure.” We face various legal and operational risks and uncertainties related to doing business in China. The overwhelming majority of our business operations are in China, and we are subject to complex and evolving PRC laws and regulations.
Risk Factors—Risks Related to Our Corporate Structure.” We face various legal and operational risks and uncertainties related to doing business in China. The majority of our business operations are in China, and we are subject to complex and evolving PRC laws and regulations.
As the online consumer finance industry is relatively new in the markets where we operate, and the regulatory framework for this industry is also evolving, negative publicity about this industry may arise from time to time.
As the online consumer finance industry is relatively new in certain markets where we operate, and the regulatory framework for this industry is also evolving, negative publicity about this industry may arise from time to time.
If our business practices are deemed to violate any existing and future applicable laws, regulations or requirements of local regulatory authorities, our business, financial condition and results of operations would be materially and adversely affected.” With the regulatory environment of the consumer finance industry continually evolving, regulatory authorities may introduce new requirements, potentially including a new licensing regime to oversee the type of business activities conducted by Shanghai Erxu.
If our business practices are deemed to violate any existing and future applicable laws, regulations or requirements of local regulatory authorities, our business, financial condition and results of operations would be materially and adversely affected.” With the regulatory environment of the consumer finance industry continually evolving, regulatory authorities may introduce new requirements, potentially including a new licensing regime to oversee the type of business activities conducted by Shanghai Erxu and our other subsidiaries.
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 in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” Enforceability of Civil Liabilities We are incorporated in the Cayman Islands to take advantage of certain benefits associated with being a Cayman Islands exempted company, such as: • political and economic stability; • an effective judicial system; • a favorable tax system; • the absence of exchange control or currency restrictions; and 7 Table of Contents • the availability of professional and support services.
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 in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” Enforceability of Civil Liabilities We are incorporated in the Cayman Islands to take advantage of certain benefits associated with being a Cayman Islands exempted company, such as: ● political and economic stability; ● an effective judicial system; ● a favorable tax system; ● the absence of exchange control or currency restrictions; and ● the availability of professional and support services.
This creates the risk that a borrower may borrow money through our platforms in order to pay off loans on other consumer finance marketplaces and vice versa.
This creates the risk that a borrower may borrow money through our platforms in order to pay off loans on other consumer finance platforms and vice versa.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 65 Table of Contents There is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands is not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment is final and conclusive and for a liquidated sum, and may not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 63 There is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands is not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment is final and conclusive and for a liquidated sum, and may not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
We will also be subject to a variety of risks inherent in operating overseas businesses, including: • business licensing or certification requirements of the local markets; 23 Table of Contents • compliance challenges due to different laws and regulatory environments, including but not limited to those related to online consumer finance, privacy and data protection, data localization, network security, payments, and tax regimes and policies; • the need for increased resources to manage regulatory compliance across our overseas businesses; • challenges of localizing our services and products to meet the local needs; • failure to effectively or efficiently locate and cooperate with local business partners; • failure to attract and retain capable talent with international perspectives who can effectively manage and operate local businesses; • higher costs of doing business globally, including increased accounting, travel, infrastructure and legal compliance costs; • exchange rate fluctuations; • international geopolitical tensions and events; and • political, social and economic instability of each jurisdiction where we operate.
We will also be subject to a variety of risks inherent in operating overseas businesses, including: ● business licensing or certification requirements of the local markets; ● compliance challenges due to different laws and regulatory environments, including but not limited to those related to online consumer finance, privacy and data protection, data localization, network security, payments, and tax regimes and policies; 20 ● the need for increased resources to manage regulatory compliance across our overseas businesses; ● challenges of localizing our services and products to meet the local needs; ● failure to effectively or efficiently locate and cooperate with local business partners; ● failure to attract and retain capable talent with international perspectives who can effectively manage and operate local businesses; ● higher costs of doing business globally, including increased accounting, travel, infrastructure and legal compliance costs; ● exchange rate fluctuations; ● international geopolitical tensions and events; and ● political, social and economic instability of each jurisdiction where we operate.
Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the consolidated variable interest entities for a significant portion of our business operations, and such contractual arrangements may not be as effective as equity ownership in providing operational control” and “—The shareholders of the consolidated variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.” 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 the consolidated variable interest entities and their shareholders.
Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the consolidated variable interest entities for a significant portion of our business operations, and such contractual arrangements may not be as effective as equity ownership in providing operational control” and “—The shareholders of the consolidated variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.” 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 the consolidated variable interest entities and their shareholders.
Furthermore, the Ministry of Public Security promulgated the Guidance on Several Issues for Soft Violence Regarding Criminal Cases on April 9, 2019, which provides, among other things, that harassment by means of the internet or telecommunication to disturb people’s normal life, work, production, business, and social order may be deemed as soft violence, subjecting individuals to criminal liabilities.
For example, the Ministry of Public Security promulgated the Guidance on Several Issues for Soft Violence Regarding Criminal Cases on April 9, 2019, which provides, among other things, that harassment by means of the internet or telecommunication to disturb people’s normal life, work, production, business, and social order may be deemed as soft violence, subjecting individuals to criminal liabilities.
We conduct the overwhelming majority of our operations in China and a significant portion of our assets are located in China. In addition, a majority of our directors and executive officers reside within China, and a significant portion of the assets of these persons are located within China.
We conduct the majority of our operations in China and a significant portion of our assets are located in China. In addition, a majority of our directors and executive officers reside within China, and a significant portion of the assets of these persons are located within China.
These risks and challenges include our ability to, among other things: • navigate an evolving regulatory environment; • expand the base of borrowers and institutional funding partners served on our platforms; • maintain our credit standards; • enhance our risk management capabilities; • improve our operational efficiency; • continue to scale our technology infrastructure to support the growth of our platforms and higher transaction volume; • broaden our loan product offerings; • operate without being adversely affected by the negative publicity about the industry in general and our company in particular; 21 Table of Contents • maintain the security of our platforms and the confidentiality of the information provided and utilized across our platforms; • cultivate a vibrant consumer finance ecosystem; • attract, retain and motivate talented employees; and • defend ourselves in litigation, and against regulatory, intellectual property, privacy or other claims.
These risks and challenges include our ability to, among other things: ● navigate an evolving regulatory environment; ● expand the base of borrowers and institutional funding partners served on our platforms; ● maintain our credit standards; ● enhance our risk management capabilities; ● improve our operational efficiency; ● continue to scale our technology infrastructure to support the growth of our platforms and higher transaction volume; ● broaden our loan product offerings; ● operate without being adversely affected by the negative publicity about the industry in general and our company in particular; 18 ● maintain the security of our platforms and the confidentiality of the information provided and utilized across our platforms; ● cultivate a vibrant consumer finance ecosystem; ● attract, retain and motivate talented employees; and ● defend ourselves in litigation, and against regulatory, intellectual property, privacy or other claims.
Any non-compliance or potential non-compliance may subject us to fines or criminal liability, which may potentially impact our financial performance and results of operations. Moreover, we depend on certain data partners, who collaborate with a licensed credit reference agency, to collect borrower credit information for our credit scoring and fraud detection purposes.
Any non-compliance or potential non-compliance may subject us to fines, injunctions, suspension of operations, or criminal liability, which may potentially impact our financial performance and results of operations. Moreover, we depend on certain data partners, who collaborate with a licensed credit reference agency, to collect borrower credit information for our credit scoring and fraud detection purposes.
Based upon that evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. Our independent registered public accounting firm, PricewaterhouseCoopers Zhong Tian LLP, also attested and reported our internal control over financial reporting. See the attestation report on page F-2 issued by our independent registered public accounting firm for further details.
Based upon that evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2024. Our independent registered public accounting firm, PricewaterhouseCoopers Zhong Tian LLP, also attested and reported our internal control over financial reporting. See the attestation report on page F-2 issued by our independent registered public accounting firm for further details.
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15I under the Exchange Act) and internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) as of the end of the period covered by this annual report, as required by Rule 13a-15(b) through (c) under the Exchange Act.
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) and internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) as of the end of the period covered by this annual report, as required by Rule 13a-15(b) through (c) under the Exchange Act.
Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China.
Economic conditions in China are sensitive to global economic trends, as well as to changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China.
If any of the abovementioned natural disasters, health epidemics or other outbreaks were to occur in Shanghai, our operation may experience material disruptions, such as temporary closure of our offices and suspension of services, disruption of communications between our headquarters and overseas operations, which may materially and adversely affect our business, financial condition and results of operations. 46 Table of Contents Risks Related to Our Corporate Structure If the PRC government deems that the contractual arrangements regarding the consolidated variable interest entities 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 in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
If any of the abovementioned natural disasters, health epidemics or other outbreaks were to occur in Shanghai, our operation may experience material disruptions, such as temporary closure of our offices and suspension of services, disruption of communications between our headquarters and overseas operations, which may materially and adversely affect our business, financial condition and results of operations. 43 Risks Related to Our Corporate Structure If the PRC government deems that the contractual arrangements regarding the consolidated variable interest entities 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 in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
In particular, one of the holders of our Class B ordinary shares beneficially owned 65.4% of the aggregate voting power of our company as of the same date. As a result, the existing holders of our Class B ordinary shares will have decisive influence over matters such as electing directors and approving material mergers, acquisitions or other business combination transactions.
In particular, one of the holders of our Class B ordinary shares beneficially owned 65.9% of the aggregate voting power of our company as of the same date. As a result, the existing holders of our Class B ordinary shares will have decisive influence over matters such as electing directors and approving material mergers, acquisitions or other business combination transactions.
If any data provided by borrowers or third parties are incorrect or stale or our preliminary credit assessment service is not effective, our cooperation with institutional funding partners could be negatively affected. In addition, we bear credit risks for a substantial majority of the loans funded by institutional funding partners to borrowers we introduced.
If any data provided by borrowers or third parties are incorrect or stale or our preliminary credit assessment service is not effective, our cooperation with institutional funding partners could be negatively affected. In addition, we bear credit risks for the majority of the loans funded by institutional funding partners to borrowers we introduced.
In addition, we bear credit risks for a substantial majority of the loans funded by our institutional funding partners to borrowers we introduced. If our ability to collect delinquent loans is not as effective or efficient as expected, our liquidity, financial conditions and results of operations could be materially and adversely affected.
In addition, we bear credit risks for the majority of the loans funded by our institutional funding partners to borrowers we introduced. If our ability to collect delinquent loans is not as effective or efficient as expected, our liquidity, financial conditions and results of operations could be materially and adversely affected.
When a general meeting is convened, you may not receive sufficient advance notice to enable you to withdraw the underlying shares which are represented by your ADSs and become the registered holder of such shares prior to the record date for the general meeting to allow you to attend the general meeting or to vote directly with respect to any specific matter or resolution which is to be considered and voted upon at the general meeting. 63 Table of Contents In addition, under our currently effective memorandum and articles of association, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent you from withdrawing the underlying shares which are represented by your ADSs and becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly.
When a general meeting is convened, you may not receive sufficient advance notice to enable you to withdraw the underlying shares which are represented by your ADSs and become the registered holder of such shares prior to the record date for the general meeting to allow you to attend the general meeting or to vote directly with respect to any specific matter or resolution which is to be considered and voted upon at the general meeting. 61 In addition, under our currently effective memorandum and articles of association, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent you from withdrawing the underlying shares which are represented by your ADSs and becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly.
We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for the taxable year ended December 31, 2023, which could subject United States investors in our ADSs or ordinary shares to significant adverse United States federal income tax consequences.
We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for the taxable year ended December 31, 2024, which could subject United States investors in our ADSs or ordinary shares to significant adverse United States federal income tax consequences.
If any of our third-party service providers fails to comply with applicable anti-money laundering laws and regulations, our reputation could suffer and we could become subject to regulatory intervention, which could have a material adverse effect on our business, financial condition and results of operations. 40 Table of Contents For example, in October 2018, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the CSRC, jointly issued the Anti-money Laundering and Anti-terrorism Financing Administrative Measures for Internet Finance Institution, which states that internet finance institutions in China are obliged to accept the anti-money laundering and anti-terrorism financing inspection conducted by the People’s Bank of China and its branches.
If any of our third-party service providers fails to comply with applicable anti-money laundering laws and regulations, our reputation could suffer and we could become subject to regulatory intervention, which could have a material adverse effect on our business, financial condition and results of operations. 37 For example, in October 2018, the People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the CSRC, jointly issued the Anti-money Laundering and Anti-terrorism Financing Administrative Measures for Internet Finance Institution, which states that internet finance institutions in China are obliged to accept the anti-money laundering and anti-terrorism financing inspection conducted by the People’s Bank of China and its branches.
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” and “—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.” 5 Table of Contents The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, or the HFCA Act, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
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” and “—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.” The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, or the HFCA Act, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
However, we cannot guarantee that this approach will be deemed fully compliant with applicable laws and regulations regarding the “disconnecting direct connection.” As of the date of this annual report, we have not been subject to any penalties from the People’s Bank of China or any of its branches related to our cooperation with institutional funding partners. 22 Table of Contents Failure to meet the requirements of regulatory authorities may necessitate modifications to our business model, termination of certain practices, or even cessation of our business operations.
However, we cannot guarantee that this approach will be deemed fully compliant with applicable laws and regulations regarding the “disconnecting direct connection.” As of the date of this annual report, we have not been subject to any penalties from the People’s Bank of China or any of its branches related to our cooperation with institutional funding partners. 19 Failure to meet the requirements of regulatory authorities may necessitate modifications to our business model, termination of certain practices, or even cessation of our business operations.
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. 66 Table of Contents 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.
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. 64 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.
The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the internet industry. These internet-related laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainties.
The PRC government extensively regulates the internet industry, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the internet industry. These internet-related laws and regulations are evolving, and their interpretation and enforcement involve significant uncertainties.
In 2023, we did not enter into hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk” for more details.
In 2024, we did not enter into hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk” for more details.
In addition, if a borrower’s financial condition deteriorates after their loan application is approved, we may not be able to take measures to prevent such borrower’s default and thereby maintain a reasonably low default rate for loans facilitated through our platforms. 31 Table of Contents Credit and other information that we receive from prospective borrowers and third parties about a borrower may be inaccurate or may not accurately reflect the borrower’s creditworthiness, which may compromise the accuracy of our credit assessment.
In addition, if a borrower’s financial condition deteriorates after their loan application is approved, we may not be able to take measures to prevent such borrower’s default and thereby maintain a reasonably low default rate for loans facilitated through our platforms. 28 Credit and other information that we receive from prospective borrowers and third parties about a borrower may be inaccurate or may not accurately reflect the borrower’s creditworthiness, which may compromise the accuracy of our credit assessment.
If the consolidated variable interest entities undergo a voluntary or involuntary liquidation proceeding, independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations. 50 Table of Contents Risks Related to Doing Business in China 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.
If the consolidated variable interest entities undergo a voluntary or involuntary liquidation proceeding, independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations. 47 Risks Related to Doing Business in China 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.
The aforementioned one-year Loan Prime Rate refers to the one-year loan market quoted interest rate issued by the National Bank Interbank Funding Center. As of the date of this annual report, the most recent one-year loan market quoted interest rate issued by the National Bank Interbank Funding Center was 3.45%.
The aforementioned one-year Loan Prime Rate refers to the one-year loan market quoted interest rate issued by the National Bank Interbank Funding Center. As of the date of this annual report, the most recent one-year loan market quoted interest rate issued by the National Bank Interbank Funding Center was 3.10%.
If regulatory authorities categorize these services as credit reference business or information provision activities, Shanghai Erxu may be requested to obtain a license for individual credit reference business, or alternatively, engage in collaborations with licensed credit reference agencies and submit the related cooperation agreements with the People’s Bank of China or its provincial branches.
If regulatory authorities categorize these services as credit reference business or information provision activities, we may be requested to obtain a license for individual credit reference business, or alternatively, engage in collaborations with licensed credit reference agencies and submit the related cooperation agreements with the People’s Bank of China or its provincial branches.
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Investing in our ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our ADSs. Below please find the principal risks we face, organized under relevant headings.
Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Investing in our ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our ADSs. Below please find the principal risks we face, organized under relevant headings.
See “—Cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions of us or of a third party could result in disclosure or misuse of confidential information and misappropriation of funds of our borrowers and institutional funding partners, subject us to liabilities, cause reputational harm and adversely impact our results of operations and financial condition.” 38 Table of Contents If our ability to collect delinquent loans is impaired, our business and results of operations might be materially and adversely affected.
See “—Cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions of us or of a third party could result in disclosure or misuse of confidential information and misappropriation of funds of our borrowers and institutional funding partners, subject us to liabilities, cause reputational harm and adversely impact our results of operations and financial condition.” 35 If our ability to collect delinquent loans is impaired, our business and results of operations might be materially and adversely affected.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: • regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; • difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, rights, platforms, products and services of the acquired business; • inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; • difficulties in retaining, training, motivating and integrating key personnel; • diversion of management’s time and resources from our daily operations; • difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; • difficulties in retaining relationships with customers, employees and business partners of the acquired business; • risks of entering markets in which we have limited or no prior experience; • assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; • failure to successfully further develop the acquired technology; • liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; • potential disruptions to our ongoing businesses; and • unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
Any strategic alliances, investments or acquisitions and the subsequent integration of the new assets and businesses obtained or developed from such transactions into our own businesses will involve risks commonly encountered in business relationships, including: ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, rights, platforms, products and services of the acquired business; ● inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from our daily operations; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with customers, employees and business partners of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; ● failure to successfully further develop the acquired technology; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; ● potential disruptions to our ongoing businesses; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
Notes: 3 Table of Contents (1) Beijing Paipairongxin currently has four shareholders: Jun Zhang, our co-founder and director, Tiezheng Li, our co-founder, vice chairman and chief executive officer, Honghui Hu, our co-founder and director, and Shaofeng Gu, our co-founder, chairman and chief innovation officer, each holding 13.22%, 4.81%, 12.85%, and 69.12% of Beijing Paipairongxin’s equity interests, respectively.
Notes: (1) Beijing Paipairongxin currently has four shareholders: Jun Zhang, our co-founder and director, Tiezheng Li, our co-founder, vice chairman and chief executive officer, Honghui Hu, our co-founder and director, and Shaofeng Gu, our co-founder, chairman and chief innovation officer, each holding 13.22%, 4.81%, 12.85%, and 69.12% of Beijing Paipairongxin’s equity interests, respectively.
Also, since the online consumer finance industry in the markets where we operate is relatively new and fast-evolving, potential institutional funding partners and borrowers may not fully understand how our platforms work and may not fully appreciate the additional customer protections and features that we have invested in and adopted on our platforms compared to others.
Also, since the online consumer finance industry in the markets where we operate is evolving, potential institutional funding partners and borrowers may not fully understand how our platforms work and may not fully appreciate the additional customer protections and features that we have invested in and adopted on our platforms compared to others.
The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. For more details, see “tem 3. Key Information—D.
The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. For more details, see “Item 3. Key Information—D.
As the regulations regarding data protection, data security, cybersecurity and personal information protection are quickly evolving in China and globally, we may become subject to new laws and regulations applying to the solicitation, collection, processing or use of personal information that could affect how we store, process and share data of our borrowers. 36 Table of Contents In particular, the PRC government has tightened the regulation of the storage, sharing, use, disclosure and protection of personal data and user data in recent years.
As the regulations regarding data protection, data security, cybersecurity and personal information protection are quickly evolving in China and globally, we may become subject to new laws and regulations applying to the solicitation, collection, processing or use of personal information that could affect how we store, process and share data of our borrowers. 33 In particular, the PRC government has tightened the regulation of the storage, sharing, use, disclosure and protection of personal data and user data in recent years.
Business Overview—Regulations in the PRC—Regulations Relating to Overseas Listing and M&A.” 60 Table of Contents If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the amended Measures for Cybersecurity Review, are required for our offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures.
Business Overview—Regulations in the PRC—Regulations Relating to Overseas Listing and M&A.” If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the amended Measures for Cybersecurity Review, are required for our offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures.
We may be deemed to be an illegal financial institution under such trust arrangement, which may materially and adversely affect our business and financial condition. 18 Table of Contents • Interest rates of certain of our loan products may exceed the statutory interest rate limit and therefore part of the interests may not be enforceable through the PRC judicial system. • We operate in markets where the credit infrastructure may still be at an early stage of development. • We bear credit risks for a substantial majority of the loans funded by institutional funding partners to borrowers we introduced.
We may be deemed to be an illegal financial institution under such trust arrangement, which may materially and adversely affect our business and financial condition. ● Interest rates of certain of our loan products may exceed the statutory interest rate limit and therefore part of the interests may not be enforceable through the PRC judicial system. ● We operate in markets where the credit infrastructure may still be at an early stage of development. ● We bear credit risks for the majority of the loans funded by institutional funding partners to borrowers we introduced.
We cannot assure you that the internet infrastructure and the fixed telecommunications networks in China will be able to support the demands associated with the continued growth in internet usage. 41 Table of Contents In addition, we have no control over the costs of the services provided by telecommunication service providers.
We cannot assure you that the internet infrastructure and the fixed telecommunications networks in China will be able to support the demands associated with the continued growth in internet usage. In addition, we have no control over the costs of the services provided by telecommunication service providers.
As used in this annual report, “we,” “us,” “our company” and “our” refer to FinVolution Group, its subsidiaries, and, in the context of describing our operations in China and consolidated financial information, the consolidated variable interest entities and their respective subsidiaries in China, including but not limited to (i) Beijing Paipairongxin Investment Consulting Co., Ltd., or Beijing Paipairongxin, which was established in June 2012; (ii) Shanghai PPDai Financial Information Service Co., Ltd., or Shanghai PPDai, a subsidiary of Beijing Paipairongxin, which was established in January 2011 and operates our ppdai.com website and PPDai mobile application; (iii) Hefei PPDai Information Technology Co., Ltd., or Hefei PPDai, a subsidiary of Shanghai PPDai, which was established in December 2016 and holds the value-added telecommunication business operation license for operation of call center services; (iv) Shanghai Erxu Information Technology Co., Ltd., or Shanghai Erxu, a subsidiary of Shanghai Zihe, which was established in April 2018 and primarily engages in the business of introducing borrowers to institutional funding partners to match transactions; and (v) Shanghai Ledao Technology Co., Ltd., or Shanghai Ledao, which was established in January 2019 and currently does not engage in any business operations.
As used in this annual report, “we,” “us,” “our company” and “our” refer to FinVolution Group, its subsidiaries, and, in the context of describing our operations in China and consolidated financial information, the consolidated variable interest entities and their respective subsidiaries in China, including but not limited to (i) Beijing Paipairongxin Investment Consulting Co., Ltd., or Beijing Paipairongxin, which was established in June 2012; (ii) Shanghai PPDai Financial Information Service Co., Ltd., or Shanghai PPDai, a subsidiary of Beijing Paipairongxin, which was established in January 2011 and operates our ppdai.com website and PPDai mobile application; (iii) Hefei PPDai Information Technology Co., Ltd., a subsidiary of Shanghai PPDai and Beijing Paipairongxin, which was established in December 2016 and holds the value-added telecommunication business operation license for operation of call center services; (iv) Shanghai Erxu Information Technology Co., Ltd., or Shanghai Erxu, a subsidiary of Shanghai Zihe, which was established in April 2018 and primarily focuses on partnering with our other subsidiaries to introduce borrowers to institutional funding partners and match transactions; and (v) Shanghai Ledao Technology Co., Ltd., or Shanghai Ledao, which was established in January 2019 and currently does not engage in any business operations.
This structure provides investors with exposure to foreign investment in China-based companies where PRC laws and regulations prohibit or restrict direct foreign investment in operating companies in certain sectors. Revenues contributed by the consolidated variable interest entities and their respective subsidiaries accounted for 88.0%, 83.9% and 78.6% of our total revenues for 2021, 2022 and 2023, respectively.
This structure provides investors with exposure to foreign investment in China-based companies where PRC laws and regulations prohibit or restrict direct foreign investment in operating companies in certain sectors. Revenues contributed by the consolidated variable interest entities and their respective subsidiaries accounted for 83.9%, 78.6% and 75.0% of our total revenues for 2022, 2023 and 2024, respectively.
In addition, because of the rapid pace of technological change in our industry, parts of our business rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms, or at all. 42 Table of Contents It may be difficult to maintain and enforce intellectual property rights in certain markets where we operate.
In addition, because of the rapid pace of technological change in our industry, parts of our business rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms, or at all. 39 It may be difficult to maintain and enforce intellectual property rights in certain markets where we operate.
A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. 8 Table of Contents Hui Ye Law Firm has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. Hui Ye Law Firm has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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In certain instances, we also offer security deposits to third-party financing guarantee companies for loans funded by specific institutional funding partners as an additional quality assurance commitment. Furthermore, in 2019 and 2020, we established three financing guarantee companies in Fujian, Tianjin, and Hainan.
In certain instances, we also offer security deposits to third-party financing guarantee companies for loans funded by specific institutional funding partners as an additional quality assurance commitment. Furthermore, we established three financing guarantee companies in Fujian, Tianjin, and Hainan in 2019 and 2020.
Shanghai Manyin shall own the intellectual property rights arising out of the provisions of services under this agreement. Unless Shanghai Manyin terminates this agreement in advance, this agreement will remain effective for 30 years, renewable upon Shanghai Manyin’s advance written notice.
Shanghai Manyin shall own the intellectual property rights arising out of the provisions of services under this agreement. Unless Shanghai Manyin terminates this agreement in advance, this agreement will remain effective for 30 years, renewable upon Shanghai Manyin’s advance written notice.
The following factors are associated with variables that are important for assessing the probability of delinquency: • repayment history • personal identity information • education • consumption behavior • credit reports • fraudulent records • third-party supplementary data For applicants of our standard loan products, the Magic Mirror score derived from our proprietary credit scoring model is used to determine which of the eight segments in our existing credit grid such applicants fall into.
The following factors are associated with variables that are important for assessing the probability of delinquency: ● repayment history ● personal identity information ● education ● consumption behavior ● credit reports ● fraudulent records ● third-party supplementary data 74 For applicants of our standard loan products, the Magic Mirror score derived from our proprietary credit scoring model is used to determine which of the eight segments in our existing credit grid such applicants fall into.
However, there are instances where we provide financing guarantees for only a portion of the loan repayment, or in some cases, none at all. Please refer to “Item 4. Information on the Company—B. Business Overview—Quality Assurance Commitments for Our Institutional Funding Partners” for further details. For a small portion of loans, we collaborate with third-party trust management companies.
However, there are instances where we provide financing guarantees for only a portion of the loan repayment, or in some cases, none at all. Please refer to “Item 4. Information on the Company—B. Business Overview—Quality Assurance Commitments for Our Institutional Funding Partners” for further details. 72 For a small portion of loans, we collaborate with third-party trust management companies.
Risk Factors—Risks Related to Our Business—Interest rates of certain of our loan products may exceed the statutory interest rate limit and therefore part of the interests may not be enforceable through the PRC judicial system.” In December 2017, the Notice on Regulating and Rectifying “Cash Loan” Business was promulgated by the Internet Finance Rectification Office and the Online Lending Rectification Office.
Risk Factors—Risks Related to Our Business—Interest rates of certain of our loan products may exceed the statutory interest rate limit and therefore part of the interests may not be enforceable through the PRC judicial system.” 78 In December 2017, the Notice on Regulating and Rectifying “Cash Loan” Business was promulgated by the Internet Finance Rectification Office and the Online Lending Rectification Office.
Risk Factors—Risks Related to Our Business—We may be deemed to use our own funds to finance certain loans and therefore be subject us to regulatory risks.” In addition, the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice jointly issued the Guidance on Several Issues Regarding Illegal Lending in Criminal Cases on July 23, 2019.
Risk Factors—Risks Related to Our Business—We may be deemed to use our own funds to finance certain loans and therefore be subject us to regulatory risks.” 80 In addition, the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice jointly issued the Guidance on Several Issues Regarding Illegal Lending in Criminal Cases on July 23, 2019.
This restated agreement will remain effective until Shanghai Guangjian has acquired all equity interests of Beijing Paipairongxin from its shareholders. Contractual Arrangements with Shanghai Zihe and Its Shareholders The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Shanghai Manyin, the consolidated variable interest entity, Shanghai Zihe, and the shareholders of Shanghai Zihe.
This restated agreement will remain effective until Shanghai Guangjian has acquired all equity interests of Beijing Paipairongxin from its shareholders. 100 Contractual Arrangements with Shanghai Zihe and Its Shareholders The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Shanghai Manyin, the consolidated variable interest entity, Shanghai Zihe, and the shareholders of Shanghai Zihe.
Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our offshore financing to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” 92 Table of Contents Regulations on foreign exchange registration of overseas investment by PRC residents SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Round-trip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75.” SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event.
Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our offshore financing to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” Regulations on foreign exchange registration of overseas investment by PRC residents SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Round-trip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75.” SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event.
Borrowers across various credit score tiers are subject to different credit limits and borrowing costs. The borrowing costs associated with our standard loans encompass loan interest payable to institutional funding partners. Borrowers may also incur a guarantee service fee for services rendered by financing guarantee companies.
Borrowers across various credit score tiers are subject to different credit limits and borrowing costs. 70 The borrowing costs associated with our standard loans encompass loan interest payable to institutional funding partners. Borrowers may also incur a guarantee service fee for services rendered by financing guarantee companies.
Regulations in Other Jurisdictions Due to our global operations, we are also subject to the rules and regulations of the other jurisdictions in which we operate. For example, the Indonesian regulator, the Financial Services Authority of Indonesia, has lowered the maximum interest rate that online lenders can charge their borrowers.
Regulations in Other Jurisdictions Due to our global operations, we are also subject to the rules and regulations of the other jurisdictions in which we operate. For example, the Indonesian regulator, the Financial Services Authority of Indonesia (OJK), has lowered the maximum interest rate that online lenders can charge their borrowers.
We use a variety of traditional and internet marketing channels to acquire borrowers although most of our borrowers are acquired online. Our borrower acquisition channels mainly include: • Online Advertising . From time to time, we work with App Stores to promote our mobile applications and with internet companies to place online advertisements. • Online Partnership s.
We use a variety of traditional and internet marketing channels to acquire borrowers although most of our borrowers are acquired online. Our borrower acquisition channels mainly include: ● Online Advertising . From time to time, we work with App Stores to promote our mobile applications and with internet companies to place online advertisements. 76 ● Online Partnership s.
Consumer finance marketplaces which operate online platforms connecting borrowers and institutional funding partners compete directly with us for both borrowers and institutional funding partners. We also compete with traditional financial institutions, including credit card issuers, consumer finance business units in commercial banks and other consumer finance companies.
Consumer finance platforms which operate online platforms connecting borrowers and institutional funding partners compete directly with us for both borrowers and institutional funding partners. We also compete with traditional financial institutions, including credit card issuers, consumer finance business units in commercial banks and other consumer finance companies.
As a leading player in the online consumer finance market in China and the overseas markets, we face intensive competition from other online marketplaces, online finance service providers, and technology giant backed internet finance platforms, as well as traditional financial institutions.
As a leading player in the online consumer finance market in China and the overseas markets, we face intensive competition from other online platforms, online finance service providers, and technology giant backed internet finance platforms, as well as traditional financial institutions.
Although this agreement can be terminated by mutual agreement between Shanghai Manyin and Shanghai Zihe, Shanghai Zihe has no right to unilaterally terminate this agreement. Agreement that provides us with the option to purchase the equity interest in Shanghai Zihe Exclusive Call Option Agreement .
Although this agreement can be terminated by mutual agreement between Shanghai Manyin and Shanghai Zihe, Shanghai Zihe has no right to unilaterally terminate this agreement. 101 Agreement that provides us with the option to purchase the equity interest in Shanghai Zihe Exclusive Call Option Agreement .
The power of attorney will remain in force and irrevocable during the term each shareholder remains as a shareholder of Shanghai Ledao. Equity Pledge Agreement . Shanghai Manyin, Shanghai Ledao, and the shareholders of Shanghai Ledao entered into an equity pledge agreement on January 14, 2019.
The power of attorney will remain in force and irrevocable during the term each shareholder remains as a shareholder of Shanghai Ledao. 102 Equity Pledge Agreement . Shanghai Manyin, Shanghai Ledao, and the shareholders of Shanghai Ledao entered into an equity pledge agreement on January 14, 2019.
The CSRC Filing Measures also set forth certain regulatory red lines for overseas offerings and listings by domestic enterprises: (i) if the intended securities offering and listing is specifically prohibited by national laws and regulations and applicable provisions; (ii) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, (iv) if the domestic company is currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations and no decision has been made; (v) if there are material ownership disputes over the stocks controlled by the controlling shareholder, or by the shareholders controlled by the controlling shareholder or actual controller. 97 Table of Contents On February 24, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection, and National Archives Administration of China published the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies.
The CSRC Filing Measures also set forth certain regulatory red lines for overseas offerings and listings by domestic enterprises: (i) if the intended securities offering and listing is specifically prohibited by national laws and regulations and applicable provisions; (ii) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, (iv) if the domestic company is currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations and no decision has been made; (v) if there are material ownership disputes over the stocks controlled by the controlling shareholder, or by the shareholders controlled by the controlling shareholder or actual controller. 96 On February 24, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection, and National Archives Administration of China published the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies.
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” and “—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us.” 105 Table of Contents 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” and “—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to us.” D.
Furthermore, on August 31, 2022, the Cyberspace Administration of China promulgated the Guidelines to the Application for Security Assessment of Cross-border Data Transfer (First Edition), which provides that the activities of “cross-border data transfer” include (i) overseas transmission and storage by data processors of data generated during operations in mainland China; (ii) the access to, use, download or export of the data collected and generated by data processors and stored in mainland China by overseas institutions, organizations or individuals; and (iii) other acts as specified by the Cyberspace Administration of China. 89 Table of Contents On February 22, 2023, the Cyberspace Administration of China promulgated the Measures on Standard Contract for Outbound Data Transfer of Personal Information, which became effective on June 1, 2023.
Furthermore, on August 31, 2022, the Cyberspace Administration of China promulgated the Guidelines to the Application for Security Assessment of Cross-border Data Transfer (First Edition), which provides that the activities of “cross-border data transfer” include (i) overseas transmission and storage by data processors of data generated during operations in mainland China; (ii) the access to, use, download or export of the data collected and generated by data processors and stored in mainland China by overseas institutions, organizations or individuals; and (iii) other acts as specified by the Cyberspace Administration of China. 87 On February 22, 2023, the Cyberspace Administration of China promulgated the Measures on Standard Contract for Outbound Data Transfer of Personal Information, which became effective on June 1, 2023.
Quality Assurance Commitments for Our Institutional Funding Partners We provide quality assurance commitments to our institutional funding partners for a substantial majority of the loans they have funded. These commitments comprise two primary types: financing guarantee and insurance policy. Financing guarantee . We collaborate with licensed third-party financing guarantee companies to provide financing guarantees to our institutional funding partners.
Quality Assurance Commitments for Our Institutional Funding Partners We provide quality assurance commitments to our institutional funding partners for the majority of the loans they have funded. These commitments comprise two primary types: financing guarantee and insurance policy. Financing guarantee . We collaborate with licensed third-party financing guarantee companies to provide financing guarantees to our institutional funding partners.
Currently, our institutional funding partners primarily include commercial banks, internet banks, private banks, consumer finance companies, micro-loan companies and trust management companies. Generally, these institutional funding partners directly provide loans to the borrowers we introduce using their own funds.
Currently, our institutional funding partners primarily include commercial banks, internet or digital banks, private banks, consumer finance companies, micro-loan companies and trust management companies. Generally, these institutional funding partners directly provide loans to the borrowers we introduce using their own funds.
Loans funded by financial institutions licensed by financial regulatory authorities are not considered private lending transactions. 79 Table of Contents On August 20, 2020, the Supreme People’s Court issued the Decision on Amending the Provisions on Several Issues Concerning Laws Applicable to Trial of Private Lending Cases, which was further amended by the Supreme People’s Court on December 29, 2020.
Loans funded by financial institutions licensed by financial regulatory authorities are not considered private lending transactions. On August 20, 2020, the Supreme People’s Court issued the Decision on Amending the Provisions on Several Issues Concerning Laws Applicable to Trial of Private Lending Cases, which was further amended by the Supreme People’s Court on December 29, 2020.
Copyright in the PRC, including copyrighted software, is principally protected under the Copyright Law and related rules and regulations. Under the Copyright Law, the term of protection for copyrighted software is 50 years. 93 Table of Contents Patent . The Patent Law provides for patentable inventions, utility models and designs, which must meet three conditions: novelty, inventiveness and practical applicability.
Copyright in the PRC, including copyrighted software, is principally protected under the Copyright Law and related rules and regulations. Under the Copyright Law, the term of protection for copyrighted software is 50 years. Patent . The Patent Law provides for patentable inventions, utility models and designs, which must meet three conditions: novelty, inventiveness and practical applicability.
Although termination of this restated agreement can be achieved by mutual agreement among Shanghai Guangjian, Shanghai Shanghu, Beijing Paipairongxin, Shanghai PPDai, and Beijing Prosper, Beijing Paipairongxin and Shanghai PPDai do not have the right to unilaterally terminate this agreement. 101 Table of Contents Agreement that provides us with the option to purchase the equity interest in Beijing Paipairongxin Restated Option Agreement .
Although termination of this restated agreement can be achieved by mutual agreement among Shanghai Guangjian, Shanghai Shanghu, Beijing Paipairongxin, Shanghai PPDai, and Beijing Prosper, Beijing Paipairongxin and Shanghai PPDai do not have the right to unilaterally terminate this agreement. Agreement that provides us with the option to purchase the equity interest in Beijing Paipairongxin Restated Option Agreement .
According to this regulation, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (a) the primary location of the day-to-day operational management is in China; (b) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in China; (c) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholders meeting minutes are located or maintained in China; and (d) 50% or more of voting board members or senior executives habitually reside in China.
According to this regulation, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: (i) the primary location of the day-to-day operational management is in China; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in China; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholders meeting minutes are located or maintained in China; and (iv) 50% or more of voting board members or senior executives habitually reside in China.
The power of attorney will remain in force and irrevocable during the term each shareholder remains as a shareholder of Shanghai Zihe. 102 Table of Contents Equity Pledge Agreement . Shanghai Manyin, Shanghai Zihe, and the shareholders of Shanghai Zihe entered into an equity pledge agreement on March 21, 2018.
The power of attorney will remain in force and irrevocable during the term each shareholder remains as a shareholder of Shanghai Zihe. Equity Pledge Agreement . Shanghai Manyin, Shanghai Zihe, and the shareholders of Shanghai Zihe entered into an equity pledge agreement on March 21, 2018.
It embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since it is relatively new, uncertainties still exist regarding its interpretation and implementation.
It embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, uncertainties still exist regarding its interpretation and implementation.
In 2023, 98.0% of loan applications in China were automated, with the remaining 2.0% undergoing manual review. Approved applicants are connected with our institutional funding partners, while others are directed to third-party platforms. If they pass those platforms’ assessments, we charge service fees to the platforms.
In 2024, 99.2% of loan applications in China were automated, with the remaining 0.8% undergoing manual review. Approved applicants are connected with our institutional funding partners, while others are directed to third-party platforms. If they pass those platforms’ assessments, we charge service fees to the platforms.
We also leased office space in other places, primarily including Beijing, Hainan, Fujian and Hong Kong in 2023. We lease our premises from unrelated third parties under operating lease agreements. The lease term varies from one year to ten years. Our servers are primarily hosted at internet data centers owned by major domestic internet data center providers.
We also leased office space in other places, primarily including Beijing, Hainan and Fujian in 2024. We lease our premises from unrelated third parties under operating lease agreements. The lease term varies from one year to five years. Our servers are primarily hosted at internet data centers owned by major domestic internet data center providers.
In 2021, 2022 and 2023, 80.0%, 86.8% and 87.2% of the total loan origination volume on our platform in China was generated from repeat borrowers who had at least one drawdown before. Our platforms appeal to institutional funding partners by offering a wide spectrum of loan products.
In 2022, 2023 and 2024, 86.8%, 87.2% and 86.5% of the total loan origination volume on our platform in China was generated from repeat borrowers who had at least one drawdown before. 68 Our platforms appeal to institutional funding partners by offering a wide spectrum of loan products.
Unless terminated in advance by Shanghai Guangjian and Shanghai Shanghu, this restated agreement will remain effective until the dissolution of Beijing Paipairongxin pursuant to PRC law. 100 Table of Contents Restated Power of Attorney .
Unless terminated in advance by Shanghai Guangjian and Shanghai Shanghu, this restated agreement will remain effective until the dissolution of Beijing Paipairongxin pursuant to PRC law. 99 Restated Power of Attorney .
We also have other brands in China, such as KOO Virtual Credit. The number of our cumulative registered users in China increased from 131.2 million as of December 31, 2021 to 143.9 million as of December 31, 2022 and further to 155.6 million as of December 31, 2023.
We also have other brands in China, such as KOO Virtual Credit. The number of our cumulative registered users in China increased from 143.9 million as of December 31, 2022 to 155.6 million as of December 31, 2023 and further to 172.6 million as of December 31, 2024.
We provide our institutional funding partners with an opportunity to locate high quality borrowers and achieve attractive returns. Institutional funding partners may provide loans to borrowers that we introduce to them, relying on the preliminary credit assessment services as well as other services we provide to them.
We provide our institutional funding partners with an opportunity to locate high quality borrowers and achieve attractive returns. Institutional funding partners may provide loans to borrowers that we introduce to them, making use of the preliminary credit assessment services as well as other services we provide to them.
In 2023, over 68.9% of our borrowers in China were between 20 and 40 years of age. We strategically cultivate customer loyalty, aiming to capture the vast growth opportunities as our borrowers enter into different stages of their lives and qualify for higher credit limits.
In 2024, over 66.3% of our borrowers in China were between 20 and 40 years of age. We strategically cultivate customer loyalty, aiming to capture the vast growth opportunities as our borrowers enter into different stages of their lives and qualify for higher credit limits.
The Ministry of Industry and Information Technology is the major regulatory authority responsible for the administration of the PRC Internet domain names. The registration of domain names in PRC is on a “first-apply-first-registration” basis. A domain name applicant will become the domain name holder upon the completion of the application procedure. Our major domain name “ppdai.com” has been registered.
The Ministry of Industry and Information Technology is the major regulatory authority responsible for the administration of the PRC Internet domain names. The registration of domain names in PRC is on a “first-apply-first-registration” basis. A domain name applicant will become the domain name holder upon the completion of the application procedure.
We have also established an offline direct sales team with a workforce of over 700 employees as of December 31, 2023. Competition Online consumer finance is an emerging industry. It provides a new means for consumers to obtain financing.
We have also established an offline direct sales team with a workforce of over 200 full-time employees as of December 31, 2024. Competition Online consumer finance is an emerging industry. It provides a new means for consumers to obtain financing.
In 2021, 2022 and 2023, revenues generated from the overseas markets were RMB826.4 million, RMB1,149.7 million and RMB2,136.9 million (US$301.0 million), representing 8.7%, 10.3% and 17.0% of net revenues for the respective years. Our business models in both the PRC and overseas markets share substantial similarities, albeit with variations in specific loan products stemming from localization strategies and regulatory requirements.
In 2022, 2023 and 2024, revenues generated from the overseas markets were RMB1,149.7 million, RMB2,136.9 million and RMB2,532.5 million (US$347.0 million), representing 10.3%, 17.0% and 19.4% of net revenues for the respective years. Our business models in both the PRC and overseas markets share substantial similarities, albeit with variations in specific loan products stemming from localization strategies and regulatory requirements.
Approved borrowers typically receive loan disbursements within 24 hours following the loan listing. In 2023, 94.3% of the total number of loans facilitated through our platform in China were funded within two hours. We believe these features are essential to meeting borrowers’ often imminent financing needs.
Approved borrowers typically receive loan disbursements within 24 hours following the loan listing. In 2024, 94.7% of the total number of loans facilitated through our platform in China were funded within one hour. We believe these features are essential to meeting borrowers’ often imminent financing needs.
On January 30, 2024, the National Financial Regulatory Administration promulgated the Measures on the Administration of Personal Loans, which stipulate that (i) several conditions must be met to apply for a personal loan, including, but not limited to: (a) clear and legal purposes for the loan, (b) reasonable amounts, terms, and currencies as indicated in the loan application, and (c) willingness and ability of the borrower to make repayments, with a good credit standing and no record of bad credit; (ii) loan investigations must cover, but are not limited to, the borrower’s basic information, earnings, loan purposes, source of funds, ability to repay, and repayment method; and (iii) the lender may not delegate core risk management matters, such as assessing the borrower’s genuine intentions, earnings, indebtedness, source of funds, and the evaluation of service providers, to a third party.
On January 30, 2024, the National Financial Regulatory Administration promulgated the Measures on the Administration of Personal Loans, which stipulate that (i) several conditions must be met to apply for a personal loan, including, but not limited to: (a) clear and legal purposes for the loan, (b) reasonable amounts, terms, and currencies as indicated in the loan application, and (c) willingness and ability of the borrower to make repayments, with a good credit standing and no record of bad credit; (ii) loan investigations must cover, but are not limited to, the borrower’s basic information, earnings, loan purposes, source of funds, ability to repay, and repayment method; and (iii) the lender may not delegate core risk management matters, such as assessing the borrower’s genuine intentions, earnings, indebtedness, source of funds, and the evaluation of service providers, to a third party. 77 On August 6, 2015, the Supreme People’s Court issued the Provisions on Several Issues Concerning Laws Applicable to Trials of Private Lending Cases.
On May 1, 2021, the Regulations on the Scope of Necessary Personal Information Collected by the Frequently Used Mobile Applications, jointly promulgated by the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security and the State Administration for Market Regulation came into effect, which provides, among others, that: (i) the application operators may not refuse to provide fundamental function services to the users for reason that such users refuse to provide the personal information out of the scope of necessity; (ii) the fundamental function service of online lending applications is to facilitate loans provided to the users online for use of personal consumption and business operation; and (iii) the necessary personal information includes the borrower’s mobile phone number, name, bank account, as well as type, number and valid period of its identity card.
Such draft amendment was released for soliciting public comments only and their final form, interpretation and implementation remain substantially uncertain. 85 On May 1, 2021, the Regulations on the Scope of Necessary Personal Information Collected by the Frequently Used Mobile Applications, jointly promulgated by the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security and the State Administration for Market Regulation came into effect, which provides, among others, that: (i) the application operators may not refuse to provide fundamental function services to the users for reason that such users refuse to provide the personal information out of the scope of necessity; (ii) the fundamental function service of online lending applications is to facilitate loans provided to the users online for use of personal consumption and business operation; and (iii) the necessary personal information includes the borrower’s mobile phone number, name, bank account, as well as type, number and valid period of its identity card.
The number of unique borrowers in a given year means the total number of borrowers whose loans on our platforms were funded during such year. The number of our unique borrowers in China were approximately 5.6 million in 2021, 4.7 million in 2022, 4.4 million in 2023. Our platforms feature a high proportion of repeat borrowers.
The number of unique borrowers in a given year means the total number of borrowers whose loans on our platforms were funded during such year. The number of our unique borrowers in China were approximately 4.7 million in 2022, 4.4 million in 2023, and 4.1 million in 2024. Our platforms feature a high proportion of repeat borrowers.
Since the launch of our operations in the overseas markets and up to December 31, 2023, we had facilitated loans for approximately 4.8 million borrowers in Indonesia and the Philippines. The borrowers in the overseas markets are typically younger individuals, compared to borrowers in the Chinese market.
Since the launch of our operations in the overseas markets and up to December 31, 2024, we had facilitated loans for approximately 7.0 million borrowers in Indonesia and the Philippines. The borrowers in the overseas markets are typically younger individuals, compared to borrowers in the Chinese market.
For our customer services and loan collection services, we leased an area of approximately 3,948 square meters in Changsha, approximately 5,435 square meters in Hefei, and approximately 1,332 square meters in Zhengzhou. For our operations in the overseas markets, we leased areas of approximately 3,193 square meters in Indonesia and approximately 1,057 square meters in the Philippines.
For our customer services and loan collection services, we leased an area of approximately 3,948 square meters in Changsha, approximately 5,435 square meters in Hefei, and approximately 2,356 square meters in Zhengzhou. For our operations in the overseas markets, we leased areas of approximately 3,193 square meters in Indonesia and approximately 3,363 square meters in the Philippines.
Upon completion of the credit assessment, eligible borrowers may apply for loans within the approved credit limit, with repayment terms spanning from 1 month to 24 months. The average loan amounts for our standard loan products in China were RMB4,982 in 2021, RMB7,249 in 2022, and RMB8,318 in 2023.
Upon completion of the credit assessment, eligible borrowers may apply for loans within the approved credit limit, with repayment terms spanning from 1 month to 24 months. The average loan amounts for our standard loan products in China were RMB7,249 in 2022, RMB8,318 in 2023, and RMB10,402 (US$1,425) in 2024.
This makes our platforms both highly reliable and scalable. • Scalabilit y. With modular architecture, our platforms can be easily expanded as data storage requirements and user visits increase. In addition, load balancing technology helps us improve distribution of workloads across multiple computing components, optimizing resource utilization and minimizing response time. • Automatio n.
With modular architecture, our platforms can be easily expanded as data storage requirements and user visits increase. In addition, load balancing technology helps us improve distribution of workloads across multiple computing components, optimizing resource utilization and minimizing response time. ● Automatio n.
In 2021, 2022 and 2023, the average principal amount of loans originated on our platform in China was RMB4,982, RMB7,249 and RMB8,318 (US$1,172), respectively, with an average term of 8.4 months, 8.7 months and 8.3 months, respectively. Borrowers come to our platforms for convenient, simple and fast loan transaction process. We generally have a high level of borrower stickiness.
In 2022, 2023 and 2024, the average principal amount of loans originated on our platform in China was RMB7,249, RMB8,318 and RMB10,402 (US$1,425), respectively, with an average term of 8.7 months, 8.3 months and 8.0 months, respectively. Borrowers come to our platforms for convenient, simple and fast loan transaction process. We generally have a high level of borrower stickiness.
Generally, borrowers in overseas markets are younger on average, with lower average loan amounts and tenors compared to those in China. Borrowers Since our inception and up to December 31, 2023, we had facilitated loans for over 25.2 million borrowers in China from substantially all cities and counties across China.
Generally, borrowers in overseas markets are younger on average, with lower average loan amounts and shorter tenors compared to those in China. 69 Borrowers Since our inception and up to December 31, 2024, we had facilitated loans for over 26.8 million borrowers in China from substantially all cities and counties across China.
Shanghai Manyin has entered into contractual arrangements with Shanghai Ledao and its shareholders, enabling us to direct the operational activities of Shanghai Ledao. Please refer to “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements” for further details.
Shanghai Manyin has entered into contractual arrangements with Shanghai Ledao and its shareholders, enabling us to direct the operational activities of Shanghai Ledao. Please refer to “Item 4. Information on the Company—C.
The number of unique borrowers for the overseas markets were approximately 1.7 million in 2021, 1.6 million in 2022, and 1.9 million in 2023.
The number of unique borrowers for the overseas markets were approximately 1.6 million in 2022, 1.9 million in 2023, and 2.9 million in 2024.
The following are typical data that we seek to collect for each loan application: • historical credit data accumulated through our online platform; • behavioral data that we glean from an applicant’s behaviors as they apply for loans; • personal identity information maintained by an organization operated under the Ministry of Public Security; • background information, such as income level, education level and marital status, collected from prospective borrowers; • list and database of fraud cases; and • credit data from the credit bureau in the markets where we operate.
The following are typical data that we seek to collect for each loan application: ● historical credit data accumulated through our online platform; ● behavioral data that we glean from an applicant’s behaviors as they apply for loans; ● personal identity information maintained by an organization operated under the Ministry of Public Security; ● background information, such as income level, education level and marital status, collected from prospective borrowers; ● list and database of fraud cases; and ● credit data from the credit bureau in the markets where we operate. 73 Upon the data aggregation, our system converts the originally unstructured data and structured data into credit scores using machine learning techniques.
Our loan origination volume in the overseas markets increased from RMB3.7 billion as of December 31, 2021 to RMB4.3 billion as of December 31, 2022 and further to RMB7.9 billion (US$1.1 billion) as of December 31, 2023.
Our loan origination volume in the overseas markets increased from RMB4.3 billion as of December 31, 2022 to RMB7.9 billion as of December 31, 2023 and further to RMB10.1 billion (US$1.4 billion) as of December 31, 2024.
In April 2018, Shanghai Erxu Information Technology Co., Ltd. was incorporated as a wholly-owned PRC subsidiary of Shanghai Zihe to operate business related to loan facilitation services. In June 2018, PT Pembiayaan Digital Indonesia was incorporated in Indonesia. We currently hold an 80% equity interest in PT Pembiayaan Digital Indonesia.
Organizational Structure—Contractual Arrangements” for further details. 67 In April 2018, Shanghai Erxu Information Technology Co., Ltd. was incorporated as a wholly-owned PRC subsidiary of Shanghai Zihe to operate business related to loan facilitation services. In June 2018, PT Pembiayaan Digital Indonesia was incorporated in Indonesia. We currently hold an ultimate 80% equity interest in PT Pembiayaan Digital Indonesia.
(5) The remaining 51% equity interest is held by our company through different intermediate entities. 99 Table of Contents Contractual Arrangements PRC laws and regulations impose restrictions on foreign ownership and investment in internet-based businesses. We are a Cayman Islands company and our PRC subsidiaries are considered foreign-invested enterprises.
(5) The remaining 51% equity interest is held by our company through an intermediate entity. 98 Contractual Arrangements PRC laws and regulations impose restrictions on foreign ownership and investment in internet-based businesses. We are a Cayman Islands company and our PRC subsidiaries are considered foreign-invested enterprises.
Our net revenues grew from RMB9.5 billion in 2021 and to RMB11.1 billion in 2022 and further to RMB12.5 billion (US$1.8 billion) in 2023. Our net profit was RMB2.5 billion in 2021, RMB2.3 billion in 2022 and RMB2.4 billion (US$335.7 million) in 2023. China and Overseas Markets We primarily operate in China under the PPDai brand.
Our net revenues grew from RMB11.1 billion in 2022 and to RMB12.5 billion in 2023 and further to RMB13.1 billion (US$1.8 billion) in 2024. Our net profit was RMB2.3 billion in 2022, RMB2.4 billion in 2023 and RMB2.4 billion (US$0.3 billion) in 2024. China and Overseas Markets We primarily operate in China under the PPDai brand.
Shanghai Manyin entered into a loan agreement with each of the shareholders of Shanghai Ledao, namely Mr. Lizhong Chen and Mr. Yejun Jiang on January 14, 2019, who are family relatives of two of our founders.
Agreements that enable us to direct the activities of operation of Shanghai Ledao Loan Agreement . Shanghai Manyin entered into a loan agreement with each of the shareholders of Shanghai Ledao, namely Mr. Lizhong Chen and Mr. Yejun Jiang on January 14, 2019, who are family relatives of two of our founders.
On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021, requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly related to the processing purpose and should be conducted in a method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information.
These provisions also ban provision of undisclosed vulnerabilities to overseas organizations or individuals other than to the product providers. 86 On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021, requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly related to the processing purpose and should be conducted in a method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information.
Small business owners are also given the option to upload their business license to our system. 73 Table of Contents Step 2: Fraud Detection and Credit Assessment After receiving loan applications, our system gathers data from various sources, including information provided by applicants, third-party data partners, and internet sources with authorization.
Small business owners are also given the option to upload their business license to our system. Step 2: Fraud Detection and Credit Assessment After receiving loan applications, our system gathers data from various sources, including information provided by applicants, third-party data partners, and internet sources with authorization. This data includes background details, behavior patterns and credit history.
In addition, it imposes further obligations on a personal information processor that provides for basic internet platform services, has large amount of users, has complicated business activities, including formulating of an independent institution mainly comprising of outside members to supervise personal information processing activities, termination of provision of services for product or service providers on the platform whose personal information processing activities are in material violation of laws and regulations, and issuing personal information protection social responsibilities reports regularly. 91 Table of Contents Regulations Relating to Foreign Exchange Regulations on foreign currency exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently amended in August 2008.
In addition, it imposes further obligations on a personal information processor that provides for basic internet platform services, has large amount of users, has complicated business activities, including formulating of an independent institution mainly comprising of outside members to supervise personal information processing activities, termination of provision of services for product or service providers on the platform whose personal information processing activities are in material violation of laws and regulations, and issuing personal information protection social responsibilities reports regularly.
As of March 31, 2024, we had (i) 181 patent applications and 56 registered patents in China and other jurisdictions, including our proprietary facial recognition technology used for fraud detection, (ii) 249 registered computer software copyrights, (iii) 238 registered domain names, including www.ppdai.com, and (iv) 347 trademark registrations in China and other jurisdictions, including our “FINV,” “PPDAI,” “ 信也 ,” “ 拍拍贷 ” and “ 魔镜 ” trademarks.
As of March 31, 2025, we had (i) 197 patent applications and 59 registered patents in China and other jurisdictions, including our proprietary facial recognition technology used for fraud detection, (ii) 297 registered computer software copyrights, (iii) 251 registered domain names, including www.ppdai.com , and (iv) 390 trademark registrations in China and other jurisdictions, including our “FINV,” “PPDAI,” “信也,” “拍拍贷” and “魔镜” trademarks.
The associated borrowing costs for our standard loan products in the overseas markets typically include loan interest payable to institutional funding partners. Borrowers may also incur a guarantee service fee in certain instances for services provided by insurance companies.
Borrowers across various credit score tiers are subject to different credit limits and borrowing costs. The associated borrowing costs for our standard loan products in the overseas markets typically include loan interest payable to institutional funding partners. Borrowers may also incur a guarantee service fee in certain instances for services provided by insurance companies.
On September 4, 2020, nine local governmental authorities in Shanghai jointly issued the Guidance on Further Strengthening the Administration of Financial Advertisement, which stipulates, among other things, that (i) advertisements released by financial institutions and financial service providers should be within the scope permitted by local governmental authorities; (ii) any market players without financial business qualifications cannot advertise or promote financial business; (iii) financial advertisements should not induce the purchase of improper financial products or services; and (iv) financial service providers are required to disclose the name of their client when acting as an intermediary.
On September 4, 2020, nine local governmental authorities in Shanghai jointly issued the Guidance on Further Strengthening the Administration of Financial Advertisement, which stipulates, among other things, that (i) advertisements released by financial institutions and financial service providers should be within the scope permitted by local governmental authorities; (ii) any market players without financial business qualifications cannot advertise or promote financial business; (iii) financial advertisements should not induce the purchase of improper financial products or services; and (iv) financial service providers are required to disclose the name of their client when acting as an intermediary. 79 On February 19, 2021, the China Banking and Insurance Regulatory Commission issued the Notice of Further Regulating Online Loan Business of Commercial Banks, also known as CBIRC Circular 24.
Regulations on privacy protection The Several Provisions on Regulating the Market Order of Internet Information Services, issued by the Ministry of Industry and Information Technology in December 2011, provide that, an internet information service provider may not collect any user personal information or provide any such information to third parties without the consent of a user.
Compliance with these measures is critical to avoiding regulatory sanctions and protecting institutional reputations. 88 Regulations on privacy protection The Several Provisions on Regulating the Market Order of Internet Information Services, issued by the Ministry of Industry and Information Technology in December 2011, provide that, an internet information service provider may not collect any user personal information or provide any such information to third parties without the consent of a user.
The application process for our standard loan products typically takes only a few minutes. If the application is initiated via mobile applications, applicants may provide requested personal details and take a real-time selfie holding their identity documentation.
Step 1: Initial Application Prospective borrowers can initiate applications online anytime, anywhere through our mobile applications. The application process for our standard loan products typically takes only a few minutes. If the application is initiated via mobile applications, applicants may provide requested personal details and take a real-time selfie holding their identity documentation.
Our outstanding loan balance in the China market increased from RMB50.0 billion as of December 31, 2021 to RMB63.8 billion as of December 31, 2022 and RMB66.1 billion (US$9.3 billion) as of December 31, 2023.
Our outstanding loan balance in the China market increased from RMB63.8 billion as of December 31, 2022 to RMB66.1 billion as of December 31, 2023 and further to RMB69.8 billion (US$9.6 billion) as of December 31, 2024.
In the opinion of Hui Ye Law Firm, our PRC counsel: • the structures of the consolidated variable interest entities and our WFOEs are in compliance with PRC laws or regulations currently in effect; and • the agreements under the contractual arrangements between our WFOEs, the consolidated variable interest entities and their shareholders governed by PRC law are valid, binding and enforceable under PRC law, and do not and will not result in any violation of applicable PRC laws or regulations currently in effect.
This agreement will remain effective for 30 years, renewable upon Shanghai Manyin’s advance written notice. 103 In the opinion of Hui Ye Law Firm, our PRC counsel: ● the structures of the consolidated variable interest entities and our WFOEs are in compliance with PRC laws or regulations currently in effect; and ● the agreements under the contractual arrangements between our WFOEs, the consolidated variable interest entities and their shareholders governed by PRC law are valid, binding and enforceable under PRC law, and do not and will not result in any violation of applicable PRC laws or regulations currently in effect.
A new Magic Mirror credit score is generated each time a borrower applies for a loan, which may change the borrower’s credit limit for that type of loan. We apply various machine learning techniques to the data collected.
Based on the assessment results, our credit scoring model generates Magic Mirror scores for each of the prospective borrowers. A new Magic Mirror credit score is generated each time a borrower applies for a loan, which may change the borrower’s credit limit for that type of loan. We apply various machine learning techniques to the data collected.
Our outstanding loan balance in the overseas markets increased from RMB330.0 million as of December 31, 2021 to RMB800.4 million as of December 31, 2022 and further to RMB1,262.3 million (US$177.8 million) as of December 31, 2023.
Our outstanding loan balance in the overseas markets increased from RMB800.4 million as of December 31, 2022 to RMB1,262.3 million as of December 31, 2023 and further to RMB1,696.2 million (US$232.4 million) as of December 31, 2024.
Our loan origination volume in China increased from RMB133.6 billion in 2021 to RMB171.1 billion in 2022 and further to RMB186.4 billion (US$26.3 billion) in 2023.
Our loan origination volume in China increased from RMB171.1 billion in 2022 to RMB186.4 billion in 2023 and further to RMB196.1 billion (US$26.9 billion) in 2024.
By contrast, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China.
By contrast, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China. 90 On February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment.
In August 2018, Hainan Shanghu Information Technology Co., Ltd. was incorporated as a subsidiary indirectly and wholly owned by Shanghai Manyin to operate technology service business. 69 Table of Contents In November 2019, Fujian Zhiyun Financing Guarantee Co., Ltd. was incorporated as a wholly-owned PRC subsidiary of Shanghai PPDai to provide financing guarantees services to our institutional funding partners for loans funded by them to the borrowers we introduced.
In November 2019, Fujian Zhiyun Financing Guarantee Co., Ltd. was incorporated as a wholly-owned PRC subsidiary of Shanghai PPDai to provide financing guarantees services to our institutional funding partners for loans funded by them to the borrowers we introduced.
In 2023, the total origination volume of our standard loan products in China amounted to RMB180.7 billion (US$25.5 billion), accounting for 96.9% of the total loan origination volume on our platform in China for the same period.
In 2024, the total origination volume of our standard loan products in China amounted to RMB188.3 billion (US$25.8 billion), accounting for 96.0% of the total loan origination volume on our platform in China for the same period.
These interpretations provide more practical conviction and sentencing criteria for the infringement of citizens’ personal information and mark a milestone for the criminal protection of citizens’ personal information. 90 Table of Contents The Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Administration for Market Regulation jointly promulgated the Notice on Rectification of Illegal Collection of Personal Information on Application on January 23, 2019, which requires application operators to strictly comply with the Cyber Security Law and strengthens the personal information protection.
The Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Administration for Market Regulation jointly promulgated the Notice on Rectification of Illegal Collection of Personal Information on Application on January 23, 2019, which requires application operators to strictly comply with the Cyber Security Law and strengthens the personal information protection.
A taxpayer is allowed to offset the qualified input valued-added tax paid on taxable purchases against the output valued-added tax chargeable on the revenue from services provided. 96 Table of Contents Regulations Relating to Overseas Listing and M&A On August 8, 2006, six PRC governmental and regulatory agencies, including the Ministry of Commerce and the CSRC, jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, a new regulation with respect to the mergers and acquisitions of domestic enterprises by foreign investors that became effective on September 8, 2006 and revised on June 22, 2009.
Regulations Relating to Overseas Listing and M&A On August 8, 2006, six PRC governmental and regulatory agencies, including the Ministry of Commerce and the CSRC, jointly promulgated the Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, a new regulation with respect to the mergers and acquisitions of domestic enterprises by foreign investors that became effective on September 8, 2006 and revised on June 22, 2009.
If an intermediary intentionally conceals any material fact or provides false information in connection with the conclusion of the proposed contract, resulting in harm to the client’s interests, the intermediary may not claim service fees and is liable for the damages caused. 82 Table of Contents Regulations on financial guarantee In June 1995, the Standing Committee of the National People’s Congress promulgated the PRC Guarantee Law.
If an intermediary intentionally conceals any material fact or provides false information in connection with the conclusion of the proposed contract, resulting in harm to the client’s interests, the intermediary may not claim service fees and is liable for the damages caused.
On December 31, 2021, the People’s Bank of China published the Regulations on the Local Financial Supervision and Administration (Draft for Comments), which stipulate that, among others, (i) the local financial organizations should primarily serve their local clients; (ii) the guidance for local financial organizations to carry out business outside provinces where they are registered should be made by the State Council or financial regulatory authorities designated by the State Council; (iii) six types of financial organizations, including financing guarantee companies and micro-lending companies, are deemed as local financial organizations; (iv) a transition period will be given to the organizations carrying out business outside provinces before the effectiveness of the draft by the financial regulatory authorities; and (v) organizations carrying out business outside provinces without approval of the competent provincial regulatory authorities may be subject to penalties, including correction orders, confiscation of illegal gains or fines, cessation of business operations, and revocation of business license.
These guidelines provide, among others, that (i) the regulatory authorities and China Banking and Insurance Regulatory Commission shall collect data and non-data information from the financing guarantee companies and banks respectively; (ii) financing guarantee companies shall establish and implement an off-site supervision information report system and submit data and non-data information timely according to the requirements of the competent regulatory authorities; and (iii) for the off-site supervision, the competent regulatory authorities shall mainly focus on the corporate governance, internal control, risk management capabilities, guarantee business, associated guarantee risks, asset quality, liquidity indicators, and investment conditions of financing guarantee companies. 81 On December 31, 2021, the People’s Bank of China published the Regulations on the Local Financial Supervision and Administration (Draft for Comments), which stipulate that, among others, (i) the local financial organizations should primarily serve their local clients; (ii) the guidance for local financial organizations to carry out business outside provinces where they are registered should be made by the State Council or financial regulatory authorities designated by the State Council; (iii) six types of financial organizations, including financing guarantee companies and micro-lending companies, are deemed as local financial organizations; (iv) a transition period will be given to the organizations carrying out business outside provinces before the effectiveness of the draft by the financial regulatory authorities; and (v) organizations carrying out business outside provinces without approval of the competent provincial regulatory authorities may be subject to penalties, including correction orders, confiscation of illegal gains or fines, cessation of business operations, and revocation of business license.
This data includes background details, behavior patterns and credit history. For repeat borrowers, historical loan performance data accumulated on our platforms is also incorporated into the borrowers’ profile. We use an anti-fraud model to detect fraudulent behavior, employing advanced methods to analyze individual and collusive fraud.
For repeat borrowers, historical loan performance data accumulated on our platforms is also incorporated into the borrowers’ profile. We use an anti-fraud model to detect fraudulent behavior, employing advanced methods to analyze individual and collusive fraud. If fraud is detected, we notify the applicant or proceed with the application if no fraud is found.
In 2021, 2022 and 2023, revenues generated from the China markets were RMB8.6 billion, RMB10.0 billion and RMB10.4 billion (US$1.5 billion), representing 91.3%, 89.7% and 83.0% of net revenues for the respective years. While our business still primarily focuses on the PRC market, we have also been expanding our business in the overseas markets, including Indonesia and the Philippines.
In 2022, 2023 and 2024, revenues generated from the China markets were RMB10.0 billion, RMB10.4 billion and RMB10.5 billion (US$1.4 billion), representing 89.7%, 83.0% and 80.6% of net revenues for the respective years. Although our business remains primarily focused on the PRC market, we have been actively expanding into overseas markets, with a current emphasis on Indonesia and the Philippines.
Our systems infrastructure is primarily hosted in data centers at two separate locations in Shanghai. We maintain redundancy through a real-time multi-layer data backup system to ensure the reliability of our network. Our platforms adopts modular architecture that consists of multiple connected components, each of which can be separately upgraded and replaced without compromising the functioning of other components.
We maintain redundancy through a real-time multi-layer data backup system to ensure the reliability of our network. Our platforms adopts modular architecture that consists of multiple connected components, each of which can be separately upgraded and replaced without compromising the functioning of other components. This makes our platforms both highly reliable and scalable. ● Scalabilit y.
On February 13, 2015, SAFE released Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies, under which local banks are authorized to examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, starting from June 1, 2015. See “Item 3.
Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls. 91 On February 13, 2015, SAFE released Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies, under which local banks are authorized to examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, starting from June 1, 2015.
Under these laws and regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations.
The principal regulations governing distribution of dividends of foreign-invested enterprises include the Foreign-Invested Enterprise Law, as amended in September 2016, and its implementation rules. Under these laws and regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations.
Pursuant to the Notice of the State Administration of Taxation on the Issues Concerning the Application of the Dividend Clauses of Tax Agreements, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends.
Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise is reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. 93 Pursuant to the Notice of the State Administration of Taxation on the Issues Concerning the Application of the Dividend Clauses of Tax Agreements, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends.

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The increase in prepaid expenses and other assets was primarily due to increased amount of deposits required by institutional funding partners as a result of the increase in outstanding loan balance. The increase in quality assurance receivable was primarily due to the increases in the loan origination volume.
The increase in prepaid expenses and other assets was primarily due to the increased amount of deposits required by institutional funding partners as a result of the increase in outstanding loan balance. The increase in quality assurance receivable was primarily due to the increases in the loan origination volume.
See “Forward-Looking Statements” on page 2 of this annual report. In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A.
See “Forward-Looking Statements” on page 2 of this annual report. In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. 104 A.
We generate revenues primarily by collecting transaction service fees from institutional funding partners for our services provided to them such as borrower introduction and preliminary credit assessment, as well as other services we provide along the lifecycle of loans. Typically, we provided quality assurance service, loan facilitation services and post-facilitation services to the borrowers and institutional funding partners.
We generate revenues primarily by collecting transaction service fees from institutional funding partners for our services provided to them such as borrower introduction and preliminary credit assessment, as well as other services we provide along the lifecycle of loans. 109 Typically, we provided quality assurance service, loan facilitation services and post-facilitation services to the borrowers and institutional funding partners.
In 2020, Shanghai Guangjian, one of our PRC subsidiaries, had paid dividends of RMB79.5 million out of China. C. Research and Development, Patents, and Licenses, etc. See “Item 4. Information On the Company—B. Business Overview—Technology” and “Item 4. Information On the Company—B. Business Overview—Intellectual Property.” D.
In 2020, Shanghai Guangjian, one of our PRC subsidiaries, had paid dividends of RMB79.5 million out of China. 122 C. Research and Development, Patents, and Licenses, etc. See “Item 4. Information On the Company—B. Business Overview—Technology” and “Item 4. Information On the Company—B. Business Overview—Intellectual Property.” D.
Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” The overwhelming majority of our future revenues are likely to continue to be in the form of RMB.
Organizational Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” The majority of our future revenues are likely to continue to be in the form of RMB.
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 and adverse effect on our ability to conduct our business.” 116 Table of Contents If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the Enterprise Income Tax Law of the PRC, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
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 and adverse effect on our ability to conduct our business.” If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the Enterprise Income Tax Law of the PRC, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
Net cash used in financing activities was RMB795.9 million in 2022, which was mainly attributable to cash paid to our institutional funding partners that invested in our consolidated trusts in an amount of RMB1.4 billion, dividends payout in amount of RMB372.5 million, and repurchase of our ADSs in an amount of RMB340.8 million, partially offset by cash received from our institutional funding partners that invested in our consolidated trusts in an amount of RMB1.3 billion.
Net cash used in financing activities was RMB763.9 million in 2022, which was mainly attributable to cash paid to our institutional funding partners that invested in our consolidated trusts in an amount of RMB1.4 billion, dividends payout in amount of RMB372.5 million, and repurchase of our ADSs in an amount of RMB340.8 million, partially offset by cash received from our institutional funding partners that invested in our consolidated trusts in an amount of RMB1.3 billion.
When change in one of our estimates or a combined effect of changes of multiple estimates, which results in a 100 basis points increase/decrease in our default rate while holding all other estimates constant, there would be approximately RMB1,947 million pre-tax impact to our consolidated results of operations.
When change in one of our estimates or a combined effect of changes of multiple estimates, which results in a 100 basis points increase/decrease in our default rate while holding all other estimates constant, there would be approximately RMB1,775 million pre-tax impact to our consolidated results of operations.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” Discussion of Certain Balance Sheet Items The following table sets forth selected information from our consolidated balance sheet as of December 31, 2021, 2022 and 2023.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 115 Discussion of Certain Balance Sheet Items The following table sets forth selected information from our consolidated balance sheet as of December 31, 2022, 2023 and 2024.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The following selected consolidated balance sheet as of December 31, 2021 are derived from our audited consolidated balance sheet as of December 31, 2021 not included in this annual report.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The following selected consolidated balance sheet as of December 31, 2022 are derived from our audited consolidated balance sheet as of December 31, 2022 not included in this annual report.
Loan facilitation service fees are the portion of transaction service fees collected for the work we perform through our platforms in connecting borrowers with institutional funding partners and facilitating the origination of loan transactions. 2023 Compared to 2022.
Loan facilitation service fees are the portion of transaction service fees collected for the work we perform through our platforms in connecting borrowers with institutional funding partners and facilitating the origination of loan transactions. 2024 Compared to 2023 .
Origination, servicing expenses and other cost of revenue Origination, servicing expenses and other cost of revenue consist primarily of expenses for credit assessment, loan origination, salaries and benefits for the personnel who work on credit checking, data processing and analysis, loan origination, customer service, loan collection and other cost of revenue. 2023 Compared to 2022 .
Origination, servicing expenses and other cost of revenue Origination, servicing expenses and other cost of revenue consist primarily of expenses for credit assessment, loan origination, salaries and benefits for the personnel who work on credit checking, data processing and analysis, loan origination, customer service, loan collection and other cost of revenue. 2024 Compared to 2023 .
In 2023, one of our PRC subsidiaries was recognized as a “software enterprise” and is entitled to a preferential income tax rate of 12.5% from 2022 to 2024. In 2023, one of our PRC subsidiaries was recognized as “Hainan encouraged industrial enterprise” and was entitled to a preferential income tax rate of 15%.
In 2024, one of our PRC subsidiaries was recognized as a “software enterprise” and was entitled to a preferential income tax rate of 12.5% from 2022 to 2024. In 2024, one of our PRC subsidiaries was recognized as “Hainan encouraged industrial enterprise” and was entitled to a preferential income tax rate of 15%.
Recent Accounting Pronouncements See note 2 to the consolidated financial statements on page F-37 for details on recent accounting pronouncements and our adoption of certain accounting rules. 119 Table of Contents B. Liquidity and Capital Resources Cash Flows and Working Capital To date, we have financed our operations primarily through cash generated by operating activities.
Recent Accounting Pronouncements See note 2 to the consolidated financial statements on page F-37 for details on recent accounting pronouncements and our adoption of certain accounting rules. B. Liquidity and Capital Resources Cash Flows and Working Capital To date, we have financed our operations primarily through cash generated by operating activities.
Post-facilitation service fees Post-facilitation service fees are the portion of transaction service fees collected for services we provide after loan origination, such as repayment facilitation and loan collection. 2023 Compared to 2022.
Post-facilitation service fees Post-facilitation service fees are the portion of transaction service fees collected for services we provide after loan origination, such as repayment facilitation and loan collection. 2024 Compared to 2023 .
Our online customer acquisition expenses primarily include expenses paid to internet marketing channels for online advertising and search engine marketing as well as to certain websites that enable us to reach quality borrowers.
Our advertising and online marketing expenses primarily include expenses paid to internet marketing channels for online advertising and search engine marketing as well as to certain websites that enable us to reach quality borrowers.
Our online customer acquisition expenses primarily include expenses paid to internet marketing channels for online advertising and search engine marketing as well as to certain websites that enable us to reach quality borrowers.
Our advertising and online marketing expenses primarily include expenses paid to internet marketing channels for online advertising and search engine marketing as well as to certain websites that enable us to reach quality borrowers.
Our origination, servicing expenses and other cost of revenue increased by 3.6% from RMB2,038.6 million in 2022 to RMB2,111.5 million (US$297.4 million) in 2023, primarily due to the increase in the facilitation costs and the loan collection expenses as a result of the higher transaction volume.
Our origination, servicing expenses and other cost of revenue increased by 3.6% from RMB2,038.6 million in 2022 to RMB2,111.5 million in 2023, primarily due to the increase in the facilitation costs and the loan collection expenses as a result of the higher transaction volume.
Credit losses for quality assurance commitment Credit losses for quality assurance commitment was accounted for in addition to and separately from the guarantee liabilities accounted for under the Accounting Standards Codification 460. 2023 Compared to 2022 .
Credit losses for quality assurance commitment Credit losses for quality assurance commitment was accounted for in addition to and separately from the guarantee liabilities accounted for under the Accounting Standards Codification 460. 2024 Compared to 2023 .
Our guarantee income increased by 46.2% from RMB3,064.4 million in 2022 to RMB4,479.0 million (US$630.9 million) in 2023, primarily due to the increased outstanding loan balance of the off-balance sheet loans, the higher guarantee rates and the rolling impact of deferred guarantee income.
Our guarantee income increased by 46.2% from RMB3,064.4 million in 2022 to RMB4,479.0 million in 2023, primarily due to the increased outstanding loan balance of the off-balance sheet loans, the higher guarantee rates and the rolling impact of the deferred guarantee income.
Funds payable to investors of consolidated trusts decreased to RMB436.4 million (US$61.5 million) as of December 31, 2023 from RMB1.8 billion as of December 31, 2022, primarily due to the decrease in the loan origination volume of trust products and the early repayment of trust products in the fourth quarter of 2023.
Funds Payable to Investors of Consolidated Trusts Funds payable to investors of consolidated trusts decreased to RMB436.4 million as of December 31, 2023 from RMB1.8 billion as of December 31, 2022, primarily due to the decrease in the loan origination volume of trust products and the early repayment of trust products in the fourth quarter of 2023.
The fair value of quality assurance commitment upon loan origination is released as guarantee income systematically over the term of the loans subject to quality assurance commitment. 2022 Compared to 2021 .
The fair value of quality assurance commitment upon loan origination is released as guarantee income systematically over the term of the loans subject to quality assurance commitment. 2023 Compared to 2022 .
Our sales and marketing expenses as a percentage of our total operating revenues slightly decreased from 15.1% to 15.0% during the same period, primarily attributable to the increase in the revenue generated from repeat borrowers. 2022 Compared to 2021 .
Our sales and marketing expenses as a percentage of our total operating revenues slightly decreased from 15.1% to 15.0% during the same period, primarily attributable to the increase in the revenue generated from repeat borrowers.
Provision for credit loss allowance decreased from RMB496.9 million as of December 31, 2022 to RMB 310.4 million (US$43.7 million) as of December 31, 2023, mainly due to the reversal of impairment loss related to certain counterparties from prior years.
Provision for credit loss allowance decreased from RMB496.9 million as of December 31, 2022 to RMB 310.4 million as of December 31, 2023, mainly due to the reversal of impairment loss related to certain counterparties from prior years.
Loan facilitation service fees increased by 2.0% from RMB4,430.8 million in 2022 to RMB4,520.5 million (US$636.7 million) in 2023, primarily due to the increase in loan origination volume, partially offset by the decrease in the average rate of transaction service fees. The loan origination volume increased from approximately RMB175.4 billion in 2022 to RMB194.3 billion (US$27.4 billion) in 2023.
Loan facilitation service fees increased by 2.0% from RMB4,430.8 million in 2022 to RMB4,520.5 million in 2023, primarily due to the increase in loan origination volume, partially offset by the decrease in the average rate of transaction service fees. The loan origination volume increased from approximately RMB175.4 billion in 2022 to RMB194.3 billion in 2023.
Guarantee income Liabilities of quality assurance commitment are released as guarantee income systematically over the term of the loans subject to quality assurance commitment. 2023 Compared to 2022 .
Guarantee income Liabilities of quality assurance commitment are released as guarantee income systematically over the term of the loans subject to quality assurance commitment. 2024 Compared to 2023 .
(2) The interest income from loans originated under the overseas trust arrangements was RMB22,381, RMB22,576 and nil for the year ended December 31, 2021, 2022, and 2023, respectively.
(2) The interest income from loans originated under the overseas trust arrangements was RMB22,576, nil and nil for the year ended December 31, 2022, 2023, and 2024, respectively.
Investing Activities Net cash provided by investing activities was RMB1.4 billion (US$199.1 million) in 2023, which was mainly attributable to proceeds from short-term investments in an amount of RMB12.4 billion (US$1.8 billion) from maturity of time deposits and wealth management products, and proceeds from investment in loans originated and held by us in an amount of RMB7.3 billion (US$1.0 billion), partially offset by purchase of short-term investments (mainly time deposits and wealth management products) in an amount of RMB11.9 billion (US$1.7 billion) and cash paid for investment in loans originated and held by us in an amount of RMB5.8 billion (US$821.0 million).
Net cash provided by investing activities was RMB1.4 billion in 2023, which was mainly attributable to proceeds from short-term investments in an amount of RMB12.4 billion from maturity of time deposits and wealth management products, and proceeds from investment in loans originated and held by us in an amount of RMB7.3 billion, partially offset by purchase of short-term investments (mainly time deposits and wealth management products) in an amount of RMB11.9 billion and cash paid for investment in loans originated and held by us in an amount of RMB5.8 billion.
Post-facilitation service fees increased by 2.1% from RMB1,929.9 million in 2022 to RMB1,969.7 million (US$277.4 million) in 2023, primarily due to the increase in the outstanding loans facilitated by the company and the rolling impact of deferred transaction fees, partially offset by the decrease in the average rate of transaction service fees. 2022 Compared to 2021.
Post-facilitation service fees increased by 2.1% from RMB1,929.9 million in 2022 to RMB1,969.7 million in 2023, primarily due to the increase in the outstanding loans facilitated by the company and the rolling impact of deferred transaction fees, partially offset by the decrease in the average rate of transaction service fees.
Our results of operations and ability to sustain and increase loan origination volume will depend, in part, on the effectiveness of our sales and marketing efforts. Our sales and marketing expenses were 16.7%, 15.1% and 15.0% of our total operating revenues in 2021, 2022 and 2023, respectively.
Our results of operations and ability to sustain and increase loan origination volume will depend, in part, on the effectiveness of our sales and marketing efforts. Our sales and marketing expenses were 15.1%, 15.0% and 15.4% of our total operating revenues in 2022, 2023 and 2024, respectively.
The average rate of transaction service fees, which is computed by dividing the total amount of transaction service fees we received during the period by the total volume of loans originated on our platforms during the same period, was 4.2% in 2021, 3.7% in 2022, and 3.1% in 2023.
The average rate of transaction service fees, which is computed by dividing the total amount of transaction service fees we received during the period by the total volume of loans originated on our platforms in China during the same period, was 3.7% in 2022, 3.1% in 2023, and 3.1% in 2024.
In 2021, 2022 and 2023, 80.0%, 86.8% and 87.2% of the total loan origination volume on our platform in China was generated from repeat borrowers who had at least one drawdown before.
In 2022, 2023 and 2024, 86.8%, 87.2% and 86.5% of the total loan origination volume on our platform in China was generated from repeat borrowers who had at least one drawdown before.
The increase in the loan origination volume was primarily driven by the increase in loan origination volume generated from repeat borrowers. The loan origination volume generated from repeat borrowers, who had at least one drawdown before, as a percentage of the total loan origination volume facilitated on our platform in China increased from 80.0% in 2021 to 86.8% in 2022.
The increase in the loan origination volume was primarily driven by the increase in loan origination volume generated from repeat borrowers. The loan origination volume generated from repeat borrowers, who had at least one drawdown before, as a percentage of the total loan origination volume facilitated on our platform in China increased from 86.8% in 2022 to 87.2% in 2023.
Our provision for accounts receivable and contract assets decreased by 35.0% from RMB390.9 million in 2022 to RMB253.9 million (US$35.8 million) in 2023, primarily due to the decrease in provision from other third-party platforms. 2022 Compared to 2021 .
Our provision for accounts receivable and contract assets decreased by 35.0% from RMB390.9 million in 2022 to RMB253.9 million in 2023, primarily due to the decrease in provision from other third-party platforms. Other Income 2024 Compared to 2023 .
Liability from quality assurance commitment decreased to RMB3.3 billion (US$465.7 million) as of December 31, 2023 from RMB3.6 billion as of December 31, 2022, primarily due to the higher payment of quality assurance commitment.
Liability from Quality Assurance Commitment Liability from quality assurance commitment decreased to RMB3.3 billion as of December 31, 2023 from RMB3.6 billion as of December 31, 2022, primarily due to the higher payment of quality assurance commitment.
In 2021, 2022 and 2023, the average principal amount of loans originated on our platform in China was RMB4,982, RMB7,249 and RMB8,318 (US$1,172), respectively, with an average term of 8.4 months, 8.7 months and 8.3 months, respectively. Borrowers come to our platforms for convenient, simple and fast loan transaction process. We generally have a high level of borrower stickiness.
In 2022, 2023 and 2024, the average principal amount of loans originated on our platform in China was RMB7,249, RMB8,318 and RMB10,402 (US$1,425), respectively, with an average term of 8.7 months, 8.3 months and 8.0 months, respectively. Borrowers come to our platforms for convenient, simple and fast loan transaction process. We generally have a high level of borrower stickiness.
In 2023, the difference between our net cash provided by operating activities and our net profit of RMB2.4 billion (US$335.7 million) resulted mainly from a net gain from investment in loans of RMB1.0 billion (US$147.8 million), an increase in deferred tax assets of RMB705.0 million (US$99.3 million), an increase in quality assurance fund receivable of RMB440.1 million (US$62.0 million), a provision for loans receivable of RMB586.8 million (US$82.7 million), a provision for quality assurance receivable of RMB354.4 million (US$49.9 million), and a provision for accounts receivable and contract assets of RMB253.9 million (US$35.8 million).
In 2023, the difference between our net cash provided by operating activities and our net profit of RMB2.4 billion resulted mainly from a net gain from investment in loans of RMB1.0 billion, an increase in deferred tax assets of RMB705.0 million, an increase in quality assurance fund receivable of RMB440.1 million, a provision for loans receivable of RMB586.8 million, a provision for quality assurance receivable of RMB354.4 million, and a provision for accounts receivable and contract assets of RMB253.9 million.
Our general and administrative expenses as a percentage of our total operating revenues decreased from 5.5% to 3.6% during the same period, primarily because of the improved operation efficiency. Research and development expenses 2023 Compared to 2022 .
Our general and administrative expenses as a percentage of our total operating revenues decreased from 3.6% to 3.1% during the same period, primarily due to the improved operation efficiency. Research and development expenses 2024 Compared to 2023 .
Credit losses for quality assurance commitment increased by 38.4% from RMB3,195.2 million in 2022 to RMB4,422.8 million (US$622.9 million) in 2023, primarily due to the increases in the loan origination volume, the outstanding loan balance and the delinquency rates. 2022 Compared to 2021 .
Credit losses for quality assurance commitment increased by 38.4% from RMB3,195.2 million in 2022 to RMB4,422.8 million in 2023, primarily due to the increases in the loan origination volume, the outstanding loan balance and the delinquency rates. Provision for loans receivable 2024 Compared to 2023 .
As loans facilitated during 2021 continue to age, the delinquency rate for the 2023 vintage, calculated as the volume weighted average of the quarterly vintage delinquency rates at the end of the 12 th month following the inception of each loan in an applicable vintage, may be different from the vintage delinquency rate of 1.56% as of December 31, 2023. 109 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our total operating revenues for the periods presented.
As loans bearing credit risk facilitated through our platform during 2022 continue to age, the delinquency rate for the 2024 vintage, calculated as the volume-weighted average of the quarterly vintage delinquency rates at the end of the 12 th month following the inception of each loan in an applicable vintage, may be different from the vintage delinquency rate of 1.55% as of December 31, 2024. 108 Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our total operating revenues for the periods presented.
Origination, servicing expenses and other cost of revenue for the period included share-based compensation of RMB26.7 million.
Origination, servicing expenses and other cost of revenue for the period included share-based compensation of RMB33.8 million.
As of December 31, 2021, 2022 and 2023, we had RMB4.4 billion, RMB3.6 billion and RMB5.0 billion (US$699.9 million), respectively, in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash on hand and short-term bank demand deposits.
As of December 31, 2022, 2023 and 2024, we had RMB3.6 billion, RMB5.0 billion and RMB4.7 billion (US$640.2 million), respectively, in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash on hand and short-term bank demand deposits.
The average funds payable to investors of the overseas consolidated trusts was RMB 83,525, RMB56,152 and nil for the year ended December 31, 2021, 2022, and 2023, respectively.
The average funds payable to investors of the overseas consolidated trusts was RMB 56,152, nil and nil for the year ended December 31, 2022, 2023, and 2024, respectively.
Operating Results Overview We are a leading fintech platform with strong brand recognition in China, Indonesia and the Philippines. Launched in 2007, we have been a pioneer in China’s online consumer finance industry. In 2018, we began our business operations in overseas markets, and we are currently serving borrowers in Indonesia and the Philippines.
Operating Results Overview We are a leading fintech platform with strong brand recognition in China, Indonesia and the Philippines. Launched in 2007, we have been a pioneer in China’s online consumer finance industry. In 2018, we commenced operations in overseas markets, with our current focus on Indonesia and the Philippines.
See “Item 4. Information on the Company—B. Business Overview—Quality Assurance Commitments for Our Institutional Funding Partners.” As a result, we are subject to credit risk for such loans.
For our institutional funding partners, we provide our institutional funding partners with quality assurance commitments for a substantial majority of the loans they have funded. See “Item 4. Information on the Company—B. Business Overview—Quality Assurance Commitments for Our Institutional Funding Partners.” As a result, we are subject to credit risk for such loans.
Notes: (1) Our vintage delinquency rate for loans facilitated during 2021 was 2.34%, calculated as the volume weighted average of the quarterly vintage delinquency rates at the end of the 12 th month following the inception of each loan in an applicable vintage.
Notes: (1) Our vintage delinquency rate for loans bearing credit risk facilitated through our platform during 2022 was 2.36%, calculated as the volume-weighted average of the quarterly vintage delinquency rates at the end of the 12 th month following the inception of each loan in an applicable vintage.
Those trusts are administered by third-party trust management companies. We are considered the primary beneficiary of those trusts and therefore consolidated the financial results of those trusts in our consolidated financial statements in accordance with U.S. GAAP. Other revenue Other revenue mainly includes customer referral fees and revenue generated from new businesses. 2023 Compared to 2022 .
We are considered the primary beneficiary of those trusts and therefore consolidated the financial results of those trusts in our consolidated financial statements in accordance with U.S. GAAP. 111 Other revenue Other revenue mainly includes customer referral fees and revenue generated from new businesses. 2024 Compared to 2023 .
(2) Our vintage delinquency rate for loans facilitated during 2022 was 2.35%, calculated as the volume weighted average of the quarterly vintage delinquency rates at the end of the 12 th month following the inception of each loan in an applicable vintage.
(2) Our vintage delinquency rate for loans bearing credit risk facilitated through our platform during 2023 was 2.84%, calculated as the volume-weighted average of the quarterly vintage delinquency rates at the end of the 12 th month following the inception of each loan in an applicable vintage.
In 2023, we generated 83.0% of our revenues from China and 17.0% of our revenues from the overseas markets. We primarily offer short-term loans to our borrowers to meet their immediate credit needs while allowing them to gradually establish their credit history through activities on our platforms.
In 2024, we generated approximately 80.6% of our revenues from China and 19.4% of our revenues from the overseas markets. We primarily offer short-term loans to our borrowers to meet their immediate credit needs while allowing them to gradually establish their credit history through activities on our platforms.
Our sales and marketing expenses increased by 12.0% from RMB1,685.0 million in 2022 to RMB1,887.4 million (US$265.8 million) in 2023, primarily due to the increase in online customer acquisition expenses from RMB1,605.5 million in 2022 to RMB1,871.4 million (US$263.6 million) in 2023.
Our sales and marketing expenses increased by 12.0% from RMB1,685.0 million in 2022 to RMB1,887.4 million in 2023, primarily due to the increase in advertising and online marketing expenses from RMB1,605.5 million in 2022 to RMB1,871.4 million in 2023.
Our short-term investments decreased by 13.6% from RMB3,427.0 million as of December 31, 2022 to RMB2,960.8 million (US$417.0 million) as of December 31, 2023, primarily due to the maturity of some wealth management products we purchased in the past.
Our short-term investments decreased by 13.6% from RMB3.4 billion as of December 31, 2022 to RMB3.0 billion as of December 31, 2023, primarily due to the maturity of some wealth management products we purchased in the past.
Our research and development expenses in 2022 included the share-based compensation expenses of RMB26.5 million. Our research and development expenses as a percentage of our total operating revenues decreased from 4.6% to 4.4%.
Our research and development expenses in 2023 included the share-based compensation expenses of RMB36.1 million. Our research and development expenses as a percentage of our total operating revenues decreased from 4.4% to 4.1%.
Loans that are delinquent for 180 days or more are typically considered charged-off and are not included in the delinquency rate calculation. The following table provides our 90 day+ delinquency rates for outstanding loans on our platform in China as of December 31 of 2021, 2022, and 2023.
Loans that are delinquent for 180 days or more are typically considered charged-off and are not included in the delinquency rate calculation. The table below presents our 90+ day delinquency rates for outstanding loans on our platform in China as of December 31, 2022, 2023, and 2024, all calculated based on this latest definition.
The following table sets forth the average balances and interest rates of the interest-earning asset and interest-bearing liability under the trust arrangements for the periods presented: 112 Table of Contents Average balance Interest income/ expense Yield/ rate Average balance Interest income/ expense Yield/ rate Average balance Interest income/ expense Yield/ rate 2021 2022 2023 (RMB in thousands) Interest-earning Assets Loans receivable from consolidated trusts (1) 1,306,889 407,077 31.1 % 2,047,322 571,240 27.9 % 967,289 260,694 27.0 % Interest-bearing liabilities Funds payable to investors of consolidated trusts (1) 1,073,133 73,846 6.9 % 2,057,290 146,306 7.1 % 894,481 53,114 5.9 % The net yield on interest-earning assets 25.5 % 20.8 % 21.5 % Note: (1) The average balance of loans receivable from the overseas consolidated trusts was RMB50,888, RMB63,071 and nil for the year ended December 31, 2021, 2022, and 2023, respectively.
The following table sets forth the average balances and interest rates of the interest-earning asset and interest-bearing liability under the trust arrangements for the periods presented: Average balance Interest income/ expense Yield/ rate Average balance Interest income/ expense Yield/ rate Average balance Interest income/ expense Yield/ rate 2022 2023 2024 (RMB in thousands) Interest-earning Assets Loans receivable from consolidated trusts (1) 2,047,322 571,240 27.9 % 967,289 260,694 27.0 % 1,258,526 301,815 24.0 % Interest-bearing liabilities Funds payable to investors of consolidated trusts (1) 2,057,290 146,306 7.1 % 894,481 53,114 5.9 % 496,439 19,369 3.9 % The net yield on interest-earning assets 20.8 % 21.5 % 22.4 % Note: (1) The average balance of loans receivable from the overseas consolidated trusts was RMB63,071, nil and nil for the year ended December 31, 2022, 2023, and 2024, respectively.
Hong Kong Our subsidiary incorporated in Hong Kong is subject to Hong Kong profit tax at a rate of 16.5%. No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiary during the periods presented. Hong Kong does not impose a withholding tax on dividends.
No Hong Kong profits tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiary during the periods presented. Hong Kong does not impose a withholding tax on dividends.
Our provision for loans receivables increased by 41.1% to RMB586.8 million (US$82.7 million) in 2023 from RMB415.9 million in 2022, primarily due to the increase in the loan origination volume in our overseas markets. 2022 Compared to 2021 .
Our provision for loans receivables increased by 41.1% to RMB586.8 million in 2023 from RMB415.9 million in 2022, primarily due to the increase in the loan origination volume in our overseas markets. Provision for accounts receivable and contract assets 2024 Compared to 2023 .
We conduct our operations primarily through our subsidiaries, three consolidated variable interest entities and their subsidiaries in China. As a result, FinVolution Group’s ability to continue paying dividends depends upon dividends paid by our PRC subsidiaries.
Holding Company Structure FinVolution Group is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries, three consolidated variable interest entities and their subsidiaries in China. As a result, FinVolution Group’s ability to continue paying dividends depends upon dividends paid by our PRC subsidiaries.
(3) As of December 31, 2023, our vintage delinquency rate for loans facilitated during the first three quarters was 1.56%, calculated as the volume weighted average of the quarterly vintage delinquency rates as of December 31, 2023.
(3) As of December 31, 2024, our vintage delinquency rate for loans bearing credit risk facilitated through our platform during the first three quarters was 1.55%, calculated as the volume-weighted average of the quarterly vintage delinquency rates as of December 31, 2024.
Our net profit was RMB2.5 billion in 2021, RMB2.3 billion in 2022 and RMB2.4 billion (US$335.7 million) in 2023. 106 Table of Contents General Factors Affecting Our Results of Operations Our business and results of operations are affected by general factors affecting the online consumer finance industry in the markets where we operate, which include, among other things: • overall economic growth; • per capita disposable income; • fluctuation of interest rates; • development of regulatory environment for the online consumer finance industry in the markets where we operate; and • growth of mobile internet penetration, including the popularity of smart mobile devices.
General Factors Affecting Our Results of Operations Our business and results of operations are affected by general factors affecting the online consumer finance industry in the markets where we operate, which include, among other things: ● overall economic growth; ● per capita disposable income; ● fluctuation of interest rates; ● development of regulatory environment for the online consumer finance industry in the markets where we operate; and ● growth of mobile internet penetration, including the popularity of smart mobile devices.
Our research and development expenses as a percentage of our total operating revenues decreased from 4.4% to 4.1%. 2022 Compared to 2021 . Research and development expenses increased by 13.0% from RMB434.9 million in 2021 to RMB491.5 million in 2022, as we continued investing in our technology capabilities in 2022.
Our research and development expenses as a percentage of our total operating revenues decreased from 4.1% to 3.8%, primarily due to our improved technology development efficiency. 2023 Compared to 2022 . Research and development expenses increased by 4.0% from RMB491.5 million in 2022 to RMB511.0 million in 2023 as we continued investing in our technology capabilities in 2023.
Quality Assurance Receivable Quality assurance receivable increased by 79.2% from RMB0.9 billion as of December 31, 2021 to RMB1.7 billion as of December 31, 2022, primarily due to the increases in the loan origination volume.
Quality Assurance Receivable Quality assurance receivable increased by 5.1% from RMB1.7 billion as of December 31, 2022 to RMB1.8 billion as of December 31, 2023, primarily due to the increases in the loan origination volume.
The provision for accounts receivable and contract assets was primarily due to the recognition of the life time credit losses. 120 Table of Contents Net cash provided by operating activities was RMB268.8 million in 2022, decreased from RMB630.2 million in 2021.
The provision for accounts receivable and contract assets was primarily due to the recognition of the life time credit losses. 120 Net cash provided by operating activities was RMB236.9 million in 2022.
The following chart and table display the historical cumulative 30-day plus past due delinquency rates by loan origination vintage for all continuing loan products facilitated through our online platform in China.
Loans that have been considered charged-off are included in the calculation of vintage delinquency rates. 107 The following chart and table display the historical cumulative 30-day plus past due delinquency rates by loan origination vintage for all continuing loan products facilitated through our online platform in China.
As we transitioned our business towards the better-quality borrowers, the fair value of quality assurance commitment upon loan origination decreased due to the better asset quality. 111 Table of Contents Net interest income The following table sets forth the composition of the interest income recorded in the consolidated statement of comprehensive income related to the loans originated on our platforms for the periods presented: For the Year Ended December 31, 2021 2022 2023 (RMB in thousands) Interest income from loans originated through micro-lending company (1) 79,029 58,114 59,420 Interest income from loans originated in the overseas markets (1) 803,910 691,156 782,379 Interest income from loans originated under the trust arrangements (2) 407,077 571,240 260,694 Total interest income 1,290,016 1,320,510 1,102,493 Notes: (1) Typically, for loans originated through micro-lending company and in the overseas markets, these loans are funded by us with no interest bearing liabilities.
The fair value of quality assurance commitment upon loan origination is released as guarantee income systematically over the term of the loans subject to quality assurance commitment. 110 Net interest income The following table sets forth the composition of the interest income recorded in the consolidated statement of comprehensive income related to the loans originated on our platforms for the periods presented: For the Year Ended December 31, 2022 2023 2024 (RMB in thousands) Interest income from loans originated through micro-lending company (1) 58,114 59,420 79,249 Interest income from loans originated in the overseas markets (1) 691,156 782,379 492,084 Interest income from loans originated under the trust arrangements (2) 571,240 260,694 301,815 Total interest income 1,320,510 1,102,493 873,148 Notes: (1) Typically, for loans originated through micro-lending company and in the overseas markets, these loans are funded by us with no interest bearing liabilities.
We intend to continue to invest in product development, technology infrastructure and our sales and marketing capabilities to address the competition we face.
We must compete effectively in order to grow our platforms and increase our revenues. We intend to continue to invest in product development, technology infrastructure and our sales and marketing capabilities to address the competition we face.
Our general and administrative expenses decreased by 22.5% from RMB518.2 million in 2021 to RMB401.7 million in 2022, primarily due to the improved operation efficiency. General and administrative expenses in 2022 included share-based compensation of RMB34.2 million.
Our general and administrative expenses decreased by 2.9% from RMB401.7 million in 2022 to RMB390.0 million in 2023, primarily due to the improved operation efficiency. General and administrative expenses in 2023 included share-based compensation of RMB46.6 million.
Our origination, servicing expenses and other cost of revenue-related party decreased by 99.5% from RMB7.5 million in 2021 to RMB37 thousand in 2022, primarily due to the decreased data collection service from the related party. Sales and marketing expenses Sales and marketing expenses consist primarily of advertising and online marketing promotion expenses. 2023 Compared to 2022 .
Our origination, servicing expenses and other cost of revenue-related party were nil in 2023, compared to RMB37 thousand in 2022, primarily due to the termination of collection service provided by the related party. Sales and marketing expenses Sales and marketing expenses consist primarily of advertising and online marketing promotion expenses. 2024 Compared to 2023 .
When our estimates of the standalone selling prices for loan facilitation service as a percentage of total consideration increased/decreased by 100 basis points while holding all other estimates constant, our loan facilitation service revenue would increase/decrease by approximately RMB22 million. Our estimate of the key assumptions related to revenue recognition did not change significantly throughout the periods presented.
When our estimates of the standalone selling prices for loan facilitation service as a percentage of total consideration increased/decreased by 100 basis points while holding all other estimates constant, our loan facilitation service revenue would increase/decrease by approximately RMB23 million.
The following table sets forth our contractual obligations as of December 31, 2023: Total Less than 1 year 1–3 years 3–5 years More than 5 years (RMB) (US$) (RMB) (US$) (RMB) (US$) (RMB) (US$) (RMB) (US$) (in thousands) Non-cancellable operating leases 37,726 5,314 20,232 2,850 16,496 2,323 998 141 — — We intend to fund our existing and future material cash requirements with our existing cash balance and other financing alternatives.
The following table sets forth our contractual obligations as of December 31, 2024: Total Less than 1 year 1–3 years 3–5 years More than 5 years (RMB) (US$) (RMB) (US$) (RMB) (US$) (RMB) (US$) (RMB) (US$) (in thousands) Non-cancellable operating leases 31,164 4,269 16,777 2,298 14,159 1,940 228 31 — — We intend to fund our existing and future material cash requirements with our existing cash balance and other financing alternatives.
The increase in expenses associated with online customer acquisition was primarily due to our proactive customer acquisition efforts focusing on higher-quality borrowers in both China and the overseas markets.
The increase in the advertising and online marketing expenses was primarily driven by our increased proactive customer acquisition efforts focusing on quality borrowers in both China and the overseas markets.
Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with PPcredit.” 2023 Compared to 2022 . Our origination, servicing expenses and other cost of revenue-related party were nil in 2023, compared to RMB37 thousand in 2022, primarily due to the termination of collection service provided by the related party. 2022 Compared to 2021 .
Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with PPcredit.” Our origination, servicing expenses and other cost of revenue-related party were nil in 2023 and nil in 2024. 2023 Compared to 2022 .
Accounts receivable and contract assets decreased by 7.2% to RMB2.5 billion (US$354.8 million) as of December 31, 2023 from RMB2.7 billion as of December 31, 2022, mainly due to the lower average rate of transaction fees in 2023.
Provision for credit loss allowance mainly consist of provision for accounts receivable and contract assets for loan facilitation and post facilitation services. Accounts receivable and contract assets decreased by 7.2% to RMB2.5 billion as of December 31, 2023 from RMB2.7 billion as of December 31, 2022, mainly due to the lower average rate of transaction fees in 2023.
Material Cash Requirements Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include our capital expenditures and operating lease obligations. We made capital expenditures of RMB55.3 million, RMB52.8 million and RMB538.1 million (US$75.8 million) in 2021, 2022 and 2023, respectively.
Material Cash Requirements Our material cash requirements as of December 31, 2024 and any subsequent interim period primarily include our capital expenditures and contractual obligations. We made capital expenditures of RMB52.8 million, RMB538.1 million and RMB27.8 million (US$3.8 million) in 2022, 2023 and 2024, respectively. In 2024, our capital expenditures were mainly used for purchases of property, equipment and software.
The 90 day+ delinquency rate as of December 31, 2023 was higher than previous 90 day+ delinquency rates, mainly due to the slower-than-expected recovery of the macro-economy. 108 Table of Contents As of 90 Day+ Delinquency Rate (1) December 31, 2021 1.26 % December 31, 2022 1.41 % December 31, 2023 1.93 % Note: (1) Since the origination amount of our standard loan products accounted for the vast majority of the total origination amount of loans facilitated on our platform in China in the past three years, the 90 day+ delinquency rate in this table mainly reflects the performance of our standard loan products in China.
As of 90 Day+ Delinquency Rate (1) December 31, 2022 1.41 % December 31, 2023 1.98 % December 31, 2024 2.13 % Note: (1) Since the origination amount of our standard loan products accounted for the vast majority of the total origination amount of loans facilitated on our platform in China in the past three years, the 90 day+ delinquency rate in this table mainly reflects the performance of our standard loan products in China.
Allowance for Credit Losses We have the following types of financial assets and liabilities that are subject to credit losses of borrowers: accounts receivable and contract assets, quality assurance receivable, loans receivable and liability from quality assurance commitment.
Our estimate of the key assumptions related to revenue recognition did not change significantly throughout the periods presented. 123 Allowance for Credit Losses We have the following types of financial assets and liabilities that are subject to credit losses of borrowers: accounts receivable and contract assets, quality assurance receivable, loans receivable and liability from quality assurance commitment.
Our net revenues grew from RMB9.5 billion in 2021 and to RMB11.1 billion in 2022 and further to RMB12.5 billion (US$1.8 billion) in 2023.
Our net revenues grew from RMB11.1 billion in 2022 and to RMB12.5 billion in 2023 and further to RMB13.1 billion (US$1.8 billion) in 2024. Our net profit was RMB2.3 billion in 2022, RMB2.4 billion in 2023 and RMB2.4 billion (US$0.3 billion) in 2024.
We intend to optimize our fraud detection capabilities, improve accuracy of our credit scoring model and enhance our collection effectiveness on a continuing basis through the combination of our big-data analytical capabilities and the increasing amount of data we accumulate through our operations. 107 Table of Contents For our institutional funding partners, we provide our institutional funding partners with quality assurance commitments for a substantial majority of the loans they have funded.
We intend to optimize our fraud detection capabilities, improve accuracy of our credit scoring model and enhance our collection effectiveness on a continuing basis through the combination of our big-data analytical capabilities and the increasing amount of data we accumulate through our operations.
In 2023, we recorded interest income of RMB1,102.5 million (US$155.3 million) and interest expenses of RMB53.1 million (US$7.5 million), compared to interest income of RMB1,320.5 million and interest expenses of RMB146.3 million in 2022. In 2021, we recorded interest income of RMB1,290.0 million and interest expenses of RMB73.8 million.
In 2024, we recorded interest income of RMB873.1 million (US$119.6 million) and interest expenses of RMB19.4 million (US$2.7 million), compared to interest income of RMB1,102.5 million and interest expenses of RMB53.1 million in 2023. In 2022, we recorded interest income of RMB1,320.5 million and interest expenses of RMB146.3 million.
Quality assurance receivable increased by 5.1% from RMB1.7 billion as of December 31, 2022 to RMB1.8 billion (US$247.3 million) as of December 31, 2023, primarily due to the increases in the loan origination volume. 118 Table of Contents Accounts Receivable and Contract Assets and Related Provision Accounts receivable and contract assets primarily consists of transaction service fees for facilitation and post facilitation services.
Loans receivable increased by 268.8% from RMB1.1 billion as of December 31, 2023 to RMB4.2 billion (US$224.6 million) as of December 31, 2024, primarily due to the increase in the on-balance loan origination volume. Accounts Receivable and Contract Assets and Related Provision Accounts receivable and contract assets primarily consists of transaction service fees for facilitation and post facilitation services.
For purpose of this annual report, loans facilitated during a specified time period are referred to as a vintage. Loans that have been considered charged-off are included in the calculation of vintage delinquency rates.
For purpose of this annual report, loans facilitated during a specified time period are referred to as a vintage.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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The compensation committee is responsible for, among other things: • reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; • reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; • reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and • selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
The compensation committee is responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; 129 ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
Li served as a risk manager at China Minsheng Banking Corporation Limited from 2006 to 2011. Mr. Li received his bachelor’s degree in civil engineering from Shanghai Jiaotong University in China and FMBA degree from China Europe International Business School in China. Mr.
Li served as a risk manager at China Minsheng Banking Corporation Limited from 2006 to 2011. Mr. Li received his bachelor’s degree in civil engineering from Shanghai Jiaotong University in China and FMBA degree from China Europe International Business School in China. 124 Mr.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets. 126 Table of Contents In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets. 126 In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.
Subject to certain exceptions, awards may not be transferred by the recipient, except as otherwise provided by applicable laws or the award agreement. Termination of the plan . Unless terminated earlier, the plan will terminate automatically in 2027.
Subject to certain exceptions, awards may not be transferred by the recipient, except as otherwise provided by applicable laws or the award agreement. 127 Termination of the plan . Unless terminated earlier, the plan will terminate automatically in 2027.
The audit committee is responsible for, among other things: 129 Table of Contents • appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; • reviewing with the independent auditors any audit problems or difficulties and management’s response; • discussing the annual audited financial statements with management and the independent auditors; • reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; • reviewing and approving all proposed related party transactions; • meeting separately and periodically with management and the independent auditors; and • monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
C. Board Practices Our board of directors consists of seven directors. A director is not required to hold any shares in our company to qualify to serve as a director.
Board Practices Our board of directors consists of seven directors. A director is not required to hold any shares in our company to qualify to serve as a director.
The following table summarizes, as of March 31, 2024, the number of Class A ordinary shares underlying the options that we granted (excluding those that were canceled, forfeited, or expired) to our directors, executive officers, and other grantees under the 2017 Plan.
The following table summarizes, as of March 31, 2025, the number of Class A ordinary shares underlying the options that we granted (excluding those that were canceled, forfeited, or expired) to our directors, executive officers, and other grantees under the 2017 Plan.
(Podlook), a startup running podcast aggregation business, from 2005 to 2007. Prior to founding Podlook, Mr. Gu served as a technical lead of Microsoft Corporation from 2000 to 2005. Mr. Gu received his bachelor’s degree in communication science and engineering from Shanghai Jiaotong University in China. 124 Table of Contents Mr.
(Podlook), a startup running podcast aggregation business, from 2005 to 2007. Prior to founding Podlook, Mr. Gu served as a technical lead of Microsoft Corporation from 2000 to 2005. Mr. Gu received his bachelor’s degree in communication science and engineering from Shanghai Jiaotong University in China. Mr.
Term of options . The term of each option grant shall be stated in the award agreement, provided that the term may not exceed ten years from the date of the grant. 127 Table of Contents Transfer restrictions .
Term of options . The term of each option grant shall be stated in the award agreement, provided that the term may not exceed ten years from the date of the grant. Transfer restrictions .
As of December 31, 2023, 1,493 of our employees were located in Shanghai while the remaining employees were located in other regions in China or other countries. The following table sets forth the numbers of our employees categorized by function as of December 31, 2023.
As of December 31, 2024, 1,564 of our employees were located in Shanghai while the remaining employees were located in other regions in China or other countries. The following table sets forth the numbers of our employees categorized by function as of December 31, 2024.
Ho currently serves as the group chief financial officer of Maya Philippines. Mr. Ho served as our chief financial officer from September 2016 to November 2020. Prior to joining us, Mr. Ho served various positions at Citigroup Global Markets Asia Limited from 2008 to 2016 including managing director and head of Asian financials research. Mr.
Ho served as the group chief financial officer of Maya Philippines from April 2023 to July 2024. Mr. Ho served as our chief financial officer from September 2016 to November 2020. Prior to joining us, Mr. Ho served various positions at Citigroup Global Markets Asia Limited from 2008 to 2016 including managing director and head of Asian financials research. Mr.
Our officers are appointed by and serve at the discretion of the board of directors. D. Employees We had 4,259 employees as of December 31, 2021, 4,144 employees as of December 31, 2022, and 3,648 employees as of December 31, 2023.
Our officers are appointed by and serve at the discretion of the board of directors. D. Employees We had 4,144 employees as of December 31, 2022, 3,648 employees as of December 31, 2023, and 3,623 employees as of December 31, 2024.
Directors and Executive Officers Age Position/Title Shaofeng Gu 45 Chairman of the Board and Chief Innovation Officer Tiezheng Li 39 Vice Chairman of the Board and Chief Executive Officer Jun Zhang 46 Director Honghui Hu 46 Director Simon Tak Leung Ho 50 Director Jimmy Y.
Directors and Executive Officers Age Position/Title Shaofeng Gu 46 Chairman of the Board and Chief Innovation Officer Tiezheng Li 40 Vice Chairman of the Board and Chief Executive Officer Jun Zhang 47 Director Honghui Hu 47 Director Simon Tak Leung Ho 51 Independent Director Jimmy Y.
Jun Zhang is the sole shareholder and the sole director of Metallica Holding Limited. The registered office address of Metallica Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands. (4) Represents 54,883,400 Class B ordinary shares directly held by Emma & Oliver Holding Limited, a company incorporated in the British Virgin Islands. Mr.
The registered office address of Metallica Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands. (4) Represents 52,383,400 Class B ordinary shares directly held by Emma & Oliver Holding Limited, a company incorporated in the British Virgin Islands. Mr.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. 133 Table of Contents
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.
Susquehanna Fundamental Investments, LLC and Susquehanna Securities, LLC are collectively referred to as Susquehanna Entities. Susquehanna Securities, LLC, an independent broker-dealer, and Susquehanna Fundamental Investments, LLC may be deemed a group. The address of the principal business office of each of Susquehanna Entities is 401 E. City Avenue, Suite 220, Bala Cynwyd, PA 19004.
Susquehanna Fundamental Investments, LLC and Susquehanna Securities, LLC are collectively referred to as Susquehanna Entities. Susquehanna Securities, LLC, an independent broker-dealer, and Susquehanna Fundamental Investments, LLC may be deemed a group. The address of the principal business office of each of Susquehanna Entities is 401 E.
The registered office address of PPD Investment Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands.
Shaofeng Gu is the sole shareholder and the sole director of PPD Investment Limited. The registered office address of PPD Investment Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2024 by: • each of our directors and executive officers; and • each of our principal shareholders who beneficially own more than 5% of our total outstanding ordinary shares.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2025 by: ● each of our directors and executive officers; and ● each of our principal shareholders who beneficially own more than 5% of our total outstanding ordinary shares. 131 We have adopted a dual class ordinary share structure.
Our directors must also exercise their powers only for a proper purpose. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances.
Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances.
The functions and powers of our board of directors include, among others: • convening shareholders’ annual and extraordinary general meetings; • declaring dividends and distributions; • appointing officers and determining the term of office of the officers; • exercising the borrowing powers of our company and mortgaging the property of our company; and • approving the transfer of shares in our company, including the registration of such shares in our register of members.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual and extraordinary general meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our register of members. 130 Terms of Directors and Officers Our directors may be appointed by a resolution of our board of directors, or by a special resolution of our shareholders.
As of March 31, 2024, none of our outstanding Class A or Class B ordinary shares were held by record holders in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F.
City Avenue, Suite 220, Bala Cynwyd, PA 19004. 132 As of March 31, 2025, none of our outstanding Class A or Class B ordinary shares were held by record holders in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F.
We believe that we maintain a good working relationship with our employees, and we have not experienced any labor disputes. None of our employees are represented by labor unions. E.
We believe that we maintain a good working relationship with our employees and labor unions, and we have not experienced any material labor disputes. E.
The nominating and corporate governance committee is responsible for, among other things: • selecting and recommending nominees for election by the shareholders or appointment by the board; • reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; • making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and • advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. 130 Table of Contents Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests.
The nominating and corporate governance committee is responsible for, among other things: ● selecting and recommending nominees for election by the shareholders or appointment by the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.
Ordinary Shares Beneficially Owned as of March 31, 2024 Class A ordinary shares Class B ordinary shares Percentage of total ordinary shares† Percentage of aggregate voting power†† Directors and Executive Officers** : Shaofeng Gu (1) 31,783,960 394,818,900 32.8 % 65.4 % Tiezheng Li (2) 12,417,870 27,987,900 3.1 % 4.7 % Jun Zhang (3) 22,419,945 65,209,800 6.7 % 11.0 % Honghui Hu (4) — 54,883,400 4.2 % 9.1 % Simon Tak Leung Ho * — * * Jimmy Y.
Ordinary Shares Beneficially Owned as of March 31, 2025 Class A ordinary shares Class B ordinary shares Percentage of total ordinary shares † Percentage of aggregate voting power †† Directors and Executive Officers**: Shaofeng Gu (1) 33,781,250 394,818,900 33.8 % 65.9 % Tiezheng Li (2) 12,815,710 27,987,900 3.2 % 4.8 % Jun Zhang (3) 20,669,945 65,209,800 6.8 % 11.0 % Honghui Hu (4) — 52,383,400 4.1 % 8.7 % Simon Tak Leung Ho — — — — Jimmy Y.
Lai 67 Independent Director Bing Xiang 61 Independent Director Pingping Chen 40 President and Chief Compliance Officer Jiayuan Xu 43 Chief Financial Officer Yuxiang Wang 44 Chief Operating Officer and Chief Technology Officer Mr.
Lai 68 Independent Director Bing Xiang 62 Independent Director Pingping Chen 41 President and Chief Compliance Officer Jiayuan Xu 44 Chief Financial Officer Yuxiang Wang 45 Chief Operating Officer and Chief Technology Officer Mr.
Lai also serves as an independent director of several other NYSE-listed companies, including Zepp Corporation (NYSE: ZEPP). Mr. Lai served as the chief financial officer of China Online Education Group, a leading online education platform in China listed on the NYSE, from June 2015 to December 2018. Prior to joining China Online Education Group in 2015, Mr.
Lai served as the chief financial officer of China Online Education Group, a leading online education platform in China listed on the NYSE, from June 2015 to December 2018. Prior to joining China Online Education Group in 2015, Mr.
(5) Represents (i) 38,884 ADSs, representing 194,420 Class A ordinary shares beneficially owned by Susquehanna Fundamental Investments, LLC, a company incorporated in Delaware, and (ii) 16,490,862 ADSs, representing 82,454,310 Class A ordinary shares, and options to buy 1,900 ADSs, representing 9,500 Class A ordinary shares, beneficially owned by Susquehanna Securities, LLC, as reported in a Schedule 13G/A filed by Susquehanna Fundamental Investments, LLC and Susquehanna Securities, LLC on February 12, 2024.
(5) Represents (i) 38,884 ADSs, representing 194,420 Class A ordinary shares beneficially owned by Susquehanna Fundamental Investments, LLC, a company incorporated in Delaware, and (ii) 16,493,362 ADSs, representing 82,454,310 Class A ordinary shares beneficially owned by Susquehanna Securities, LLC, as reported in a Schedule 13G/A filed by Susquehanna Fundamental Investments, LLC and Susquehanna Securities, LLC on February 13, 2025.
Name Class A Ordinary Shares Underlying Options Awarded Exercise Price (US$/ Share) Date of Grant Date of Expiration Tiezheng Li * 1.400 February 1, 2018 January 31, 2025 * 0.654 January 28, 2019 January 27, 2025 * 0.794 April 10, 2023 April 9, 2028 Jun Zhang * 1.400 February 1, 2018 January 31, 2023 Simon Tak Leung Ho * 1.400 February 1, 2018 January 31, 2024 * 0.330 April 6, 2020 April 6, 2022 Jiayuan Xu * 0.330 April 6, 2020 April 5, 2025 Other grantees as a Group 1,653,135 From 0.32 to 1.400 From April 1, 2017 to April 6, 2020 From September 28, 2019 to April 5, 2025 * Less than 1% of our total outstanding shares.
Name Class A Ordinary Shares Underlying Options Awarded Exercise Price (US$/Share) Date of Grant Date of Expiration Tiezheng Li * 1.400 February 1, 2018 January 31, 2028 * 0.794 April 10, 2023 April 9, 2028 Jiayuan Xu * 0.330 April 6, 2020 April 5, 2025 Other grantees as a Group * 0.330 April 6, 2020 April 5, 2025 * Less than 1% of our total outstanding shares.
As of December 31, 2023 Number of employees % of total Functions: Operations 638 17.5 % Risk Management 907 24.9 % Research and Development 698 19.1 % Sales and Marketing 1,090 29.9 % General and Administration 315 8.6 % Total number of employees 3,648 100.0 % 131 Table of Contents As required by laws and regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments, including, among other things, housing, pension, medical insurance and unemployment insurance.
As of December 31, 2024 Number of employees % of total Functions: Operations 709 19.6 % Risk Management 1,163 32.1 % Research and Development 780 21.5 % Sales and Marketing 621 17.1 % General and Administration 350 9.7 % Total number of employees 3,623 100.0 % As required by laws and regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments, including, among other things, housing, pension, medical insurance and unemployment insurance.
Hu served as a loan officer in Shanghai Branch of Industrial and Commercial Bank of China Limited. Mr. Hu received his bachelor’s degree in economics from Shanghai Jiaotong University in China and master’s degree in economics from Fudan University in China. Mr. Simon Tak Leung Ho has been serving as our director since November 2020. Mr.
Hu served as a loan officer in Shanghai Branch of Industrial and Commercial Bank of China Limited. Mr. Hu received his bachelor’s degree in economics from Shanghai Jiaotong University in China and master’s degree in economics from Fudan University in China. Mr.
As of March 31, 2024, options to purchase a total of 7,518,325 Class A ordinary shares were outstanding under the 2017 Plan, and restricted share units to receive a total of 66,811,350 Class A ordinary shares were outstanding under the 2017 Plan. The following paragraphs summarize the terms of the 2017 Plan: Plan administration .
As of March 31, 2025, options to purchase a total of 3,858,450 Class A ordinary shares were outstanding under the 2017 Plan, and restricted share units to receive a total of 76,153,295 Class A ordinary shares were outstanding under the 2017 Plan. The following paragraphs summarize the terms of the 2017 Plan: Plan administration .
Lai * May 24, 2021 May 23, 2026 Jiayuan Xu * February 1, 2018 January 31, 2023 * January 28, 2019 January 27, 2024 * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 Yuxiang Wang * February 1, 2018 January 31, 2023 * January 28, 2019 January 27, 2024 * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 Pingping Chen * January 28, 2019 January 27, 2024 * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 * February 5, 2024 February 4, 2029 Other grantees as a Group 105,378,885 From February 1, 2018 to February 26, 2024 From January 31, 2023 to February 25, 2029 * Less than 1% of our total outstanding shares.
Lai * May 24, 2021 May 23, 2026 Jiayuan Xu * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 * April 3, 2024 April 2, 2029 Yuxiang Wang * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 * April 3, 2024 April 2, 2034 Pingping Chen * April 6, 2020 April 5, 2025 * October 6, 2020 October 5, 2025 * April 10, 2023 April 9, 2028 * February 5, 2024 February 4, 2029 * April 3, 2024 April 2, 2034 Other grantees as a Group 104,541,885 From April 6, 2020 to March 17, 2025 From April 5, 2025 to March 16, 2030 * Less than 1% of our total outstanding shares. 128 C.
Tiezheng Li, and (iv) 3,700,860 Class A ordinary shares that Mr. Tiezheng Li may purchase upon exercise of share-based awards within 60 days after March 31, 2024. Mr. Tiezheng Li is the sole shareholder and the sole director of Happyariel Holding Limited. The registered office address of Happyariel Holding Limited is Geneva Place, Waterfront Drive, P.O.
Tiezheng Li may purchase upon exercise of share-based awards within 60 days after March 31, 2025. Mr. Tiezheng Li is the sole shareholder and the sole director of Happyariel Holding Limited. The registered office address of Happyariel Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands.
Jiayuan Xu has been serving as our chief financial officer since December 2020. Prior to serving as our chief financial officer, Mr. Xu served various positions at our company from June 2015 to November 2020, including our senior vice president for finance, head of financial institutions department and our financial controller. Prior to joining us, Mr.
Xu served various positions at our company from June 2015 to November 2020, including our senior vice president for finance, head of financial institutions department and our financial controller. Prior to joining us, Mr. Xu served as the head of financial management department of Nanyang Commercial Bank (China) Co., Ltd. from 2008 to 2015. Mr.
Wang served as the vice president of product at Opera Software ASA, a Norwegian software company, from 2013 to 2015. Mr. Wang worked at Baidu.com as a product head of Baidu mobile browser from 2012 to 2013. Mr. Wang served as the product director at TeleNav, a company providing location-based services including navigation, from 2009 to 2012.
Mr. Wang worked at Baidu.com as a product head of Baidu mobile browser from 2012 to 2013. Mr. Wang served as the product director at TeleNav, a company providing location-based services including navigation, from 2009 to 2012. Prior to that, Mr. Wang served as a senior product manager at MiTAC Research (Shanghai) Ltd., an electronics company, from 2002 to 2009.
(2) Represents (i) 27,987,900 Class B ordinary shares directly held by Happyariel Holding Limited, a company incorporated in the British Virgin Islands, (ii) 1,406,330 ADSs, representing 7,031,650 Class A ordinary shares, directly held by Happyariel Holding Limited, (iii) 337,072 ADSs, representing 1,685,360 Class A ordinary shares, directly held by Mr.
(2) Represents (i) 27,987,900 Class B ordinary shares directly held by Happyariel Holding Limited, a company incorporated in the British Virgin Islands, (ii) 7,031,650 Class A ordinary shares, directly held by Happyariel Holding Limited, (iii) 3,420,845 Class A ordinary shares, directly held by Mr. Tiezheng Li, and (iv) 2,363,215 Class A ordinary shares that Mr.
Xu is also a member of Chinese Institute of Certified Public Accountants. Mr. Yuxiang Wang has been serving as our chief operating officer since March 2023 and our chief technology officer since October 2019. Mr. Wang served as our chief product officer from June 2015 to March 2023. Prior to joining us, Mr.
Yuxiang Wang has been serving as our chief operating officer since March 2023 and our chief technology officer since October 2019. Mr. Wang served as our chief product officer from June 2015 to March 2023. Prior to joining us, Mr. Wang served as the vice president of product at Opera Software ASA, a Norwegian software company, from 2013 to 2015.
Ho received his bachelor’s degree in engineering from Northwestern University, Illinois. Mr. Ho is also a Chartered Financial Analyst. Mr. Jimmy Y. Lai has been serving as our independent director since November 2017. Mr. Lai currently serves as the chief financial officer of Kneron, a leading provider of full stack edge AI solutions company. Mr.
Ho received his bachelor’s degree in engineering from Northwestern University, Illinois. Mr. Ho is also a Chartered Financial Analyst. Mr. Jimmy Y. Lai has been serving as our independent director since November 2017. Mr. Lai also serves as an independent director of several other NYSE-listed companies, including Zepp Corporation (NYSE: ZEPP). Mr.
Xu served as the head of financial management department of Nanyang Commercial Bank (China) Co., Ltd. from 2008 to 2015. Mr. Xu was an audit manager at PricewaterhouseCoopers Zhong Tian LLP from 2003 to 2008. Mr. Xu received his bachelor’s degree in international trade and finance from Shanghai Jiaotong University and FMBA degree from China Europe International Business School. Mr.
Xu was an audit manager at PricewaterhouseCoopers Zhong Tian LLP from 2003 to 2008. Mr. Xu received his bachelor’s degree in international trade and finance from Shanghai Jiaotong University and FMBA degree from China Europe International Business School. Mr. Xu is also a member of Chinese Institute of Certified Public Accountants. Mr.
We have adopted a dual class ordinary share structure. The calculations in the table below are based on 1,299,225,219 outstanding ordinary shares (consisting of 730,025,219 Class A ordinary shares and 569,200,000 Class B ordinary shares) as of March 31, 2024. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
The calculations in the table below are based on 1,267,069,304 outstanding ordinary shares (consisting of 700,369,304 Class A ordinary shares and 566,700,000 Class B ordinary shares) as of March 31, 2025. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Pingping Chen has been serving as our president and chief compliance officer since March 2024, maintaining her existing responsibilities across legal, compliance, human resources, and internal controls, which she has held since 2019. Ms. Chen was the chief executive officer of Pai Pai Xin, from 2016 to 2018.
Xiang received his bachelor’s degree in mechanical engineering from Xi’an Jiaotong University and a PhD degree in finance and accounting from the University of Alberta. 125 Ms. Pingping Chen has been serving as our president and chief compliance officer since March 2024, maintaining her existing responsibilities across legal, compliance, human resources, and internal controls, which she has held since 2019.
Box 3469, Road Town, Tortola, British Virgin Islands. (3) Represents (i) 65,209,800 Class B ordinary shares directly held by Metallica Holding Limited, a company incorporated in the British Virgin Islands, and (ii) 4,483,989 ADSs, representing 22,419,945 Class A ordinary shares, directly held by Metallica Holding Limited. Mr.
(3) Represents (i) 65,209,800 Class B ordinary shares directly held by Metallica Holding Limited, a company incorporated in the British Virgin Islands, and (ii) 20,669,945 Class A ordinary shares, directly held by Metallica Holding Limited. Mr. Jun Zhang is the sole shareholder and the sole director of Metallica Holding Limited.
The following table summarizes, as of March 31, 2024, the number of Class A ordinary shares underlying the restricted share units that we granted (excluding those that were canceled, forfeited, or expired) to our directors, executive officers, and other grantees under the 2017 Plan. 128 Table of Contents Name Class A Ordinary Shares Underlying Restricted Share Units Awarded Date of Grant Date of Expiration Tiezheng Li * October 6, 2020 October 5, 2025 * June 1, 2022 May 31, 2027 * January 23, 2023 January 22, 2028 Bing Xiang * May 24, 2021 May 23, 2026 Jimmy Y.
The following table summarizes, as of March 31, 2025, the number of Class A ordinary shares underlying the restricted share units that we granted (excluding those that were canceled, forfeited, or expired) to our directors, executive officers, and other grantees under the 2017 Plan.
Prior to that, she held the position of vice president of our company, overseeing the legal, compliance, government relations, and innovation departments from 2013 to 2016. Ms. Chen received her master’s degree in law from Fudan University and her EMBA from the China Europe International Business School. Mr.
Ms. Chen was the chief executive officer of Pai Pai Xin, from 2016 to 2018. Prior to that, she held the position of vice president of our company, overseeing the legal, compliance, government relations, and innovation departments from 2013 to 2016. Ms.
Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of approximately RMB19.5 million (US$2.8 million) in cash to our directors and officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.
We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.
(1) Represents (i) 394,818,900 Class B ordinary shares directly held by PPD Investment Limited, a company incorporated in the British Virgin Islands, and (ii) 6,356,792 ADSs, representing 31,783,960 Class A ordinary shares, directly held by PPD Investment Limited. Mr. Shaofeng Gu is the sole shareholder and the sole director of PPD Investment Limited.
Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. (1) Represents (i) 394,818,900 Class B ordinary shares directly held by PPD Investment Limited, a company incorporated in the British Virgin Islands, and (ii) 33,781,250 Class A ordinary shares owned by PPD Investment Limited. Mr.
Lai * — * * Bing Xiang * — * * Pingping Chen * — * * Jiayuan Xu * — * * Yuxiang Wang * — * * All directors and executive officers as a group 86,294,445 542,900,000 48.2 % 90.3 % Principal Shareholders: PPD Investment Limited (1) 31,783,960 394,818,900 32.8 % 65.4 % Metallica Holding Limited (3) 22,419,945 65,209,800 6.7 % 11.0 % Susquehanna Entities (5) 82,670,730 — 6.4 % * * Less than 1% of our total outstanding shares. ** Except for Jimmy Y.
Lai * — * * Bing Xiang * — * * Pingping Chen * — * * Jiayuan Xu * — * * Yuxiang Wang * — * * All directors and executive officers as a group 89,939,175 540,400,000 49.4 % 90.5 % Principal Shareholders: PPD Investment Limited (1) 33,781,250 394,818,900 33.8 % 65.9 % Metallica Holding Limited (3) 20,669,945 65,209,800 6.8 % 11.0 % Susquehanna Entities (6) 82,661,230 — 6.5 % 0.7 % * Less than 1% of our total outstanding shares. † For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the total number of shares outstanding and the number of shares such person or group has the right to acquire upon exercise of option, warrant or other right within 60 days after March 31, 2025. †† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
Prior to that, Mr. Wang served as a senior product manager at MiTAC Research (Shanghai) Ltd., an electronics company, from 2002 to 2009. Mr. Wang received his bachelor’s degree in communication engineering from Jiangsu University, his master’s degree in software engineering from Fudan University and his EMBA degree from China Europe International Business School. B.
Mr. Wang received his bachelor’s degree in communication engineering from Jiangsu University, his master’s degree in software engineering from Fudan University and his EMBA degree from China Europe International Business School. B. Compensation For the fiscal year ended December 31, 2024, we paid an aggregate of approximately RMB20.6 million (US$2.8 million) in cash to our directors and officers.
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Xiang received his bachelor’s degree in mechanical engineering from Xi’an Jiaotong University and a PhD degree in finance and accounting from the University of Alberta. 125 Table of Contents Ms.
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Simon Tak Leung Ho has been serving as our director since November 2020 and transitioned to an independent director in March 2025. Mr. Ho currently serves as the group chief financial officer of PT GoTo Gojek Tokopedia Tbk in Indonesia. Prior to this, Mr.
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Terms of Directors and Officers Our directors may be appointed by a resolution of our board of directors, or by a special resolution of our shareholders.
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Chen received her master’s degree in law from Fudan University and her EMBA from the China Europe International Business School. Mr. Jiayuan Xu has been serving as our chief financial officer since December 2020. Prior to serving as our chief financial officer, Mr.
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Lai and Bing Xiang, the business address for our directors and executive officers is Building G1, No. 999 Dangui Road, Pudong New District, Shanghai 201203, People’s Republic of China. The business address of Jimmy Y. Lai is 7th Floor, No. 8 Zhongyuan St. Zhonghe District, New Taipei City 23556, Taiwan.
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Name Class A Ordinary Shares Underlying Restricted Share Units Awarded Date of Grant Date of Expiration Tiezheng Li * October 6, 2020 October 5, 2025 * June 1, 2022 May 31, 2027 * January 23, 2023 January 22, 2028 * April 3, 2024 April 2, 2029 Bing Xiang * May 24, 2021 May 23, 2026 Jimmy Y.
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The business address of Bing Xiang is Floor 20th, Tower East II, Dongfang Square, Dongcheng District, Beijing, China. 132 Table of Contents † For each person and group included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the total number of shares outstanding and the number of shares such person or group has the right to acquire upon exercise of option, warrant or other right within 60 days after March 31, 2024. †† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
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Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose.
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Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

4 edited+3 added−0 removed3 unchanged
In 2020, we and PPcredit agreed to extend the term of the original service agreement to December 31, 2022. In 2021 and 2022, we incurred RMB7.5 million and RMB37.0 thousand expenses for such services. In 2023, this service agreement was terminated and no expenses were incurred.
In 2020, we and PPcredit agreed to extend the term of the original service agreement to December 31, 2022. In 2022, we incurred RMB37.0 thousand expenses for such services. In 2023, this service agreement was terminated and no expenses were incurred in 2023 and 2024.
As of December 31, 2022 and 2023, the amount due to PPcredit was RMB1.0 million and RMB10.0 thousand, respectively. As of December 31, 2022 and 2023, the amount due from PPcredit was nil and RMB3.9 million, respectively.
As of December 31, 2022, 2023 and 2024, the amount due to PPcredit was RMB1.0 million, RMB10.0 thousand and RMB6.0 thousand, respectively.
Transactions with Guoya Shanghai Gouya Technology Co., Ltd., which we refer to as Guoya, was founded in November 2020 by our founders to provide smart vending machine services. In August 2023, we disposed of 70% of the equity interest in Gouya, and Gouya became a related party of our company since then.
As of December 31, 2022, 2023 and 2024, the amount due from PPcredit was nil, RMB3.9 million and RMB444 thousand, respectively. 133 Transactions with Gouya Shanghai Gouya Technology Co., Ltd., which we refer to as Gouya, was founded in November 2020 by our founders to provide smart vending machine services.
As of December 31, 2023, the amount due to Guoya was RMB124 thousand. C. Interests of Experts and Counsel Not applicable.
In January 2024, we purchased a 40% equity interest in Fuzhou Rongheng, and Fuzhou Rongheng has been a related party of our company since then. As of December 31, 2024, the amount due from Fuzhou Rongheng was RMB508 thousand. C. Interests of Experts and Counsel Not applicable.
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In August 2023, we disposed of 70% of the equity interest in Gouya, and Gouya became a related party of our company since then. As of December 31, 2023 and 2024, the amount due to Gouya was RMB124 thousand and RMB124 thousand, respectively.
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Transactions with Halodo Limited Halodo Limited, which we refer to as Halodo, was founded in 2019 as a holding company within our group. In September 2024, we disposed of our equity interest in Halodo but still hold significant influence over its management and operating policies. As a result, Halodo became a related party of our company since then.
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As of December 31, 2024, the amount due to and due from Halodo was RMB13.2 million and 16.8 million, respectively. Transactions with Fuzhou Rongheng Fuzhou Rongheng Information Technology Co., Ltd., which we refer to as Fuzhou Rongheng, was founded in July 2023 to provide mediation services.

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