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What changed in LexinFintech Holdings Ltd.'s 20-F — 2023 vs 2024

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Paragraph-level year-over-year comparison of LexinFintech Holdings Ltd.'s 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+588 added−580 removedSource: 20-F (2025-04-18) vs 20-F (2024-04-29)

Top changes in LexinFintech Holdings Ltd.'s 2024 20-F

588 paragraphs added · 580 removed · 482 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

218 edited+51 added−26 removed842 unchanged
Biggest changeThe financial information of the consolidated trusts and asset-backed securities were included in the financial position for the VIEs and the VIEs’ subsidiaries, as the consolidated VIEs companies are considered the primary beneficiary of these trusts and ABS plans. 10 Condensed Consolidating Statements of Income Information For the Year Ended December 31, 2023 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Condensed Consolidating Schedule of Results of Operations Operating revenue: Third-party revenues — 564,004 1,228,546 11,264,532 — 13,057,082 Inter-group revenues (1) — 140,640 1,407,468 186,968 (1,735,076 ) — Total Operating revenue — 704,644 2,636,014 11,451,500 (1,735,076 ) 13,057,082 Operating cost: Third-party costs — (172,010 ) (1,017,639 ) (7,354,363 ) — (8,544,012 ) Inter-group costs (1) — (183,182 ) — (27 ) 183,209 — Total operating cost — (355,192 ) (1,017,639 ) (7,354,390 ) 183,209 (8,544,012 ) Gross profit — 349,452 1,618,375 4,097,110 (1,551,867 ) 4,513,070 Operating expense: Third-party expenses (15,749 ) (125,752 ) (725,661 ) (1,766,810 ) — (2,633,972 ) Inter-group expenses (1) — — (7,235 ) (1,544,632 ) 1,551,867 — Total operating expenses (15,749 ) (125,752 ) (732,896 ) (3,311,442 ) 1,551,867 (2,633,972 ) Share of income from subsidiaries (2) 1,152,654 940,621 — — (2,093,275 ) — Income of the VIEs and the VIEs’ subsidiaries (3) — — 237,267 — (237,267 ) — Others (70,960 ) 30,044 (63,287 ) (448,109 ) — (552,312 ) Income before income tax 1,065,945 1,194,365 1,059,459 337,559 (2,330,542 ) 1,326,786 Income tax expenses — (41,711 ) (118,838 ) (100,292 ) — (260,841 ) Net income 1,065,945 1,152,654 940,621 237,267 (2,330,542 ) 1,065,945 Less: net income attributable to non-controlling interests — — — — — — Net income/(Loss) attributable to ordinary shareholders 1,065,945 1,152,654 940,621 237,267 (2,330,542 ) 1,065,945 For the Year Ended December 31, 2022 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Condensed Consolidating Schedule of Results of Operations Operating revenue: Third-party revenues — 48,868 519,209 9,297,734 — 9,865,811 Inter-group revenues (1) — 112,943 1,516,904 329 (1,630,176 ) — Total Operating revenue — 161,811 2,036,113 9,298,063 (1,630,176 ) 9,865,811 Operating cost: Third-party costs — (77,711 ) (268,727 ) (6,484,657 ) — (6,831,095 ) Inter-group costs (1) — — — (36 ) 36 — Total operating cost — (77,711 ) (268,727 ) (6,484,693 ) 36 (6,831,095 ) Gross profit — 84,100 1,767,386 2,813,370 (1,630,140 ) 3,034,716 Operating expense: Third-party expenses (15,082 ) (82,216 ) (838,069 ) (1,764,902 ) — (2,700,269 ) Inter-group expenses (1) — — (329 ) (1,629,811 ) 1,630,140 — Total operating expenses (15,082 ) (82,216 ) (838,398 ) (3,394,713 ) 1,630,140 (2,700,269 ) Share of income from subsidiaries (2) 872,049 888,094 — — (1,760,143 ) — Income of the VIEs and the VIEs’ subsidiaries (3) — — 16,098 — (16,098 ) — Others (37,215 ) (17,753 ) 131,522 617,568 — 694,122 Income before income tax 819,752 872,225 1,076,608 36,225 (1,776,241 ) 1,028,569 Income tax expenses — (176 ) (188,514 ) (13,950 ) — (202,640 ) Net income 819,752 872,049 888,094 22,275 (1,776,241 ) 825,929 Less: net income attributable to non-controlling interests — — — 6,177 — 6,177 Net income/(Loss) attributable to ordinary shareholders 819,752 872,049 888,094 16,098 (1,776,241 ) 819,752 11 For the Year Ended December 31, 2021 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Condensed Consolidating Schedule of Results of Operations Operating revenue: Third-party revenues — 1,527 287,020 11,091,978 — 11,380,525 Inter-group revenues (1) — 68,500 2,980,763 11,429 (3,060,692 ) — Total Operating revenue — 70,027 3,267,783 11,103,407 (3,060,692 ) 11,380,525 Operating cost: Third-party costs — 1,945 (112,202 ) (5,520,994 ) — (5,631,251 ) Inter-group costs (1) — — — (1,636 ) 1,636 — Total operating cost — 1,945 (112,202 ) (5,522,630 ) 1,636 (5,631,251 ) Gross profit — 71,972 3,155,581 5,580,777 (3,059,056 ) 5,749,274 Operating expense: Third-party expenses (19,109 ) (40,298 ) (930,293 ) (1,689,151 ) — (2,678,851 ) Inter-group expenses (1) — — (11,429 ) (3,047,627 ) 3,059,056 — Total operating expenses (19,109 ) (40,298 ) (941,722 ) (4,736,778 ) 3,059,056 (2,678,851 ) Share of income from subsidiaries (2) 2,395,789 2,333,912 — — (4,729,701 ) — Income of the VIEs and the VIEs’ subsidiaries (3) — — 332,405 — (332,405 ) — Others (35,606 ) 38,281 65,636 (369,200 ) — (300,889 ) Income before income tax 2,341,074 2,403,867 2,611,900 474,799 (5,062,106 ) 2,769,534 Income tax expenses (7,151 ) (8,078 ) (277,988 ) (142,201 ) — (435,418 ) Net income 2,333,923 2,395,789 2,333,912 332,598 (5,062,106 ) 2,334,116 Less: net income attributable to non-controlling interests — — — 193 — 193 Net income attributable to ordinary shareholders 2,333,923 2,395,789 2,333,912 332,405 (5,062,106 ) 2,333,923 12 Condensed Consolidating Balance Sheets Information As of December 31, 2023 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Consolidating Schedule of Financial Position ASSETS Cash and cash equivalents 48,030 202,117 539,834 1,834,738 — 2,624,719 Restricted cash — 123,496 538,939 916,015 — 1,578,450 Restricted term deposit and short-term investments — 5,504 150,000 149,678 — 305,182 Financing receivables, net — 12,360 142,071 3,990,083 — 4,144,514 Amounts due from Group companies (4) 343,091 2,682,841 6,258,873 201,390 (9,486,195 ) — Deposits to insurance companies and guarantee companies — — 7,807 2,605,464 — 2,613,271 Contract assets, service fees receivable and guarantee receivables — 5,527 1,121,015 5,586,257 — 6,712,799 Property, equipment and software, net — 977 93,975 351,688 — 446,640 Land use rights, net and right of use assets — 9,996 20,080 955,250 — 985,326 Long‑term investments — 15,759 — 239,244 — 255,003 Investments in subsidiaries (2) 12,058,899 9,317,339 — — (21,376,238 ) — Net assets of the VIEs and the VIEs’ subsidiaries (3) — — 2,533,607 — (2,533,607 ) — Other assets 6,820 64,934 283,134 3,119,999 — 3,474,887 TOTAL ASSETS 12,456,840 12,440,850 11,689,335 19,949,806 (33,396,040 ) 23,140,791 LIABILITIES Amounts due to Group companies (4) 2,230,015 293,249 416,405 6,546,526 (9,486,195 ) — Borrowings — — 184,125 842,158 — 1,026,283 Funding debts — — — 3,938,996 — 3,938,996 Deferred guarantee income — — 322,895 1,215,490 — 1,538,385 Contingent guarantee liabilities — — 576,538 1,232,002 — 1,808,540 Convertible notes 505,450 — — — — 505,450 Other liabilities 11,293 88,702 872,033 3,641,027 — 4,613,055 TOTAL LIABILITIES 2,746,758 381,951 2,371,996 17,416,199 (9,486,195 ) 13,430,709 Total equity attributable to owners of the company 9,710,082 12,058,899 9,317,339 2,533,607 (23,909,845 ) 9,710,082 Non-controlling interests — — — — — — TOTAL SHAREHOLDERS’ EQUITY (2) 9,710,082 12,058,899 9,317,339 2,533,607 (23,909,845 ) 9,710,082 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 12,456,840 12,440,850 11,689,335 19,949,806 (33,396,040 ) 23,140,791 As of December 31, 2022 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Consolidating Schedule of Financial Position ASSETS Cash and cash equivalents 1,517 66,953 151,857 1,273,823 — 1,494,150 Restricted cash — 120,556 596,802 718,675 — 1,436,033 Restricted term deposit and short-term investments — 1,012,180 200,000 119,678 — 1,331,858 Financing receivables, net — 7,665 93,820 6,756,760 — 6,858,245 Amounts due from Group companies (4) 335,934 1,486,746 5,214,557 106,977 (7,144,214 ) — Deposits to insurance companies and guarantee companies — — 34,251 2,214,771 2,249,022 Contract assets, service fees receivable and guarantee receivables — 5,427 342,459 4,151,340 — 4,499,226 Property, equipment and software, net — 2,689 68,294 213,610 — 284,593 Land use rights, net and right of use assets — — 48,982 1,029,258 — 1,078,240 Long‑term investments — 16,816 — 331,560 — 348,376 Investments in subsidiaries (2) 10,741,234 8,270,993 — — (19,012,227 ) — Net assets of the VIEs and the VIEs’ subsidiaries (3) — — 2,291,434 — (2,291,434 ) — Other assets 8,549 42,607 220,288 2,919,516 — 3,190,960 TOTAL ASSETS 11,087,234 11,032,632 9,262,744 19,835,968 (28,447,875 ) 22,770,703 LIABILITIES Amounts due to Group companies (4) 357,042 250,499 251,562 6,285,111 (7,144,214 ) — Borrowings — — 30,000 1,288,476 — 1,318,476 Funding debts — — — 5,719,358 — 5,719,358 Deferred guarantee income — — 113,225 781,633 — 894,858 Contingent guarantee liabilities — — 111,612 770,495 — 882,107 Convertible notes 2,063,545 — — — — 2,063,545 Other liabilities 17,896 40,899 485,352 2,699,461 — 3,243,608 TOTAL LIABILITIES 2,438,483 291,398 991,751 17,544,534 (7,144,214 ) 14,121,952 Total equity attributable to owners of the company 8,648,751 10,741,234 8,270,993 2,291,434 (21,303,661 ) 8,648,751 TOTAL SHAREHOLDERS’ EQUITY (2) 8,648,751 10,741,234 8,270,993 2,291,434 (21,303,661 ) 8,648,751 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 11,087,234 11,032,632 9,262,744 19,835,968 (28,447,875 ) 22,770,703 13 Condensed Consolidating Statements of Cash Flows For the Year Ended December 31, 2023 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Net cash provided by/(used in) operating activities (58,579 ) 301,989 1,130,781 1,412,861 — 2,787,052 Net cash provided by/(used in) transactions with external parties (58,579 ) 332,491 (379,275 ) 2,892,415 — 2,787,052 Net cash provided by/(used in) transactions with inter-group entities for technical service charges and others (5) — (30,502 ) 1,510,056 (1,479,554 ) — — Net cash provided by/(used in) investing activities (6,040 ) (165,284 ) (1,133,227 ) 1,337,528 2,301,475 2,334,452 Net cash provided by/(used in) transactions with external parties — 1,006,076 (59,478 ) 1,387,854 — 2,334,452 Net cash (used in)/ provided by funds to Group companies (6) (6,040 ) (1,171,360 ) (1,073,749 ) (50,326 ) 2,301,475 — Net cash provided by/(used in) financing activities 108,536 81 332,560 (1,992,134 ) (2,301,475 ) (3,852,432 ) Net cash provided by/(used in) transactions with external parties (1,764,418 ) — 154,125 (2,242,139 ) — (3,852,432 ) Net cash provided by/(used in) funds from Group companies (8) 1,872,954 81 178,435 250,005 (2,301,475 ) — For the Year Ended December 31, 2022 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Net cash provided by/(used in) operating activities (51,139 ) (15,497 ) (371,539 ) 537,019 — 98,844 Net cash provided by/(used in) transactions with external parties (51,139 ) (106,623 ) (1,807,221 ) 2,063,827 — 98,844 Net cash provided by/(used in) transactions with inter-group entities for technical service charges and others (5) — 91,126 1,435,682 (1,526,808 ) — — Net cash provided by/(used in) investing activities 36,141 33,143 743,054 (2,062,379 ) (1,158,996 ) (2,409,037 ) Net cash provided by/(used in) transactions with external parties (676 ) 356,841 (178,995 ) (2,586,207 ) — (2,409,037 ) Net cash (used in)/ provided by funds to Group companies (6) 36,817 (323,698 ) 1,507,708 (61,831 ) (1,158,996 ) — Transfer of Shenzhen Lexin Financing Guarantee Co., Ltd from VIE to subsidiary (7) — — (585,659 ) 585,659 — — Net cash provided by/(used in) financing activities (754 ) (36,817 ) 28,021 (37,777 ) 1,158,996 1,111,669 Net cash provided by/(used in) transactions with external parties (324,200 ) — (33,810 ) 1,469,679 — 1,111,669 Net cash provided by/(used in) funds from Group companies (8) 323,446 (36,817 ) 61,831 (1,507,456 ) 1,158,996 — For the Year Ended December 31, 2021 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Net cash provided by/(used in) operating activities 14,196 (45,084 ) 2,996,575 (298,268 ) — 2,667,419 Net cash provided by/(used in) transactions with external parties 14,196 (114,057 ) (1,071,974 ) 3,839,254 — 2,667,419 Net cash provided by/(used in) transactions with inter-group entities for technical service charges and others (5) — 68,973 4,068,549 (4,137,522 ) — — Net cash provided by/(used in) investing activities 9,089 (3,931 ) (2,509,341 ) 622,696 2,296,102 414,615 Net cash provided by/(used in) transactions with external parties 24,352 (3,831 ) (78,134 ) 472,228 — 414,615 Net cash (used in)/ provided by funds to Group companies (6) (15,263 ) (100 ) (2,431,207 ) 150,468 2,296,102 — Net cash provided by/(used in) financing activities 7,124 15,489 (162,314 ) 656,269 (2,296,102 ) (1,779,534 ) Net cash provided by/(used in) transactions with external parties 7,124 — (11,620 ) (1,775,038 ) — (1,779,534 ) Net cash provided by/(used in) funds from Group companies (8) — 15,489 (150,694 ) 2,431,307 (2,296,102 ) — (1) The inter-group revenues and inter-group costs recognized by the consolidated VIEs were related to the goods and services between the consolidated VIEs and WFOEs; The inter-group revenues generated by other subsidiaries and primary beneficiaries of the VIEs represent the technical service charges to the consolidated VIEs, which were recognized as inter-group expenses by the consolidated VIEs.
Biggest changeThe financial information of the consolidated trusts and asset-backed securities were included in the financial position for the VIEs and the VIEs’ subsidiaries, as the consolidated VIEs companies are considered the primary beneficiary of these trusts and ABS plans. 10 Condensed Consolidating Statements of Income Information For the Year Ended December 31, 2024 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Condensed Consolidating Schedule of Results of Operations Operating revenue: Third-party revenues — 1,341,142 1,904,337 10,958,115 — 14,203,594 Inter-group revenues (1) — 276,140 843,123 196,310 (1,315,573 ) — Total Operating revenue — 1,617,282 2,747,460 11,154,425 (1,315,573 ) 14,203,594 Operating cost: Third-party costs — (599,535 ) (1,263,387 ) (7,314,444 ) — (9,177,366 ) Inter-group costs (1) — (196,220 ) — (188 ) 196,408 — Total operating cost — (795,755 ) (1,263,387 ) (7,314,632 ) 196,408 (9,177,366 ) Gross profit — 821,527 1,484,073 3,839,793 (1,119,165 ) 5,026,228 Operating expense: Third-party expenses (10,082 ) (201,933 ) (728,839 ) (1,799,169 ) — (2,740,023 ) Inter-group expenses (1) — — (10,246 ) (1,108,919 ) 1,119,165 — Total operating expenses (10,082 ) (201,933 ) (739,085 ) (2,908,088 ) 1,119,165 (2,740,023 ) Share of income from subsidiaries (2) 1,097,147 562,181 — — (1,659,328 ) — Income of the VIEs and the VIEs’ subsidiaries (3) — — 281,885 — (281,885 ) — Others 13,395 (6,776 ) (383,072 ) (556,017 ) — (932,470 ) Income before income tax 1,100,460 1,174,999 643,801 375,688 (1,941,213 ) 1,353,735 Income tax expense — (77,852 ) (81,620 ) (93,803 ) — (253,275 ) Net income 1,100,460 1,097,147 562,181 281,885 (1,941,213 ) 1,100,460 Less: net income attributable to non-controlling interests — — — — — — Net income/(Loss) attributable to ordinary shareholders 1,100,460 1,097,147 562,181 281,885 (1,941,213 ) 1,100,460 For the Year Ended December 31, 2023 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Condensed Consolidating Schedule of Results of Operations Operating revenue: Third-party revenues — 564,004 1,228,546 11,264,532 — 13,057,082 Inter-group revenues (1) — 140,640 1,407,468 186,968 (1,735,076 ) — Total Operating revenue — 704,644 2,636,014 11,451,500 (1,735,076 ) 13,057,082 Operating cost: Third-party costs — (172,010 ) (1,017,639 ) (7,354,363 ) — (8,544,012 ) Inter-group costs (1) — (183,182 ) — (27 ) 183,209 — Total operating cost — (355,192 ) (1,017,639 ) (7,354,390 ) 183,209 (8,544,012 ) Gross profit — 349,452 1,618,375 4,097,110 (1,551,867 ) 4,513,070 Operating expense: Third-party expenses (15,749 ) (125,752 ) (725,661 ) (1,766,810 ) — (2,633,972 ) Inter-group expenses (1) — — (7,235 ) (1,544,632 ) 1,551,867 — Total operating expenses (15,749 ) (125,752 ) (732,896 ) (3,311,442 ) 1,551,867 (2,633,972 ) Share of income from subsidiaries (2) 1,152,654 940,621 — — (2,093,275 ) — Income of the VIEs and the VIEs’ subsidiaries (3) — — 237,267 — (237,267 ) — Others (70,960 ) 30,044 (63,287 ) (448,109 ) — (552,312 ) Income before income tax 1,065,945 1,194,365 1,059,459 337,559 (2,330,542 ) 1,326,786 Income tax expense — (41,711 ) (118,838 ) (100,292 ) — (260,841 ) Net income 1,065,945 1,152,654 940,621 237,267 (2,330,542 ) 1,065,945 Less: net income attributable to non-controlling interests — — — — — — Net income/(Loss) attributable to ordinary shareholders 1,065,945 1,152,654 940,621 237,267 (2,330,542 ) 1,065,945 11 For the Year Ended December 31, 2022 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Condensed Consolidating Schedule of Results of Operations Operating revenue: Third-party revenues — 48,868 519,209 9,297,734 — 9,865,811 Inter-group revenues (1) — 112,943 1,516,904 329 (1,630,176 ) — Total Operating revenue — 161,811 2,036,113 9,298,063 (1,630,176 ) 9,865,811 Operating cost: Third-party costs — (77,711 ) (268,727 ) (6,484,657 ) — (6,831,095 ) Inter-group costs (1) — — — (36 ) 36 — Total operating cost — (77,711 ) (268,727 ) (6,484,693 ) 36 (6,831,095 ) Gross profit — 84,100 1,767,386 2,813,370 (1,630,140 ) 3,034,716 Operating expense: Third-party expenses (15,082 ) (82,216 ) (838,069 ) (1,764,902 ) — (2,700,269 ) Inter-group expenses (1) — — (329 ) (1,629,811 ) 1,630,140 — Total operating expenses (15,082 ) (82,216 ) (838,398 ) (3,394,713 ) 1,630,140 (2,700,269 ) Share of income from subsidiaries (2) 872,049 888,094 — — (1,760,143 ) — Income of the VIEs and the VIEs’ subsidiaries (3) — — 16,098 — (16,098 ) — Others (37,215 ) (17,753 ) 131,522 617,568 — 694,122 Income before income tax 819,752 872,225 1,076,608 36,225 (1,776,241 ) 1,028,569 Income tax expense — (176 ) (188,514 ) (13,950 ) — (202,640 ) Net income 819,752 872,049 888,094 22,275 (1,776,241 ) 825,929 Less: net income attributable to non-controlling interests — — — 6,177 — 6,177 Net income/(Loss) attributable to ordinary shareholders 819,752 872,049 888,094 16,098 (1,776,241 ) 819,752 12 Condensed Consolidating Balance Sheets Information As of December 31, 2024 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Consolidating Schedule of Financial Position ASSETS Cash and cash equivalents 24,523 65,135 493,720 1,670,835 — 2,254,213 Restricted cash — 39,111 558,505 1,141,723 — 1,739,339 Restricted term deposit and short-term investments — 6,886 51,851 79,760 — 138,497 Financing receivables, net — 38,278 212,694 4,530,170 — 4,781,142 Amounts due from Group companies (4) 348,316 3,876,798 6,186,034 109,196 (10,520,344 ) — Deposits to insurance companies and guarantee companies — — 8,219 2,347,124 — 2,355,343 Contract assets, service fees receivable and guarantee receivables — 194,976 779,538 4,790,945 — 5,765,459 Property, equipment and software, net — 768 89,624 522,718 — 613,110 Land use rights, net and right of use assets — 6,247 12,474 901,443 — 920,164 Long‑term investments — 44,953 — 239,244 — 284,197 Investments in subsidiaries (2) 13,272,552 9,571,206 — — (22,843,758 ) — Net assets of the VIEs and the VIEs’ subsidiaries (3) — — 2,875,636 — (2,875,636 ) — Other assets 7,894 128,522 458,787 2,794,112 — 3,389,315 TOTAL ASSETS 13,653,285 13,972,880 11,727,082 19,127,270 (36,239,738 ) 22,240,779 LIABILITIES Amounts due to Group companies (4) 2,903,332 270,444 674,540 6,672,028 (10,520,344 ) — Borrowings — 141,231 218,260 916,305 — 1,275,796 Funding debts — — — 3,951,665 — 3,951,665 Deferred guarantee income — — 188,309 786,793 — 975,102 Contingent guarantee liabilities — — 202,386 876,614 — 1,079,000 Other liabilities 9,947 288,653 872,381 3,048,229 — 4,219,210 TOTAL LIABILITIES 2,913,279 700,328 2,155,876 16,251,634 (10,520,344 ) 11,500,773 Total equity attributable to owners of the company 10,740,006 13,272,552 9,571,206 2,875,636 (25,719,394 ) 10,740,006 Non-controlling interests — — — — — — TOTAL SHAREHOLDERS’ EQUITY (2) 10,740,006 13,272,552 9,571,206 2,875,636 (25,719,394 ) 10,740,006 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 13,653,285 13,972,880 11,727,082 19,127,270 (36,239,738 ) 22,240,779 As of December 31, 2023 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Consolidating Schedule of Financial Position ASSETS Cash and cash equivalents 48,030 202,117 539,834 1,834,738 — 2,624,719 Restricted cash — 123,496 538,939 916,015 — 1,578,450 Restricted term deposit and short-term investments — 5,504 150,000 149,678 — 305,182 Financing receivables, net — 12,360 142,071 3,990,083 — 4,144,514 Amounts due from Group companies (4) 343,091 2,682,841 6,258,873 201,390 (9,486,195 ) — Deposits to insurance companies and guarantee companies — — 7,807 2,605,464 — 2,613,271 Contract assets, service fees receivable and guarantee receivables — 5,527 1,121,015 5,586,257 — 6,712,799 Property, equipment and software, net — 977 93,975 351,688 — 446,640 Land use rights, net and right of use assets — 9,996 20,080 955,250 — 985,326 Long‑term investments — 15,759 — 239,244 — 255,003 Investments in subsidiaries (2) 12,058,899 9,317,339 — — (21,376,238 ) — Net assets of the VIEs and the VIEs’ subsidiaries (3) — — 2,533,607 — (2,533,607 ) — Other assets 6,820 64,934 283,134 3,119,999 — 3,474,887 TOTAL ASSETS 12,456,840 12,440,850 11,689,335 19,949,806 (33,396,040 ) 23,140,791 LIABILITIES Amounts due to Group companies (4) 2,230,015 293,249 416,405 6,546,526 (9,486,195 ) — Borrowings — — 184,125 842,158 — 1,026,283 Funding debts — — — 3,938,996 — 3,938,996 Deferred guarantee income — — 322,895 1,215,490 — 1,538,385 Contingent guarantee liabilities — — 576,538 1,232,002 — 1,808,540 Convertible notes 505,450 — — — — 505,450 Other liabilities 11,293 88,702 872,033 3,641,027 — 4,613,055 TOTAL LIABILITIES 2,746,758 381,951 2,371,996 17,416,199 (9,486,195 ) 13,430,709 Total equity attributable to owners of the company 9,710,082 12,058,899 9,317,339 2,533,607 (23,909,845 ) 9,710,082 Non-controlling interests — — — — — — TOTAL SHAREHOLDERS’ EQUITY (2) 9,710,082 12,058,899 9,317,339 2,533,607 (23,909,845 ) 9,710,082 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 12,456,840 12,440,850 11,689,335 19,949,806 (33,396,040 ) 23,140,791 13 Condensed Consolidating Statements of Cash Flows For the Year Ended December 31, 2024 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Net cash (used in)/provided by operating activities (43,400 ) 602,677 315,102 207,079 — 1,081,458 Net cash (used in)/provided by transactions with external parties (43,400 ) 591,067 (1,021,374 ) 1,555,165 — 1,081,458 Net cash provided by/(used in) transactions with inter-group entities for technical service charges and others (5) — 11,610 1,336,476 (1,348,086 ) — — Net cash provided by/(used in) investing activities — (993,375 ) (440,625 ) (799,910 ) 1,329,030 (904,880 ) Net cash provided by/(used in) transactions with external parties — (206 ) (67,480 ) (837,194 ) — (904,880 ) Net cash provided by/(used in) funds to Group companies (6) — (993,169 ) (373,145 ) 37,284 1,329,030 — Net cash provided by/(used in) financing activities 19,402 168,740 98,975 654,636 (1,329,030 ) (387,277 ) Net cash (used in)/provided by transactions with external parties (653,771 ) 141,230 34,135 91,129 — (387,277 ) Net cash provided by/(used in) funds from Group companies (8) 673,173 27,510 64,840 563,507 (1,329,030 ) — For the Year Ended December 31, 2023 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Net cash (used in)/provided by operating activities (58,579 ) 301,989 1,130,781 1,443,381 — 2,817,572 Net cash (used in)/provided by transactions with external parties (9) (58,579 ) 332,491 (379,275 ) 2,922,935 — 2,817,572 Net cash provided by/(used in) transactions with inter-group entities for technical service charges and others (5) — (30,502 ) 1,510,056 (1,479,554 ) — — Net cash (used in)/provided by investing activities (6,040 ) (165,284 ) (1,133,227 ) 1,337,528 2,301,475 2,334,452 Net cash provided by/(used in) transactions with external parties — 1,006,076 (59,478 ) 1,387,854 — 2,334,452 Net cash (used in)/ provided by funds to Group companies (6) (6,040 ) (1,171,360 ) (1,073,749 ) (50,326 ) 2,301,475 — Net cash provided by/(used in) financing activities 108,536 81 332,560 (2,022,654 ) (2,301,475 ) (3,882,952 ) Net cash (used in)/provided by transactions with external parties (9) (1,764,418 ) — 154,125 (2,272,659 ) — (3,882,952 ) Net cash provided by/(used in) funds from Group companies (8) 1,872,954 81 178,435 250,005 (2,301,475 ) — For the Year Ended December 31, 2022 Parent Other Subsidiaries Primary Beneficiary of the VIEs The VIEs and the VIEs’ subsidiaries Eliminating adjustments Consolidated totals (RMB in thousands) Net cash (used in)/provided by operating activities (51,139 ) (15,497 ) (371,539 ) 495,448 — 57,273 Net cash (used in)/provided by transactions with external parties (9) (51,139 ) (106,623 ) (1,807,221 ) 2,022,256 — 57,273 Net cash provided by/(used in) transactions with inter-group entities for technical service charges and others (5) — 91,126 1,435,682 (1,526,808 ) — — Net cash provided by/(used in) investing activities 36,141 33,143 743,054 (2,062,379 ) (1,158,996 ) (2,409,037 ) Net cash (used in)/provided by transactions with external parties (676 ) 356,841 (178,995 ) (2,586,207 ) — (2,409,037 ) Net cash provided by/(used in) funds to Group companies (6) 36,817 (323,698 ) 1,507,708 (61,831 ) (1,158,996 ) — Transfer of Shenzhen Lexin Financing Guarantee Co., Ltd from VIE to subsidiary (7) — — (585,659 ) 585,659 — — Net cash (used in)/provided by financing activities (754 ) (36,817 ) 28,021 3,794 1,158,996 1,153,240 Net cash (used in)/provided by transactions with external parties (9) (324,200 ) — (33,810 ) 1,511,250 — 1,153,240 Net cash provided by/(used in) funds from Group companies (8) 323,446 (36,817 ) 61,831 (1,507,456 ) 1,158,996 — (1) The inter-group revenues and inter-group costs recognized by the consolidated VIEs were related to the goods and services between the consolidated VIEs and WFOEs; The inter-group revenues generated by other subsidiaries and primary beneficiaries of the VIEs represent the technical service charges to the consolidated VIEs, which were recognized as inter-group expenses by the consolidated VIEs.
Risks Related to the American Depositary Shares • The market price for our ADSs may be volatile; • We cannot guarantee that any share repurchase program will be fully consummated or that any share repurchase program will enhance our long-term shareholder value, and share repurchase could increase the volatility of the price of our ADSs and diminish our cash reserves; • 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 the ADSs may view as beneficial; and 18 • We are an exempted company limited by shares incorporated under the laws of the Cayman Islands.
Risks Related to the American Depositary Shares • The market price for our ADSs may be volatile; • We cannot guarantee that any share repurchase program will be fully consummated or that any share repurchase program will enhance our long-term shareholder value, and share repurchase could increase the volatility of the price of our ADSs and diminish our cash reserves; 18 • 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 the ADSs may view as beneficial; and • We are an exempted company limited by shares incorporated under the laws of the Cayman Islands.
We conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, a majority of our directors and executive officers reside within China, and most of the assets of these individuals are located within China.
We conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, a majority of our directors and executive officers reside within China, and most of the assets of these individuals are located within China.
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.
Our holding company in the Cayman Islands, the variable interest entities, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the variable interest entities and, consequently, significantly affect the financial performance of the variable interest entities and our company as a group.
Our holding company in the Cayman Islands, the variable interest entities, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the variable interest entities and, consequently, significantly affect the financial performance of the variable interest entities and our company as a group.
If this were to occur, we would not be able to operate the relevant businesses through the contractual arrangements and would lose our rights to receive the economic benefits of the variable interest entities.
If this were to occur, we would not be able to operate the relevant businesses through the contractual arrangements and would lose our rights to receive the economic benefits of the variable interest entities.
As a result, we would no longer consolidate the variable interest entities into our financial results and we would have to derecognize their assets and liabilities according to the relevant accounting standards. If we do not receive any compensation, we would recognize an investment loss as a result of such derecognition.
As a result, we would no longer consolidate the variable interest entities into our financial results and we would have to derecognize their assets and liabilities according to the relevant accounting standards. If we do not receive any compensation, we would recognize an investment loss as a result of such derecognition.
In December 2022, Shenzhen Lexin Software successfully re-applied for a new HNTE qualification for the three years ending December 31, 2022, 2023, and 2024. In this regard, Shenzhen Lexin Software was subject to the income tax rate of 15% in 2023.
In December 2022, Shenzhen Lexin Software successfully re-applied for a new HNTE qualification for the three years ending December 31, 2022, 2023, and 2024. In this regard, Shenzhen Lexin Software was subject to the income tax rate of 15% in 2024.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
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.
However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature.
However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature.
In addition to the above factors, the price and trading volume of the ADSs may be highly volatile due to multiple factors, including the following: • regulatory developments affecting us, our users, or our industry; • conditions in the online consumer finance industry and the public perception of the legitimacy and ethics of certain business practices of our competitors or other market players within the industry; • announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors; 69 • changes in the economic performance or market valuations of other online and offline consumption platforms; • actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; • changes in financial estimates by securities research analysts; • announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; • additions to or departures of our senior management; • detrimental negative publicity about us, our management or our industry; • fluctuations of exchange rates between the RMB and the U.S. dollar; • release or expiry of lock-up or other transfer restrictions on our outstanding Class A ordinary shares or the ADSs; and • sales or perceived potential sales of additional Class A ordinary shares or ADSs.
In addition to the above factors, the price and trading volume of the ADSs may be highly volatile due to multiple factors, including the following: • regulatory developments affecting us, our users, or our industry; • conditions in the online consumer finance industry and the public perception of the legitimacy and ethics of certain business practices of our competitors or other market players within the industry; • announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors; • changes in the economic performance or market valuations of other online and offline consumption platforms; • actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; • changes in financial estimates by securities research analysts; • announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; • additions to or departures of our senior management; • detrimental negative publicity about us, our management or our industry; • fluctuations of exchange rates between the RMB and the U.S. dollar; • release or expiry of lock-up or other transfer restrictions on our outstanding Class A ordinary shares or the ADSs; and • sales or perceived potential sales of additional Class A ordinary shares or ADSs.
On March 22, 2024, the CAC issued the Measures for Regulating and Promoting Outbound Data Flow, which took effect on the same day, in order to further regulate and promote the orderly and free flow of data legally, it is not required to apply for outbound data security assessment to be provided abroad, to conclude a standard contract for outbound provision of personal information or to pass the certification for personal information protection in certain situations, including, but not limited to, (i) for the data that have not been informed by relevant departments or regions or have been publicly announced as important data, (ii) where the personal information must be provided abroad, as it is necessary for the conclusion and performance of a contract to which the individual is a party, such as cross border shopping, or other listed situations, and (iii) in the event that it is estimated to provide abroad personal information of less than 10,000 individuals within one year.
However, on March 22, 2024, the CAC issued the Measures for Regulating and Promoting Outbound Data Flow, which took effect on the same day, in order to further regulate and promote the orderly and free flow of data legally, it is not required to apply for outbound data security assessment to be provided abroad, to conclude a standard contract for outbound provision of personal information or to pass the certification for personal information protection in certain situations, including, but not limited to, (i) for the data that have not been informed by relevant departments or regions or have been publicly announced as important data, (ii) where the personal information must be provided abroad, as it is necessary for the conclusion and performance of a contract to which the individual is a party, such as cross border shopping, or other listed situations, and (iii) in the event that it is estimated to provide abroad personal information of less than 10,000 individuals within one year.
See“Item 3.Key Information—D.Risk Factors—Risks Related to Our Business and Industry—If our current investor protection measures for institutional funding partners are deemed to violate the relevant laws and regulations, or if we are deemed to have operated 42 financial guarantee business by the PRC regulatory authorities, our business, liquidity, financial condition and results of operations would be materially and adversely affected.” In addition, in case that certain risk warning events set forth in the trust agreements occur, including, among others, when the utilization rate of funds in the trust has been less than a certain percentage for a period of time, the trust will no longer fund any loans and shall be dissolved in advance, which may materially and adversely affect our business, financial condition, results of operations and prospects.
See“Item 3.Key Information—D.Risk Factors—Risks Related to Our Business and Industry—If our current investor protection measures for institutional funding partners are deemed to violate the relevant laws and regulations, or if we are deemed to have operated financial guarantee business by the PRC regulatory authorities, our business, liquidity, financial condition and results of operations would be materially and adversely affected.” In addition, in case that certain risk warning events set forth in the trust agreements occur, including, among others, when the utilization rate of funds in the trust has been less than a certain percentage for a period of time, the trust will no longer fund any loans and shall be dissolved in advance, which may materially and adversely affect our business, financial condition, results of operations and prospects.
In addition, according to the PRC Civil Procedures Law, the PRC 15 courts will not enforce a foreign judgment against us or our directors and officers if they decide that (i) the judgment violates the basic principles of the PRC laws or national sovereignty, security, or public interest, (ii) the foreign court has no jurisdiction over the case pursuant to the provisions of the PRC Civil Procedures Law, (iii) the respondent has not been legitimately summoned or the respondents had been legitimately summoned but have not been given a reasonable opportunity to make a representation and debate, or the litigant without litigation capacity has not been assigned appropriate agent, (iv) the judgment or ruling is obtained by fraud, or (v) the PRC court has made a judgment or ruling on the same dispute or has recognized the judgment or ruling made by a court of a third country for the same dispute.
In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that (i) the judgment violates the basic principles of the PRC laws or national sovereignty, security, or public interest, (ii) the foreign court has no jurisdiction over the case pursuant to the provisions of the PRC Civil Procedures Law, (iii) the respondent has not been legitimately summoned or the respondents had been legitimately summoned but have not been given a reasonable opportunity to make a representation and debate, or the litigant without litigation capacity has not been assigned appropriate agent, (iv) the judgment or ruling is obtained by fraud, or (v) the PRC court has made a judgment or ruling on the same dispute or has recognized the judgment or ruling made by a court of a third country for the same dispute.
Many of these laws and regulations are subject to change and uncertain interpretation, and any failure or perceived failure to comply with these laws and regulations could result in claims, changes to our business practices, negative publicity, legal proceedings, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business; • If we are unable to effectively maintain the quality of our loan portfolio, our business, financial condition and results of operations may be materially and adversely affected; • We need adequate funding at a reasonable cost to successfully operate our business, and access to adequate funding at a reasonable cost cannot be assured; and • Due to the complex political and economic environment and international laws and regulations, our overseas business operations face additional risks and uncertainties.
Many of these laws and regulations are subject to change and uncertain interpretation in the future, and any failure or perceived failure to comply with these laws and regulations could result in claims, changes to our business practices, negative publicity, legal proceedings, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business; • If we are unable to effectively maintain the quality of our loan portfolio, our business, financial condition and results of operations may be materially and adversely affected; • We need adequate funding at a reasonable cost to successfully operate our business, and access to adequate funding at a reasonable cost cannot be assured; and • Due to the complex political and economic environment and international laws and regulations, our overseas business operations face additional risks and uncertainties.
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 (i) is given by a foreign court of competent jurisdiction, (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (iii) is final and conclusive, (iv) is not in respect of taxes, a fine or a penalty, and (v) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.
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 (i) is given by a foreign court of competent jurisdiction, (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (iii) is final, (iv) is not in respect of taxes, a fine or a penalty, and (v) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC 16 government deems that the contractual arrangements in relation to the variable interest entities and their subsidiaries 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”; • We rely on contractual arrangements with the variable interest entities and their shareholders, for a significant portion of our business operations, which may not be as effective as ownership in directing the activities.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements in relation to the variable interest entities and their subsidiaries 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”; • We rely on contractual arrangements with the variable interest entities and their shareholders, for a significant portion of our business operations, which may not be as effective as ownership in directing the activities.
Risk Factors—Risks Related to Doing Business in China—The PRC government’s oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.” Risks Related to Our Business and Industry 17 • We have a limited operating history in China’s online and offline consumption market, an emerging and evolving industry, which makes it difficult to evaluate our future prospects; • The laws and regulations governing the online consumer finance industry in China are developing and evolving, and our business operations have been and may need to continue to be modified to ensure full compliance with relevant laws and regulations.
Risk Factors—Risks Related to Doing Business in China—The PRC government’s oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.” Risks Related to Our Business and Industry • We have a limited operating history in China’s online and offline consumption market, an emerging and evolving industry, which makes it difficult to evaluate our future prospects; • The laws and regulations governing the online consumer finance industry in China are developing and evolving, and our business operations have been and may need to continue to be modified to ensure full compliance with relevant laws and regulations.
Risk Factors—Risks Related to the American Depositary Shares—You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.” We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.
Risk Factors—Risks Related to the American Depositary Shares—You may face difficulties in 25 protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.” We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.
Although we have taken measures to comply with the laws and regulations that are applicable to our business operations, including the regulatory principles raised by the China Banking and Insurance Regulatory Commission, or the CBIRC, and avoid conducting any noncompliant activities under the applicable laws and regulations, such as illegal fund-raising, forming fund collection or providing guarantee to investors, the 23 PRC government authority may promulgate new laws and regulations regulating the online consumer finance industry in the future.
Although we have taken measures to comply with the laws and regulations that are applicable to our business operations, including the regulatory principles raised by the China Banking and Insurance Regulatory Commission, or the CBIRC, and avoid conducting any noncompliant activities under the applicable laws and regulations, such as illegal fund-raising, forming fund collection or providing guarantee to investors, the PRC government authority may promulgate new laws and regulations regulating the online consumer finance industry in the future.
Our Cayman Islands legal counsel has advised us that the courts of the Cayman Islands are unlikely (i) to recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, and (ii) in 73 original actions brought in the Cayman Islands to impose liabilities against us or our directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States so far as the liabilities imposed by those provisions are penal in nature.
Our Cayman Islands legal counsel has advised us that the courts of the Cayman Islands are unlikely (i) to recognize or enforce judgments of U.S. courts obtained against us or our directors or officers that are predicated upon the civil liability provisions of the federal securities laws of the United States or the securities laws of any state in the United States, and (ii) in original actions brought in the Cayman Islands to impose liabilities against us or our directors or officers that are predicated upon the federal securities laws of the United States or the securities laws of any state in the United States so far as the liabilities imposed by those provisions are penal in nature.
Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC, and without the consent by the Chinese securities regulatory authorities and the other competent governmental 25 agencies, no entity or individual may provide documents or materials related to securities business to any foreign party.
Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC, and without the consent by the Chinese securities regulatory authorities and the other competent governmental agencies, no entity or individual may provide documents or materials related to securities business to any foreign party.
Does not specify what constitutes “activities relating to credit reporting business.” It is also unclear what activities may be deemed as “actually providing credit reporting services.” Further, the Measures for Credit Reporting Business does not provide a clear guidance or execution rules on how and when these providers, if deemed to be conducting credit reporting business, could apply for required licenses or otherwise comply with the Measures for Credit Reporting Business.
For example, the Measures for Credit Reporting Business does not specify what constitutes “activities relating to credit reporting business.” It is also unclear what activities may be deemed as “actually providing credit reporting services.” Further, the Measures for Credit Reporting Business does not provide a clear guidance or execution rules on how and when these providers, if deemed to be conducting credit reporting business, could apply for required licenses or otherwise comply with the Measures for Credit Reporting Business.
On March 15, 2019, the National People’s Congress promulgated the PRC Foreign Investment Law, which became effective on January 1, 2020 and replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.
On March 15, 2019, the National People’s Congress promulgated the PRC Foreign Investment Law, which became effective on January 1, 2020 and replace the trio of existing laws regulating foreign investment in China, namely, the 24 Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations.
The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. We expect that our labor costs, including wages and employee benefits, will continue to increase.
The relevant government agencies may examine whether an employer has made adequate payments to the 69 statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. We expect that our labor costs, including wages and employee benefits, will continue to increase.
Under the current Outbound Data Transfer Security Assessment Measures, an entity must apply for a CAC security assessment if it processes personal information of over one million individuals and transfer personal information outbound, or if it has cumulatively transferred personal information outbound of more than 100,000 individuals or sensitive personal information of more than 10,000 individuals since January 1 of the previous year.
Under the current Outbound Data Transfer Security Assessment Measures, an entity must apply for a CAC security assessment if it processes personal information of over one million individuals and transfer personal information 44 outbound, or if it has cumulatively transferred personal information outbound of more than 100,000 individuals or sensitive personal information of more than 10,000 individuals since January 1 of the previous year.
These factors include: • the growth of internet, broadband, personal computer and mobile penetration and usage in China, and the rate of any such growth; • the level of trust and confidence of Chinese consumers in online shopping, as well as changes in user demographics and consumer tastes and preferences; • the selection, price and popularity of products that we and our competitors offer online; • whether alternative retail channels or business models that better address the needs of consumers emerge in China; and • the development of fulfillment, payment and other ancillary services associated with online purchases. 57 A decline in the popularity of online shopping in general, or any failure by us to adapt our website and improve the online shopping experience of our users in response to trends and consumer requirements, may adversely affect our operating revenue and business prospects.
These factors include: • the growth of internet, broadband, personal computer and mobile penetration and usage in China, and the rate of any such growth; • the level of trust and confidence of Chinese consumers in online shopping, as well as changes in user demographics and consumer tastes and preferences; • the selection, price and popularity of products that we and our competitors offer online; • whether alternative retail channels or business models that better address the needs of consumers emerge in China; and • the development of fulfillment, payment and other ancillary services associated with online purchases. 58 A decline in the popularity of online shopping in general, or any failure by us to adapt our website and improve the online shopping experience of our users in response to trends and consumer requirements, may adversely affect our operating revenue and business prospects.
For example, based on the LPR of 3.7% as published on January 21, 2022, such cap was 14.8%. The Private Lending Judicial Interpretations (2020 version) shall apply to the first-instance cases 38 involving private lending disputes accepted by the people's courts after the implementation of such revised judicial interpretation.
For example, based on the LPR of 3.7% as published on January 21, 2022, such cap was 14.8%. The Private Lending Judicial Interpretations (2020 version) shall apply to the first-instance cases involving private lending disputes accepted by the people's courts after the implementation of such revised judicial interpretation.
In recent years, we have donated to the pandemic-hit city of Wuhan for purchases of scarce medical supplies. We have also donated to Henan province in central China, which was hit by heavy rains and flooding, to support relief efforts and 55 help local communities resume normal life, work and production.
In recent years, we have donated to the pandemic-hit city of Wuhan for purchases of scarce medical supplies. We have also donated to Henan province in central China, which was hit by heavy rains and flooding, to support relief efforts and help local communities resume normal life, work and production.
Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. 75 The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. 27 While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all.
To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all.
In addition, as the interpretation and implementation of these regulations are still evolving, our employment practices may not be at all times be deemed in compliance with the regulations. As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations.
In addition, as the interpretation and implementation of these regulations are still evolving, our employment practices may not be at all times be 28 deemed in compliance with the regulations. As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations.
Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business and financial condition. 68 Due to the complex political and economic environment and international laws and regulations, our overseas business operations face additional risks and uncertainties. Most of our operations are conducted in mainland China.
Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business and financial condition. Due to the complex political and economic environment and international laws and regulations, our overseas business operations face additional risks and uncertainties. Most of our operations are conducted in mainland China.
As it is in short sellers’ interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short.
As it is in short sellers’ interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations 72 regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short.
Certain rules and regulations can change quickly, and there may be risks and uncertainties regarding the interpretation and enforcement of the PRC laws and regulations. These risks and uncertainties may make it difficult for us to meet or comply with requirements under the applicable laws and regulations. See “Item 3. Key Information—D.
Certain rules and regulations can change quickly, and there may be risks and uncertainties regarding the interpretation and 17 enforcement of the PRC laws and regulations. These risks and uncertainties may make it difficult for us to meet or comply with requirements under the applicable laws and regulations. See “Item 3. Key Information—D.
Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business. 67 We believe our success depends on the efforts and talent of our employees, including risk management, software engineering, technology and product development, financial and marketing personnel.
Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business. We believe our success depends on the efforts and talent of our employees, including risk management, software engineering, technology and product development, financial and marketing personnel.
For the effect of the PRC Foreign Investment Law on us, see “—Risks Related to Doing Business in China—The interpretation and implementation of the PRC Foreign Investment Law may impact the viability of our current corporate structure, corporate governance and business operations.” If the operation of our businesses conducted through the variable interest entities is subject to any restrictions pursuant to the Special Administrative Measures for Foreign Investment Access (Edition 2021), or the 2021 Negative List, jointly promulgated by the Ministry of Commerce and the National Development and Reform Committee, or the NDRC, or any successor regulations, and the contractual arrangements are not treated as domestic investments, the contractual arrangements may be regarded as invalid and illegal.
For the effect of the PRC Foreign Investment Law on us, see “—Risks Related to Doing Business in China—The interpretation and implementation of the PRC Foreign Investment Law may impact the viability of our current corporate structure, corporate governance and business operations.” If the operation of our businesses conducted through the variable interest entities is subject to any restrictions pursuant to the Special Administrative Measures for Foreign Investment Access (Edition 2024), or the 2024 Negative List, jointly promulgated by the Ministry of Commerce and the National Development and Reform Committee, or the NDRC, or any successor regulations, and the contractual arrangements are not treated as domestic investments, the contractual arrangements may be regarded as invalid and illegal.
Further, if an employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting contract, with 28 certain exceptions, must have non-fixed term, subject to certain exceptions. With certain exceptions, an employer must pay severance to an employee where a labor contract is terminated or expires.
Further, if an employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting contract, with certain exceptions, must have non-fixed term, subject to certain exceptions. With certain exceptions, an employer must pay severance to an employee where a labor contract is terminated or expires.
For detailed discussions of applicable laws, regulations and implementation rules, see “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Tax—Regulations Relating to Enterprise Income Tax.” We believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes.
For detailed discussions of applicable laws, regulations and implementation rules, see “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Tax—Regulations Relating to Enterprise Income Tax.” 30 We believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes.
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 33 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.
Further, if we are a PFIC for any year during which a U.S. holder holds ADSs or our ordinary shares, we will generally continue to be treated as a PFIC for all succeeding years during which such U.S. holder holds our ADSs or ordinary shares. For more information see “Item 10. Additional Information—E.
Further, if we are a PFIC for any year during which a U.S. holder holds ADSs or our ordinary shares, we will generally continue to be treated as a PFIC 77 for all succeeding years during which such U.S. holder holds our ADSs or ordinary shares. For more information see “Item 10. Additional Information—E.
Risks Related to Our Corporate Structure • We are a Cayman Islands holding company with no equity ownership in the variable interest entities and we conduct our operations in China through (i) our PRC subsidiaries and (ii) the variable interest entities, with which we have maintained contractual arrangements, and their subsidiaries.
Risks Related to Our Corporate Structure 16 • We are a Cayman Islands holding company with no equity ownership in the variable interest entities and we conduct our operations in China through (i) our PRC subsidiaries and (ii) the variable interest entities, with which we have maintained contractual arrangements, and their subsidiaries.
SAFE Circular 19 launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises and allows foreign-invested enterprises to settle their foreign exchange capital at their discretion, but continues to prohibit foreign-invested enterprises from using the Renminbi fund converted from their foreign exchange capitals for expenditures beyond their business scopes.
SAFE Circular 19 launched a nationwide reform of the 26 administration of the settlement of the foreign exchange capitals of foreign-invested enterprises and allows foreign-invested enterprises to settle their foreign exchange capital at their discretion, but continues to prohibit foreign-invested enterprises from using the Renminbi fund converted from their foreign exchange capitals for expenditures beyond their business scopes.
Business Overview—Regulations—Regulations Relating to Foreign Currency Exchange.” 30 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—Regulations Relating to Foreign Currency Exchange.” 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.
Only where there is a specific purpose and sufficient necessity, and under circumstances where strict protection measures are taken, may personal information processors process sensitive personal information. A personal information processor shall inform the individual 44 of the necessity of processing such sensitive personal information and the impact thereof on the individual’s rights and interests.
Only where there is a specific purpose and sufficient necessity, and under circumstances where strict protection measures are taken, may personal information processors process sensitive personal information. A personal information processor shall inform the individual of the necessity of processing such sensitive personal information and the impact thereof on the individual’s rights and interests.
Although we have 45 adopted measures to comply with the requirements of the regulators to the best we can, we cannot guarantee that we will not be subject to more similar rectification requests from the governmental authorities or that we will fully comply with all applicable rules and regulations at all times.
Although we have adopted measures to comply with the requirements of the regulators to the best we can, we cannot guarantee that we will not be subject to more similar rectification requests from the governmental authorities or that we will fully comply with all applicable rules and regulations at all times.
(3) The shareholders of Beijing Lejiaxin include Jay Wenjie Xiao (99.87%) and Jared Yi Wu (0.13%). Jared Yi Wu is our president and director. (4) The shareholders of Qianhai Dingsheng include Shenzhen Xinjie (70%) and Jianwei Wei (30%). Jianwei Wei is a non-executive PRC employee.
(3) The shareholders of Beijing Lejiaxin include Jay Wenjie Xiao (99.87%) and Jared Yi Wu (0.13%). Jared Yi Wu is our director. (4) The shareholders of Qianhai Dingsheng include Shenzhen Xinjie (70%) and Jianwei Wei (30%). Jianwei Wei is a non-executive PRC employee.
If any of the foregoing were to occur, our business, competitive position, financial condition and results of operations may be materially and adversely affected. 46 We need adequate funding at a reasonable cost to successfully operate our business, and access to adequate funding at a reasonable cost cannot be assured.
If any of the foregoing were to occur, our business, competitive position, financial condition and results of operations may be materially and adversely affected. We need adequate funding at a reasonable cost to successfully operate our business, and access to adequate funding at a reasonable cost cannot be assured.
If we fail to complete such recording or registration, our 26 ability to use the proceeds of our initial public offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.
If we fail to complete such recording or registration, our ability to use the proceeds of our initial public offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.
Our auditor is located in mainland China, a jurisdiction where the PCAOB had historically been unable to conduct inspections and investigations completely before 2022. As a result, we and investors in 33 the ADSs were deprived of the benefits of such PCAOB inspections.
Our auditor is located in mainland China, a jurisdiction where the PCAOB had historically been unable to conduct inspections and investigations completely before 2022. As a result, we and investors in the ADSs were deprived of the benefits of such PCAOB inspections.
From time to time, however, we received and may receive opinion letters issued by the relevant government authorities regarding our practices in guarantee and technology services. In these cases, we replied in time and cooperated to address the comments, having resolved most of these comments.
From time to time, however, we received and may receive opinion letters issued by the relevant government authorities regarding our practices in guarantee and technology services. In these cases, we replied in time and cooperated to address the comments, having resolved most of 38 these comments.
The PRC government has instituted specific rules, including the Guidelines on Promoting the Healthy Development of the Internet Finance, the Commercial Banks Online Lending Measures, and the Circular 141, to develop a more transparent regulatory environment for the online consumer finance industry.
The PRC government has instituted specific rules, including the Guidelines on Promoting the Healthy Development of the Internet Finance, the Commercial Banks Online 50 Lending Measures, and the Circular 141, to develop a more transparent regulatory environment for the online consumer finance industry.
Our failure to discover and address any material weaknesses or deficiencies in the future may result in inaccuracies in our financial statements or delay in the preparation of our financial statements. This could in turn result in the loss of investor confidence in the reliability of our financial statements and negatively impact the trading price of our ADSs.
Our failure to discover and address any material weaknesses or deficiencies in the future may result in inaccuracies in our financial 68 statements or delay in the preparation of our financial statements. This could in turn result in the loss of investor confidence in the reliability of our financial statements and negatively impact the trading price of our ADSs.
Such tensions between the United States and China, and any escalation thereof, may have a negative impact on the general, economic, political, and social conditions in China and, in turn, adversely impacting our business, financial condition, and results of operations.
Such tensions between the United 67 States and China, and any escalation thereof, may have a negative impact on the general, economic, political, and social conditions in China and, in turn, adversely impacting our business, financial condition, and results of operations.
In addition, under our amended and restated 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 Class A ordinary shares which are represented by your ADSs and becoming the registered holder of such shares prior to the record date for the general meeting, so that you would not be able to attend the general meeting or to vote directly.
In addition, under our sixth amended and restated memorandum and articles of association, for 73 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 Class A ordinary shares which are represented by your ADSs and becoming the registered holder of such shares prior to the record date for the general meeting, so that you would not be able to attend the general meeting or to vote directly.
Investor advocacy groups, certain institutional investors, investment funds, and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments.
Investor advocacy 56 groups, certain institutional investors, investment funds, and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments.
Holders of our Class A ordinary shares are not subject to this discretionary proxy. The deposit agreement may be amended or terminated without your consent. 72 We and the depositary may amend the deposit agreement, and we may initiate termination of it, without your consent.
Holders of our Class A ordinary shares are not subject to this discretionary proxy. The deposit agreement may be amended or terminated without your consent. We and the depositary may amend the deposit agreement, and we may initiate termination of it, without your consent.
Our directors have discretion under our amended and restated memorandum and articles of association, to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders.
Our directors have discretion under our sixth amended and restated memorandum and articles of association, to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders.
SAFE Circular 37 was issued to replace the Circular on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments through Overseas Special Purpose 29 Vehicles, or SAFE Circular 75.
SAFE Circular 37 was issued to replace the Circular on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments through Overseas Special Purpose Vehicles, or SAFE Circular 75.
Negative publicity associated with fabricated or malicious reports to 49 the government authorities on our products or services made by competitors or our users may also adversely affect our brand image and reputation and undermine our trust and credibility.
Negative publicity associated with fabricated or malicious reports to the government authorities on our products or services made by competitors or our users may also adversely affect our brand image and reputation and undermine our trust and credibility.
Under our amended and restated memorandum and articles of association, the minimum notice period required to be given by our company to our registered shareholders for convening a general meeting is seven (7) calendar days.
Under our sixth amended and restated memorandum and articles of association, the minimum notice period required to be given by our company to our registered shareholders for convening a general meeting is seven (7) calendar days.
We also cooperate with institutional funding partners, whose compliance with the PRC laws and regulations may affect our business.” 52 Our online consumer finance platform, Fenqile, operated by Shenzhen Fenqile, has obtained certain value-added telecommunications service license for the operation of domestic call center service in May 2022, which will remain valid until May 2027, and certain value-added telecommunications service license for online data processing and transaction processing in July 2019, which will remain valid until July 2024.
We also cooperate with institutional funding partners, whose compliance with the PRC laws and regulations may affect our business.” 53 Our online consumer finance platform, Fenqile, operated by Shenzhen Fenqile, has obtained certain value-added telecommunications service license for the operation of domestic call center service in May 2022, which will remain valid until May 2027, and certain value-added telecommunications service license for online data processing and transaction processing in July 2019, which will remain valid until July 2024.
We could also be perceived to have facilitated or participated in the illegal misappropriation of funds, documents or data, or have failed to follow protocol, and therefore be subject to civil or criminal liability. 56 If our ability to collect delinquent loans is impaired, or if the collection efforts of our in-house team or third-party service providers are impaired, our business and results of operations might be materially and adversely affected.
We could also be perceived to have facilitated or participated in the illegal misappropriation of funds, documents or data, or have failed to follow protocol, and therefore be subject to civil or criminal liability. 57 If our ability to collect delinquent loans is impaired, or if the collection efforts of our in-house team or third-party service providers are impaired, our business and results of operations might be materially and adversely affected.
There are also other conditions for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. See “Item 4. Information on the Company—B.
There are also other conditions for enjoying the reduced 31 withholding tax rate according to other relevant tax rules and regulations. See “Item 4. Information on the Company—B.
We have been and may be subject to intellectual property infringement claims or other legal proceedings and claims in the ordinary course of our business, which may be expensive to defend and may disrupt our business and operations. 63 We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties.
We have been and may be subject to intellectual property infringement claims or other legal proceedings and claims in the ordinary course of our business, which may be expensive to defend and may disrupt our business and operations. 64 We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties.
See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Online Consumer Finance Services.” As we rely primarily on our funding partners for our loan products, our collaboration with institutional funding partners has exposed us to and may continue to expose us to additional regulatory uncertainties faced by such institutional funding partners whose businesses are highly regulated.
See “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Online Consumer Finance Services.” As we rely primarily on our funding partners for our loan products, our collaboration with institutional funding partners has exposed us to and may continue to expose us to additional regulatory changes faced by such institutional funding partners whose businesses are highly regulated.
Our pricing and terms could deteriorate if we fail to act to meet these competitive challenges. 58 In addition, in response to more stringent PRC laws and regulations regarding cash loans, more online lending platforms may expand their services and products to scenario-based lending, including partnering with e-commerce platforms, which may drive up the competition among online lending platforms.
Our pricing and terms could deteriorate if we fail to act to meet these competitive challenges. 59 In addition, in response to more stringent PRC laws and regulations regarding cash loans, more online lending platforms may expand their services and products to scenario-based lending, including partnering with e-commerce platforms, which may drive up the competition among online lending platforms.
Entities engaged in personal credit reporting business without such approval may be subject to penalties, including ban of business, confiscation of revenues related to personal credit reporting business, imposition of fines of RMB50,000 to RMB500,000 or criminal liabilities. 53 In September 2021, the People’s Bank of China released the Measures for Credit Reporting Business, which took effect on January 1, 2022.
Entities engaged in personal credit reporting business without such approval may be subject to penalties, including ban of business, confiscation of revenues related to personal credit reporting business, imposition of fines of RMB50,000 to RMB500,000 or criminal liabilities. 54 In September 2021, the People’s Bank of China released the Measures for Credit Reporting Business, which took effect on January 1, 2022.
Any failure to protect the confidential information of our users, funding sources and other third parties or improper use of such data may subject us to liabilities imposed by data privacy and protection laws and regulations, negatively impact our reputation, and discourage users from using our platform. 60 Our platform collects, stores and processes certain personal and other sensitive data from our users and funding sources.
Any failure to protect the confidential information of our users, funding sources and other third parties or improper use of such data may subject us to liabilities imposed by data privacy and protection laws and regulations, negatively impact our reputation, and discourage users from using our platform. 61 Our platform collects, stores and processes certain personal and other sensitive data from our users and funding sources.
However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs.
However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of 74 ADSs.
New laws and regulations may impose additional requirements and other obligations on our e-commerce business, which may materially and adversely affect our business, financial condition and results of operations. 54 In addition to requirements of licenses and permits, the PRC laws and regulations also require e-commerce platform operators to take measures to protect consumer rights. See “Item 4.
New laws and regulations may impose additional requirements and other obligations on our e-commerce business, which may materially and adversely affect our business, financial condition and results of operations. 55 In addition to requirements of licenses and permits, the PRC laws and regulations also require e-commerce platform operators to take measures to protect consumer rights. See “Item 4.
Erroneous reports with respect to certain of our users have been sent to the credit reference center of the People’s Bank of China, which may result in reputational damage to us. 64 Some of our institutional funding partners report delinquencies of our users to the credit reference center of the People’s Bank of China, which adversely affect such users’ credit profiles and abilities to obtain loans in the future.
Erroneous reports with respect to certain of our users have been sent to the credit reference center of the People’s Bank of China, which may result in reputational damage to us. 65 Some of our institutional funding partners report delinquencies of our users to the credit reference center of the People’s Bank of China, which adversely affect such users’ credit profiles and abilities to obtain loans in the future.
If we fail to maintain cooperation with our funding partners or to maintain sufficient liquidity to originate loans to our users, our reputation, results of operations and financial condition may be materially and adversely affected. 50 Our institutional funding partners typically agree to provide funding to our users who meet their predetermined criteria, subject to their approval process.
If we fail to maintain cooperation with our funding partners or to maintain sufficient liquidity to originate loans to our users, our reputation, results of operations and financial condition may be materially and adversely affected. 51 Our institutional funding partners typically agree to provide funding to our users who meet their predetermined criteria, subject to their approval process.
However, if there is less demand than we anticipate for loan products offered on our platform, it may materially and adversely impact our business, financial condition and results of operations. 59 Our quarterly results may fluctuate significantly due to the seasonality of our business and may not fully reflect the underlying performance of our business.
However, if there is less demand than we anticipate for loan products offered on our platform, it may materially and adversely impact our business, financial condition and results of operations. 60 Our quarterly results may fluctuate significantly due to the seasonality of our business and may not fully reflect the underlying performance of our business.
Many of these laws and regulations are subject to change and uncertain interpretation, and any failure or perceived failure to comply with these laws and regulations could result in claims, changes to our business practices, negative publicity, legal proceedings, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.
Many of these laws and regulations are subject to change and uncertain interpretation in the future, and any failure or perceived failure to comply with these laws and regulations could result in claims, changes to our business practices, negative publicity, legal proceedings, increased cost of operations, or declines in user growth or engagement, or otherwise harm our business.
In addition, when a company meets the SEC’s criteria, an independent registered public accounting firm must attest to and report on the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.
In addition, when a company meets the SEC’s criteria, an independent registered public accounting firm must attest to and report on the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2024.
Business Overview—Regulations—Regulations Relating to E-Commerce” and “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Product Quality and Consumer Rights Protection.” 51 In addition, we cooperate with a number of business partners and other third parties to fulfill and deliver our products to our users.
Business Overview—Regulations—Regulations Relating to E-Commerce” and “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations Relating to Product Quality and Consumer Rights Protection.” 52 In addition, we cooperate with a number of business partners and other third parties to fulfill and deliver our products to our users.
If the operation of our businesses conducted through the variable interest entities is subject to any restrictions pursuant to the 2021 Negative List or any successor regulations, and the contractual arrangements are not treated as domestic investment, the contractual arrangements may be regarded as invalid and illegal.
If the operation of our businesses conducted through the variable interest entities is subject to any restrictions pursuant to the 2024 Negative List or any successor regulations, and the contractual arrangements are not treated as domestic investment, the contractual arrangements may be regarded as invalid and illegal.
For example, we source products from third-party suppliers for our online direct sales. In particular, we have cooperated extensively with JD.com, from which we source a significant portion of products that we offer on our e-commerce channel.
For example, we source products from third-party suppliers for our online direct sales. In particular, we have cooperated extensively with JD.com, from which we source a significant amount of products that we offer on our e-commerce channel.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

118 edited+40 added−45 removed470 unchanged
Biggest changeAs a result, we and our non-resident investors in such transactions may become at risk of being taxed under Circular 7, and we may be required to expend valuable resources to comply with Circular 7 or to establish that we should not be taxed under the general anti-avoidance rule of the Enterprise Income Tax Law, which may have a material adverse effect on our financial condition and results of operations.
Biggest changeAs a result, we and our non-resident investors in such transactions may become at risk of being taxed under Circular 7, and we may be required to expend valuable resources to comply with Circular 7 or to establish that we should not be taxed under the general anti-avoidance rule of the Enterprise Income Tax Law, which may have a material adverse effect on our financial condition and results of operations. 115 Regulations Relating to Dividend Withholding Tax Pursuant to the Enterprise Income Tax Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC, or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment, it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%.
This regulation further illustrates certain commonly-seen illegal practices of apps operators in terms of personal information protection, including “failure to publicize rules for collecting and using personal information,” “failure to expressly state the purpose, manner and scope of collecting and using personal information,” “collection and use of personal information without consent of users of such App,” “collecting personal information irrelevant to the services provided by such app in violation of the principle of necessity,” “provision of personal information to others without users’ consent,” “failure to provide the function of deleting or correcting personal information as required by laws” and “failure to publish information such as methods for complaints and reporting.” Among others, any of the following acts of an app operator will constitute “collection and use of personal information without consent of users”: (i) collecting an user’s personal information or activating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii) collecting personal information or activating the permission for collecting the personal information of any user who explicitly refuses such collection, or repeatedly seeking for user’s consent such that the user’s normal use of such app is disturbed; (iii) any user’s personal information which has 103 been actually collected by the app operator or the permission for collecting any user’s personal information activated by the app operator is beyond the scope of personal information which such user authorizes such app operator to collect; (iv) seeking for any user’s consent in a non-explicit manner; (v) modifying any user’s settings for activating the permission for collecting any personal information without such user’s consent; (vi) using users’ personal information and any algorithms to directionally push any information, without providing the option of non-directed pushing such information; (vii) misleading users to permit collecting their personal information or activating the permission for collecting such users’ personal information by improper methods such as fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission of collecting personal information; and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by such app operator.
This regulation further illustrates certain commonly-seen illegal practices of apps operators in terms of personal information protection, including “failure to publicize rules for collecting and using personal information,” “failure to expressly state the purpose, manner and scope of collecting and using personal information,” “collection and use of personal information without consent of users of such App,” “collecting personal information irrelevant to the services provided by such app in violation of the principle of necessity,” “provision of personal information to others without users’ consent,” “failure to provide the function of deleting or correcting personal information as required by laws” and “failure to publish information such as methods for complaints and reporting.” Among others, any of the following acts of an app operator will constitute “collection and use of personal information without consent of users”: (i) collecting an user’s personal information or activating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii) collecting personal information or activating the permission for collecting the personal information of any user who explicitly refuses such collection, or repeatedly seeking for user’s consent such that the user’s normal use of such app is disturbed; (iii) any user’s personal information which has been actually collected by the app operator or the permission for collecting any user’s personal information activated by the app operator is beyond the scope of personal information which such user authorizes such app operator to collect; (iv) seeking for any user’s consent in a non-explicit manner; (v) modifying any user’s settings for activating the permission for collecting any personal information without such user’s consent; (vi) using users’ personal information and any algorithms to directionally push any information, without providing the option of non-directed pushing such information; (vii) misleading users to permit collecting their personal information or activating the permission for collecting such users’ personal information by improper methods such as fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission of collecting personal information; and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by such app operator.
According to the Trial Measures, no overseas offering and listing shall be made under any of the following circumstances: (i) where such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) where the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) where the domestic company intending to make the securities offering and listing, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) where the domestic company intending to make the securities offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; (v) where there are 117 material ownership disputes over equity held by the domestic company’s controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller.
According to the Trial Measures, no overseas offering and listing shall be made under any of the following circumstances: (i) where such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) where the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) where the domestic company intending to make the securities offering and listing, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) where the domestic company intending to make the securities offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; (v) where there are material ownership disputes over equity held by the domestic company’s controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller.
Though the implementation rules of the Enterprise Income Tax Law define “de facto management bodies” as “establishments that carry out substantial and overall management and control over the manufacturing and business operations, personnel, accounting, and properties of an enterprise,” the only detailed guidance currently available for the definition of “de facto management body” as well as the determination and administration of tax residency status of offshore-incorporated enterprises are set forth in the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies promulgated by the State Administration of Taxation, in April 2009, or Circular 82, and the Administrative Measures for Enterprise Income Tax of Chinese-Controlled Overseas Incorporated Resident Enterprises (Trial Version) issued by the State Administration of Taxation in July 2011, or Bulletin No. 45, which provides guidance on the administration as well as the determination of the tax residency status of a Chinese-controlled offshore-incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC company or PRC corporate group as its primary controlling shareholder.
Though the implementation rules of the Enterprise Income Tax Law define “de facto management bodies” as “establishments that carry 114 out substantial and overall management and control over the manufacturing and business operations, personnel, accounting, and properties of an enterprise,” the only detailed guidance currently available for the definition of “de facto management body” as well as the determination and administration of tax residency status of offshore-incorporated enterprises are set forth in the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies promulgated by the State Administration of Taxation, in April 2009, or Circular 82, and the Administrative Measures for Enterprise Income Tax of Chinese-Controlled Overseas Incorporated Resident Enterprises (Trial Version) issued by the State Administration of Taxation in July 2011, or Bulletin No. 45, which provides guidance on the administration as well as the determination of the tax residency status of a Chinese-controlled offshore-incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC company or PRC corporate group as its primary controlling shareholder.
In addition, in 2023, the CAC issued a few drafts for public comments related to personal information protection including the Administrative Measures for the Compliance Audit of Personal Information Protection (Draft for Comment), which states that such draft shall apply to the regular compliance audits of personal information protection by personal information processors, or the compliance audits of their personal information processing activities by a specialized agency entrusted by such processors as required by the authorities performing duties of personal information protection, as well as the supervision and administration of compliance audits of personal information protection, and the Administrative Provisions on the Application Security of Facial Recognition Technology (Draft for Comment), which states that (i) users of facial recognition technology shall, when processing facial information, make assessment n the impact of personal information protection in advance and record the processing, and (ii) any user of facial recognition technology that uses facial recognition technology in public places or stores the facial information of more than 10,000 people shall submit the filings with the local cyberspace authority at the prefectural level or above within 30 working days, both issued in August, 2023.
In addition, in 2023, the CAC issued a few drafts for public comments related to personal information protection including the Administrative Measures for the Compliance Audit of Personal Information Protection (Draft for Comment), which states that such draft shall apply to the regular compliance audits of personal information protection by personal information processors, or the compliance audits of their personal information processing activities by a specialized agency entrusted by such processors as required by the authorities performing duties of personal information protection, as well as the supervision and administration of compliance audits of personal information protection, and the Administrative Provisions on the Application Security of Facial Recognition Technology (Draft for Comment), which states that (i) users of 105 facial recognition technology shall, when processing facial information, make assessment n the impact of personal information protection in advance and record the processing, and (ii) any user of facial recognition technology that uses facial recognition technology in public places or stores the facial information of more than 10,000 people shall submit the filings with the local cyberspace authority at the prefectural level or above within 30 working days, both issued in August, 2023.
According to Circular 82, a Chinese-controlled offshore-incorporated enterprise will be regarded as a PRC resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: 113 • the primary location of the day-to-day operational management and the places where they perform their duties are in the PRC; • decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval of organizations or personnel in the PRC; • the enterprise’s primary assets, accounting books and records, company seals and board and shareholder resolutions are located or maintained in the PRC; and • 50% or more of voting board members or senior executives habitually reside in the PRC.
According to Circular 82, a Chinese-controlled offshore-incorporated enterprise will be regarded as a PRC resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: • the primary location of the day-to-day operational management and the places where they perform their duties are in the PRC; • decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval of organizations or personnel in the PRC; • the enterprise’s primary assets, accounting books and records, company seals and board and shareholder resolutions are located or maintained in the PRC; and • 50% or more of voting board members or senior executives habitually reside in the PRC.
According to the Anti-Terrorism Law, telecommunication service operators or internet service providers shall (i) carry out pertinent anti-terrorism publicity and education to society; (ii) provide technical interfaces, decryption and other technical support and assistance for the competent departments to prevent and investigate terrorist activities; (iii) implement network security and information monitoring systems as well as safety and technical prevention measures to avoid the dissemination of terrorism information, delete the terrorism information, immediately halt its dissemination, keep relevant records and 99 report to the competent departments once the terrorism information is discovered; and (iv) examine customer identities before providing services.
According to the Anti-Terrorism Law, telecommunication service operators or internet service providers shall (i) carry out pertinent anti-terrorism publicity and education to society; (ii) provide technical interfaces, decryption and other technical support and assistance for the competent departments to prevent and investigate terrorist activities; (iii) implement network security and information monitoring systems as well as safety and technical prevention measures to avoid the dissemination of terrorism information, delete the terrorism information, immediately halt its dissemination, keep relevant records and report to the competent departments once the terrorism information is discovered; and (iv) examine customer identities before providing services.
Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, promulgated by the State Administration of Taxation in February 2009, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it should be a company as provided in the tax treaty; (ii) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it must have directly owned such percentage in the 114 PRC resident enterprise throughout the 12 months prior to receiving the dividends.
Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, promulgated by the State Administration of Taxation in February 2009, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it should be a company as provided in the tax treaty; (ii) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends.
Furthermore, this law stipulates for increasing the fines for illegal concentration of business operators to “no more than ten percent of its preceding year’s sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition,” and also requires the relevant authority to investigate 109 transaction where there is evidence that the concentration has or may have the effect of eliminating or restricting competition, even if such concentration does not reach the filing threshold.
Furthermore, this law stipulates for increasing the fines for illegal concentration of business operators to “no more than ten percent of its preceding year’s sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition,” and also requires the relevant authority to investigate transaction where there is evidence that the concentration has or may have the effect of eliminating or restricting competition, even if such concentration does not reach the filing threshold.
Regulations Relating to Campus Online Lending In April 2017, the CBIRC issued the Guidelines on Prevention and Control of the Risks in Banking Industry, to emphasize the relevant requirements on the campus online lending business provided in the Rectification of Campus Online Lending Notice, which include the prohibitions of: (i) marketing to individuals unable to repay loans; (ii) providing online lending service to college students under the age of eighteen; (iii) conducting false and fraudulent advertising and promotion; or (iv) providing usurious loans in disguised forms.
Regulations Relating to Campus Online Lending 93 In April 2017, the CBIRC issued the Guidelines on Prevention and Control of the Risks in Banking Industry, to emphasize the relevant requirements on the campus online lending business provided in the Rectification of Campus Online Lending Notice, which include the prohibitions of: (i) marketing to individuals unable to repay loans; (ii) providing online lending service to college students under the age of eighteen; (iii) conducting false and fraudulent advertising and promotion; or (iv) providing usurious loans in disguised forms.
Furthermore, it clearly states that financial information of consumers shall be used for the purpose in compliance with laws and regulations and agreed by 105 both parties and kept in strict confidential, and no leakage or illegal disclosure to other parties shall be allowed, and institutions are required to set up a management system for the usage of financial information of consumers and implement technologies and other measures as necessary to properly maintain and store the financial information of consumers collected.
Furthermore, it clearly states that financial information of consumers shall be used for the purpose in compliance with laws and regulations and agreed by both parties and kept in strict confidential, and no leakage or illegal disclosure to other parties shall be allowed, and institutions are required to set up a management system for the usage of financial information of consumers and implement technologies and other measures as necessary to properly maintain and store the financial information of consumers collected.
Where a recall measure is taken pursuant to the preceding sentences, the manufacturer and the seller shall bear the necessary expenses incurred by the infringed party resulted therefrom; and (v) in the event of death or serious damage to health arising from a product that is manufactured or sold when it is known to be defective or failure to take effective remedial measures pursuant to the preceding sentences, the infringed party shall be entitled to claim corresponding punitive compensation.
Where a recall measure is taken pursuant to the preceding sentences, the manufacturer and the seller shall bear the necessary expenses incurred by the infringed party resulted therefrom; and 110 (v) in the event of death or serious damage to health arising from a product that is manufactured or sold when it is known to be defective or failure to take effective remedial measures pursuant to the preceding sentences, the infringed party shall be entitled to claim corresponding punitive compensation.
According to the Foreign Investment Security Review Mechanism, foreign investment activities falling in the scope such as important cultural products and services, important information technologies and internet products and services, important financial services, key technologies and other important fields that concern state security while obtaining the actual control over the enterprises invested in, a foreign 86 investor or a party concerned in the PRC shall take the initiative to make a declaration to the working mechanism office prior to making the investment.
According to the Foreign Investment Security Review Mechanism, foreign investment activities falling in the scope such as important cultural products and services, important information technologies and internet products and services, important financial services, key technologies and other important fields that concern state security while obtaining the actual control over the enterprises invested in, a foreign investor or a party concerned in the PRC shall take the initiative to make a declaration to the working mechanism office prior to making the investment.
In addition, on November 15, 2021, the SAMR published the Overseas Anti-monopoly Compliance Guidelines for Enterprises, which provides that both PRC enterprises that conduct business and operation overseas and PRC enterprises that conduct business and operations in China and may have certain impacts on overseas markets may face risks on anti-monopoly in other jurisdictions, in particular for those that conduct import and export trade, overseas investments, acquisition, transfer or license of intellectual properties and tendering and bidding activities.
On November 15, 2021, the SAMR published the Overseas Anti-monopoly Compliance Guidelines for Enterprises, which provides that both PRC enterprises that conduct business and operation overseas and PRC enterprises that conduct business and operations in China and may have certain impacts on overseas markets may face risks on anti-monopoly in other jurisdictions, in particular for those that conduct import and export trade, overseas investments, acquisition, transfer or license of intellectual properties and tendering and bidding activities.
We provide digitalized solutions throughout the credit 81 process of loan products, including channel co-building, product co-developing, joint risk management, whole life cycle operation and customer service. We are committed to helping institutional funding partners boost their business by improving brand recognition, acquiring high-quality user assets, and managing risks more effectively.
We provide digitalized solutions throughout the credit process of loan products, including channel co-building, product co-developing, joint risk management, whole life cycle operation and customer service. We are committed to helping institutional funding partners boost their business by improving brand recognition, acquiring high-quality user assets, and managing risks more effectively.
In addition, according to the Notice of the State Administration of Foreign Exchange on Issuing the Provisions on the Foreign Exchange Administration of Domestic Direct Investment of Foreign Investors and the Supporting Documents promulgated by SAFE in May 2013 and most recently amended in December 2019, the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall 115 process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.
In addition, according to the Notice of the State Administration of Foreign Exchange on Issuing the Provisions on the Foreign Exchange Administration of Domestic Direct Investment of Foreign Investors and the Supporting Documents promulgated by SAFE in May 2013 and most recently amended in December 2019, the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.
On December 30, 2021, the CBIRC issued the Measures for the Regulation of IT Outsourcing Risks of Banking and Insurance Institutions, or the IT Outsourcing Regulation Measures, which replaced the Guidelines for Regulating Information Technology Outsourcing Risks of Banking Financial Institutions issued on February 16, 2013, the Circular on Strengthening the Management of Risks Incurred during Offsite and Centralized Information Technology Outsourcing of Banking Financial Institutions issued on July 1, 2014 and the Notice of the General Office of the China Banking Regulatory Commission of the Launch of the Regulatory Assessment of the Offsite Centralized Information Technology Outsourcing of Banking Financial Institutions issued on December 2, 2014.
On December 30, 2021, the CBIRC issued the Measures for the Regulation of IT Outsourcing Risks of Banking and Insurance Institutions, or the IT Outsourcing Regulation Measures, which replaced the Guidelines for Regulating Information Technology Outsourcing Risks of Banking Financial Institutions issued on February 16, 2013, the Circular on Strengthening the Management of Risks Incurred during Offsite and Centralized Information Technology Outsourcing of Banking Financial Institutions issued on July 1, 2014 and the Notice of the General Office of the China Banking Regulatory Commission of the 111 Launch of the Regulatory Assessment of the Offsite Centralized Information Technology Outsourcing of Banking Financial Institutions issued on December 2, 2014.
For example, Jiangxi Financial Service Office, the regulatory authority for microcredit companies in Jiangxi Province, promulgated Measures for the Supervision and Administration of Microcredit Companies in Jiangxi Province in March 2022, to impose the management duties upon the relevant regulatory authorities and to specify more detailed requirements on the microcredit companies, in accordance with which, among other requirements, (i) the microfinance companies are prohibited from engaging in deposit 94 taking activities from the public and illegal fund-raising; (ii) the modification of certain company registration issues shall be subject to the approval by the relevant regulatory authorities; and (iii) the registered capital of a microfinance company shall not be less than RMB30 million, while the registered capital of a microfinance company applying for carrying out small loan businesses or establishing branches outside the place of registration (only within the administrative region of Jiangxi Province) shall not be less than RMB50 million.
For example, Jiangxi Financial Service Office, the regulatory authority for microcredit companies in Jiangxi Province, promulgated Measures for the Supervision and Administration of Microcredit Companies in Jiangxi Province in March 2022, to impose the management duties upon the relevant regulatory authorities and to specify more detailed requirements on the microcredit companies, in accordance with which, among other requirements, (i) the microfinance companies are prohibited from engaging in deposit 95 taking activities from the public and illegal fund-raising; (ii) the modification of certain company registration issues shall be subject to the approval by the relevant regulatory authorities; and (iii) the registered capital of a microfinance company shall not be less than RMB30 million, while the registered capital of a microfinance company applying for carrying out small loan businesses or establishing branches outside the place of registration (only within the administrative region of Jiangxi Province) shall not be less than RMB50 million.
The main features of illegal public fund-raising include: (i) illegally soliciting and raising funds from the general public by means of issuing stocks, bonds, lotteries or other securities without obtaining the approval of relevant authorities, (ii) promising a return of interest or profits or investment returns in cash, properties or other forms within a specified period of time and (iii) using a legitimate form to disguise the unlawful purpose. 93 To further clarify the criminal charges and punishments relating to illegal public fund-raising, the Supreme People’s Court promulgated the Judicial Interpretations to Issues Concerning Applications of Laws for Trial of Criminal Cases on Illegal Fund-Raising which came into force in January 2011 and was revised in March 2022.
The main features of illegal public fund-raising include: (i) illegally soliciting and raising funds from the general public by means of issuing stocks, bonds, lotteries or other securities without obtaining the approval of relevant authorities, (ii) promising a return of interest or profits or investment returns in cash, properties or other forms within a specified period of time and (iii) using a legitimate form to disguise the unlawful purpose. 94 To further clarify the criminal charges and punishments relating to illegal public fund-raising, the Supreme People’s Court promulgated the Judicial Interpretations to Issues Concerning Applications of Laws for Trial of Criminal Cases on Illegal Fund-Raising which came into force in January 2011 and was revised in March 2022.
Depending on the results, different measures shall be taken before the end of March 2018: (i) for institutions holding network microcredit licenses but do not meet the 95 qualification requirements to conduct network micro-loan business, their network microcredit licenses shall be revoked and such institutions will be prohibited from conducting loan business outside the administrative jurisdiction of their respective approving authorities; (ii) for institutions holding network microcredit licenses that meet the qualification requirements to conduct network micro-loan business but were found not in compliance with other requirements, such as the requirements on the integrated actual interest rate, the scope of loan and the cooperation with third-party institutions, such institutions shall take rectification measures in a period separately specified by authorities, and in the event that the rectification does not meet the authorities’ requirements, such institutions shall be subject to several sanctions, including revocation of license and orders to cease business operation.
Depending on the results, different measures shall be taken before the end of March 2018: (i) for institutions holding network microcredit licenses but do not meet the 96 qualification requirements to conduct network micro-loan business, their network microcredit licenses shall be revoked and such institutions will be prohibited from conducting loan business outside the administrative jurisdiction of their respective approving authorities; (ii) for institutions holding network microcredit licenses that meet the qualification requirements to conduct network micro-loan business but were found not in compliance with other requirements, such as the requirements on the integrated actual interest rate, the scope of loan and the cooperation with third-party institutions, such institutions shall take rectification measures in a period separately specified by authorities, and in the event that the rectification does not meet the authorities’ requirements, such institutions shall be subject to several sanctions, including revocation of license and orders to cease business operation.
The PIPL 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 101 minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information.
The PIPL 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.
The draft defines “banking financial institutions” as policy banks, commercial banks, rural credit cooperatives, financial asset management companies, trust companies, finance companies of enterprise groups, financial leasing companies, auto finance companies, consumer finance companies, money brokerage companies, wealth management companies, financial asset investment companies and other financial institutions 110 established within the territory of the PRC with the approval of the banking regulatory authorities.
The draft defines “banking financial institutions” as policy banks, commercial banks, rural credit cooperatives, financial asset management companies, trust companies, finance companies of enterprise groups, financial leasing companies, auto finance companies, consumer finance companies, money brokerage companies, wealth management companies, financial asset investment companies and other financial institutions established within the territory of the PRC with the approval of the banking regulatory authorities.
Jay Wenjie Xiao is our chief executive officer and chairman of our board of directors, and Wenbin Li is a non-executive PRC employee. (2) The shareholders of Shenzhen Fenqile include Shenzhen Xinjie (68.7027%) and Jay Wenjie Xiao (31.2973%). (3) The shareholders of Beijing Lejiaxin include Jay Wenjie Xiao (99.87%) and Jared Yi Wu (0.13%).
Jay Wenjie Xiao is our chief executive officer and chairman of our board of directors, and Wenbin Li is a non-executive PRC employee. (2) The shareholders of Shenzhen Fenqile include Shenzhen Xinjie (68.7027%) and Jay Wenjie Xiao (31.2973%). 120 (3) The shareholders of Beijing Lejiaxin include Jay Wenjie Xiao (99.87%) and Jared Yi Wu (0.13%).
According to the Regulation for the Administration of Credit Reporting Industry, “credit reporting business” means the activities of collecting, organizing, storing and processing “credit-related information” of individuals and enterprises, as well as providing such information to others, and a “credit reporting agency” refers to a duly established agency whose primary business is credit reporting.
According to the Regulation for the Administration of Credit Reporting Industry, “credit reporting business” means the activities of collecting, organizing, storing and processing “credit-related information” of individuals and enterprises, as well as providing such information to others, and a “credit reporting agency” refers to a duly 99 established agency whose primary business is credit reporting.
The Regulation for the Administration of Credit Reporting Industry also 98 requires entities to ensure the security of personal information by setting business rules for personal credit reporting business, prohibiting collecting certain personal information (e.g., religion, finger print), and providing rights for the individuals with respect to their personal information (e.g., inquiry, objection, complaint).
The Regulation for the Administration of Credit Reporting Industry also requires entities to ensure the security of personal information by setting business rules for personal credit reporting business, prohibiting collecting certain personal information (e.g., religion, finger print), and providing rights for the individuals with respect to their personal information (e.g., inquiry, objection, complaint).
Regulations Relating to Internet Information Security The National People’s Congress has enacted legislation that prohibits the use of the internet that breaches the public security, disseminates socially destabilizing content or leaks state secrets. Breach of public security includes breach of national security and infringement on legal rights and interests of the state, society or citizens.
Regulations Relating to Internet Information Security The National People’s Congress has enacted legislation that prohibits the use of the internet that breaches the public security, disseminates socially destabilizing content or leaks state secrets. Breach of public security includes breach of 100 national security and infringement on legal rights and interests of the state, society or citizens.
On December 28, 2021, the CAC, the NDRC, the MIIT, the Ministry of Public Security, the Ministry of State Security, the Ministry of Finance, the Ministry of Commerce, the People’s Bank of China, the NRTA, the CSRC, the National Administration of State Secrets Protection and the National Cryptography Administration jointly issued the Cybersecurity Review Measures, which took effect on February 15, 2022.
On December 28, 2021, the CAC, the NDRC, the MIIT, the Ministry of Public Security, the Ministry of State Security, the Ministry of Finance, the Ministry of Commerce, the People’s Bank of China, the NRTA, the CSRC, the 101 National Administration of State Secrets Protection and the National Cryptography Administration jointly issued the Cybersecurity Review Measures, which took effect on February 15, 2022.
ICP operators collecting or using personal electronic information of citizens must specify the purposes, manners and scopes of information collection and uses, obtain consent of the relevant citizens, and keep the collected personal information confidential. ICP operators are prohibited from disclosing, tampering with, damaging, selling or illegally providing others with, collected personal information.
ICP operators collecting or using personal electronic information 103 of citizens must specify the purposes, manners and scopes of information collection and uses, obtain consent of the relevant citizens, and keep the collected personal information confidential. ICP operators are prohibited from disclosing, tampering with, damaging, selling or illegally providing others with, collected personal information.
The Chinese agents must, on behalf of the PRC residents who have the right to 116 exercise the employee share options, apply to the State Administration of Foreign Exchange or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options.
The Chinese agents must, on behalf of the PRC residents who have the right to exercise the employee share options, apply to the State Administration of Foreign Exchange or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options.
The network information content service platforms should fulfill the main responsibility of content management and establish an ecological governance mechanism of the network information, improve system for user registration, account management, information publishing review, emergency response, and etc. 88 On January 22, 2021, the CAC promulgated the amended Administrative Provisions on the Information Services Provided through Official Accounts of Internet Users, effective from February 22, 2021, further clarifies that the providers shall assume primary responsibility for establishing, improving and strictly implementing user registration, information content verification, emergency response, cybersecurity, data security, personal information protections, intellectual properties protections, credit assessment and other administration system.
The network information content service platforms should fulfill the main responsibility of content management and establish an ecological governance mechanism of the network information, improve system for user registration, account management, information publishing review, emergency response, and etc. 89 On January 22, 2021, the CAC promulgated the amended Administrative Provisions on the Information Services Provided through Official Accounts of Internet Users, effective from February 22, 2021, further clarifies that the providers shall assume primary responsibility for establishing, improving and strictly implementing user registration, information content verification, emergency response, cybersecurity, data security, personal information protections, intellectual properties protections, credit assessment and other administration system.
The online lending business of branches of foreign banks, trust companies, consumer finance companies and auto finance companies shall be subject to the Circular 24 and the Commercial Banks Online Lending Measures. 90 In July 2022, the CBIRC issued the Circular 14, which further requires commercial banks to strengthen their risk control and regulate the cooperation with third-party institutions in online loan business, including: (i) commercial banks shall enter into separate cooperation agreements in respect of joint capital contribution, information technology cooperation and other business cooperation, respectively, for clarifying rights and responsibilities of each party; (ii) commercial banks shall fulfill the primary responsibility in respect of loan administration.
The online lending business of branches of foreign banks, trust companies, consumer finance companies and auto finance companies shall be subject to the Circular 24 and the Commercial Banks Online Lending Measures. 91 In July 2022, the CBIRC issued the Circular 14, which further requires commercial banks to strengthen their risk control and regulate the cooperation with third-party institutions in online loan business, including: (i) commercial banks shall enter into separate cooperation agreements in respect of joint capital contribution, information technology cooperation and other business cooperation, respectively, for clarifying rights and responsibilities of each party; (ii) commercial banks shall fulfill the primary responsibility in respect of loan administration.
Personal information processors shall adopt necessary measures to safeguard the security of the personal information they handle. The offending entities could be ordered to correct, or to suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties.
Personal information processors shall adopt necessary measures to safeguard the security of the personal information they 102 handle. The offending entities could be ordered to correct, or to suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties.
The personal information collected or used in the course of provision of 102 services by the telecommunication business operators or ICP operators must be kept in strict confidence, and may not be divulged, tampered with or damaged, and may not be sold or illegally provided to others.
The personal information collected or used in the course of provision of services by the telecommunication business operators or ICP operators must be kept in strict confidence, and may not be divulged, tampered with or damaged, and may not be sold or illegally provided to others.
We are regulated by various government authorities, including, among others: • the MIIT, regulating the telecommunications and telecommunications-related activities including the internet information services and other value-added telecommunication services; • the People’s Bank of China, as the central bank of China, regulating the formation and implementation of monetary policy, issuing the currency, supervising the commercial banks and assisting the administration of the financing; • the CBIRC, regulating financial institutions and promulgating the regulations related to the administration of financial institutions. 85 Regulations Relating to Foreign Investment Restrictions The PRC Foreign Investment Law The establishment, operation and management of corporate entities in the PRC, including foreign-invested companies, are subject to the PRC Company Law.
We are regulated by various government authorities, including, among others: • the MIIT, regulating the telecommunications and telecommunications-related activities including the internet information services and other value-added telecommunication services; • the People’s Bank of China, as the central bank of China, regulating the formation and implementation of monetary policy, issuing the currency, supervising the commercial banks and assisting the administration of the financing; • the CBIRC, regulating financial institutions and promulgating the regulations related to the administration of financial institutions. 86 Regulations Relating to Foreign Investment Restrictions The PRC Foreign Investment Law The establishment, operation and management of corporate entities in the PRC, including foreign-invested companies, are subject to the PRC Company Law.
The Foreign Investment Security Review Mechanism in charge of organization, coordination and guidance of foreign investment security review is thereunder established. A working mechanism office shall be established under the NDRC and led by the NDRC and the Ministry of Commerce to undertake routine work on the security review of foreign investment.
The Foreign Investment Security Review Mechanism in 87 charge of organization, coordination and guidance of foreign investment security review is thereunder established. A working mechanism office shall be established under the NDRC and led by the NDRC and the Ministry of Commerce to undertake routine work on the security review of foreign investment.
The Financing Guarantee Regulations also set forth that the outstanding guarantee liabilities of a financing guarantee company shall not exceed ten 96 times of its net assets, and that the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party shall not exceed 10% of the net assets of the financing guarantee company, while the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party and its affiliated parties shall not exceed 15% of its net assets.
The Financing Guarantee Regulations also set forth that the outstanding guarantee liabilities of a financing guarantee company shall not exceed ten times of its net assets, and that the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party shall not exceed 10% of the net assets of the financing guarantee company, while the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party and its affiliated parties shall not exceed 15% of its net assets.
The term of all loans are ten years and will be extended automatically for another ten years on each expiration. 121 In the opinion of Shihui Partners, our PRC counsel: the ownership structures of the variable interest entities currently do not result in any violation of applicable PRC laws or regulations currently in effect; and the contractual arrangements among our PRC subsidiaries, the variable interest entities and their shareholders, are governed by the PRC laws or regulations and are currently valid, binding and enforceable in accordance with applicable PRC laws or regulations currently in effect, and do not result in any violation of applicable PRC laws or regulations currently in effect.
The term of all loans are ten years and will be extended automatically for another ten years on each expiration. 123 In the opinion of Shihui Partners, our PRC counsel: the ownership structures of the variable interest entities currently do not result in any violation of applicable PRC laws or regulations currently in effect; and the contractual arrangements among our PRC subsidiaries, the variable interest entities and their shareholders, are governed by the PRC laws or regulations and are currently valid, binding and enforceable in accordance with applicable PRC laws or regulations currently in effect, and do not result in any violation of applicable PRC laws or regulations currently in effect.
We are required to provide risk safeguard measures or a deposit as indemnity to these third-parties in the event of default by our borrowers. 78 Tech-empowerment service We offer a comprehensive set of tailored technology solutions at various stages of the credit facilitation process to match the diverse needs of our institution partners, such as customer acquisition, credit assessment, operations and post-loan services.
We are required to provide risk safeguard measures or a deposit as indemnity to these third-parties in the event of default by our borrowers. 80 Tech-empowerment service We offer a comprehensive set of tailored technology solutions at various stages of the credit facilitation process to match the diverse needs of our institution partners, such as customer acquisition, credit assessment, operations and post-loan services.
Beijing Shijitong owns the intellectual property rights arising out of the services performed under these agreements. Unless Beijing Shijitong terminates these agreements or pursuant to other provisions of these agreements, these agreements will remain effective indefinitely.
Beijing Shijitong owns the intellectual property rights arising out of the services performed under these agreements. Unless Beijing Shijitong terminates these agreements or 121 pursuant to other provisions of these agreements, these agreements will remain effective indefinitely.
User Acquisition and Retention To date, we have successfully accumulated a large user base and achieved deep market penetration among young generation consumers in China by providing a consumption platform that integrates high-quality financial services, online and offline consumption scenarios, membership benefits, and superior user experience. 80 We acquire users primarily through four ways: (i) online advertising and related channels, including targeted text-messaging supported by our models and advertising on online platforms and apps such as Douyin and WeChat; (ii) organic traffic, which consists of internet traffic generated from our brand recognition, as well as MGM (member get member) ; (iii) our offline sales team who can provide more firsthand detailed information of user and accurate credit assessment through offline market due diligence; and (iv) e-commerce platforms operated by us and third parties.
User Acquisition and Retention To date, we have successfully accumulated a large user base and achieved deep market penetration among young generation consumers in China by providing a consumption platform that integrates high-quality financial services, online and offline consumption scenarios, subscription benefits, and superior user experience. 82 We acquire users primarily through four ways: (i) online advertising and related channels, including targeted text-messaging supported by our models and advertising on online platforms and apps such as Douyin and WeChat; (ii) organic traffic, which consists of internet traffic generated from our brand recognition, as well as MGM (member get member) ; (iii) our offline sales team who can provide more firsthand detailed information of user and accurate credit assessment through offline market due diligence; and (iv) e-commerce platforms operated by us and third parties.
On July 20, 2018, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council of the PRC issued the Reform Plan 112 of the State Tax and Local Tax Collection Administration System.
On July 20, 2018, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council of the PRC issued the Reform Plan of the State Tax and Local Tax Collection Administration System.
Wages will 111 be paid based on the policy of performance, equal pay for equal work, lowest wage protection and special labor protection for female worker and juvenile workers.
Wages will be paid based on the policy of performance, equal pay for equal work, lowest wage protection and special labor protection for female worker and juvenile workers.
Regulations relating to Internet Information Services 87 Regulations relating to Value-added Telecommunication Service The Telecommunications Regulations of PRC promulgated in September 2000 and amended in July 2014 and February 2016, respectively, by the State Council and its related implementation rules, including the Catalog of Classification of Telecommunications Business issued and amended in June 2019 by the MIIT, categorize various types of telecommunications and telecommunications-related activities into basic or value-added telecommunications services.
Regulations relating to Internet Information Services 88 Regulations relating to Value-added Telecommunication Service The Telecommunications Regulations of PRC promulgated in September 2000 and amended in July 2014 and February 2016, respectively, by the State Council and its related implementation rules, including the Catalog of Classification of Telecommunications Business issued and amended in June 2019 by the MIIT, categorize various types of telecommunications and telecommunications-related activities into basic or value-added telecommunications services.
In addition, industries such as value-added telecommunication services (except e-commerce, domestic multi-party communications services, store-and-forward service and call center service), including internet information services, are still restricted from foreign investment pursuant to the 2021 Negative List. We provide the value-added telecommunication services that are restricted to foreign investment through the consolidated variable interest entities. • Information Reporting System.
In addition, industries such as value-added telecommunication services (except e-commerce, domestic multi-party communications services, store-and-forward service and call center service), including internet information services, are still restricted from foreign investment pursuant to the 2024 Negative List. We provide the value-added telecommunication services that are restricted to foreign investment through the consolidated variable interest entities. • Information Reporting System.
Any violation of the Circular 141 may result in penalties including suspension of operation, orders to make rectification, condemnation, revocation of license, order to cease business operation, and criminal liabilities. 89 In July 2020, the CBIRC implemented the Commercial Banks Online Lending Measure to formulate the regulation regime for online lending business conducted by commercial banks, which was amended in June 2021.
Any violation of the Circular 141 may result in penalties including suspension of operation, orders to make rectification, condemnation, revocation of license, order to cease business operation, and criminal liabilities. 90 In July 2020, the CBIRC implemented the Commercial Banks Online Lending Measure to formulate the regulation regime for online lending business conducted by commercial banks, which was amended in June 2021.
Business Overview Overview 77 We are a leading consumer finance technology company in China with a decade-long operating history. Upholding financial risk management as our operational cornerstone, we strive to apply advanced technologies such as AI and big data to form an online risk assessment and management system based on quantitative decision-making.
Business Overview Overview 79 We are a leading consumer finance technology company in China with a decade-long operating history. Upholding financial risk management as our operational cornerstone, we strive to apply advanced technologies such as AI and big data to form an online risk assessment and management system based on quantitative decision-making.
Our online consumer finance platform, Fenqile , operated by Shenzhen Fenqile, has obtained (i) certain value-added telecommunications service license for the operation of domestic call center service from MIIT in May 2022, which will remain valid until May 2027; and (ii) certain value-added telecommunications service license for online data processing and transaction processing from the Guangdong Administration of Telecommunications in July 2019, which will remain valid until July 2024.
Our online consumer finance platform, Fenqile , operated by Shenzhen Fenqile, has obtained (i) certain value-added telecommunications service license for the operation of domestic call center service from MIIT in May 2022, which will remain valid until May 2027; and (ii) certain value-added telecommunications service license for online data processing and transaction processing from the Guangdong Administration of Telecommunications in July 2024, which will remain valid until July 2029.
In 2015, the Ministry of Commerce issued the Opinions on Supporting the Innovative Development of Pilot Free Trade Zones, which approved the pilot commercial 97 factoring businesses in all the free trade zones.
In 2015, the Ministry of Commerce issued the Opinions on Supporting the Innovative Development of Pilot Free Trade Zones, which approved the pilot commercial factoring businesses in all the free trade zones.
We primarily finance the loans to users through funding provided by commercial banks, consumer finance companies and other licensed financial institutions as well as through the establishment of consolidated trusts and issuance of asset-backed securities. We refer to these funding sources collectively as our institutional funding partners. In 2023, institutional funding accounted for 100% of our newly funded loans.
We primarily finance the loans to users through funding provided by commercial banks, consumer finance companies and other licensed financial institutions as well as through the establishment of consolidated trusts and issuance of asset-backed securities. We refer to these funding sources collectively as our institutional funding partners. In 2024, institutional funding accounted for 100% of our newly funded loans.
The 2021 Negative List stipulates that the ultimate foreign equity ownership in a value-added telecommunications service provider shall not exceed 50%, except for e-commerce business, domestic multi-party communications services business, store-and-forward business and call center business which may be 100% owned by foreign investors.
The 2024 Negative List stipulates that the ultimate foreign equity ownership in a value-added telecommunications service provider shall not exceed 50%, except for e-commerce business, domestic multi-party communications services business, store-and-forward business and call center business which may be 100% owned by foreign investors.
With our expanding scale and growing operational expertise, we are selectively exploring international markets to catalyze our global business expansion. 79 Our Users Our target user base is focused on consumers in China between the ages of 23 and 40 with high growth potential and premium credit profiles.
With our expanding scale and growing operational expertise, we are selectively exploring international markets to catalyze our global business expansion. 81 Our Users Our target user base is focused on consumers in China between the ages of 23 and 40 with high growth potential and premium credit profiles.
If the seller pays compensation and it is the manufacturer that should bear the liability, the seller has a right of recourse against the 108 manufacturer. Similarly, if the manufacturer pays compensation and it is the seller that should bear the liability, the manufacturer has a right of recourse against the seller.
If the seller pays compensation and it is the manufacturer that should bear the liability, the seller has a right of recourse against the manufacturer. Similarly, if the manufacturer pays compensation and it is the seller that should bear the liability, the manufacturer has a right of recourse against the seller.
Risk Factors—Risks Related to Our Corporate Structure.” D. Property, Plant and Equipment 122 Our corporate headquarters is located in Shenzhen, China, where we lease office space with an area of approximately 14,704 square meters as of the date of this annual report.
Risk Factors—Risks Related to Our Corporate Structure.” D. Property, Plant and Equipment 124 Our corporate headquarters is located in Shenzhen, China, where we lease office space with an area of approximately 14,704 square meters as of the date of this annual report.
The license was re-issued in November 2019, and the paid-in capital set forth therein is equal to RMB1.0 billion. Meanwhile, Ganjiang New Area Mengtian Financing Guarantee Co., Ltd., a subsidiary newly established by Mengtian Technology, has obtained the license to conduct financing guarantee business in October 2019.
The license was re-issued in November 2019, and the paid-in capital set forth therein is equal to RMB1.0 billion. Meanwhile, Ganjiang New Area Mengtian Financing Guarantee Co., Ltd., a subsidiary established by Mengtian Technology, has obtained the license to 98 conduct financing guarantee business in October 2019.
Furthermore, as our business continues to grow, we face significant competition for highly-skilled personnel, including operation managers, engineers, product managers and 84 risk management personnel. The success of our growth strategy depends on our ability to retain existing personnel and attract additional talent.
Furthermore, as our business continues to grow, we face significant competition for highly-skilled personnel, including operation managers, engineers, product managers and 85 risk management personnel. The success of our growth strategy depends on our ability to retain existing personnel and attract additional talent.
As of December 31, 2023, around 40% our active users have used more than one of our products. Products for Users We offer diversified and differentiated products and services to meet various demands from our users. Our products include installment loan products, Lehua Card , and installment purchase products for personal consumption.
As of December 31, 2024, around 40% of our active users have used more than one of our products. Products for Users We offer diversified and differentiated products and services to meet various demands from our users. Our products include installment loan products, Lehua Card , and installment purchase products for personal consumption.
These agreements can be terminated by Beijing Shijitong through a 30-day advance written notice, the variable interest entities have no right to unilaterally terminate these agreements. 120 Agreements that Provide Us with Effective Control over the Variable Interest Entities Power of Attorney .
These agreements can be terminated by Beijing Shijitong through a 30-day advance written notice, the variable interest entities have no right to unilaterally terminate these agreements. 122 Agreements that Provide Us with Effective Control over the Variable Interest Entities Power of Attorney .
Regulations Relating to Anti-Money Laundering The PRC Anti-money Laundering Law, which became effective in January 2007, sets forth the principal anti-money laundering requirements applicable to financial institutions as well as non-financial institutions with anti-money laundering obligations, including the adoption of precautionary and supervisory measures, establishment of various systems for client identification, retention of clients identification information and transactions records, and reports on large transactions and suspicious transactions.
Regulations Relating to Anti-Money Laundering The PRC Anti-money Laundering Law, which became effective in January 2007 and amended in November 2024, sets forth the principal anti-money laundering requirements applicable to financial institutions as well as non-financial institutions with anti-money laundering obligations, including the adoption of precautionary and supervisory measures, establishment of various systems for client identification, retention of clients identification information and transactions records, and reports on large transactions and suspicious transactions.
We lease our premises from unrelated third parties under operating lease agreements. The lease terms vary from 1 year to 5 years. Our servers are primarily hosted at internet data centers owned by major domestic internet data center providers.
We lease our premises from unrelated third parties under operating lease agreements. The lease terms vary from 0.5 year to 5 years. Our servers are primarily hosted at internet data centers owned by major domestic internet data center providers.
The license was re-issued in August 2021, and the registered capital set forth therein is equal to RMB1.0 billion. In addition, Hainan Xinchuang Aurora Financing Guarantee Co., Ltd., a subsidiary newly established by Beihai Aurora has obtained the license to conduct financing guarantee business in July 2023,and the paid-in capital set forth therein is equal to RMB100 million.
The license was re-issued in August 2024, and the registered capital set forth therein is equal to RMB1.0 billion. In addition, Hainan Xinchuang Aurora Financing Guarantee Co., Ltd., a subsidiary established by Beihai Aurora has obtained the license to conduct financing guarantee business in July 2023, and the paid-in capital set forth therein is equal to RMB100 million.
The microcredit license was updated in July 2023 and will remain valid until August 2024. Regulations Relating to Financing Guarantee In March 2010, the CBIRC, the NDRC, the MIIT, the Ministry of Commerce, the People’s Bank of China, the SAIC and the Ministry of Finance of PRC promulgated the Tentative Administrative Measures for Financing Guarantee Companies.
The microcredit license was updated in July 2024 and will remain valid until August 2026. 97 Regulations Relating to Financing Guarantee In March 2010, the CBIRC, the NDRC, the MIIT, the Ministry of Commerce, the People’s Bank of China, the SAIC and the Ministry of Finance of PRC promulgated the Tentative Administrative Measures for Financing Guarantee Companies.
The PRC Consumer Rights and Interests Protection Law, as amended and effective as of March 15, 2014, the Administrative Regulations on Internet Transactions, the E-Commerce Law and the Regulations on the Implementation of the Law of PRC on the Protection of the Rights and Interests of Consumers promulgated by the State Council on March 15, 2024, which will take effect on July 1, 2024, have provided stringent requirements and obligations on business operators, including internet business operators and platform service providers.
The PRC Consumer Rights and Interests Protection Law, as amended and effective as of March 15, 2014, the Administrative Regulations on Internet Transactions, the E-Commerce Law and the Regulations on the Implementation of the Law of PRC on the Protection of the Rights and Interests of Consumers promulgated by the State Council on March 15, 2024, which became effective on July 1, 2024, have provided stringent requirements and obligations on business operators, including internet business operators and platform service providers.
Under the profit-sharing model, we take no or very limited credit risk on the borrowers’ principals and interests and charge the financial institutions a service fee at a pre-set percentage of the agreed-upon interests. As of December 31, 2023, we have worked with a total of 41 institutional funding partners under this model.
Under the profit-sharing model, we take no or very limited credit risk on the borrowers’ principals and interests and charge the financial institutions a service fee at a pre-set percentage of the agreed-upon interests. As of December 31, 2024, we have worked with a total of 54 institutional funding partners under this model.
Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. We have registered 193 patents in China and have applied for 205 additional patents with the PRC State Intellectual Property Office.
Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. We have registered 221 patents in China and have applied for 234 additional patents with the PRC State Intellectual Property Office.
However, Shihui Partners has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations and there can be no assurance that the PRC government will ultimately take a view that is consistent with the opinion of our PRC counsel.
However, Shihui Partners has also advised us that the interpretation and application of current or future PRC laws and regulations are still evolving and there can be no assurance that the PRC government will ultimately take a view that is consistent with the opinion of our PRC counsel.
The number of our cumulative active users reached 31.1 million in 2023. As their consumer finance service provider, we grow alongside our users since they are young and win their recognition and loyalty over years of services. In addition to credit services, we also help our users fulfill various consumption needs through our installment e-commerce platform.
The number of our cumulative active users reached 33.2 million in 2024. As their consumer finance service provider, we grow alongside our users since they are young and win their recognition and loyalty over years of services. In addition to credit services, we also help our users fulfill various consumption needs through our installment e-commerce platform.
In May 2017, the CBIRC, the Ministry of Education and Ministry of Human Resources and Social Security issued the Notice on Further Strengthening the Regulation and Management Work of Campus Online Lending Business, which provides that (i) the commercial banks and the policy banks may research and develop financial products and provide loans that provide general assistance to college students and support them in areas such as learning and training, consumption and entrepreneurship, and provide customized and quality financial services to college students with reasonable credit limits and interest rates; (ii) any entity established without approval of the relevant banking regulatory authority shall not provide any credit services to college students so as to eliminate fraud, usurious loans or violent loan collections; and (iii) all campus online lending business conducted by the online lending information intermediaries shall be suspended and the outstanding balance of campus online lending loans shall be gradually reduced until reaching a zero balance. 92 In February 2021, the CBIRC, the People’s Bank of China, the Ministry of Education, the Office of the Central Cyberspace Affairs Commission and the Ministry of Public Security jointly issued the Notice on Internet Consumer Loan for College Students.
In May 2017, the CBIRC, the Ministry of Education and Ministry of Human Resources and Social Security issued the Notice on Further Strengthening the Regulation and Management Work of Campus Online Lending Business, which provides that (i) the commercial banks and the policy banks may research and develop financial products and provide loans that provide general assistance to college students and support them in areas such as learning and training, consumption and entrepreneurship, and provide customized and quality financial services to college students with reasonable credit limits and interest rates; (ii) any entity established without approval of the relevant banking regulatory authority shall not provide any credit services to college students so as to eliminate fraud, usurious loans or violent loan collections; and (iii) all campus online lending business conducted by the online lending information intermediaries shall be suspended and the outstanding balance of campus online lending loans shall be gradually reduced until reaching a zero balance.
Our tech-empowerment service primarily includes profit-sharing model, fintech upgrade model, and customer acquisition services. Our tech-empowerment service generated approximately 24% of total loan originations in 2023.
Our tech-empowerment service primarily includes profit-sharing model, fintech upgrade model, and customer acquisition services. Our tech-empowerment service generated approximately 22% of total loan originations in 2024.
We have 174 registered domain names, including lexin.com, lexinfintech.com and fenqile.com. As of the date of this annual report, we had 491 registered trademarks, including our “ ,” “ ,” and “ ” trademarks.
We have 185 registered domain names, including lexin.com, lexinfintech.com and fenqile.com. As of the date of this annual report, we had 508 registered trademarks, including our “ ,” “ ,” and “ ” trademarks.
Customer acquisition service model In addition to providing user acquisition and matching, initial credit screening, and post-loan services to our institutional funding partners, we refer users on our platform for whom we may temporarily not in an appropriate position to provide services to other third-party online lending platforms and charge service fees.
Intelligent credit platform model In addition to providing user acquisition and matching, initial credit screening, and post-loan services to our institutional funding partners, we refer users on our platform for whom we may temporarily not in an appropriate position to provide services to other third-parties and charge service fees.
Investments in the PRC by foreign investors and foreign-invested enterprises are regulated by the Catalogue of Encouraged Industries for Foreign Investment (Edition 2022) and the 2021 Negative List, was promulgated by the Ministry of Commerce and the NDRC in December 2021 and became effective on in January 2022.
Investments in the PRC by foreign investors and foreign-invested enterprises are regulated by the Catalogue of Encouraged Industries for Foreign Investment (Edition 2022) and the 2024 Negative List, was promulgated by the Ministry of Commerce and the NDRC in September 2024 and became effective on in November 2024.
Further more, based on the Administrative Measures for Personal Loans promulgated by the NFRA on February 2 and would be effective on July 1, 2024, lenders (banking financial institutions) shall establish an effective whole‑process management mechanism and risk management for personal loans.
Furthermore, based on the Administrative Measures for Personal Loans promulgated by the NFRA on February 2 and became effective on July 1, 2024, lenders (banking financial institutions) shall establish an effective whole‑process management mechanism and risk management for personal loans.
Pursuant to the Regulations on the Administration of Housing Provident Funds, issued by the State Council on April 3, 1999 and last amended on March 24, 2019, employers must complete housing provident funds registration with local housing fund administration centers and open housing fund accounts for their employees in the bank.
Employers may not require employees to pay late payment penalties. 113 Pursuant to the Regulations on the Administration of Housing Provident Funds, issued by the State Council on April 3, 1999 and last amended on March 24, 2019, employers must complete housing provident funds registration with local housing fund administration centers and open housing fund accounts for their employees in the bank.
Moreover, the E-Commerce Law requires e-commerce operators, including individuals and entities carrying out business online, e-commerce platform operators and merchants on these platforms, to display prominently on their home page the information contained in their business licenses or administrative permits relating to their operating businesses; failure to take necessary actions against merchants on the e-commerce platforms that are not in compliance with such requirements may subject the e-commerce platform operators to rectification within a specified period and a fine between RMB20,000 and RMB100,000. 106 The E-Commerce Law also sets forth certain requirements and/or obligations particularly applicable to the e-commerce platform operators, including, among other things: • Requirements relating to credit evaluation.
Moreover, the E-Commerce Law requires e-commerce operators, including individuals and entities carrying out business online, e-commerce platform operators and merchants on these platforms, to display prominently on their home page the information contained in their business licenses or administrative permits relating to their operating businesses; failure to take necessary actions against merchants on the e-commerce platforms that are not in compliance with such requirements may subject the e-commerce platform operators to rectification within a specified period and a fine between RMB20,000 and RMB100,000.
On December 27, 2021, the NDRC and the MOC jointly issued the 2021 Negative List, which became effective on January 1, 2022. Pursuant to such Special Administrative Measures, if a domestic company engaging in the prohibited business stipulated in the 2021 Negative List seeks an overseas offering and listing, it shall obtain the approval from the competent governmental authorities.
On September 6, 2024, the NDRC and the MOC jointly issued the 2024 Negative List, which became effective on November 1, 2024. Pursuant to such Special Administrative Measures, if a domestic company engaging in the prohibited business stipulated in the 2024 Negative List seeks an overseas offering and listing, it shall obtain the approval from the competent governmental authorities.
In addition, on November 22, 2022, the SAMR issued the Draft Anti-unfair Competition Law until December 22, 2022, which proposes the following five new type of unfair competition in the data economy: (i) committing malicious transactions to impede or disrupt the normal operation of other undertakings; (ii) taking advantage of data and algorithms, technologies, platform rules and so on to disrupt the fair competition order of the market by influencing user choices or otherwise; setting links to its own commodities or services by means of keyword association, false operation options or otherwise, so as to cheat or mislead users to click on such links; (iii) taking advantage of technical means, platform rules, etc. to improperly exclude or hinder the access to and transaction of the commodities or services legally provided by other undertakings in violation of industry practices or technical specifications; (iv) improperly acquire or use the business data of other undertakings; (v) making use of algorithms to implement unreasonable differential treatment or unreasonable restriction for transaction counterparties in terms of transaction conditions by analyzing user preference, transaction habit and other characteristics. 107 Regulations Relating to Internet Advertising and Marketing In April 2015, the National People’s Congress Standing Committee promulgated the PRC Advertising Law, which was amended on October 26, 2018 and April 29, 2021 respectively.
In addition, on November 22, 2022, the SAMR issued the Draft Anti-unfair Competition Law until December 22, 2022, which proposes the following five new type of unfair competition in the data economy: (i) committing malicious transactions to impede or disrupt the normal operation of other undertakings; (ii) taking advantage of data and algorithms, technologies, platform rules and so on to disrupt the fair competition order of the market by influencing user choices or otherwise; setting links to its own commodities or services by means of keyword association, false operation options or otherwise, so as to cheat or mislead users to click on such links; (iii) taking advantage of technical means, platform rules, etc. to improperly exclude or hinder the access to and transaction of the commodities or services legally provided by other undertakings in violation of industry practices or technical specifications; (iv) improperly acquire or use the business data of other undertakings; (v) making use of algorithms to implement unreasonable differential treatment or unreasonable restriction for transaction counterparties in terms of transaction conditions by analyzing user preference, transaction habit and other characteristics.
For our user services, data verification services and collection services, we lease office space in six cities in China, namely Beijing, Shanghai, Wuhan, Nanchang, Changsha and Ji’an, with aggregate area of approximately 22,460 square meters. We also lease office space in various locations in the PRC, with an aggregate area of approximately 8,080 square meters.
For our user services, data verification services and collection services, we lease office space in six cities in China, namely Beijing, Shanghai, Wuhan, Nanchang, Changsha and Ji’an, with aggregate area of approximately 24,072 square meters. We also lease office space in various locations in the PRC, with an aggregate area of approximately 6,087 square meters.
The GMV generated by our existing active users increased by 30.9% in 2023 year-over-year. We also provide our users with a wide variety of products and superior user experience through our e-commerce platform, which significantly enhances our user retention.
The average GMV generated by one existing active user increased by 21.6% in 2024 year-over-year. We also provide our users with a wide variety of products and superior user experience through our e-commerce platform, which significantly enhances our user retention.
The Domain Names Measures has adopted a “first-to-file” principle with respect to the registration of domain names. We have registered 193 patents in China, and have applied for 205 additional patents with the PRC State Intellectual Property Office. We have registered 208 software copyrights and 19 copyrights for artworks with the PRC National Copyright Administration.
The Domain Names Measures has adopted a “first-to-file” principle with respect to the registration of domain names. 112 We have registered 221 patents in China, and have applied for 234 additional patents with the PRC State Intellectual Property Office. We have registered 230 software copyrights and 20 copyrights for artworks with the PRC National Copyright Administration.
We have registered 208 software copyrights and 19 copyrights for artworks with the PRC National Copyright Administration. We have 174 registered domain names, including lexin.com, lexinfintech.com, and fenqile.com. As of the date of this annual report, we had 491 registered trademarks, including our “ ,” “ ,” and “ ” trademarks.
We have registered 230 software copyrights and 20 copyrights for artworks with the PRC National Copyright Administration. We have 185 registered domain names, including lexin.com, lexinfintech.com, and fenqile.com. As of the date of this annual report, we had 508 registered trademarks, including our “ ,” “ ,” and “ ” trademarks.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for per share and per ADS data) Selected Consolidated Statements of Operations Data: Operating revenue: Credit facilitation service income 6,955,810 61.1 5,963,803 60.4 9,666,120 1,361,445 74.0 Loan facilitation and servicing fees-credit oriented-credit oriented 4,448,344 39.1 2,486,527 25.2 5,001,881 704,500 38.3 Guarantee income 774,544 6.8 1,453,180 14.7 2,519,284 354,834 19.3 Financing income 1,732,922 15.2 2,024,096 20.5 2,144,955 302,111 16.4 Tech-empowerment service income 2,762,995 24.3 1,845,943 18.7 1,640,453 231,053 12.6 Installment e-commerce platform service income 1,661,720 14.6 2,056,065 20.8 1,750,509 246,554 13.4 Total operating revenue 11,380,525 100.0 9,865,811 100.0 13,057,082 1,839,052 100.0 Operating cost: Cost of sales (1,759,956 ) -15.5 (2,066,804 ) -20.9 (1,635,635 ) (230,374 ) -12.5 Funding cost (457,615 ) -4.0 (518,069 ) -5.3 (513,869 ) (72,377 ) -3.9 Processing and servicing cost (1,858,901 ) -16.3 (1,875,292 ) -19.0 (1,935,016 ) (272,541 ) -14.8 Provision for financing receivables (401,104 ) -3.5 (437,477 ) -4.4 (627,061 ) (88,320 ) -4.8 Provision for contract assets and receivables (531,237 ) -4.7 (465,188 ) -4.7 (629,308 ) (88,636 ) -4.8 Provision for contingent guarantee liabilities (622,438 ) -5.5 (1,468,265 ) -14.9 (3,203,123 ) (451,150 ) -24.5 Total operating cost (5,631,251 ) -49.5 (6,831,095 ) -69.2 (8,544,012 ) (1,203,398 ) -65.4 Gross profit 5,749,274 50.5 3,034,716 30.8 4,513,070 635,654 34.6 Operating expenses: Sales and marketing expenses (1,658,904 ) -14.6 (1,685,438 ) -17.1 (1,733,301 ) (244,130 ) -13.3 Research and development expenses (549,286 ) -4.8 (583,260 ) -5.9 (513,284 ) (72,295 ) -3.9 General and administrative expenses (470,661 ) -4.1 (431,571 ) -4.4 (387,387 ) (54,562 ) -3.0 Total operating expenses (2,678,851 ) -23.5 (2,700,269 ) -27.4 (2,633,972 ) (370,987 ) -20.2 Change in fair value of financial guarantee derivatives and loans at fair value (347,084 ) -3.0 722,381 7.3 (206,368 ) (29,066 ) -1.6 Interest expense, net (63,125 ) -0.6 (55,636 ) -0.6 (50,483 ) (7,110 ) -0.4 Investment loss (4,160 ) - (33,944 ) -0.3 (303,235 ) (42,710 ) -2.3 Other, net 113,480 1.0 61,321 0.6 7,774 1,095 0.1 Income before income tax expense 2,769,534 24.3 1,028,569 10.4 1,326,786 186,876 10.2 Income tax expense (435,418 ) -3.8 (202,640 ) -2.1 (260,841 ) (36,739 ) -2.0 Net income 2,334,116 20.5 825,929 8.4 1,065,945 150,137 8.2 Less: Net income attributable to non-controlling interests 193 — 6,177 0.1 — — - Net income attributable to ordinary shareholders of the Company 2,333,923 20.5 819,752 8.3 1,065,945 150,137 8.2 (1) Share-based compensation expenses are allocated to processing and servicing cost and operating expense items as follows: For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Processing and servicing cost 9,968 0.1 5,179 0.1 246 35 0.0 Sales and marketing expenses 30,508 0.3 23,142 0.2 17,454 2,458 0.1 Research and development expenses 39,413 0.3 30,386 0.3 23,547 3,317 0.2 General and administrative expenses 107,995 0.9 97,613 1.0 76,605 10,790 0.6 132 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Operating revenue Operating revenue increased by 32.3% from RMB9,866 million in 2022 to RMB13,057 million (US$1,839 million) in 2023.
Biggest changeThe period-to-period comparisons of results of operations should not be relied upon as indicative of future performance. 133 For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for per share and per ADS data) Selected Consolidated Statements of Operations Data: Operating revenue: Credit facilitation service income 5,963,803 60.5 9,666,120 74.0 10,999,931 1,506,984 77.5 Loan facilitation and servicing fees-credit oriented-credit oriented 2,486,527 25.3 5,001,881 38.3 6,325,924 866,648 44.5 Guarantee income 1,453,180 14.7 2,519,284 19.3 2,663,824 364,942 18.8 Financing income 2,024,096 20.5 2,144,955 16.4 2,010,183 275,394 14.2 Tech-empowerment service income 1,845,943 18.7 1,640,453 12.6 1,881,376 257,747 13.2 Installment e-commerce platform service income 2,056,065 20.8 1,750,509 13.4 1,322,287 181,153 9.3 Total operating revenue 9,865,811 100.0 13,057,082 100.0 14,203,594 1,945,884 100.0 Operating cost: Cost of sales (2,066,804 ) -20.9 (1,635,635 ) -12.5 (1,319,526 ) (180,774 ) -9.3 Funding cost (518,069 ) -5.3 (513,869 ) -3.9 (326,451 ) (44,724 ) -2.3 Processing and servicing cost (1,875,292 ) -19.0 (1,935,016 ) -14.8 (2,291,904 ) (313,990 ) -16.1 Provision for financing receivables (437,477 ) -4.4 (627,061 ) -4.8 (865,524 ) (118,576 ) -6.1 Provision for contract assets and receivables (465,188 ) -4.7 (629,308 ) -4.8 (718,413 ) (98,422 ) -5.1 Provision for contingent guarantee liabilities (1,468,265 ) -14.9 (3,203,123 ) -24.5 (3,655,548 ) (500,808 ) -25.7 Total operating cost (6,831,095 ) -69.2 (8,544,012 ) -65.4 (9,177,366 ) (1,257,294 ) -64.6 Gross profit 3,034,716 30.8 4,513,070 34.6 5,026,228 688,590 35.4 Operating expenses: Sales and marketing expenses (1,685,438 ) -17.1 (1,733,301 ) -13.3 (1,787,299 ) (244,859 ) -12.6 Research and development expenses (583,260 ) -5.9 (513,284 ) -3.9 (578,243 ) (79,219 ) -4.1 General and administrative expenses (431,571 ) -4.4 (387,387 ) -3.0 (374,481 ) (51,304 ) -2.6 Total operating expenses (2,700,269 ) -27.4 (2,633,972 ) -20.2 (2,740,023 ) (375,382 ) -19.3 Change in fair value of financial guarantee derivatives and loans at fair value 722,381 7.3 (206,368 ) -1.6 (979,234 ) (134,155 ) -6.9 Interest expense, net (55,636 ) -0.6 (50,483 ) -0.4 (9,007 ) (1,234 ) -0.1 Investment loss (33,944 ) -0.3 (303,235 ) -2.3 (2,417 ) (331 ) - Others, net 61,321 0.6 7,774 0.1 58,188 7,972 0.4 Income before income tax expense 1,028,569 10.4 1,326,786 10.2 1,353,735 185,460 9.5 Income tax expense (202,640 ) -2.1 (260,841 ) -2.0 (253,275 ) (34,699 ) -1.8 Net income 825,929 8.4 1,065,945 8.2 1,100,460 150,761 7.7 Less: Net income attributable to non-controlling interests 6,177 0.1 — — — — - Net income attributable to ordinary shareholders of the Company 819,752 8.3 1,065,945 8.2 1,100,460 150,761 7.7 (1) Share-based compensation expenses are allocated to processing and servicing cost and operating expense items as follows: For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Processing and servicing cost 5,179 0.1 246 0.0 3,173 435 0.0 Sales and marketing expenses 23,142 0.2 17,454 0.1 13,756 1,885 0.1 Research and development expenses 30,386 0.3 23,547 0.2 10,715 1,468 0.1 General and administrative expenses 97,613 1.0 76,605 0.6 66,979 9,176 0.5 134 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Operating revenue Operating revenue increased by 8.8% from RMB13,057 million in 2023 to RMB14,204 million (US$1,946 million) in 2024.
In December 2022, Shenzhen Lexin Software obtained a qualification as HNTE for the three years ending December 31, 2022, 2023 and 2024, in this regard, Shenzhen Lexin Software was subject to 15% income tax rate in 2023.
In December 2022, Shenzhen Lexin Software obtained a qualification as HNTE for the three years ending December 31, 2022, 2023 and 2024, in this regard, Shenzhen Lexin Software was subject to 15% income tax rate in 2024.
Material Modifications to the Rights of Security Holders and Use of Proceeds.” 139 Funding debts Liabilities to institutional funding partners. As part of our arrangement with institutional funding partners, we typically agree on an aggregate amount of funds to be provided, the maximum credit limit given to an individual customer, the maximum borrowing term and an annualized interest rate.
Material Modifications to the Rights of Security Holders and Use of Proceeds.” Funding debts Liabilities to institutional funding partners. As part of our arrangement with institutional funding partners, we typically agree on an aggregate amount of funds to be provided, the maximum credit limit given to an individual customer, the maximum borrowing term and an annualized interest rate.
The lifetime expected credit losses on these financial assets and contingent guarantee liabilities are determined using a pooled basis within respective credit risk classification levels of the underlying customers, taking into consideration the historical credit loss experience, the current credit quality of the portfolio and application of macroeconomic forecasts.
The expected credit losses on these financial assets and contingent guarantee liabilities are determined using a pooled basis within respective credit risk classification levels of the underlying customers, taking into consideration the historical credit loss experience, the current credit quality of the portfolio and application of macroeconomic forecasts.
We still intend to indefinitely reinvest the remaining earnings in our PRC subsidiaries. 131 Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amount and as a percentage of our total operating revenue for the periods presented.
We still intend to indefinitely reinvest the remaining earnings in our PRC subsidiaries. Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amount and as a percentage of our total operating revenue for the periods presented.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period since January 1, 2024 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period since January 1, 2025 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition.
These effects may be partly mitigated by the fact each loan borrowed by our users is relatively small, which should be less affected by adverse economic conditions than if the principal amount of each loan were larger. 125 Key Specific Factors Affecting Our Results of Operations Major specific factors affecting our results of operations include the following: Ability to attract and retain users Our ability to grow depends on the addition of new users and increasing business from existing users.
These effects may be partly mitigated by the fact each loan borrowed by our users is relatively small, which should be less affected by adverse economic conditions than if the principal amount of each loan were larger. 127 Key Specific Factors Affecting Our Results of Operations Major specific factors affecting our results of operations include the following: Ability to attract and retain users Our ability to grow depends on the addition of new users and increasing business from existing users.
The “Software Enterprise Encouraged by the State” is subject to review by the relevant authorities every year. 130 Benefiting from Notice of Promoting High-Level Opening and High-Quality Development of Guangxi Beibu Gulf Economic Zone In The New Era, and Announcement on The Continuation of The Western Development Enterprise Income Tax Policy, Beihai Aurora Information Technology Co., Ltd. and Beihai Lexin Information Technology Co., Ltd.
The “Software Enterprise Encouraged by the State” is subject to review by the relevant authorities every year. 132 Benefiting from Notice of Promoting High-Level Opening and High-Quality Development of Guangxi Beibu Gulf Economic Zone In The New Era, and Announcement on The Continuation of The Western Development Enterprise Income Tax Policy, Beihai Aurora Information Technology Co., Ltd. and Beihai Lexin Information Technology Co., Ltd.
Such revenue sharing rates are determined based on the performance of the underlying off-balance sheet loans. 146 Significant judgment is applied in allocation of transaction prices for each distinct performance obligation and in determination of variable considerations. We primarily use the expected cost plus a margin approach to determine the standalone selling price.
Such revenue sharing rates are determined based on the performance of the underlying off-balance sheet loans. 147 Significant judgment is applied in allocation of transaction prices for each distinct performance obligation and in determination of variable considerations. We primarily use the expected cost plus a margin approach to determine the standalone selling price.
Risk Factors—Risks Related to Our Business and Industry—If our ability to collect delinquent loans is impaired, or if the collection efforts of our in-house team or third-party service providers are impaired, our business and results of operations might be materially and adversely affected.” 126 Loan Performance Data We define 30 day+ and 90 day+ delinquency ratio as outstanding principal balance of on- and off-balance sheet loans that was over 30 and 90 calendar days past due as a percentage of the total outstanding principal balance of on- and off-balance sheet loans on our platform as of a specific date.
Risk Factors—Risks Related to Our Business and Industry—If our ability to collect delinquent loans is impaired, or if the collection efforts of our in-house team or third-party service providers are impaired, our business and results of operations might be materially and adversely affected.” 128 Loan Performance Data We define 90 day+ delinquency ratio as outstanding principal balance of on- and off-balance sheet loans that was over 90 calendar days past due as a percentage of the total outstanding principal balance of on- and off-balance sheet loans on our platform as of a specific date.
Provision for contingent guarantee liabilities was RMB3,203 million(US$451 million) in 2023, as compared to RMB1,468 million in 2022. The increase was primarily due to the increase in loan origination of the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees, as well as the decrease in performance of the off-balance sheet loans.
Provision for contingent guarantee liabilities was RMB3,203 million in 2023, as compared to RMB1,468 million in 2022. The increase was primarily due to the increase in loan origination of the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees , as well as the decrease in performance of the off-balance sheet loans.
For a detailed discussion of our significant accounting policies and related judgments, see “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies.” 144 Allowance for credit losses The allowance for credit losses represents our estimate of expected credit losses on the financial assets measured at amortized cost and financial guarantees not accounted for as derivatives for off-balance sheet loans.
For a detailed discussion of our significant accounting policies and related judgments, see “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies.” 145 Allowance for credit losses The allowance for credit losses represents our estimate of expected credit losses on the financial assets measured at amortized cost and financial guarantees not accounted for as derivatives for off-balance sheet loans.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. 143 Holding Company Structure LexinFintech Holdings Ltd. is a holding company with no material operations of its own.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. 144 Holding Company Structure LexinFintech Holdings Ltd. is a holding company with no material operations of its own.
This increase in operating revenues was primarily attributable to an increase in credit facilitation service income, partially offset by a decrease in Tech-empowerment service income, and installment e-commerce platform service income for the year. Installment e-commerce platform service . Installment e-commerce platform service income decreased by 14.9% from RMB2,056 million in 2022 to RMB1,751 million (US$247 million) in 2023.
This increase in operating revenues was primarily attributable to an increase in credit facilitation service income, partially offset by a decrease in Tech-empowerment service income, and installment e-commerce platform service income for the year. Installment e-commerce platform service . Installment e-commerce platform service income decreased by 14.9% from RMB2,056 million in 2022 to RMB1,751 million in 2023.
The increase was primarily due to the increase in off-balance sheet loans originated under the credit-oriented model, as well as better control over the early repayment behaviors. • Guarantee income. Guarantee income increased by 73.4% from RMB1,453 million in 2022 to RMB2,519 million (US$355 million) in 2023.
The increase was primarily due to the increase in off-balance sheet loans originated under the credit-oriented model, as well as better control over the early repayment behaviors. • Guarantee income. Guarantee income increased by 73.4% from RMB1,453 million in 2022 to RMB2,519 million in 2023.
Operating cost Operating cost increased by 25.1% from RMB6,831 million in 2022 to RMB8,544 million (US$1,203million) in 2023, primarily as a result of the increases in provision for financing receivables, provision for contingent guarantee liabilities, and provision for contract assets and receivables, partially offset by the decreases in cost of sales and funding cost. Cost of sales.
Operating cost Operating cost increased by 25.1% from RMB6,831 million in 2022 to RMB8,544 million in 2023, primarily as a result of the increases in provision for financing receivables, provision for contingent guarantee liabilities, and provision for contract assets and receivables, partially offset by the decreases in cost of sales and funding cost. Cost of sales.
The notes will mature in seven years due by September 16, 2026, bearing interest at a rate of 2.0% per annum. On March 13, 2023, we entered into an amendment agreement with the holder regarding previous documents governing the notes.
The notes would mature in seven years due by September 16, 2026, bearing interest at a rate of 2.0% per annum. On March 13, 2023, we entered into an amendment agreement with the holder regarding previous documents governing the notes.
The number of active users was approximately 14.2 million in 2021, approximately 9.7 million in 2022 and approximately 8.5 million in 2023. Since 2021, we optimized our customer acquisition model by enhancing segmentation and providing differentiated credit lines, pricing and billing terms.
The number of active users was approximately 9.7 million in 2022, approximately 8.5 million in 2023 and approximately 8.2 million in 2024. Since 2021, we optimized our customer acquisition model by enhancing segmentation and providing differentiated credit lines, pricing and billing terms.
In 2022, the difference between net cash used in operating activities and our net income of RMB826 million mainly resulted from provision for contingent guarantee liabilities of RMB1,468 million, provision for contract assets and receivables of RMB465 million, provision for financing and interest receivables of RMB437 million, net gain of change in fair value of financial guarantee derivatives of RMB614 million, net gain of change in fair value of loans at fair value of RMB109 million, share-based compensation expenses of RMB156 million, depreciation and amortization of RMB94.9 million.
In 2022, the difference between net cash used in operating activities and our net income of RMB826 million mainly resulted from provision for contingent guarantee liabilities of RMB1,468 million, provision for contract assets and receivables of RMB465 million, provision for financing and interest receivables of RMB437 million, net gain of change in fair value of financial guarantee derivatives and loans at fair value of RMB722 million, share-based compensation expenses of RMB156 million, depreciation and amortization of RMB94.9 million.
Among the three types of services (i.e., credit facilitation service, tech-empowerment service and installment e-commerce platform service) we provide, the revenue from our credit facilitation service is recognized as credit facilitation service income, the revenue from our installment e-commerce platform service is primarily recognized as installment e-commerce platform service income, and the revenue from our tech-empowerment service is primarily recognized as tech-empowerment service income and, to a lesser extent, membership services and other services income.
Among the three types of services (i.e., credit facilitation service, tech-empowerment service and installment e-commerce platform service) we provide, the revenue from our credit facilitation service is recognized as credit facilitation service income, the revenue from our installment e-commerce platform service is primarily recognized as installment e-commerce platform service income, and the revenue from our tech-empowerment service is primarily recognized as tech-empowerment service income and, to a lesser extent, referral services and other services income.
(previously known as Beihai Turing Technology Co., Ltd.) are entitled for a preferential income tax rate of 15% for China’s Western Development Strategy. Therefore, Beihai Aurora and Beihai Lexin Information Technology Co., Ltd. applied a preferential income tax rate of 15% from 2023 to 2030.
(previously known as Beihai Turing Technology Co., Ltd.) are entitled for a preferential income tax rate of 15% for China’s Western Development Strategy. Therefore, Beihai Aurora and Beihai Lexin Information Technology Co., Ltd. applied a preferential income tax rate of 15% from 2024 to 2030.
The change was primarily due to the increase of loan facilitation and servicing fees-credit oriented, guarantee income, and financing income. • Loan facilitation and servicing fees-credit oriented. Loan facilitation and servicing fees-credit oriented increased by 101% from RMB2,487 million in 2022 to RMB5,002 million (US$705 million) in 2023.
The change was primarily due to the increase of loan facilitation and servicing fees-credit oriented, guarantee income, and financing income. • Loan facilitation and servicing fees-credit oriented. Loan facilitation and servicing fees-credit oriented increased by 101% from RMB2,487 million in 2022 to RMB5,002 million in 2023.
Our cost of sales consists of the purchase price of the products, shipping charges and handling costs, as well as inventory write-downs, which were not significant in 2021, 2022 and 2023. Funding cost.
Our cost of sales consists of the purchase price of the products, shipping charges and handling costs, as well as inventory write-downs, which were not significant in 2022, 2023 and 2024. Funding cost.
Deposits to insurance companies and guarantee companies 137 We engaged third-party licensed insurance companies and guarantee companies to provide assurance to some institutional funding partners, and are required to prepay certain amount of deposit as guarantee to these insurance companies and guarantee companies.
Deposits to insurance companies and guarantee companies 139 We engaged third-party licensed insurance companies and guarantee companies to provide assurance to some institutional funding partners, and are required to prepay certain amount of deposit as guarantee to these insurance companies and guarantee companies.
The decrease was primarily driven by the decrease in transaction volume in 2023. Credit facilitation service income. Credit facilitation service income increased by 62.1% from RMB5,964 million in 2022 to RMB9,666 million (US$1,361 million) in 2023.
The decrease was primarily driven by the decrease in transaction volume in 2023. Credit facilitation service income. Credit facilitation service income increased by 62.1% from RMB5,964 million in 2022 to RMB9,666 million in 2023.
Provision for contract assets and receivables was RMB629 million (US$88.6 million) in 2023, as compared to RMB465 million in 2022. The increase was primarily due to the increase in loan facilitations and servicing fees and the decrease in performance of the off-balance sheet loans. Provision for contingent guarantee liabilities.
Provision for contract assets and receivables was RMB629 million in 2023, as compared to RMB465 million in 2022. The increase was primarily due to the increase in loan facilitations and servicing fees and the decrease in performance of the off-balance sheet loans. Provision for contingent guarantee liabilities.
Income tax expense Income tax expense increased by 28.7% from RMB203 million in 2022 to RMB261 million (US$36.7 million) in 2023. The increase in income tax expense was primarily due to the increase in the income before income tax expense in 2023.
Income tax expense Income tax expense increased by 28.7% from RMB203 million in 2022 to RMB261 million in 2023. The increase in income tax expense was primarily due to the increase in the income before income tax expense in 2023.
The effect of the indicated increase/decrease in the assumption of the expected loss rates for off-balance sheet loans for the consolidated statements of operations is as follows (in RMB thousands): Assumption Relative Change in Basis Point Increase/(Decrease) Weighted average cumulative loss rate (i) +/- 100 bps 54,432 / (54,432) (i) Expressed as a percentage of the original principal balance of the loans.
The effect of the indicated increase/decrease in the assumption of the expected loss rates for off-balance sheet loans for the consolidated statements of operations is as follows (in RMB thousands): Assumption Relative Change in Basis Point Increase/(Decrease) Weighted average cumulative loss rate (i) +/- 100 bps 41,773 / (41,773) (i) Expressed as a percentage of the original principal balance of the loans.
Restricted cash - current Restricted cash mainly represents (i) cash received from users but not yet repaid to funding parties or received from funding parties but not yet remitted to users, which is not available to fund our general liquidity needs; and (ii) security deposits set aside for our partnering commercial banks in case of users’ defaults; and (iii) cash received via consolidated trust and ABS that has not been distributed.
Liquidity and Capital Resources—Cash Flows.” Restricted cash Restricted cash mainly represents (i) cash received from users but not yet repaid to funding parties or received from funding parties but not yet remitted to users, which is not available to fund our general liquidity needs; and (ii) security deposits set aside for our partnering commercial banks in case of users’ defaults; and (iii) cash received via consolidated trust and ABS that has not been distributed.
Cost of sales decreased by 20.9% from RMB2,067 million in 2022 to RMB1,636 million (US$230 million) in 2023, which was consistent with the decrease in installment e-commerce platform service income. Funding cost. Funding cost was RMB514 million (US$72.4million) in 2023, as compared to RMB518 million in 2022. Processing and servicing cost.
Cost of sales decreased by 20.9% from RMB2,067 million in 2022 to RMB1,636 million in 2023, which was consistent with the decrease in installment e-commerce platform service income. Funding cost. Funding cost was RMB514 million in 2023, as compared to RMB518 million in 2022. Processing and servicing cost.
General and administrative expenses decreased by 10.2% from RMB432 million in 2022 to RMB387 million (US$54.6 million) in 2023, primarily as a result of the Company’s expense control measures.
General and administrative expenses decreased by 10.2% from RMB432 million in 2022 to RMB387 million in 2023, primarily as a result of the Company’s expense control measures.
Our processing and servicing cost consist primarily of vendor costs related to credit assessment, user and system support, payment processing services and collection services associated with originating, facilitating and servicing loans, and related payroll cost for personnel engaged in processing and servicing activities. Provision for financing receivables.
Our processing and servicing cost consist primarily of vendor costs related to credit assessment, user and system support, payment processing services and collection services associated with originating, facilitating and servicing loans, and related payroll cost and related share-based compensation expenses for personnel engaged in processing and servicing activities. Provision for financing receivables.
Change in fair value of financial guarantee derivatives and loans at fair value Change in fair value of financial guarantee derivatives and loans at fair value was a loss of RMB206 million (US$29.1 million) in 2023, as compared to a gain of RMB722 million in 2022.
Change in fair value of financial guarantee derivatives and loans at fair value Change in fair value of financial guarantee derivatives and loans at fair value was a loss of RMB206 million in 2023, as compared to a gain of RMB722 million in 2022.
On March 13, 2023, we entered into an amendment agreement with PAGAC Lemongrass Holding I Limited regarding previous documents governing the notes.The notes were paid in full by April 2024 in 14 monthly installments. The amount of interest expense recognized for the year ended December 31, 2023 totaled RMB73.8 million (US$10.6 million).
On March 13, 2023, we entered into an amendment agreement with PAGAC Lemongrass Holding I Limited regarding previous documents governing the notes. The notes were paid in full by April 2024 in 14 monthly installments. The amount of interest expense recognized for the year ended December 31, 2024 totaled RMB5.7 million (US$0.8 million).
Financing income increased by 6.0% from RMB2,024 million in 2022 to RMB2,145million (US$302 million) in 2023, The increase was primarily driven by the increase in APR of loans originated of on-balance sheet loans. Tech-empowerment service income decreased by 11.1% from RMB1,846 million in 2022 to RMB1,640 million(US$231 million) in 2023.
Financing income increased by 6.0% from RMB2,024 million in 2022 to RMB2,145 million in 2023, The increase was primarily driven by the increase in APR of loans originated of on-balance sheet loans. Tech-empowerment service income decreased by 11.1% from RMB1,846 million in 2022 to RMB1,640 million in 2023.
Investing Activities Net cash provided by investing activities was RMB2,334 million (US$329 million) in 2023, which was primarily attributable to principal collection on financing receivables and recoveries (excluding receivables related to online direct sales) of RMB19,888 million (US$2,801 million), collection of principals of loans at fair value RMB5,120 million (US$721 million), and withdrawal of restricted term deposit and short-term investments of RMB2,130 million (US$300 million), partially offset by financing receivables originated and purchased (excluding receivables related to online direct sales) of RMB18,316 million (US$2,580 million), investments in loans at fair value of RMB5,155 million (US$726 million) and placement of restricted term deposit and short-term investments of RMB1,103 million (US$155 million).
Net cash provided by investing activities was RMB2,334 million in 2023, which was primarily attributable to principal collection on financing receivables and recoveries (excluding receivables related to online direct sales) of RMB19,888 million, collection of principals of loans at fair value RMB5,120 million, and withdrawal of restricted term deposit and short-term investments of RMB2,130 million, partially offset by financing receivables originated and purchased (excluding receivables related to online direct sales) of RMB18,316 million, investments in loans at fair value of RMB5,155 million and placement of restricted term deposit and short-term investments of RMB1,103 million.
Processing and servicing costs was RMB1,935 million (US$273 million) in 2023, as compared to RMB1,875 million in 2022. Provision for financing receivables. Provision for financing receivables was RMB627 million for 2023(US$88.3 million), as compared to RMB437 million for 2022.The increase was primarily due to the decrease in performance of the on-balance sheet loans. 133 Provision for contract assets and receivables.
Processing and servicing costs was RMB1,935 million in 2023, as compared to RMB1,875 million in 2022. Provision for financing receivables. Provision for financing receivables was RMB627 million for 2023, as compared to RMB437 million for 2022.The increase was primarily due to the decrease in performance of the on-balance sheet loans. 137 Provision for contract assets and receivables.
We generate financing income from on-balance sheet loans, which are funded by establishment of the consolidated Trusts and issuance of asset‑backed securitized debts, as well as loans funded by our own microcredit company. Tech-empowerment service We generate tech-empowerment service income from profit sharing model, customer acquisition service model, fintech upgrade model as well as membership services.
We generate financing income from on-balance sheet loans, which are funded by establishment of the consolidated Trusts and issuance of asset‑backed securitized debts, as well as loans funded by our own microcredit company. Tech-empowerment service We generate tech-empowerment service income from profit sharing model, intelligent credit platform model, fintech upgrade model as well as subscription services.
The loss given default takes into account the expected future recoveries. The macroeconomic factors used in estimation include variables that have historically been key drivers of increases and decreases in credit losses, such as CPI and M2.
The loss given default takes into account the expected future recoveries. The macroeconomic factors used in estimation include variables that have historically been key drivers of increases and decreases in credit losses, such as CPI and Total retail sales of consumer goods.
The effect of the indicated increase/decrease in the assumptions for the consolidated statements of operations is as follows (in RMB thousands): Assumption Relative Change in Basis Point Increase/(Decrease) Probability of default (lifetime) +/- 100 bps 27,735 / (27,735) Loss given default +/- 100 bps 48,677 / (48,677) 145 Fair value measurement of financial guarantee derivative s Financial guarantee derivatives provided for off-balance sheet loans are recorded at fair value at the inception of the off-balance sheet loans and are subsequently remeasured at fair value on an ongoing basis.
The effect of the indicated increase/decrease in the assumptions for the consolidated statements of operations is as follows (in RMB thousands): Assumption Relative Change in Basis Point Increase/(Decrease) Probability of default (lifetime) +/- 100 bps 21,056 / (21,056) Loss given default +/- 100 bps 64,772 / (64,772) 146 Fair value measurement of financial guarantee derivative s Financial guarantee derivatives provided for off-balance sheet loans are recorded at fair value at the inception of the off-balance sheet loans and are subsequently remeasured at fair value on an ongoing basis.
As of December 31, 2021, 2022 and 2023, we had RMB2,664 million, RMB1,494 million and RMB2,625 million (US$370 million), respectively, in cash and cash equivalents. Our cash and cash equivalents solely consist of demand deposits placed with banks or other financial institutions.
As of December 31, 2022, 2023 and 2024, we had RMB1,494 million, RMB2,625 million and RMB2,254 million (US$309 million), respectively, in cash and cash equivalents. Our cash and cash equivalents solely consist of demand deposits placed with banks or other financial institutions.
With our access to multiple funding sources and the ability to adjust allocation of funding needs to different sources, we are not dependent on any particular type of funding source, and we are able to withstand seasonality and fluctuations in the supply and costs of funding.
With our access to multiple funding sources and the ability to adjust allocation of funding needs to different sources, we are not dependent on any particular type of funding source, and we are able to withstand seasonality and fluctuations in the supply and costs of funding. In 2023 and 2024, we cooperated with 10 and 15 new funding partners.
Changes in operating assets and liabilities mainly included an increase in deposits to insurance companies and guarantee companies of RMB364 million (US$51 million), an increase in contract assets and receivables of RMB2,841 million (US$400 million), a decrease in contingent guarantee liabilities of RMB2,277 million (US$321 million), an increase in accruals and other current liabilities of RMB1,121 million (US$158 million) and an increase in deferred guarantee income of RMB644 million (US$91 million).
Changes in operating assets and liabilities mainly included an increase in deposits to insurance companies and guarantee companies of RMB364 million, an increase in contract assets and receivables of RMB2,841 million, a decrease in contingent guarantee liabilities of RMB2,277 million, an increase in accruals and other current liabilities of RMB1,151 million and an increase in deferred guarantee income of RMB644 million.
Our capital expenditures for 2024 are expected to be approximately RMB280 million, including RMB221 million payment in construction of our new headquarters located in Shenzhen, and RMB59 million in expansion and enhancement of our information technology infrastructure. We will continue to incur capital expenditures to meet the expected growth of our business.
Our capital expenditures for 2025 are expected to be approximately RMB304 million, including RMB268 million payment in construction of our new headquarters located in Shenzhen, and RMB36 million in expansion and enhancement of our information technology infrastructure. We will continue to incur capital expenditures to meet the expected growth of our business.
In 2023, the difference between net cash provided by operating activities and our net income of RMB1,066 million (US$150 million) mainly resulted from provision for contingent guarantee liabilities of RMB3,203 million (US$451 million), provision for contract assets and receivables of RMB629 million (US$89 million), provision for financing and interest receivables of RMB627 million (US$88 million), net loss of change in fair value of financial guarantee derivatives of RMB268 million (US$38 million), share-based compensation expenses of RMB118 million (US$17 million), depreciation and amortization of RMB105 million (US$15 million).
In 2023, the difference between net cash provided by operating activities and our net income of RMB1,066 million mainly resulted from provision for contingent guarantee liabilities of RMB3,203 million, provision for contract assets and receivables of RMB629 million, provision for financing and interest receivables of RMB627 million, net loss of change in fair value of financial guarantee derivatives and loans at fair value of RMB206 million, share-based compensation expenses of RMB118 million, depreciation and amortization of RMB105 million.
Liquidity and Capital Resources To date, we have financed our operations primarily through cash generated by operating activities, the funding provided by institutional funding partners, the issuance of preferred shares in private placements, and issuance of convertible notes and asset-backed securities.
The notes were paid in full in 14 installments by April 2024. B. Liquidity and Capital Resources 140 To date, we have financed our operations primarily through cash generated by operating activities, the funding provided by institutional funding partners, the issuance of preferred shares in private placements, and issuance of convertible notes and asset-backed securities.
Financing Activities Net cash used in financing activities was RMB3,852 million (US$542 million) in 2023, which was primarily attributable to principle payments on funding debts of RMB19,719 million (US$2,777 million) and principle payments on borrowings of RMB2,266 million (US$319 million), partially offset by proceeds from funding debts of RMB17,938 million (US$2,527 million) and proceeds from borrowings of RMB1,958 million (US$276 million).
Net cash used in financing activities was RMB3,883 million in 2023, which was primarily attributable to principle payments on funding debts of RMB19,719 million and principle payments on borrowings of RMB2,266 million, partially offset by proceeds from funding debts of RMB17,938 million and proceeds from borrowings of RMB1,958 million.
Capital Expenditures We incurred capital expenditures of RMB122 million, RMB149 million and RMB222 million (US$31.3 million) in 2021, 2022 and 2023, respectively. In these periods, our capital expenditures were mainly used for purchases of property, equipment and software, and in construction of our new headquarters located in Shenzhen.
Capital Expenditures We incurred capital expenditures of RMB149 million, RMB222 million and RMB244 million (US$33.9 million) in 2022, 2023 and 2024, respectively. In these periods, our capital expenditures were mainly used for purchases of property, equipment and software, and in construction of our new headquarters located in Shenzhen.
In 2023, we cooperated with 10 new funding partners and as of December 31, 2023, we had cumulatively served over 150 funding partners, including commercial banks, consumer finance companies, and other licensed financial institutions, with many of which we developed long-term, stable business relationships. Since 2016, we have also offered six public and private asset-backed securitization programs.
As of December 31, 2024, we had cumulatively served over 170 funding partners, including commercial banks, consumer finance companies, and other licensed financial institutions, with many of which we developed long-term, stable business relationships. Since 2016, we have also offered 6 public asset-backed securitization programs.
In the meantime, the local tax bureau in Guangxi exempted 40% of the income based on the preferential income tax rate of 15% from 2021 to 2025. A new Beihai entity is entitled to enjoy a preferential income tax rate of 9% from 2023 to 2028.
In the meantime, the local tax bureau in Guangxi exempted 40% of the income based on the preferential income tax rate of 15%. Beihai Dulin is entitled to enjoy a preferential income tax rate of 9% from 2023 to 2027.
These liabilities mature between January 2023 and December 2024, and had weighted average interest rates of 9.2%, 9.3% and 9.1%, as of December 31, 2021, 2022 and 2023, respectively. As of December 31, 2021, 2022 and 2023, institutional funding partners funded an aggregate amount of RMB3,540 million, RMB6,372 million and RMB3,893 million (US$548 million), in our outstanding financing receivables, respectively.
These liabilities mature between January 2023 and December 2024, and had weighted average interest rates of 9.3%, 9.1% and 7.4%, as of December 31, 2022, 2023 and 2024, respectively. As of December 31, 2023 and 2024, institutional funding partners funded an aggregate amount of RMB3,893 million and RMB4,380 million (US$600 million), in our outstanding financing receivables, respectively.
We adopt an advanced and customized credit risk management approach driven by our proprietary Hawkeye credit assessment engine and strong risk management culture.
We adopt an advanced and customized credit risk management approach driven by our proprietary risk control system and strong risk management culture.
Changes in operating assets and liabilities mainly included an increase in deposits to insurance companies and guarantee companies of RMB871 million, an increase in other assets of RMB276 million, an increase in financing receivables related to online direct sales of RMB399 million, a decrease in contingent guarantee liabilities of RMB1,515 million, and a decrease in accruals and other current liabilities of RMB214 million, partially offset by an increase in deferred guarantee income of RMB475 million. 141 Net cash provided by operating activities was RMB2,667 million in 2021.
Changes in operating assets and liabilities mainly included an increase in deposits to insurance companies and guarantee companies of RMB871 million, an increase in other assets of RMB276 million, an increase in financing receivables related to online direct sales of RMB399 million, and a decrease in contingent guarantee liabilities of RMB1,515 million, partially offset by an increase in deferred guarantee income of RMB475 million.
We have expanded the scale of our platform rapidly since our inception. From our inception in August 2013 through the end of 2023, we cumulatively originated RMB1,113 billion (US$157 billion) in loans. In 2021, 2022 and 2023, we originated RMB214 billion, RMB205 billion and RMB250 billion (US$35.1 billion) in loans, respectively.
We have expanded the scale of our platform rapidly since our inception. From our inception in August 2013 through the end of 2024, we cumulatively originated RMB1,325 billion (US$182 billion) in loans. In 2022, 2023 and 2024, we originated RMB205 billion, RMB250 billion and RMB212 billion (US$29.1 billion) in loans, respectively.
Loans that are delinquent for 180 days or more are charged off and are not included in the delinquency rate calculation. The 30 day+ delinquency ratio was 3.99%, 4.62% and 5.59% as of December 31, 2021, 2022 and 2023 and 90 day+ delinquency ratio was 1.92%, 2.53% and 2.90% as of December 31, 2021, 2022 and 2023, respectively.
Loans that are delinquent for 180 days or more are charged off and are not included in the delinquency rate calculation. The 90 day+ delinquency ratio was 2.5%, 2.9% and 3.6% as of December 31, 2022, 2023 and 2024, respectively.
Research and development expenses decreased by 12.0% from RMB583 million in 2022 to RMB513 million (US$72.3 million) in 2023, primarily as a result of the Company’s improved efficiency. General and administrative expenses .
Sales and marketing expenses was RMB1,733 million in 2023, as compared to RMB1,685 million in 2022. Research and development. Research and development expenses decreased by 12.0% from RMB583 million in 2022 to RMB513 million in 2023, primarily as a result of the Company’s improved efficiency. General and administrative expenses .
Our current restricted cash increased by 13.1% from RMB1,268 million as of December 31, 2022 to RMB1,434 million (US$202 million) as of December 31, 2023, primarily due to an increase in the security deposits placed with and set aside for our partnering commercial banks in case of users' defaults.
Restricted cash increased by 10.2% from RMB1,578 million as of December 31, 2023 to RMB1,739 million (US$238 million) as of December 31, 2024, primarily due to an increase in the security deposits placed with and set aside for our partnering commercial banks in case of users' defaults.
Deferred guarantee income Our deferred guarantee income increased by 71.9% from RMB895 million as of December 31, 2022 to RMB1,538 million (US$217 million) as of December 31, 2023, due to the increase of loan origination of the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees.
Deferred guarantee income Our deferred guarantee income decreased by 36.6% from RMB1,538 million as of December 31, 2023 to RMB975 million (US$134 million) as of December 31, 2024, due to the decrease of loan origination of the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees.
As of December 31, 2022 and 2023, financing receivables amounting to RMB734 million and RMB190 million (US$26.7 million) were pledged as collaterals, respectively. The decrease in pledged collaterals in 2023 was due to the decrease in the amount of funds provided by certain institutional funding partners.
As of December 31, 2023 and 2024, financing receivables amounting to RMB190 million and RMB11.9 million (US$1.6 million) were pledged as collateral, respectively. The decrease in pledged collateral in 2024 was due to the decrease in the amount of funds provided by certain institutional funding partners.
Net cash provided by operating activities was RMB98.8 million in 2022.
Net cash provided by operating activities was RMB57.3 million in 2022.
After the adoption of ASC 326 on January 1, 2020, a separate contingent liability in full amount determined using current expected credit losses (“CECL”) lifetime methodology is accounted for in addition to and separately from the guarantee liabilities accounted for under ASC 460, and relevant credit losses are recorded as “Provision for contingent guarantee liabilities.” Operating expenses For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing expenses 1,658,904 61.9 1,685,438 62.4 1,733,301 244,130 65.8 Research and development expenses 549,286 20.5 583,260 21.6 513,284 72,295 19.5 General and administrative expenses 470,661 17.6 431,571 16.0 387,387 54,562 14.7 Total operating expenses 2,678,851 100.0 2,700,269 100.0 2,633,972 370,987 100.0 129 Sales and marketing.
After the adoption of ASC 326 on January 1, 2020, a separate contingent liability in full amount determined using current expected credit losses (“CECL”) lifetime methodology is accounted for in addition to and separately from the guarantee liabilities accounted for under ASC 460, and relevant credit losses are recorded as “Provision for contingent guarantee liabilities.” Operating expenses For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing expenses 1,685,438 62.4 1,733,301 65.8 1,787,299 244,859 65.2 Research and development expenses 583,260 21.6 513,284 19.5 578,243 79,219 21.1 General and administrative expenses 431,571 16.0 387,387 14.7 374,481 51,304 13.7 Total operating expenses 2,700,269 100.0 2,633,972 100.0 2,740,023 375,382 100.0 131 Sales and marketing.
Accruals and other current liabilities Accruals and other current liabilities increased by 45% from RMB3,057 million as of December 31, 2022 to RMB4,434 million (US$626 million) as of December 31, 2023, primarily due to the increase in guarantee derivative liabilities. 138 Convertible notes Convertible notes represented the US$300 million convertible senior notes we issued through a private placement in September 2019.
Accruals and other current liabilities Accruals and other current liabilities decreased by 9.3% from RMB4,434 million as of December 31, 2023 to RMB4,020 million (US$551 million) as of December 31, 2024, primarily due to the decrease in guarantee derivative liabilities. Convertible notes Convertible notes represented the US$300 million convertible senior notes we issued through a private placement in September 2019.
Risk Factors—Risks Related to Our Corporate Structure—The PRC regulation of loans to and direct investment in the PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans to our PRC subsidiaries and the consolidated variable interest entities or making additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” and “Item 14.
Risk Factors—Risks Related to Our Corporate Structure—We and the VIEs are subject to the PRC regulation of loans to and direct investment in the PRC entities by offshore holding companies and governmental regulations on currency conversion when making loans to our PRC subsidiaries and the consolidated variable interest entities or making additional capital contributions to our PRC subsidiaries, which could affect our liquidity and our ability to fund and expand our business” and “Item 14.
Net cash used in financing activities was RMB1,780 million in 2021, which was primarily attributable to principal payments on funding debts of RMB19,981 million and principal payments on borrowings of RMB2,331 million, partially offset by proceeds from funding debts of RMB18,222 million and proceeds from borrowings of RMB2,304 million. 142 Material Cash Requirements Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include capital expenditures and contractual obligations, including funding debts, convertible notes, short-term borrowings, operating lease obligations, and commitment to purchase delinquent loans.
Net cash provided by financing activities was RMB1,153 million in 2022, which was primarily attributable to proceeds from funding debts of RMB19,837 million and proceeds from borrowings of RMB1,385 million, partially offset by principle payments on funding debts of RMB17,930 million and principle payments on borrowings of RMB1,868 million. 143 Material Cash Requirements Our material cash requirements as of December 31, 2024 and any subsequent interim period primarily include capital expenditures and contractual obligations, including funding debts, convertible notes, short-term borrowings, operating lease obligations, and commitment to purchase delinquent loans.
Net income As a result of the foregoing, our net income decreased significantly by 64.6% from RMB2,334 million in 2021 to RMB826 million in 2022. 136 Changes in Financial Position The following table sets forth selected information from our consolidated balance sheets as of December 31, 2022 and 2023.
Net income As a result of the foregoing, our net income increased by 29.1% from RMB826 million in 2022 to RMB1,066 million in 2023. 138 Changes in Financial Position The following table sets forth selected information from our consolidated balance sheets as of December 31, 2023 and 2024.
See “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies-Presentation for on- and off-balance sheet loans.” 124 General Factors Affecting Our Results of Operations Our results of operations are affected by general factors driving the online consumer finance industry in China. Regulatory environment in China The online consumer finance industry in China is regulated.
Other institutional funding partners do not require us to provide any guarantee pursuant to the loans facilitated. See “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies-Presentation for on- and off-balance sheet loans.” General Factors Affecting Our Results of Operations Our results of operations are affected by general factors driving the online consumer finance industry in China.
These metrics aid us in developing and refining our growth strategies and making strategic decisions: As of or for the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ Outstanding principal balance (in millions) 85,930 99,618 123,984 17,463 Outstanding principal balance by accounting treatment: Outstanding principal balance of on-balance sheet loans (in millions) 4,341 6,952 4,137 583 Outstanding principal balance of off-balance sheet loans (in millions) 81,589 92,666 119,847 16,880 Originations (in millions) 213,807 204,585 249,454 35,135 Number of active users who used our loan products (in thousands) 14,167 9,694 8,530 — Outstanding principal balance.
These metrics aid us in developing and refining our growth strategies and making strategic decisions: As of or for the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ Outstanding principal balance (in millions) 99,618 123,984 110,266 15,107 Outstanding principal balance by accounting treatment: Outstanding principal balance of on-balance sheet loans (in millions) 6,952 4,137 4,808 659 Outstanding principal balance of off-balance sheet loans (in millions) 92,666 119,847 105,458 14,448 Originations (in millions) 204,585 249,454 212,050 29,051 Number of active users who used our loan products (in thousands) 9,694 8,530 8,164 — 125 Outstanding principal balance.
Such prepayment in the bank accounts of these insurance companies and guarantee companies is recorded as deposits to insurance companies and guarantee companies. Deposits to insurance companies and guarantee companies increased by16.2% from RMB2,249 million as of December 31, 2022 to RMB2,613 million (US$368 million) as of December 31, 2023.
Such prepayment in the bank accounts of these insurance companies and guarantee companies is recorded as deposits to insurance companies and guarantee companies. Deposits to insurance companies and guarantee companies decreased by 9.9% from RMB2,613 million as of December 31, 2023 to RMB2,355 million (US$323 million) as of December 31, 2024.
This increase is primarily due to the increase in underlying loans. Short-term and long-term contract assets and receivables, net The contract assets and receivables increased by 49.2%, from RMB4,499 million as of December 31, 2022 to RMB6,713 million (US$945 million) as of December 31, 2023, primarily due to the increase in off-balance sheet loans.
This decrease is primarily due to the decrease in underlying loans. Short-term and long-term contract assets and receivables, net The contract assets and receivables decreased by 14.1% from RMB6,713 million as of December 31, 2023 to RMB5,765 million (US$790 million) as of December 31, 2024, primarily due to the decrease in off-balance sheet loans.
The notes were paid in full by April 2024. Off-Balance Sheet Arrangements We provide services in connection with off-balance sheet loans, including account maintenance, collection and payment processing from user and distributions to certain institutional funding partners.
On March 13, 2023, we entered into an amendment agreement with PAGAC Lemongrass Holding I Limited regarding previous documents governing the notes. The notes were paid in full by April 2024. Off-Balance Sheet Arrangements We provide services in connection with off-balance sheet loans, including account maintenance, collection and payment processing from user and distributions to certain institutional funding partners.
This decrease in operating revenues was primarily attributable to a decrease in credit facilitation service income and in tech-empowerment service income, partially offset by an increase in guarantee income, financing income and installment e-commerce platform service income for the year. Installment e-commerce platform service .
This increase in operating revenues was primarily attributable to an increase in credit facilitation service income and Tech-empowerment service income, partially offset by a decrease in installment e-commerce platform service income for the year. Credit facilitation service income. Credit facilitation service income increased by 13.8% from RMB9,666 million in 2023 to RMB11,000 million (US$1,507 million) in 2024.
See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Cash Flows”..
See “Item 5. Operating and Financial Review and Prospects—B.
We account for our contracts with these institutional funding partners as a derivative under ASC Topic 815, Derivatives and Hedging, which is recognized on our consolidated balance sheets as either assets or liabilities. Other institutional funding partners do not require us to provide any guarantee pursuant to the loans facilitated.
For the financial guarantee provided by us that does not meet the scope exception under ASC 815 10 15 58, we account for our contracts with these institutional funding partners as a derivative under ASC Topic 815, Derivatives and Hedging, which is recognized on our consolidated balance sheets as either assets or liabilities.
Net income As a result of the foregoing, our net income increased by 29.1% from RMB826 million in 2022 to RMB1,066 million (US$150 million) in 2023. 134 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Operating revenue Operating revenue decreased by 13.3% from RMB11,381 million in 2021 to RMB9,866 million in 2022.
Net income As a result of the foregoing, our net income increased by 3.2% from RMB1,066 million in 2023 to RMB1,100 million (US$151 million) in 2024. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 136 Operating revenue Operating revenue increased by 32.3% from RMB9,866 million in 2022 to RMB13,057 million (US$1,839 million) in 2023.
Change in fair value of financial guarantee derivatives and loans at fair value Change in fair value of financial guarantee derivatives and loans at fair value was a gain of RMB722 million in 2022, as compared to a loss of RMB347 million in 2021.
Change in fair value of financial guarantee derivatives and loans at fair value Change in fair value of financial guarantee derivatives and loans at fair value was a loss of RMB979 million (US$134 million) in 2024, as compared to a loss of RMB206 million in 2023.
The convertible notes have a term of seven years and bear interest at a rate of 2.0% per annum. The holder of the convertible notes had the right to require us to repurchase for cash all or any portion of the convertible notes on the fourth anniversary of the issuance date.
The holder of the convertible notes had the right to require us to repurchase for cash all or any portion of the convertible notes on the fourth anniversary of the issuance date.
We accrued related withholding tax liabilities based on a 10% tax rate for certain percentage of the annual profits to be distributed according to the dividend policy.
In November 2024, our board of directors approved a dividend payout ratio of 25% of total net profit for the entire year of 2025. We accrued related withholding tax liabilities based on a 10% tax rate for certain percentage of the annual profits to be distributed according to the dividend policy.
Operating cost Operating cost increased by 21.3% from RMB5,631 million in 2021 to RMB6,831 million in 2022, primarily as a result of the increases in cost of sales, funding cost, provision for financing receivables and provision for contingent guarantee liabilities, partially offset by the increases in provision for contract assets and receivables. Cost of sales.
Operating cost Operating cost increased by 7.4% from RMB8,544 million in 2023 to RMB9,177 million (US$1,257 million) in 2024, primarily as a result of the increases in provision for financing receivables, provision for contingent guarantee liabilities, and provision for contract assets and receivables, partially offset by the decreases in cost of sales and funding cost. Cost of sales.
Short-term financing receivables, net Our short-term financing receivables, net decreased by 38.4% from RMB6,398 million as of December 31, 2022 to RMB3,944 million (US$556 million) as of December 31, 2023, primarily due to the decrease associated with on-balance sheet loans originated on our platform in 2023.
Financing receivables, net Financing receivables, net increased by 15.4% from RMB4,145 million as of December 31, 2023 to RMB4,781 million (US$655 million) as of December 31, 2024, primarily due to the increase associated with on-balance sheet loans originated on our platform in 2024.
The decrease in contingent guarantee liabilities primarily due to the decrease of loan origination of the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460.
Contingent guarantee liabilities Our contingent guarantee liabilities decreased by 40.3% from RMB1,809 million as of December 31, 2023 to RMB1,079million (US$148 million) as of December 31, 2024, due to the decrease of loan origination of the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees.

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Item 6. [Reserved]

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

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Biggest changeThe following table summarizes, as of the date of this annual report, the outstanding options and restricted share units granted under the 2014 Plan and the 2017 Plan to our directors and executive officers. 150 Name Ordinary Shares Underlying Options or Restricted Share Units Awarded Exercise Price (US$/Share) Date of Grant Date of Expiration Jay Wenjie Xiao * 0.5 October 25, 2019 October 25, 2029 * 0.5 January 15, 2021 January 15, 2031 * 1.51 March 3, 2023 March 3, 2033 *(1) — December 29, 2023 — Jared Yi Wu * 0.0001 June 30, 2016 June 30, 2026 * 0.5 October 25, 2019 October 25, 2029 * 0.5 January 15, 2021 January 15, 2031 * 1.51 March 3, 2023 March 3, 2033 *(1) — December 29, 2023 — James Xigui Zheng * (1) — January 31, 2023 — *(1) — December 29, 2023 — Arvin Zhanwen Qiao *(1) — January 29, 2024 — Shirley Yunwen Yang * 0.5 October 25, 2019 October 25, 2029 * 1.51 March 3, 2023 March 3, 2033 * 0.92 December 29, 2023 December 29, 2033 *(1) — December 29, 2023 — *(1) — December 29, 2023 — Jason Ming Zhao * 0.0001 November 8, 2017 November 8, 2027 * 0.5 October 25, 2019 October 25, 2029 * 0.5 January 15, 2021 January 15, 2031 * 0.5 January 15, 2021 January 15, 2031 * 0.5 January 18, 2022 January 18, 2032 * 1.51 March 3, 2023 March 3, 2033 *(1) — December 29, 2023 — Erwin Yong Lu * 0.5 March 18, 2021 March 18, 2031 * 0.5 January 18, 2022 January 18, 2032 * 1.51 March 3, 2023 March 3, 2033 *(1) — December 29, 2023 — Wei Wu * 0.0001 November 8, 2017 November 8, 2027 * (1) — March 29, 2022 — Xiaoguang Wu * (1) — March 29, 2022 — Neng Wang * (1) — March 29, 2022 — Annabelle Yu Long * (1) — August 18, 2020 — All Directors and Executive Officers as a Group 9,058,836 * Upon exercising of all options that are exercisable with 60 days after the date of this annual report and vesting of all restricted shares unites that are to be vested within 60 days after the date of this annual report, would beneficially own less than 1% of our total outstanding shares.
Biggest changeThe following table summarizes, as of the date of this annual report, the outstanding options and restricted share units granted under the 2014 Plan and the 2017 Plan to our directors and executive officers. 151 Name Ordinary Shares Underlying Options or Restricted Share Units Awarded Exercise Price (US$/Share) Date of Grant Date of Expiration Jay Wenjie Xiao * 0.5 October 25, 2019 October 25, 2029 * 0.5 January 15, 2021 January 15, 2031 * 1.51 March 3, 2023 March 3, 2033 *(1) — December 29, 2023 — Jared Yi Wu * 1.51 March 3, 2023 March 3, 2033 *(1) — December 29, 2023 — James Xigui Zheng * (1) — January 31, 2023 — *(1) — December 29, 2023 — *(1) — January 26, 2025 — Arvin Zhanwen Qiao *(1) — January 29, 2024 — *(1) — January 26, 2025 — Shirley Yunwen Yang * 0.5 October 25, 2019 October 25, 2029 * 1.51 March 3, 2023 March 3, 2033 * 0.92 December 29, 2023 December 29, 2033 *(1) — December 29, 2023 — *(1) — December 29, 2023 — *(1) — January 26, 2025 — Jason Ming Zhao * 0.0001 November 8, 2017 November 8, 2027 * 0.5 October 25, 2019 October 25, 2029 * 0.5 January 15, 2021 January 15, 2031 * 0.5 January 15, 2021 January 15, 2031 * 0.5 January 18, 2022 January 18, 2032 * 1.51 March 3, 2023 March 3, 2033 *(1) — December 29, 2023 — *(1) — January 26, 2025 — Erwin Yong Lu * 0.5 March 18, 2021 March 18, 2031 * 0.5 January 18, 2022 January 18, 2032 * 1.51 March 3, 2023 March 3, 2033 *(1) — December 29, 2023 — *(1) — January 26, 2025 — Wei Wu * (1) — March 29, 2022 — Xiaoguang Wu * (1) — March 29, 2022 — Neng Wang * (1) — March 29, 2022 — Annabelle Yu Long * (1) — August 18, 2024 — All Directors and Executive Officers as a Group 7,597,502 * Upon exercising of all options that are exercisable with 60 days after the date of this annual report and vesting of all restricted shares unites that are to be vested within 60 days after the date of this annual report, would beneficially own less than 1% of our total outstanding shares.
The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States. 156 Except for the above, we are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F.
The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States. Except for the above, we are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F.
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. 153 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. 154 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.
Share Incentive Plans 2014 Plan In September 2014, our board of directors approved the Share Incentive Plan, or the 2014 Plan, to promote our success and the interests of our shareholders by providing a means through which we may grant equity-based incentives to attract, motivate, retain and reward certain officers, employees, directors and other eligible persons and to further link the 149 interests of recipients with those of our shareholders generally.
Share Incentive Plans 2014 Plan In September 2014, our board of directors approved the Share Incentive Plan, or the 2014 Plan, to promote our success and the interests of our shareholders by providing a means through which we may grant equity-based incentives to attract, motivate, retain and reward certain officers, employees, directors and other eligible persons and to further link the 150 interests of recipients with those of our shareholders generally.
He obtained his EMBA degree from China Europe International Business School. 147 Mr. James Xigui Zheng has served as our chief financial officer and director since January 2023. Prior to joining us, Mr. Zheng served as the chief financial officer of Lufax Holding Ltd (NYSE: LU) from December 2017 to May 2022.
He obtained his EMBA degree from China Europe International Business School. 148 Mr. James Xigui Zheng has served as our chief financial officer and director since January 2023. Prior to joining us, Mr. Zheng served as the chief financial officer of Lufax Holding Ltd (NYSE: LU) from December 2017 to May 2022.
Lu received his master’s degree in computer science from the University of Denver in 2003 and a master’s degree in chemistry from Zhejiang University in 1998. Mr. Lu is also a named contributor in five IT patents in the United States. 148 Mr. Wei Wu has served as our independent director since December 2017. Mr.
Lu received his master’s degree in computer science from the University of Denver in 2003 and a master’s degree in chemistry from Zhejiang University in 1998. Mr. Lu is also a named contributor in five IT patents in the United States. 149 Mr. Wei Wu has served as our independent director since December 2017. Mr.
Neng Wang, and Annabelle Yu Long, the business address for our directors and executive officers is 27/ F CES Tower, No. 3099 Keyuan South Road, Nanshan District, Shenzhen 518057, the People’s Republic of China. † 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 as of February 29, 2024 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 February 29, 2024.
Neng Wang, and Annabelle Yu Long, the business address for our directors and executive officers is 27/ F CES Tower, No. 3099 Keyuan South Road, Nanshan District, Shenzhen 518057, the People’s Republic of China. † 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 as of February 28, 2025 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 February 28, 2025.
(1) Represents restricted share units. 151 C. Board Practices Board of Directors Our board of directors consists of eight directors. A director is not required to hold any shares in our company to qualify to serve as a director.
(1) Represents restricted share units. 152 C. Board Practices Board of Directors Our board of directors consists of eight directors. A director is not required to hold any shares in our company to qualify to serve as a director.
Jared Yi Wu has served as our president since May 2016 and as our director since November 2017. Prior to joining us, Mr. Wu served at Tencent for 9 years. From 2013 to 2016, Mr. Wu served as general manager of WeChat Pay, an integrated feature in Tencent’s WeChat. From 2007 to 2013, Mr.
Jared Yi Wu has served as our director since November 2017 and was our president from May 2016 to March 2025. Prior to joining us, Mr. Wu served at Tencent for 9 years. From 2013 to 2016, Mr. Wu served as general manager of WeChat Pay, an integrated feature in Tencent’s WeChat. From 2007 to 2013, Mr.
Item 6. Directors, Senior Management and Employees A. Directors and Senior Management The following table sets forth information regarding our executive officers and directors as of the date of this annual report.
Item 6. Directors, Senior Man agement and Employees A. Directors and Senior Management The following table sets forth information regarding our executive officers and directors as of the date of this annual report.
Board Diversity Board Diversity Matrix (As of February 29, 2024) Country of Principal Executive Offices: People's Republic of China Foreign Private Issuer Yes Disclose Prohibited Under Home Country Law No Total Number of Directors 8 Part I: Gender Identity Female Male Non-Binary Did Not Disclose Gender Directors 1 7 — — Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction — LGBTQ+ — Did Not Disclose Demographic Background — D.
Board Diversity Board Diversity Matrix (As of February 28, 2025) Country of Principal Executive Offices: People's Republic of China Foreign Private Issuer Yes Disclose Prohibited Under Home Country Law No Total Number of Directors 8 Part I: Gender Identity Female Male Non-Binary Did Not Disclose Gender Directors 1 7 — — Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction — LGBTQ+ — Did Not Disclose Demographic Background — D.
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 152 • 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; • 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. 153 Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Mr.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our shares as of February 29, 2024 by: • each of our current directors and executive officers; and • each person known to us to own beneficially more than 5% of our shares.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our shares as of February 28, 2025 by: • each of our current directors and executive officers; and • each person known to us to own beneficially more than 5% of our shares.
Employees As of December 31, 2021, 2022 and 2023, we had 3,896, 3,872 and 4,268 employees, respectively. The following table sets forth the numbers of our employees categorized by function as of December 31, 2023.
Employees As of December 31, 2022, 2023 and 2024, we had 3,872, 4,268 and 4667 employees, respectively. The following table sets forth the numbers of our employees categorized by function as of December 31, 2024.
Directors and Executive Officers Age Position/Title Jay Wenjie Xiao 40 Chief Executive Officer and Chairman of the Board Jared Yi Wu 44 President and Director James Xigui Zheng 58 Chief Financial Officer and Director Arvin Zhanwen Qiao 41 Chief Risk Officer and Director Shirley Yunwen Yang 53 Chief Human Resources Officer Jason Ming Zhao 48 Chief Marketing Officer Erwin Yong Lu 49 Chief Technology Officer Wei Wu 59 Independent Director Xiaoguang Wu 48 Independent Director Neng Wang 50 Independent Director Annabelle Yu Long 51 Independent Director Mr.
Directors and Executive Officers Age Position/Title Jay Wenjie Xiao 41 Chief Executive Officer and Chairman of the Board Jared Yi Wu 45 Director James Xigui Zheng 59 Chief Financial Officer and Director Arvin Zhanwen Qiao 42 Chief Risk Officer and Director Shirley Yunwen Yang 54 Chief Human Resources Officer Jason Ming Zhao 49 Chief Marketing Officer Erwin Yong Lu 50 Chief Technology Officer Wei Wu 60 Independent Director Xiaoguang Wu 49 Independent Director Neng Wang 51 Independent Director Annabelle Yu Long 52 Independent Director Mr.
(3) The business address of Mr. Wei Wu is Flat E, 9/F, Tower 5, The Visionary, 1 Ying Hong Street, Tung Chung, Lantau Island, Hong Kong. (4) The business address of Mr. Xiaoguang Wu is Flat 49A, Tower 6, Phase 4, Bel-Air on The Peak, South Island, Pokfulam, Hong Kong. (5) The business address of Dr.
Wei Wu is Flat E, 9/F, Tower 5, The Visionary, 1 Ying Hong Street, Tung Chung, Lantau Island, Hong Kong. (4) The business address of Mr. Xiaoguang Wu is Flat 49A, Tower 6, Phase 4, Bel-Air on The Peak, South Island, Pokfulam, Hong Kong. (5) The business address of Dr. Neng Wang is 34 Cedarwood Grove, Singapore 738414.
Class A Ordinary Shares Class B Ordinary Shares Percentage of total ordinary shares on an as-converted basis † Percentage of aggregate voting power†† Directors and Executive Officers**: Jay Wenjie Xiao(1) 7,501,370 71,342,227 24.0 74.2 Jared Yi Wu(2) 24,819,016 — 7.5 2.6 James Xigui Zheng * — * * Arvin Zhanwen Qiao — — — — Shirley Yunwen Yang * — * * Jason Ming Zhao * — * * Ervin Yong Lu * — * * Wei Wu(3) * — * * Xiaoguang Wu(4) * — * * Dr.
Class A Ordinary Shares Class B Ordinary Shares Percentage of total ordinary shares on an as-converted basis † Percentage of aggregate voting power†† Directors and Executive Officers**: Jay Wenjie Xiao(1) 9,158,464 71,342,227 23.9 73.8 Jared Yi Wu(2) 24,048,668 — 7.1 2.5 James Xigui Zheng * — * * Arvin Zhanwen Qiao * — * * Shirley Yunwen Yang * — * * Jason Ming Zhao * — * * Ervin Yong Lu * — * * Wei Wu(3) * — * * Xiaoguang Wu(4) * — * * Dr.
The total number of ordinary shares outstanding as of February 29, 2024 is 328,825,787 †† 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.
The total number of ordinary shares outstanding as of February 28, 2025 is 336,527,001. †† 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.
As of December 31, 2023 Number % of Total Employees Functions: Installment e-commerce and Operations 131 3.1 Risk management 590 13.8 Research and development 531 12.4 Sales and marketing 2,777 65.1 General and administrative 239 5.6 Total number of employees 4,268 100 154 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 others, pension insurance, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance, and housing fund plans through a PRC government-mandated defined contribution plan.
As of December 31, 2024 Number % of Total Employees Functions: Installment e-commerce and Operations 128 2.7 Risk management 1,242 26.6 Research and development 591 12.7 Sales and marketing 2,436 52.2 General and administrative 270 5.8 Total number of employees 4,667 100 155 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 others, pension insurance, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance, and housing fund plans through a PRC government-mandated defined contribution plan.
Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of approximately RMB26.9million (US$3.9 million) in cash to our executive officers and an aggregate of approximately RMB1.7 million (US$240 thousand) in cash to our non-executive directors.
Compensation For the fiscal year ended December 31, 2024, we paid an aggregate of approximately RMB41.79 million (US$5.87 million) in cash to our executive officers and an aggregate of approximately RMB1.7 million (US$240 thousand) in cash to our non-executive directors.
Neng Wang(5) * — * * Annabelle Yu Long(6) * — * * All Directors and Executive Officers as a Group 35,253,390 71,342,227 32.1 76.9 Principal Shareholders: Installment Payment Investment Inc.(7) 7,168,036 71,342,227 23.9 74.2 K2 Partners entities(8) 25,996,814 — 7.9 2.7 FIL Limited(9) 24,577,002 — 7.5 2.5 Rosy Time Global Limited(10) 23,123,466 — 7.0 2.4 155 * Aggregate number of shares accounts for less than 1% of our total outstanding ordinary shares and aggregate voting power. ** Except for Wei Wu, Xiaoguang Wu, Dr.
Neng Wang(5) * — * * Annabelle Yu Long(6) — — — — All Directors and Executive Officers as a Group 37,853,864 71,342,227 32.1 76.5 Principal Shareholders: Installment Payment Investment Inc.(7) 8,731,380 71,342,227 23.8 73.8 Rosy Time Global Limited(8) 23,123,466 — 6.9 2.4 FIL Limited(9) 19,491,406 — 5.8 2.0 156 * Aggregate number of shares accounts for less than 1% of our total outstanding ordinary shares and aggregate voting power. ** Except for Wei Wu, Xiaoguang Wu, Dr.
Neng Wang is 34 Cedarwood Grove, Singapore 738414 . (6) The business address of Ms. Annabelle Yu Long is Unit 1610, 16/F, West Tower, Genesis Beijing, 8 Xinyuan South Road, Chaoyang District, Beijing 100027, the People’s Republic of China. (7) Represents 7,168,036 Class A ordinary shares and 71,342,227 Class B ordinary shares beneficially owned by Mr.
(6) The business address of Ms. Annabelle Yu Long is Unit 1610, 16/F, West Tower, Genesis Beijing, 8 Xinyuan South Road, Chaoyang District, Beijing 100027, the People’s Republic of China. (7) Represents 8,731,380 Class A ordinary shares and 71,342,227 Class B ordinary shares beneficially owned by Mr. Jay Wenjie Xiao through The JX Chen Family Trust. See note (1) above.
Yi Wu, and 431,108 ADSs representing 862,216 Class A ordinary shares and 833,334 Class A ordinary shares issuable to Mr. Yi Wu upon exercise of options granted to him within 60 days after February 29, 2024. The registered address of Rosy Time Global Limited is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.
Yi Wu upon exercise of options granted to him within 60 days after February 28, 2025. The registered address of Rosy Time Global Limited is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. (3) The business address of Mr.
Wenjie Xiao upon exercise of options granted to him within 60 days after February 29, 2024. The registered office address of Installment Payment Investment Inc. is Start Chambers, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands. The beneficiaries of The JX Chen Family Trust are Mr. Jay Wenjie Xiao and his family and therefore, Mr.
Wenjie Xiao as of February 28, 2025; and (iii) 191,667 ADSs, representing 383,334 Class A ordinary shares issuable to Mr. Wenjie Xiao upon exercise of options granted to him within 60 days after February 28, 2025. The registered office address of Installment Payment Investment Inc. is Start Chambers, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands.
Neng Wang satisfy the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Mr. Xiaoguang Wu, Mr. Wei Wu and Dr. Neng Wang. Mr. Xiaoguang Wu is the chairman of our nominating and corporate governance committee. Mr. Xiaoguang Wu, Mr. Wei Wu and Dr.
Xiaoguang Wu, Mr. Wei Wu and Dr. Neng Wang. Mr. Xiaoguang Wu is the chairman of our nominating and corporate governance committee. Mr. Xiaoguang Wu, Mr. Wei Wu and Dr. Neng Wang satisfy the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq Stock Market.
(1) Represents 3,584,018 ADSs, equivalent to 7,168,036 Class A ordinary shares, and 71,342,227 Class B ordinary shares held by The JX Chen Family Trust through Installment Payment Investment Inc., a company incorporated under the laws of the British Virgin Islands, as of February 29, 2024, and 333,334 Class A ordinary shares issuable to Mr.
(1) Represents (i) 4,365,690 ADSs, representing 8,731,380 Class A ordinary shares, and 71,342,227 Class B ordinary shares held by The JX Chen Family Trust through Installment Payment Investment Inc., a company incorporated under the laws of the British Virgin Islands; (ii) 21,875 ADSs, representing 43,750 Class A ordinary shares, directly held by Mr.
(10) Represents 23,123,466 Class A ordinary shares held by Rosy Time Global Limited, a company incorporated in the British Virgin Islands and wholly-owned by Mr. Yi Wu. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares.
(2) Represents (i) 23,123,466 Class A ordinary shares held by Rosy Time Global Limited, a company incorporated in the British Virgin Islands and wholly-owned by Mr. Jared Yi Wu; (ii) 20,934 ADSs, representing 41,868 Class A Ordinary shares directly held by Mr. Jared Yi Wu; and (iii) 441,667 ADSs, representing 883,334 Class A ordinary shares issuable to Mr.
Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share. We issued Class A ordinary shares represented by the ADSs in our initial public offering. As of February 29, 2024, 328,825,787 of our ordinary shares were issued and outstanding.
We issued Class A ordinary shares represented by the ADSs in our initial public offering. As of February 28, 2025, 336,527,001 of our ordinary shares were issued and outstanding.
Xiao may be deemed to be the beneficial owner of the shares held by Installment Payment Investment Inc. through the Trust. (2) Represents 23,123,466 Class A ordinary shares held by Rosy Time Global Limited, a company incorporated in the British Virgin Islands and wholly-owned by Mr.
(8) Represents 23,123,466 Class A ordinary shares held by Rosy Time Global Limited, a company incorporated in the British Virgin Islands and wholly-owned by Mr. Jared Yi Wu. See note (2) above. (9) Represents 19,491,406 Class A ordinary shares held by FIL Limited as reported on Schedule 13D/A filed by FIL Limited on February 12, 2025.
(9) Represents 24,577,002 Class A ordinary shares held by FIL Limited as reported on Schedule 13D/A filed by FIL Limited on February 9, 2024. The registered office address of FIL Limited is Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, HM19.
The registered office address of FIL Limited is Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, HM19. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share.
Removed
The calculations in the table below are based on 328,825,787 ordinary shares outstanding as of February 29, 2024, comprising of (i) 257,483,560 Class A ordinary shares, excluding the 7,701,216 Class A ordinary shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under the Share Incentive Plan and the 2017 Share Incentive Plan, and (ii) 71,342,227 Class B ordinary shares.
Added
The calculations in the table below are based on 336,527,001 ordinary shares outstanding as of February 28, 2025, comprising of (i) 265,184,774 Class A ordinary shares, and (ii) 71,342,227 Class B ordinary shares. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Removed
Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Added
The beneficiaries of The JX Chen Family Trust are Mr. Jay Wenjie Xiao and his family and therefore, Mr. Xiao may be deemed to be the beneficial owner of the shares held by Installment Payment Investment Inc. through the Trust.
Removed
Jay Wenjie Xiao through The JX Chen Family Trust. See note (1) above. (8) Represents 25,996,814 Class A ordinary shares held by K2 entities as reported on Schedule 13D/A filed by KPartners Limited and K2 Partners II Limited, among others, on April 22, 2024.
Removed
The registered office address of KPartners Limited is Osiris International Cayman Limited of Suite #4-210, Governors Square, 23 Lime Tree Bay Avenue, Po Box 32311, Grand Cayman KY1-1209, Cayman Islands. The registered office address of K2 Partners II Limited is Room C, 20/F, Lucky Plaza, 315-321, Lockhart Road, Wan Chai, Hong Kong.

Item 7. Management's Discussion & Analysis

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

7 edited+2 added−2 removed1 unchanged
Biggest changeAs of December 31, 2022 and 2023, the amounts due from L.P. was RMB6.6 million and RMB7.0 million (US$1.0 million), respectively. Shareholders Agreement We entered into our amended and restated shareholders agreement on October 21, 2017 with our then-existing shareholders. The shareholders agreement provides for certain preferential rights, including board representation rights, right of participation, co-sale rights and preemptive rights.
Biggest changeShareholders Agreement We entered into our amended and restated shareholders agreement on October 21, 2017 with our then-existing shareholders. The shareholders agreement provides for certain preferential rights, including board representation rights, right of participation, co-sale rights and preemptive rights. Except for the registration rights, all the preferential rights terminated upon the completion of our initial public offering.
Item 7. Major Shareholders an d Related Party Transactions A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B. Related Party Transactions Contractual Arrangements with the Variable Interest Entities and Their Shareholders PRC laws and regulations currently restrict foreign ownership and investment in value-added telecommunications services in China.
Item 7. Major Shareholders an d Related Party Transactions A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” 157 B. Related Party Transactions Contractual Arrangements with the Variable Interest Entities and Their Shareholders PRC laws and regulations currently restrict foreign ownership and investment in value-added telecommunications services in China.
Organizational Structure—Contractual Arrangements with the Variable Interest Entities.” Transactions with Ji’an Aoxinlian and Aileyou Ji’an Aoxinlian Information Consulting Service Co., Ltd (“Ji’an Aoxinlian”), which provides collection services to the Company, are controlled by the immediate family member of the Group's senior management.
Organizational Structure—Contractual Arrangements with the Variable Interest Entities.” Transactions with Ji’an Aoxinlian and Aileyou Ji’an Aoxinlian Information Consulting Service Co., Ltd (“Ji’an Aoxinlian”), which provides collection services to the Company, are controlled by the immediate family member of our senior management.
In June 2022, we have fully disposed all our shareholding in Aileyou which was no longer a related party of us after the disposal. Loan Agreement with L.P. L.P. Technology Holdings Limited (“L.P”) is an equity investment of the Group.
In June 2022, we have fully disposed all our shareholding in Aileyou which was no longer a related party of us after the disposal. Transactions with L.P. L.P. Technology Holdings Limited (“L.P”) is an equity investment of our company.
Shenzhen Aileyou Information Technology Co., Ltd.(“Aileyou”) is an equity investment of the Group. The transaction with Aileyou for the year ended December 31, 2021, 2022 and 2023 were RMB7.7 million, RMB0.6 million and nil, respectively. The amounts due to Aileyou as of December 31, 2022 and 2023 were nil and nil, respectively.
Shenzhen Aileyou Information Technology Co., Ltd.(“Aileyou”) is an equity investment of our company. The transaction with Aileyou for the year ended December 31, 2022, 2023 and 2024 were RMB0.6 million, nil and nil, respectively. The amounts due to Aileyou as of December 31, 2023 and 2024 were nil and nil, respectively.
The transactions with Ji’an Aoxinlian for the year ended December 31, 2021, 2022 and 2023 were RMB20.5 million, RMB16.2 million and RMB14.8 million (US$2.1 million), respectively. As of December 31, 2022 and 2023, the amounts due to Ji'an Aoxinlian was RMB4.7 million and RMB3.0 million (US$0.4 million), respectively.
The transactions with Ji’an Aoxinlian for the year ended December 31, 2022, 2023 and 2024 were RMB16.2 million, RMB14.8 million and RMB35.6 million (US$4.9 million), respectively. As of December 31, 2023 and 2024, the amounts due to Ji'an Aoxinlian was RMB3.0 million and RMB10.9 million (US$1.5 million), respectively.
These registration rights ceased to be in effect after December 21, 2022, the fifth anniversary of our initial public offering. 157 Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B. Compensation.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation.” C. Interests of Experts and Counsel Not applicable.
We have granted certain demand registration rights, piggyback registration rights and F-3 registration rights to holders of our registrable securities. These registration rights ceased to be in effect after December 21, 2022, the fifth anniversary of our initial public offering. Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B. Compensation.” Share Incentive Plans See “Item 6.
Removed
In 2022 and 2023, we entered into loan agreements with L.P. and agreed to provide loan to facilitate L.P.'s business operations. These loans carry a fixed rate of interest which approximated the market interest rate at the inception of the loans.
Added
For the year ended December 31, 2022, 2023 and 2024, funds provided to L.P. were nil, nil and RMB45.9 million, respectively, and consulting services provided to L.P. were nil, nil and RMB4.4 million, respectively. As of December 31, 2023 and 2024, the amounts due from L.P. was RMB7.0 million and RMB61.7 million (US$8.5 million), respectively.
Removed
Except for the registration rights, all the preferential rights terminated upon the completion of our initial public offering. We have granted certain demand registration rights, piggyback registration rights and F-3 registration rights to holders of our registrable securities.
Added
Directors, Senior Management and Employees—B. Compensation.” C. Interests of Experts and Counsel Not applicable.

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