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XYF
Earnings call · Jun 2026 (Q2 FY26)

X Financial Q2 FY26 earnings call XYF

Aug 24, 2026 Source

Executive summary

X Financial Q2 FY26 — Sequential Credit Improvement and Capital Preservation

X Financial maintained a disciplined operating approach in Q2 FY26, prioritizing credit quality and balance sheet strength amidst challenging conditions. The company reported sequential improvements in delinquency rates and adjusted net income, driven by tighter underwriting and cost controls. However, loan origination volumes, active borrowers, and outstanding loan balances continued to decline significantly year-over-year and sequentially. Management is focused on capital preservation and exploring new business opportunities, while continuing capital returns to shareholders.

Highlights

5

  • 31-60 day delinquency rate improved to 1.73% from 2.61% sequentially.

  • 91-180 day delinquency rate improved to 9.09% from 9.95% sequentially.

  • Operating margin improved to 19.6% from 12% sequentially.

  • Non-GAAP adjusted net income increased 104.3% sequentially to RMB 166 million.

  • Shareholders' equity-to-asset ratio increased to 64% from 57% sequentially.

Concerns

5

  • Loan origination volume declined 70.2% year-over-year and 20.5% sequentially to RMB 11.63 billion.

  • Active borrowers decreased 74.8% year-over-year and 24.7% sequentially to 720,258.

  • Outstanding loan balance declined 61.5% year-over-year and 29.2% sequentially to RMB 24.97 billion.

  • Total net revenue declined 56.3% year-over-year and 15.5% sequentially to RMB 993.6 million.

  • Delinquency rates remain well above prior year levels (e.g., 31-60 day: 1.73% vs 1.16% YoY; 91-180 day: 9.09% vs 2.91% YoY).

Guidance & targets

CategoryTargetConfidence
Quantitative guidance for Q3 FY26
Not providing quantitative guidance
high materiality
Low

XYF operating KPIs by quarter

XYF operating KPIs stated on its earnings calls, by fiscal quarter
KPI Mar 2026 Q1 FY26This call Jun 2026 Q2 FY26Change vs prior quarter
Loan origination volume
14.63B CNY During the quarter, we facilitated and originated RMB 14.63 billion in loans, a decline of 58.4% year-over-year and 35.8% sequentially from the fourth quarter. Source transcript
11.63B CNY During the quarter, we facilitated and originated RMB 11.63 billion in loans, a decline of 70.2% year-over-year and 20.5% sequentially from the first quarter. Source transcript
-20.5%
Active borrowers
~956.52K We served approximately 956,520 active borrowers, down 60.6% year-over-year and 43.5% from the prior quarter. Source transcript
~720.258K From a volume standpoint, we served approximately 720,258 active borrowers in the quarter, down 74.8% year-over-year and 24.7% from the prior quarter. Source transcript
—
Loans facilitated
~1.25M We facilitated approximately 1.25 million loans during the period with an average loan size of RMB 11,741 per transaction. Source transcript
~910K We facilitated approximately 0.91 million loans during the period. Source transcript
—
Average loan size
11.741K CNY We facilitated approximately 1.25 million loans during the period with an average loan size of RMB 11,741 per transaction. Source transcript
12.712K CNY The average loan amount per transaction rose to RMB 12,712, up 8.3% from the prior quarter and 21.3% year-over-year, reflecting a shift in transaction mix toward higher-quality borrowers. Source transcript
+8.3%
Outstanding loan balance
35.3B CNY Outstanding loan balance at the quarter end stood at RMB 35.3 billion, a decline of 39.6% from the same period of 2025. Source transcript
24.97B CNY Outstanding loan balance at the quarter end stood at RMB 24.97 billion, a decline of 61.5% from the same period of 2025 and 29.2% from the year of the first quarter -- from the end of the first quarter. Source transcript
-29.3%
31- to 60-day delinquency rate
2.61% As of March 31, our 31- to 60-day delinquency rate was 2.61% compared with 2.9% at the end of Q4 2025 and 1.25% as of the same period of 2025. Source transcript
1.73% As of June 30, our 31- to 60-day delinquency rate was 1.73%, compared with 2.61% at the end of Q1 2026 and 1.16% as of the same period of 2025. Source transcript
-0.9 pt

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Challenging operating conditions Current quarter and ongoing

Loan origination volume declined 70.2% YoY and 20.5% QoQ to RMB 11.63 billion; total net revenue declined 56.3% YoY and 15.5% QoQ to RMB 993.6 million.

Mitigation:Maintaining disciplined operating approach, prioritizing credit quality, liquidity, and balance sheet strength; rigorous cost control.

Elevated delinquency rates from older vintages Ongoing

91-180 day delinquency rate remained elevated at 9.09% (vs 2.91% YoY) as earlier delinquency balances continue to season through the portfolio.

Mitigation:Tighter underwriting standards applied to recent vintages; additional resources deployed in collections; maintaining conservative stance until improvement proves durable.

Material uncertainties in the operating environment Next quarter

No quantitative guidance provided for Q3 FY26.

Mitigation:Focus on capital preservation, disciplined origination, rigorous cost control, and balance sheet protection; will resume guidance when visibility improves.

Unreturned guarantee money from funding institution Past due, currently accounted for

RMB 95.3 million provision for credit losses for deposits and other financial assets.

Mitigation:Took a cautious accounting approach to write off the amount; business with the institution is finished.

What to watch in Q3 FY26

Delinquency rates (31-60 day and 91-180 day)

next quarter
Current 31-60 day: 1.73%; 91-180 day: 9.09%
Target Continued sequential improvement, below prior year levels

Why it matters

Key indicator of credit quality stabilization and effectiveness of tighter underwriting.

Credit trends showed encouraging sequential improvement in the second quarter, although overall conditions remain challenging... We are not declaring victory on credit. We are maintaining the same conservative stance until the improvement proves durable.

Q&A highlights

Given the tangible book value is over USD 20 per ADS, why doesn't the company go private?

Management explained that being a listed company in China is a privilege, and going private would make it difficult to re-list overseas, especially for fintech companies, due to government approval requirements. They noted that Chinese companies generally prefer to remain listed in the U.S.

“In China, being a listed company is kind of a privilege and a special status. If we privatize, we might lose the opportunity for current business to be listed again because if you want -- if a Chinese-based company tries to be listed overseas, you need to get approval from the government.”

asked by Brian Guard · answered by Fuya Zheng

2 min read 6 chapters

Detailed narrative

Operational Strategy and Volume Trends

X Financial continued its disciplined operating approach in Q2 FY26, prioritizing credit quality, liquidity, and balance sheet strength over near-term origination volume. This strategy resulted in a facilitated loan volume of RMB 11.63 billion, marking a 70.2% year-over-year and 20.5% sequential decline. The average loan amount per transaction rose to RMB 12,712, an 8.3% sequential and 21.3% year-over-year increase, indicating a strategic shift towards higher-quality borrowers. Active borrowers decreased to 720,258, down 74.8% year-over-year and 24.7% sequentially.

Credit Quality Improvement

The company reported encouraging sequential improvements in credit trends, with the 31-60 day delinquency rate falling to 1.73% from 2.61% in Q1 FY26, and the 91-180 day delinquency rate improving to 9.09% from 9.95% in Q1 FY26. These improvements are attributed to tighter underwriting standards applied to recent loan vintages and enhanced collection efforts. Despite these sequential gains, both delinquency rates remain significantly above prior year levels, and management maintains a conservative stance, not declaring victory until the improvement proves durable.

Financial Performance Overview

Total net revenue for Q2 FY26 was RMB 993.6 million (USD 146.4 million), representing a 56.3% year-over-year and 15.5% sequential decline, primarily driven by lower loan facilitation volumes. Despite the revenue decline, income from operations increased 38.6% sequentially to RMB 194.9 million (USD 28.7 million), and the operating margin improved to 19.6% from 12% in the prior quarter. Net income was RMB 47 million (USD 6.9 million), up 23.8% sequentially, and non-GAAP adjusted net income rose 104.3% sequentially to RMB 166 million.

Balance Sheet and Liquidity

X Financial's balance sheet remains strongly capitalized, with total assets of approximately RMB 12.1 billion and shareholders' equity of approximately RMB 7.8 billion at the end of the quarter. This resulted in an equity-to-asset ratio of approximately 64%, an increase from 57% at the end of Q1 FY26. The company reported total cash, including restricted cash, of approximately RMB 2 billion, indicating ample liquidity to navigate the current environment.

Capital Allocation and Shareholder Returns

The company continued its share repurchase program, repurchasing approximately 2.63 million ADSs for a total consideration of USD 12.49 million between January 1, 2026, and August 14, 2026. Approximately USD 35.5 million remains under the existing USD 100 million program, which is set to run through November 30, 2026. Additionally, the Board approved a cash dividend of USD 0.28 per ADS (equivalent to USD 0.0467 per ordinary share), payable around September 28, 2026, to shareholders of record as of September 10, 2026.

Regulatory Environment and Future Outlook

The regulatory environment continues to evolve, and X Financial is closely monitoring developments. Due to material uncertainties in the current operating environment, the company is not providing quantitative guidance for the third quarter. Management reiterated its unchanged priorities: capital preservation, disciplined origination, rigorous cost control, and protecting the balance sheet, with a commitment to resume providing guidance once visibility improves. The company is also actively exploring new business opportunities.

AI-generated summary of the company's earnings call. Not investment advice.