Qudian (QD) Reports Q4 Revenue of $59.5M, EPS of ($0.04)

Qudian Inc. (NYSE: QD), a leading technology platform empowering the enhancement of the online consumer finance experience in China, today announced its unaudited financial results for the quarter and full year ended December 31, 2021.

Fourth Quarter 2021 Operational Highlights:

• Number of outstanding borrowers[1] from loan book business as of December 31, 2021 decreased by 2.7% to 2.7 million from 2.8 million as of September 30, 2021, as a result of the Company's deployment of a conservative and prudent strategy
• Total outstanding loan balance from loan book business[2] decreased by 13.7% to RMB2.6 billion as of December 31, 2021 from RMB3.0 billion as of September 30, 2021
• Amount of transactions from loan book business for this quarter decreased by 12.0% to RMB3.0 billion from the third quarter of 2021
• Weighted average loan tenure for our loan book business was 3.9 months for this quarter, compared to 4.3 months for the third quarter of 2021

Fourth Quarter 2021 Financial Highlights:

• Total revenues were RMB378.9 million (US$59.5 million), compared to RMB713.6 million for the same period of last year
• Net loss attributable to Qudian's shareholders was RMB65.1 million (US$10.2 million), compared to an income of RMB673.9 million for the same period of last year, or net loss of RMB0.26 (US$0.04) per diluted ADS
• Non-GAAP net loss attributable to Qudian's shareholders[3] was RMB59.3 million (US$9.3 million), compared to income of RMB683.5 million for the same period of last year, or Non-GAAP net loss of RMB0.23 (US$0.04) per diluted ADS

Full Year 2021 Financial Highlights:

• Total revenues were RMB1,654.0 million (US$259.6 million) for 2021, representing a decrease of 55.2% from 2020, primarily due to the decrease in the amount of transactions

• • Financing income decreased by 40.3% to RMB1,255.5 million (US$197.0 million) from RMB2,102.7 million for 2020 as a result of the decrease in the average on-balance sheet loan balance
  • Transaction services fee and other related income was RMB151.7 million (US$23.8 million) for 2021, compared to a loss of RMB136.5 million for 2020

• Net income attributable to Qudian's shareholders decreased by 38.6% year-on-year to RMB589.1 million (US$92.4 million), or RMB2.27 (US$0.36) per diluted ADS
• Non-GAAP net income attributable to Qudian's shareholders [3] increased by 60.2% year-on-year to RMB612.4 million (US$96.1 million), or RMB2.36 (US$0.37) per diluted ADS

"In light of the fast-evolving market dynamics, we maintained prudent operations in our cash credit business in the fourth quarter, closing out 2021 with steady performance. We generated approximately RMB3.0 billion of transactions from our loan book business with stable asset quality during the fourth quarter," said Mr. Min Luo, Founder, Chairman and Chief Executive Officer of Qudian. "With respect to WLM KIDS, we decided to significantly downsize the business after cautiously re-evaluating the impact of recurrent pandemic outbreaks and regulations concerning the education industry. We believe this decision is in the best interest of the Company and our shareholders. We will continue to closely monitor the shifting regulatory environment and remain vigilant in our credit loan business operations as we strive to bolster the long-term sustainability of our business."

"During the fourth quarter, we remained dedicated to controlling credit risk and continued to shift toward high-quality borrowers. As a result, we have stabilized our D1 delinquency rate[4] at approximately 5% as of the end of February 2022. Looking ahead, supported by our robust balance sheet, we are well-positioned to safeguard the interests of our shareholders and stay flexible in our strategic adjustments," said Ms. Sissi Zhu, Vice President of Investor Relations of Qudian.

Fourth Quarter Financial Results

Total revenues were RMB378.9 million (US$59.5 million), representing a decrease of 46.9% from RMB713.6 million for the fourth quarter of 2020.

Financing income totaled RMB296.4 million (US$46.5 million), representing a decrease of 28.0% from RMB411.8 million for the fourth quarter of 2020, as a result of the decrease in the average on-balance sheet loan balance.

Loan facilitation income and other related income decreased by 90.4% to RMB9.9 million (US$1.6 million) from RMB103.2 million for the fourth quarter of 2020, as a result of the reduction in transaction volume of off-balance sheet loans during this quarter.

Transaction services fee and other related income increased to RMB41.6 million (US$6.5 million) from RMB3.1 million for the fourth quarter of 2020, mainly as a result of the reassessment of variable consideration.

Sales income and others decreased to RMB7.2 million (US$1.1 million) from RMB161.5 million for the fourth quarter of 2020, mainly due to the decrease in sales related to the Wanlimu e-commerce platform, which we are in the process of winding down.

Sales commission fee decreased by 49.0% to RMB7.5 million (US$1.2 million) from RMB14.8 million for the fourth quarter of 2020, due to the decrease in the amount of merchandise credit transactions.

Total operating costs and expenses increased to RMB603.7 million (US$94.7 million) from RMB16.7 million for the fourth quarter of 2020.

Cost of revenues decreased by 81.0% to RMB38.3 million (US$6.0 million) from RMB201.6 million for the fourth quarter of 2020, primarily due to the decrease in cost of goods sold related to the Wanlimu e-commerce platform.

Sales and marketing expenses increased by 115.8% to RMB27.8 million (US$4.4 million) from RMB12.9 million for the fourth quarter of 2020, primarily due to the increase in staff salaries.

General and administrative expenses increased by 45.0% to RMB109.8 million (US$17.2 million) from RMB75.7 million for the fourth quarter of 2020, as a result of the increase in staff salaries primarily relating to our WLM Kids business.

Research and development expenses increased by 165.1% to RMB22.8 million (US$3.6 million) from RMB8.6 million for the fourth quarter of 2020, as a result of the increase in staff salaries.

Provision for receivables and other assets was RMB443.8 million (US$69.6 million), compared to a reversal of RMB75.6 million for the fourth quarter of 2020, as the results of the provision for our WLM Kids business, which we decided to downsize significantly.

As of December 31, 2021, the total balance of outstanding principal and financing service fee receivables for on-balance sheet transactions for which any installment payment was more than 30 calendar days past due was RMB154.1 million (US$24.2 million), and the balance of allowance for principal and financing service fee receivables at the end of the period was RMB267.0 million (US$41.9 million), indicating M1+ Delinquency Coverage Ratio of 1.7x.

The following charts display the "vintage charge-off rate." Total potential receivables at risk vintage charge-off rate refers to, with respect to on- and off-balance sheet transactions facilitated under the loan book business during a specified time period, the total potential outstanding principal balance of the transactions that are delinquent for more than 180 days up to twelve months after origination, divided by the total initial principal of the transactions facilitated in such vintage. Delinquencies may increase or decrease after such 12-month period.

Current receivables at risk vintage charge-off rate refers to, with respect to on- and off-balance sheet transactions facilitated under the loan book business during a specified time period, the actual outstanding principal balance of the transactions that are delinquent for more than 180 days up to twelve months after origination, divided by the total initial principal of the transactions facilitated in such vintage. Delinquencies may increase or decrease after such 12-month period.

Total potential receivables at risk M1+ delinquency rate by vintage refers to, with respect to on- and off-balance sheet transactions facilitated under the loan book business during a specified time period, the total potential outstanding principal balance of the transactions that are delinquent for more than 30 days up to twelve months after origination, divided by the total initial principal of the transactions facilitated in such vintage. Delinquencies may increase or decrease after such 12-month period.

Current receivables at risk M1+ delinquency rate by vintage refers to, with respect to on- and off-balance sheet transactions facilitated under the loan book business during a specified time period, the actual outstanding principal balance of the transactions that are delinquent for more than 30 days up to twelve months after origination, divided by the total initial principal of the transactions facilitated in such vintage. Delinquencies may increase or decrease after such 12-month period.

Loss from operations was RMB168.1 million (US$26.4 million), compared to income from operations of RMB746.6 million for the fourth quarter of 2020.

Net loss attributable to Qudian's shareholders was RMB65.1 million (US$10.2 million), or net loss of RMB0.26 (US$0.04) per diluted ADS.

Non-GAAP net loss attributable to Qudian's shareholders was RMB59.3 million (US$9.3 million), or Non-GAAP net loss of RMB0.23 (US$0.04) per diluted ADS.

Full Year 2021 Financial Results

Total revenues were RMB1,654.0 million (US$259.6 million), a decrease of 55.2% from RMB3,688.0 million for 2020.

Financing income totaled RMB1,255.5 million (US$197.0 million), a decrease of 40.3% from RMB2,102.7 million for 2020, as a result of the decrease in the average on-balance sheet loan balance.

Loan facilitation income and other related income decreased by 95.5% to RMB43.5 million (US$6.8 million) from RMB957.8 million for 2020, as a result of the decrease in the amount of off-balance sheet transactions.

Transaction services fee and other related income was RMB151.7 million (US$23.8 million), compared to a loss of RMB136.5 million for 2020, primarily due to the change in estimate for variable consideration for the transactions facilitated in the past years.

Sales income and others substantially decreased by 83.5% to RMB100.7 million (US$15.8 million) from RMB610.8 million for 2020, mainly due to the winding down of the Wanlimu e-commerce platform.

Sales commission fee decreased by 56.3% to RMB35.4 million (US$5.6 million) from RMB81.0 million for 2020, due to the decrease in the amount of merchandise credit transactions.

Total operating costs and expenses decreased by 67.5% to RMB1,029.5 million (US$161.6 million) from RMB3,165.7 million for 2020.

Cost of revenues decreased by 65.4% to RMB298.7 million (US$46.9 million) from RMB862.4 million for 2020, primarily due to the decrease in costs related to the Dabai Auto business and the decrease in cost of goods sold related to the Wanlimu e-commerce platform.

Sales and marketing expenses decreased by 56.6% to RMB127.4 million (US$20.0 million) from RMB293.3 million for 2020. The decrease was primarily due to marketing expenses incurred by the Wanlimu e-commerce platform.

General and administrative expenses increased by 55.0% to RMB443.3 million (US$69.6 million) from RMB285.9 million for 2020, as a result of the increase in staff salaries primarily relating to our WLM Kids business.

Research and development expenses decreased by 17.2% to RMB141.3 million (US$22.2 million) from RMB170.7 million for 2020. The decrease was primarily due to the decrease in staff salaries.

Provision for receivables and other assets decreased by 86.6% to RMB220.5 million (US$34.6 million) from RMB1,641.4 million for 2020. The decrease was primarily due to the decrease in past-due on-balance sheet outstanding principal receivables compared to 2020.

Income from operations decreased by 18.3% to RMB706.8 million (US$110.9 million) from RMB865.6million for 2020.

Net income attributable to Qudian's shareholders decreased by 38.6% to RMB589.1 million (US$92.4 million), or RMB2.27 (US$0.36) per diluted ADS.

Non-GAAP net income attributable to Qudian's shareholders increased by 60.2% to RMB612.4 million (US$96.1 million), or RMB2.36 (US$0.37) per diluted ADS.

Cash Flow

As of December 31, 2021, the Company had cash and cash equivalents of RMB2,065.5 million (US$324.1 million) and restricted cash of RMB177.9 million (US$27.9 million). Restricted cash mainly represents security deposits held in designated bank accounts for the guarantee of on-and-off balance sheet transactions. Such restricted cash is not available to fund the general liquidity needs of the Company.

For the fourth quarter of 2021, net cash provided by operating activities was RMB61.8 million (US$9.7 million), mainly due to the adjustment of provision for receivables and other assets. Net cash provided by investing activities was RMB210.2 million (US$33.0 million), mainly due to the net proceeds of short-term investments and partially offset by the payments of deposit pledged as collateral for derivative instruments. Net cash used in financing activities was RMB6.2 million (US$1.0 million), mainly due to the repurchase of convertible senior notes and payments of interest on convertible senior notes.

For the full year of 2021, net cash provided by operating activities was RMB922.1 million (US$144.7 million), mainly attributable to net income of RMB585.9 million (US$91.9 million) and the adjustment of provision for receivables and other assets of RMB220.5 million (US$34.6 million). Net cash used in investing activities was RMB246.6 million (US$38.7 million), mainly due to the payments of deposit pledged as collateral for derivative instruments. Net cash used in financing activities was RMB84.2 million (US$13.2 million), mainly due to the repurchases of convertible senior notes.

Update on Share Repurchase and Convertible Bond Repurchase

As of the date of this release, the Company has repurchased and cancelled a total principal amount of convertible senior notes of US$297.5 million. The Company has cumulatively completed total share repurchases of approximately US$574.0 million.

You May Also Be Interested In

• Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
• Is the global equity rally broadening? UBS weighs in
• S&P 500 may pull back before midterms, but Citi says buy the dip