Qudian (NYSE: QD) reported Q1 EPS of ($0.50), $0.24 worse than the analyst estimate of ($0.26). Revenue for the quarter came in at $135.3 million versus the consensus estimate of $169.87 million.

First Quarter 2020 Financial Highlights:

• Total revenues were RMB957.9 million (US$135.3 million), representing a decrease of 54.3% from the same period last year
• Recorded net loss of RMB486.5 million (US$68.7 million), or net loss per diluted ADS of RMB1.92 (US$0.27), compared to net income of RMB949.6 million in the same period last year
• Recorded Non-GAAP net loss[3] of RMB907.5 million (US$128.2 million), or Non-GAAP net loss per diluted ADS of RMB3.57 (US$0.50), compared to Non-GAAP net income of RMB974.3 million in the same period last year

First Quarter 2020 Operational Highlights:

• Total number of registered users as of March 31, 2020 reached 80.2 million, representing an increase of 9.5% from March 31, 2019
• Number of outstanding borrowers[1] from loan book business and transaction services business as of March 31, 2020 decreased by 7.1% to 5.7 million from 6.1 million as of December 31, 2019 as a result of the conservative and prudent strategy which the Company has deployed under the current credit environment
• Total outstanding loan balance from loan book business[2] decreased by 32.0% to RMB15.3 billion as of March 31, 2020, compared to the outstanding balance as of December 31, 2019; Total outstanding loan balance from transaction serviced on open platform decreased by 15.6% to RMB13.2 billion as of March 31, 2020, compared to the outstanding balance as of December 31, 2019
• Amount of transactions from loan book business for this quarter decreased by 52.8% to RMB4.4 billion from the fourth quarter of 2019; Amount of transactions from transaction serviced on open platform for this quarter decreased by 68.0% to RMB2.6 billion from the fourth quarter of 2019
• Weighted average loan tenure for our loan book business was 8.4 months for this quarter, compared with 10.9 months for the fourth quarter of 2019; Weighted average loan tenure for transaction serviced on open platform was 11.2 months for this quarter, compared with 13.8 months for the fourth quarter of 2019

"In the first quarter of 2020, we continued to navigate the challenging market environment with prudent execution of our operations," said Mr. Min Luo, Founder, Chairman and Chief Executive Officer of Qudian. "The COVID-19 pandemic accelerated macroeconomic and credit cycle downtrends, which further drove up our D1 delinquency rate[4] to approximately 20% in the first quarter. In light of the market headwinds, we maintained a conservative deleveraging strategy to protect our net assets. Consequently, the transaction volume in our loan book business was reduced by approximately 53% quarter-over-quarter, and helped us maintain our leverage ratio[5] at lower than 1.5x. Additionally, the amount of open platform transactions decreased by approximately 68% quarter-over-quarter as a result of stricter credit evaluation criteria by institutional funding partners on our open platform."

"As indicated in our fourth quarter earnings report, we are utilizing increased capital liquidity from prudent loan book operations for strategic investments in new areas of growth. To this end, in late March, we launched Wanlimu, a luxury e-commerce platform offering a wide spectrum of high-end products for consumers in China. We have a positive view on the tremendous demand and growth potential of China's luxury consumer market," Mr. Luo concluded.

"In March and April of 2020, we repurchased an aggregate principal amount of approximately US$170 million convertible bonds at attractive prices from the open market. This repurchase has improved the financial condition for the Company," said Ms. Sissi Zhu, Vice President of Investor Relations of Qudian.

"Looking forward, we expect a soft performance for the second quarter of 2020, given the continued negative economic impact of the COVID-19 pandemic, increasing amounts of guarantee liabilities and risk assurance liabilities and provisions, and our ongoing reduction of transaction volume to mitigate risk exposures. In addition, since our Wanlimu initiative is still in the early stages of development where substantial investment is required, we expect to incur a significant increase in inventory costs, and sales and marketing expenses in 2020. Despite the adverse operating environment, we are proactively executing our strategy to protect net assets and explore new growth opportunities," Ms. Zhu concluded.

For earnings history and earnings-related data on Qudian (QD) click here.