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LexinFintech Holdings Ltd. Reports Second Quarter 2019 Unaudited Financial Results

LexinFintech Holdings Ltd. Reports Second Quarter 2019 Unaudited Financial Results

SHENZHEN, China, Aug. 30, 2019 (GLOBE NEWSWIRE) -- LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (LX), a leading online consumer finance platform for educated young adults in China, today announced its unaudited financial results for the quarter ended June 30, 2019.

Second Quarter 2019 Operational Highlights:

  • Total outstanding principal balance of loans1 reached RMB40.6 billion as of June 30, 2019, representing an increase of 64.5% from RMB24.7 billion as of June 30, 2018.

  • Total loan originations1 in the second quarter of 2019 reached RMB26.0 billion, an increase of 57.0% from RMB16.6 billion in the second quarter of 2018.

  • The GMV2 of our e-commerce channel amounted to RMB1.9 billion, representing an increase of 24.1% from RMB1.5 billion in the second quarter of 2018.

  • The weighted average tenor of loans originated on our platform in the second quarter of 2019 was approximately 12.8 months. The weighted average APR3 was 25.3% for the second quarter of 2019.

  • Total number of registered users reached 50.2 million as of June 30, 2019, representing an increase of 71.7% from 29.2 million as of June 30, 2018; and users with credit line reached 13.5 million as of June 30, 2019, up by 50.7% from 8.9 million as of June 30, 2018.

  • Number of active users4 who used our loan products in the second quarter of 2019 reached 4.1 million, compared to 2.7 million in the second quarter of 2018. Number of new active users who used our loan products in the second quarter of 2019 was 1.3 million.

  • 90 day+ delinquency ratio5 was 1.49% as of June 30, 2019.

1 Outstanding principal balance and originations of loans represent the outstanding principal balance and originations of both on- and off-balance sheet loans.

2 GMV refers to the total value of transactions completed for products purchased on the e-commerce channel of our platform, net of returns.

3 APR is the annualized percentage rate of all-in interest costs and fees to the borrower over the net proceeds received by the borrower. Weighted average APR is weighted by loan origination amount for each loan originated in the period.

4Active users refer to, for a specified period, users who made at least one transaction during that period through our platform or through our third-party partners’ platforms using credit line granted by us.

5 90 day+ delinquency ratio refers to outstanding principal balance of on- and off-balance sheet loans that were 90 to 179 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. Loans that are charged off are not included in the delinquency rate calculation. The Company does not distinguish on the basis of the on- or off-balance sheet treatment in monitoring the credit risks of borrowers and the delinquency status of loans.

Second Quarter 2019 Financial Highlights:

  • Total operating revenue reached RMB2.5 billion. Financial services income reached RMB1.5 billion, representing an increase of 8.1% from the second quarter of 2018. Loan facilitation and servicing fees in financial services income reached RMB1.2 billion, representing an increase of 148% from the second quarter of 2018.

  • Gross profit reached RMB1.1 billion, representing an increase of 26.6% from the second quarter of 2018.

  • Net income was RMB628 million, representing a decrease of 5.4% from the second quarter of 2018.

  • Non-GAAP EBIT6 was RMB776 million, representing an increase of 28.8% from the second quarter of 2018.

  • Adjusted net income6 was RMB671 million, representing a decrease of 4.3% from the second quarter of 2018. Adjusted net income per ADS6 was RMB3.69 on a fully diluted basis.

6 Non-GAAP EBIT, adjusted net income, adjusted net income per ordinary share and per ADS are non-GAAP financial measures. For more information on non-GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures Statement” and the tables captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

Restatement of unaudited financial results for the quarter ended March 31, 2019

In connection with the preparation of the Company’s unaudited condensed consolidated financial information for the quarter ended June 30, 2019, the Company identified an error that the revenue from financial services income was overstated by RMB129 million for the quarter ended March 31, 2019, as certain discounts and interests waived were not appropriately recorded due to unintentional use of incorrect system reports in connection with preparation of the financial statement adjustments for such discounts and waived interest. The Company has determined that the unaudited financial results for the quarter ended March 31, 2019 as previously reported in the press release of the first quarter of 2019 on May 17, 2019 (“Q1 2019 Press Release”) need to be restated. Immediately upon identifying the error, the Company undertook a review of relevant internal control processes and started to implement additional measures to address potential control deficiencies.

In addition, the Company recorded an out-of-period adjustment of RMB66.1 million to financial services income for the quarter ended March 31, 2019, to correct the cumulative effect of errors in recording discounts and interests waived in the periods prior to December 31, 2018. The out-of-period adjustment primarily resulted in a decrease of RMB63.6 million of interest and financial services income and other revenues, and financing receivables, respectively. The Company has concluded that this out-of-period adjustment was not material to previously reported financial statements nor to current or estimated full year fiscal 2019 results, and recorded the out-of-period adjustment in the restated unaudited financial results for the quarter ended March 31, 2019.

As a result, the unaudited financial results for the quarter ended March 31, 2019 have been restated from the amounts previously reported in the Q1 2019 Press Release.

The following main items in the Company’s unaudited condensed consolidated statement of operations and of comprehensive income, and unaudited reconciliations of GAAP and Non-GAAP results for the quarter ended March 31, 2019 were restated. The amounts under the heading “As Reported” reflect the originally reported results. The amounts under the heading “As Restated” reflect the Company’s restated results after this restatement.

  For the Three Months Ended March 31, 2019
(In thousands) As Reported   As Restated
  RMB
  US$   RMB
  US$
Interest and financial services income and other revenues 379,236     56,508     309,065     45,021  
Loan facilitation and servicing fees 910,562     135,678     785,837     114,470  
Financial services income 1,289,798     192,186     1,094,902     159,491  
Provision for credit losses of contract assets and service fees receivable (22,461 )   (3,347 )   (18,241 )   (2,657 )
Income before income tax expense 700,519     104,379     509,843     74,271  
Income tax expense (117,535 )   (17,513 )   (85,543 )   (12,460 )
Net income 582,984     86,866     424,300     61,811  
Adjusted net income 622,391     92,738     463,707     67,551  
Non-GAAP EBIT 742,384     110,617     551,708     80,369  
Net income per ordinary share        
Basic 1.66     0.25     1.21     0.18  
Diluted 1.61     0.24     1.17     0.17  
Net income per ADS        
Basic 3.32     0.49     2.41     0.35  
Diluted 3.22     0.48     2.35     0.34  

The following main items in the Company’s unaudited condensed consolidated balance sheet as of March 31, 2019 were also restated:

  As of March 31, 2019
(In thousands) As Reported   As Restated
  RMB   US$   RMB   US$
Short-term financing receivables, net 4,027,899   600,176   3,957,728   576,508
Short-term contract assets and service fees receivable, net 1,142,136   170,184   1,021,631   148,817
Total current assets 9,922,603   1,478,515   9,731,927   1,417,615
Deferred tax liabilities 167,071   24,894   135,079   19,676
Retained earnings 2,174,880   324,067   2,016,196   293,694

For more details, please see Appendix I- Restated unaudited financial results for the quarter ended March 31, 2019.

Unless otherwise indicated, the financial figures for the quarter ended March 31, 2019 in the following paragraphs give effect to the restatement described above.

“In spite of the changes in the industry, we continue to grow at a rapid pace, thanks to our strong funding pipeline, highly compliant operations, and advanced financial technology.” said Mr. Jay Wenjie Xiao, Lexin’s chairman and chief executive officer. “I am pleased to announce that we were once again able to deliver another quarter of strong growth for our shareholders.” 

“We continue to lead the industry in the number of funding partners,” continued Mr. Xiao. “Our total number of institutional funding partners continues to grow, and we have more than sufficient funding from our institutional funding partners to meet our loan facilitation targets for the year.”

“Our efforts to continuously stay ahead of the regulatory curve and maintain our strong growth in spite of changing regulatory conditions are now paying off.” said Mr. Craig Yan Zeng, Lexin’s chief financial officer. “In the second quarter, Lexin’s gross profit reached RMB1.1 billion and our non-GAAP EBIT reached RMB776 million, representing an increase of 26.6% and 28.8% from the same period in 2018. Thanks to our strong institutional funding, we're now able to raise our loan origination guidance for the year.” 

“Credit performance and credit quality continues to be strong,” said Mr. Ryan Huanian Liu, Lexin’s chief risk officer. “Our vintage charge-off rate7 is just over 2.0%, and our 90 day+ delinquency rate was 1.49% as of June 30, 2019. We fully expect the strong performance to continue in the future.”

7 Vintage charge-off rate refers to, with respect to on- and off-balance sheet loans originated during a specified time period, which we refer to as a vintage, the total outstanding principal balance of the loans that are charged off during a specified period, divided by the total initial principal of the loans originated in such vintage.

Second Quarter 2019 Financial Results:

Operating revenue increased from RMB2.0 billion in the second quarter of 2018 to RMB2.5 billion in the second quarter of 2019. This increase in operating revenues was due to the increase in online direct sales revenue and financial services income for the quarter, driven by continuing increases in the number of active users on our platform.

Online direct sales increased by 58.8% from RMB583 million in the second quarter of 2018 to RMB925 million in the second quarter of 2019. This increase was primarily due to the significant increase in the number of orders as a result of several sales promotional events during the quarter.

Financial services income increased by 8.1% from RMB1.4 billion in the second quarter of 2018 to RMB1.5 billion in the second quarter of 2019. This increase was primarily contributed by the increase in the loan facilitation and servicing fees, partially offset by the decrease in interest and financial services income and other revenues.

Loan facilitation and servicing fees increased by 148% from RMB487 million in the second quarter of 2018 to RMB1.2 billion in the second quarter of 2019. This increase was primarily due to significant increase in off-balance sheet loans originated as a result of the continuing growth of our business as well as business model adjustments made to Juzi Licai in the second quarter of 2018. Under the adjusted business model, we act as an intermediary between the borrowers and the individual investors. Based on the assessment of the accounting impact in respect of the adjusted business model, all new loans funded by individual investors on Juzi Licai under this new business model have been accounted for as off-balance sheet loans accordingly, commencing from late April 2018. Prior to that, loans funded by individual investors on Juzi Licai were accounted for as on-balance sheet loans. As a result, revenues generated from loan facilitation and servicing fees increased significantly.

Interest and financial services income and other revenues decreased by 65.9% from RMB922 million in the second quarter of 2018 to RMB314 million in the second quarter of 2019 due to a decrease in on-balance sheet loans originated on our platform as a result of the aforementioned business model adjustments in the second quarter of 2018.

Cost of sales increased by 54.8% from RMB598 million in the second quarter of 2018 to RMB925 million in the second quarter of 2019, which is consistent with the increase of online direct sales revenue.

Funding cost decreased by 54.2% from RMB263 million in the second quarter of 2018 to RMB121 million in the second quarter of 2019, which is consistent with the decrease of the interest and financial services income and other revenues.

Processing and servicing cost increased by 94.3% from RMB71.2 million in the second quarter of 2018 to RMB138 million in the second quarter of 2019. This increase was primarily due to an increase in fees to third-party payment platforms, an increase in salaries and personnel related costs and an increase in credit assessment cost.

Provision for credit losses of financing receivables decreased by 21.1% from RMB232 million in the second quarter of 2018 to RMB183 million in the second quarter of 2019, which is consistent with the decrease in the on-balance sheet loans originated on our platform. The Company is continuing to improve its credit assessment and risk management capabilities to enhance its collection efforts while maintaining credit risks at a reasonable level.

Gross profit increased by 26.6% from RMB868 million in the second quarter of 2018 to RMB1.1 billion in the second quarter of 2019. The significant increase in the gross profit is primarily due to the significant increase of loan facilitation and servicing fees generated from the off-balance sheet loans.

Sales and marketing expenses increased by 119% from RMB144 million in the second quarter of 2018 to RMB316 million in the second quarter of 2019. This increase was primarily due to an increase in online promotional fees and advertising costs and an increase in salaries and personnel related costs.

Research and development expenses increased by 27.0% from RMB78.5 million in the second quarter of 2018 to RMB99.7 million in the second quarter of 2019. This increase was primarily due to an increase in salaries and personnel related costs.

General and administrative expenses increased by 35.1% from RMB69.6 million in the second quarter of 2018 to RMB94.1 million in the second quarter of 2019. This increase was primarily due to an increase in share-based compensation expenses allocated to general and administrative expenses, and an increase in salaries and personnel related costs.

Gain on guarantee liabilities for the second quarter of 2019 was RMB22.7 million, which resulted from releasing of liabilities through our performance of the guarantee for loans funded by individual investors on Juzi Licai that are covered by risk safeguard scheme.

Change in fair value of financial guarantee derivatives increased by 438% from RMB21.2 million in the second quarter of 2018 to RMB114 million in the second quarter of 2019. The increase was primarily due to increasing realization of gains through our performance of the guarantee, which is consistent with the continuing increases of underlying off-balance sheet loans originated on our platform since early 2018.

Income tax expense for the second quarter of 2019 was RMB106 million, compared to income tax benefit of RMB105 million in the second quarter of 2018. The Company’s PRC subsidiaries completed 2017 annual tax filings with relevant tax authorities in May 2018. The tax filing result provided additional insights as to the recoverability of the deferred tax assets arising from provision for credit losses. Accordingly, a valuation allowance of RMB193 million previously recognized as of December 31, 2017 was reversed in the same period of 2018.

Net income for the second quarter of 2019 was RMB628 million, representing a decrease of 5.4% from RMB664 million in the second quarter of 2018.

Adjusted net income for the second quarter of 2019 was RMB671 million, representing a decrease of 4.3% from RMB701 million in the second quarter of 2018.

Please click here to view our vintage curve:

http://ml.globenewswire.com/Resource/Download/3f5225aa-098c-4c78-93ed-348a26d3c500

Outlook

Based on Lexin’s preliminary assessment of the current market conditions, the Company expects total loan originations for the fiscal year 2019 to exceed RMB115 billion. This is Lexin’s current and preliminary view, which is subject to changes and uncertainties.

Conference Call

The Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern time on August 30, 2019 (8:00 PM Beijing/Hong Kong time on August 30, 2019).

Dial-in details for the earnings conference call are as follows:

United States: 1 845 675 0437 or 1 866 519 4004
International: 65 6713 5090
Hong Kong: 800 906 601 or 852 3018 6771
China: 400 6208 038 or 800 8190 121

Participants should dial-in at least 5 minutes before the scheduled start time and use the following passcode:

Passcode: 3599484

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.lexin.com.

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until September 6, 2019, by dialing the following telephone numbers:

United States: 1 855 452 5696 or 1 646 254 3697
International: 61 2 8199 0299
Replay Access Code: 3599484

About LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd. is a leading online consumer finance platform for educated young adults in China. As one of China’s leading financial technology companies, Lexin integrates its e-commerce-driven installment finance platform, Fenqile, with advanced risk management technologies, the Company’s Dingsheng asset distribution technology platform, and the Company’s Juzi Licai online investment platform for individual investors, to create a comprehensive consumer finance ecosystem. The Company utilizes technologies including big data, cloud computing and artificial intelligence to enable the near-instantaneous matching of user funding requests with offers from the Company’s more than 30 funding partners, which include commercial banks, consumer finance companies, and other licensed financial institutions.

For more information, please visit http://ir.lexin.com

To follow us on Twitter, please go to: https://twitter.com/LexinFintech.

Use of Non-GAAP Financial Measures Statement

In evaluating our business, we consider and use adjusted net income, non-GAAP EBIT, adjusted net income per ordinary share and per ADS, four non-GAAP measures, as supplemental measures to review and assess our operating performance. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define adjusted net income as net income excluding share-based compensation expenses, investment-related impairment, and investment loss and we define non-GAAP EBIT as net income excluding income tax (benefit)/expense, share-based compensation expenses, interest expense/(income), net, investment-related impairment, and investment loss.

We present these non-GAAP financial measures because it is used by our management to evaluate our operating performance and formulate business plans. Adjusted net income enables our management to assess our operating results without considering the impact of share-based compensation expenses, investment-related impairment and investment loss. Non-GAAP EBIT, on the other hand, enables our management to assess our operating results without considering the impact of income tax (benefit)/expense, share-based compensation expenses, interest expense/(income), net, investment-related impairment, and investment loss. We also believe that the use of these non-GAAP financial measures facilitate investors’ assessment of our operating performance. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP.

These non-GAAP financial measures have limitations as an analytical tool. One of the key limitations of using adjusted net income and non-GAAP EBIT is that they do not reflect all items of income and expense that affect our operations. Share-based compensation expenses, income tax (benefit)/expense, interest expense/(income), net, investment-related impairment, and investment loss have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted net income and non-GAAP EBIT. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling the non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure, which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information Statement

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.8650 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 28, 2019. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Lexin’s beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the expectation of its collection efficiency and delinquency, business outlook and quotations from management in this announcement, contain forward-looking statements. Lexin may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Lexin’s goal and strategies; Lexin’s expansion plans; Lexin’s future business development, financial condition and results of operations; Lexin’s expectation regarding demand for, and market acceptance of, its credit and investment management products; Lexin’s expectations regarding keeping and strengthening its relationship with borrowers, institutional funding partners, merchandise suppliers and other parties it collaborates with; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Lexin’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Lexin does not undertake any obligation to update any forward-looking statement, except as required under applicable law. 

For investor and media inquiries, please contact:

LexinFintech Holdings Ltd.

IR inquiries:

Tony Hung

Tel: +86 (755) 3637-8888 ext. 6258

E-mail: IR@lexin.com

Media inquiries:

Limin Chen

Tel: +86 (755) 3637-8888 ext. 6993

E-mail: liminchen@lexin.com

SOURCE LexinFintech Holdings Ltd.


LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except for share and per share data) As of
December 31, 2018 June 30, 2019
  RMB RMB US$
ASSETS      
Current assets      
Cash and cash equivalents 1,148,292     1,059,735     154,368  
Restricted cash 1,266,536     1,335,150     194,487  
Restricted time deposits 344,212     784,904     114,334  
Short‑term financing receivables, net 5,140,634     3,570,430     520,092  
Accrued interest receivable 82,943     57,660     8,399  
Prepaid expenses and other current assets 923,827     1,607,080     234,098  
Amounts due from related parties -     2,797     407  
Risk safeguard fund receivable, net 395,025     630,337     91,819  
Contract assets and service fees receivable, net 946,293     1,509,450     219,876  
Inventories, net 57,196     101,050     14,720  
Total current assets 10,304,958     10,658,593     1,552,600  
                 
Non‑current assets      
Restricted cash 82,306     122,000     17,771  
Restricted time deposits -     25,096     3,656  
Long‑term financing receivables, net 1,283,036     958,629     139,640  
Risk safeguard fund receivable, net 116,208     154,626     22,524  
Contract assets and service fees receivable, net 291,784     315,351     45,936  
Property, equipment and software, net 82,420     92,112     13,418  
Long‑term investments 186,073     226,800     33,037  
Deferred tax assets 94,598     126,764     18,465  
Other assets 29,192     160,490     23,378  
Total non‑current assets 2,165,617     2,181,868     317,825  
TOTAL ASSETS 12,470,575     12,840,461     1,870,425  
                 
       
LIABILITIES      
Current liabilities      
Accounts payable 135,848     249,010     36,272  
Amounts due to related parties 14,569     20,736     3,021  
Short‑term borrowings 438,010     664,500     96,795  
Short‑term funding debts 4,646,041     3,551,661     517,358  
Accrued interest payable 182,280     91,050     13,263  
Risk safeguard fund payable 456,276     672,367     97,941  
Accrued expenses and other current liabilities 2,145,689     2,050,889     298,749  
Total current liabilities 8,018,713     7,300,213     1,063,399  
                 
Non‑current liabilities      
Long‑term funding debts 157,887     25,773     3,754  
Deferred tax liabilities 187,183     229,168     33,382  
Other long-term liabilities -     43,760     6,374  
Total non‑current liabilities 345,070     298,701     43,510  
TOTAL LIABILITIES 8,363,783     7,598,914     1,106,909  
                 
       
SHAREHOLDERS’ EQUITY      
Class A Ordinary Shares 160     166     24  
Class B Ordinary Shares 66     64     9  
Additional paid‑in capital 2,328,716     2,410,506     351,130  
Statutory reserves 200,262     200,262     29,171  
Accumulated other comprehensive loss (14,308 )   (13,611 )   (1,983 )
Retained earnings 1,591,896     2,644,160     385,165  
TOTAL SHAREHOLDERS’ EQUITY 4,106,792     5,241,547     763,516  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 12,470,575     12,840,461     1,870,425  
                 



LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Statements of Operations

null
(In thousands, except for share and per share data) For the Three Months Ended For the Six Months Ended June 30,
  June 30, 2018 June 30, 2019 2018     2019  
  RMB RMB US$ RMB RMB US$
Operating revenue:            
Online direct sales 582,906     925,418     134,802     1,125,805     1,550,327     225,831  
Services and others 47,452     44,190     6,437     77,546     98,889     14,405  
Online direct sales and services income 630,358     969,608     141,239     1,203,351     1,649,216     240,236  
Interest and financial services income and other revenues* 921,833     314,248     45,775     1,756,516     623,313     90,796  
Loan facilitation and servicing fees* 487,226     1,209,084     176,123     693,268     1,994,921     290,593  
Financial services income* 1,409,059     1,523,332     221,898     2,449,784     2,618,234     381,389  
Total operating revenue* 2,039,417     2,492,940     363,137     3,653,135     4,267,450     621,625  
                                   
Operating cost:            
Cost of sales (597,737 )   (925,454 )   (134,808 )   (1,146,460 )   (1,553,456 )   (226,286 )
Funding cost (263,311 )   (120,664 )   (17,577 )   (520,337 )   (262,936 )   (38,301 )
Processing and servicing cost (71,161 )   (138,279 )   (20,143 )   (137,095 )   (254,998 )   (37,145 )
Provision for credit losses of financing receivables (232,125 )   (183,203 )   (26,687 )   (518,916 )   (335,720 )   (48,903 )
Provision for credit losses of contract assets and service fees receivable* (7,307 )   (26,423 )   (3,849 )   (10,930 )   (44,664 )   (6,506 )
Total operating cost* (1,171,641 )   (1,394,023 )   (203,064 )   (2,333,738 )   (2,451,774 )   (357,141 )
Gross profit* 867,776     1,098,917     160,073     1,319,397     1,815,676     264,484  
                                   
 

Operating expenses:
           
Sales and marketing expenses (144,339 )   (315,578 )   (45,969 )   (245,849 )   (510,761 )   (74,401 )
Research and development expenses (78,518 )   (99,691 )   (14,522 )   (146,611 )   (193,539 )   (28,192 )
General and administrative expenses (69,638 )   (94,082 )   (13,705 )   (128,279 )   (181,292 )   (26,408 )
Total operating expenses (292,495 )   (509,351 )   (74,196 )   (520,739 )   (885,592 )   (129,001 )
(Loss)/gain on guarantee liabilities, net (20,128 )   22,673     3,303     (20,128 )   126,350     18,405  
Interest (expense)/income, net (6,793 )   1,309     191     (10,432 )   (1,149 )   (167 )
Investment related impairment (4,841 )   -     -     (4,841 )   -     -  
Investment loss -     (1,764 )   (257 )   -     (1,764 )   (257 )
Change in fair value of financial guarantee derivatives, net 21,249     114,227     16,639     13,174     164,723     23,995  
Others, net (6,286 )   8,372     1,220     1,339     25,982     3,785  
Income before income tax expense* 558,482     734,383     106,973     777,770     1,244,226     181,244  
Income tax benefit/(expense)* 105,320     (106,419 )   (15,502 )   63,892     (191,962 )   (27,962 )
Net income* 663,802     627,964     91,471     841,662     1,052,264     153,282  
                                   
             
Net income per ordinary share*            
Basic 2.00     1.77     0.26     2.54     2.98     0.43  
Diluted 1.83     1.73     0.25     2.33     2.90     0.42  
             
Net income per ADS*            
Basic 4.00     3.54     0.52     5.08     5.96     0.87  
Diluted 3.67     3.46     0.50     4.65     5.81     0.85  
             
Weighted average number of ordinary shares outstanding            
Basic 332,208,249     355,026,635