9F Reports Decline in Revenue, Income; Focus on Diversification

The digital financial account platform has been negatively affected by the ongoing uncertainty in China's lending sector, but it stays optimistic about its expansion and diversification strategy.

Anthony Russo
    Sep 27, 2019 10:45 AM  PT
9F Reports Decline in Revenue, Income; Focus on Diversification
author: Anthony Russo   

9F Inc. (Nasdaq: JFU) reported on Friday a decline in loan facilitation and post-origination services, which negatively impacted its revenue in the second quarter. In response, the company's stock slid 6% on Friday, to $10.27 per share.

The digital financial account platform, based in Beijing, said in a statement today that its revenue in the three months through June was $152.4 million, down 58% year-over-year. Net income was $25 million, or 11 cents per diluted ordinary share, a drop of 87% from a year ago.

9F said its loan origination volume in the second quarter declined 41% to 9.8 billion yuan. Of those loans, 58% were funded by institutional partners, it reported.

Meanwhile, the number of active borrowers during the second quarter declined 38% year-over-year to 600,000, according to the report. However, the total outstanding loan balance as of June 30 was 59.2 billion yuan, up 9% from a year ago.

Lei Sun, the chairman and chief executive officer of 9F, said the "uncertain regulatory environment" continues to affect the entire fintech industry in China. He noted that the company is exploring diverse sources of revenue for future growth.

"We will continue to invest and acquire licensed financial institutions to diversify our portfolio of services and create synergies," Sun said in a statement on Friday.

He added, "We strategically acquired a stake in a licensed consumer finance company in China which will complement our existing consumer credit loan business and diversify the products we have on offer. We are also actively obtaining financial licenses in overseas markets such as Southeast Asia where we can leverage and apply our extensive experience and operational expertise to new high-growth markets,"

Earlier this week, 9F announced it made a deal to acquire a stake in Hubei Consumer Finance Co. that would make it the second-largest shareholder in the company.

"It is another step in our strategy to develop stronger relationships with financial institutions and will expand our ecosystem deeper into the consumer finance sector," Sun said in a statement at the time.

9F completed its initial public offering at Times Square in August, raising $84.6 million for 8.9 million of its American depositary shares offered at $9.50 apiece. Since then, shares in the company have traded between $9.41 and $14.88 per ADS.