China Rapid Finance Reports 43% Revenue Drop, Says May Reinstate Stock Buybacks

The lending business of China Rapid Finance has suffered in the regulatory crackdown on China’s P2P sector.

Belinda Zhou
    Dec 16, 2019 4:00 PM  PT
China Rapid Finance Reports 43% Revenue Drop, Says May Reinstate Stock Buybacks
author: Belinda Zhou   

China Rapid Finance Ltd. (NYSE: XRF) on Monday reported declined revenue and narrowed losses for the first nine months, as well as a possible stock buyback program.

Shares in the Shanghai-based lending marketplace soared 13% early on after the announcement, fell below yesterday's close by midday and rebounded in the afternoon. On the day, the stock in China Rapid closed at $1.90 per American depositary share, up more than 3%.

The company said in a statement today that its revenue in the nine months through September was $32.5 million, down 43% from the corresponding period of 2018. Revenue from transaction and service fees dove 40% to $30.7 million year-over-year, according to the company's report. 

The company has exited the marketplace lending platform business in April, after tightened regulations in China's lending sector. The regulatory changes included a reduction of the outstanding loan balance, the number of lenders and the number of borrowers, which adversely affected China Rapid's business. 

XRF is looking to facilitate lending capital from licensed financial institutions to selected borrowers through its own systems or channels like its Chinese peers 360 Finance Inc. (Nasdaq: QFIN) and PPDAI Group Inc. (NYSE: PPDF.) 

For the first three quarters of 2019, China Rapid Finance reported a narrowed net loss of $22.8 million, or 34 cents per ADS, compared with $51.8 million, or 79 cents per ADS, during the same period last year.

The company said it has cut its expenses to keep healthy cash flow. Its cash and cash equivalents by September hit $15.5 million, up 24% from a quarter ago. XRF also said it may bring back its stock buyback program.

"The cost-cutting efforts we initiated in the first nine months are bearing fruit, as shown in our lower operating expense in the period, which resulted in cash flow improvements during the period," Steven Foo, the chief financial officer of the company, said in a statement today.

In May, the company failed to file its annual financial statement in a timely manner, as required by the New York Stock Exchange. It is also not in compliance with the market's listing standards in terms of maintaining the minimum average share price, it said. 

XRF undertook a change in the ADS-to-share ratio to increase the share price to obtain the NYSE approval, restructuring 10 ADSs into one.