Qudian Inc. Reports First Quarter 2021 Unaudited Financial Results

Qudian Inc. Reports First Quarter 2021 Unaudited Financial Results

XIAMEN, China, June 15, 2021 /PRNewswire/ — Qudian Inc. (“Qudian” or “the Company” or “We”) (NYSE: QD), a leading technology platform empowering the enhancement of online consumer finance experience in China, today announced its unaudited financial results for the quarter ended March 31, 2021.

First Quarter 2021 Operational Highlights:

  • Number of outstanding borrowers[1] from loan book business as of March 31, 2021 decreased by 8.0% to 3.0 million from 3.2 million as of December 31, 2020 as a result of the conservative and prudent strategy which the Company has deployed
  • Total outstanding loan balance from loan book business[2] decreased by 15.1% to RMB4.1 billion as of March 31, 2021, compared to the outstanding balance as of December 31, 2020
  • Amount of transactions from loan book business for this quarter decreased by 8.4% to RMB4.4 billion from the fourth quarter of 2020; Amount of transactions serviced on open platform for this quarter decreased by 15.2% to RMB210.4 million from the fourth quarter of 2020
  • Weighted average loan tenure for our loan book business was 4.5 months for this quarter, compared with 4.5 months for the fourth quarter of 2020; Weighted average loan tenure for transactions serviced on open platform was 6.7 months for this quarter, compared with 6.4 months for the fourth quarter of 2020

[1] Outstanding borrowers are borrowers who have outstanding loans from the Company’s loan book business as of a particular date.

[2] Includes (i) off and on balance sheet loans directly or indirectly funded by our institutional funding partners or our own capital, net of cumulative write-offs and (ii) does not include auto loans from Dabai Auto business.

First Quarter 2021 Financial Highlights:

  • Total revenues were RMB515.7 million (US$78.7 million), representing a decrease of 46.2% from the same period of last year
  • Net income attributable to Qudian’s shareholders were RMB478.4 million (US$73.0 million), compared to a loss of RMB486.5 million from the same period of last year, or RMB1.81 (US$0.28) per diluted ADS
  • Non-GAAP net income attributable to Qudian’s shareholders[3] were RMB488.3 million (US$74.5 million), compared to non-GAAP net loss attributable to Qudian’s shareholders of RMB907.5 million from the same period of last year, or RMB1.85 (US$0.28) per diluted ADS

 [3] For more information on this Non-GAAP financial measure, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

“In the first quarter of 2021, we continued to execute a prudent operational strategy related to our cash credit business amid an evolving regulatory environment, while making significant strides to advance our early childhood education business initiative,” said Mr. Min Luo, Founder, Chairman and Chief Executive Officer of Qudian. “Our stringent credit risk control measures further improved our asset quality, evidenced by the continued decrease of the D1 delinquency rate for our loan book business[4], which dropped to a normal level of less than 5% as of March 31. Importantly, our net assets increased to RMB12.4 billion at the end of the first quarter  with cash and cash equivalents and short-term investments of RMB7.3 billion, mainly in highly liquid wealth management products. Our ability to maintain a solid balance sheet with sufficient liquidity lays a strong foundation to navigate our loan book business through challenging market dynamics, as well as providing funds to build out new business avenues, including our investment in the massive and underserved early childhood extra-curricular enrichment education market.”

“We are delighted to officially launch our first WLM KIDS activities center in January in Xiamen. The opening marked a major milestone in the development of our early childhood education business, where we strive to provide a comprehensive suite of one-stop services for children’s extra-curricular enrichment. As we work to open more WLM KIDS activities centers in cities across the nation, we are advancing our mission to help children in China grow up both happy and healthy. The incremental spending in our WLM KIDS business may place pressure on our profitability in the near term, but we believe over the long term the WLM KIDS business will enjoy superior unit economics compared with many other offline businesses. Supported by our strong financial position, we remain optimistic that we can continue to grow our overall business and deliver sustainable value to our shareholders,” said Ms. Sissi Zhu, Vice President of Investor Relations of Qudian.

[4] “D1 delinquency rate” is defined as (i) the total amount of principal and financing service fees that became overdue as of a specified date, divided by (ii) the total amount of principal and financing services fees that was due for repayment as of such date, in each case with respect to our loan book business.

First Quarter Financial Results

Total revenues were RMB515.7 million (US$78.7 million), representing a decrease of 46.2% from RMB957.9 million for the first quarter of 2020.

Financing income totaled RMB361.8 million (US$55.2 million), representing a decrease of 41.9% from RMB622.7 million for the first 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 97.1% to RMB12.2 million (US$1.9 million) from RMB422.4 million for the first 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 RMB50.6 million (US$7.7 million) from a loss of RMB150.4 million for the first quarter of 2020, mainly as a result of the reassessment of variable consideration.

Sales income and others increased to RMB62.5 million (US$9.5 million) from RMB17.1 million for the first quarter of 2020, mainly due to sales related to the Wanlimu e-commerce platform.

Sales commission fee decreased by 68.1% to RMB10.7 million (US$1.6 million) from RMB33.7 million for the first quarter of 2020, due to the decrease in the amount of merchandise credit transactions.

Total operating costs and expenses decreased by 96.9% to RMB63.3 million (US$9.7 million) from RMB2,066.6 million for the first quarter of 2020.

Cost of revenues decreased by 4.8% to RMB91.0 million (US$13.9 million) from RMB95.6 million for the first quarter of 2020, primarily due to the decrease in funding costs associated with the on-balance sheet loan book business, partially offset by the increase in cost of goods sold related to the Wanlimu e-commerce platform.

Sales and marketing expenses decreased by 36.1% to RMB37.6 million (US$5.7 million) from RMB58.8 million for the first quarter of 2020, primarily due to the decrease in third-party service fees and marketing promotional expenses.

General and administrative expenses decreased by 12.9% to RMB66.7 million (US$10.2 million) from RMB76.6 million for the first quarter of 2020, as a result of the decrease in staff salaries.

Research and development expenses decreased by 28.4% to RMB39.2 million (US$6.0 million) from RMB54.7 million for the first quarter of 2020, as a result of the decrease in staff salaries.

Provision for receivables and other assets was a reversal of RMB106.8 million (US$16.3 million), compared to a loss of RMB1,108.5 million for the first quarter of 2020, mainly due to the decrease in past-due on-balance sheet outstanding principal receivables compared to the first quarter of 2020.

As of March 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 RMB203.0 million (US$31.0 million), and the balance of allowance for principal and financing service fee receivables at the end of the period was RMB546.5 million (US$83.4 million), indicating M1+ Delinquency Coverage Ratio of 2.7x.

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.

Income from operations was RMB464.8 million (US$70.9 million), as compared to a loss of RMB961.1 million for the first quarter of 2020.

Net income attributable to Qudian’s shareholders was RMB478.4 million (US$73.0 million), or RMB1.81 (US$0.28) per diluted ADS.

Non-GAAP net income attributable to Qudian’s shareholders was RMB488.3 million (US$74.5 million), or RMB1.85 (US$0.28) per diluted ADS.

Cash Flow

As of March 31, 2021, the Company had cash and cash equivalents of RMB2,187.5 million (US$333.9 million) and restricted cash of RMB234.1 million (US$35.7 million). Restricted cash mainly represents (i) cash held by the consolidated trusts through segregated bank accounts; and (ii) security deposits held in designated bank accounts for the guarantee of off-balance sheet transactions. Such restricted cash is not available to fund the general liquidity needs of the Company.

For the first quarter of 2021, net cash provided by operating activities was RMB202.7 million (US$30.9 million), mainly attributable to net income of RMB478.2 million (US$73.0 million) and partially offset by the change in other current and non-current assets of RMB252.3 million (US$38.5 million). Net cash provided by investing activities was RMB499.2 million (US$76.2 million), mainly due to net proceeds from collection of loan principal and partially offset by net payments to originate loan principal. Net cash provided by financing activities was RMB43.0 million (US$6.5 million), mainly due to proceeds from borrowings.

Conference Call

The Company’s management will host an earnings conference call on June 15, 2021 at 7:00 AM U.S. Eastern Time (7:00 PM Beijing/Hong Kong Time). Details for the conference call are as follows:

For participants who wish to join the call, please complete the online registration at least 15 minutes prior to the scheduled call start time. Upon registration, participants will receive the conference call access information, including participant dial-in numbers, a Direct Event Passcode, a unique Registrant ID, and an e-mail with detailed instructions to join the conference call.

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

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until June 22, 2021, by dialing the following telephone numbers:

United States:

+1-855-452-5696 (toll-free) / +1-646-254-3697

International:

+61-2-8199-0299

Hong Kong, China:

800-963-117 (toll-free) / +852-3051-2780

Mainland China:

400-632-2162  / 800-870-0205 (toll-free)

Passcode:

8562567

About Qudian Inc.

Qudian Inc. (“Qudian”) is a leading technology platform empowering the enhancement of online consumer finance experience in China. The Company’s mission is to use technology to make personalized credit accessible to hundreds of millions of young, mobile-active consumers in China who need access to small credit for their discretionary spending but are underserved by traditional financial institutions due to lack of traditional credit data or high cost of servicing. Qudian’s credit solutions enable licensed, regulated financial institutions and ecosystem partners to offer affordable and customized loans to this young generation of consumers.

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

Use of Non-GAAP Financial Measures

We use adjusted net income/loss, a Non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes. We believe that adjusted net income/loss helps identify underlying trends in our business by excluding the impact of share-based compensation expenses, which are non-cash charges, and convertible bonds buyback income. We believe that adjusted net income/loss provides useful information about our operating results, enhances the overall understanding of our past performance and future prospects and allows for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

Adjusted net income/loss is not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. This Non-GAAP financial measure has limitations as analytical tools, and when assessing our operating performance, cash flows or our liquidity, investors should not consider them in isolation, or as a substitute for net loss / income, cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP.

We mitigate these limitations by reconciling the Non-GAAP financial measure to the most comparable U.S. GAAP performance measure, all of which should be considered when evaluating our performance.

For more information on this Non-GAAP financial measure, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

Exchange Rate Information

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 RMB6.5518 to US$1.00, the noon buying rate in effect on March 31, 2021 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Statement Regarding Preliminary Unaudited Financial Information

The unaudited financial information set out in this earnings release is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited financial information.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the expectation of its collection efficiency and delinquency, contain forward-looking statements. Qudian may also make written or oral forward-looking statements in its periodic reports to 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. Statements that are not historical facts, including statements about Qudian’s beliefs and expectations, are forward-looking statements. 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: Qudian’s goal and strategies; Qudian’s expansion plans; Qudian’s future business development, financial condition and results of operations; Qudian’s expectations regarding demand for, and market acceptance of, its credit products; Qudian’s expectations regarding keeping and strengthening its relationships with borrowers, institutional funding partners, merchandise suppliers and other parties it collaborate 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 Qudian’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 Qudian does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

Qudian Inc.
Tel: +86-592-591-1711
E-mail: ir@qudian.com 

The Piacente Group, Inc.
Jenny Cai
Tel: +86 (10) 6508-0677
E-mail: qudian@tpg-ir.com

The Piacente Group, Inc.
Brandi Piacente
Tel: +1-212-481-2050
E-mail: qudian@tpg-ir.com

QUDIAN INC.

Unaudited Condensed Consolidated Statements of Operations

Three months ended March 31,

(In thousands except for number

2020

2021

of shares and per-share data)

(Unaudited)

(Unaudited)

(Unaudited)

RMB

RMB

US$

Revenues:

Financing income

622,683

361,754

55,215

Sales commission fee

33,713

10,748

1,640

Sales income and others

17,056

62,530

9,544

Penalty fee

12,381

17,823

2,720

Loan facilitation income and other related income

422,443

12,200

1,862

Transaction services fee and other related income

(150,415)

50,649

7,731

Total revenues

957,861

515,704

78,712

Operating cost and expenses:

Cost of revenues

(95,615)

(91,012)

(13,891)

Sales and marketing

(58,805)

(37,559)

(5,733)

General and administrative

(76,550)

(66,693)

(10,179)

Research and development

(54,725)

(39,190)

(5,982)

Changes in guarantee liabilities and risk assurance liabilities(1)

(672,408)

64,379

9,826

Provision for receivables and other assets

(1,108,451)

106,809

16,302

Total operating cost and expenses

(2,066,554)

(63,266)

(9,657)

Other operating income

147,571

12,371

1,888

Income/(Loss) from operations

(961,122)

464,809

70,943

Interest and investment income, net

436,042

87,892

13,415

Foreign exchange loss, net

(4,635)

(219)

(33)

Other income

15,315

5,094

777

Other expenses

(189)

(206)

(31)

Net income/(loss) before income taxes

(514,588)

557,370

85,071

Income tax (expenses)/benefit

28,108

(79,175)

(12,084)

Net income/(loss)

(486,480)

478,195

72,987

Less: net loss attributable to non-controlling interest
shareholders

(167)

(25)

Net income/(loss) attributable to Qudian Inc.’s 
shareholders

(486,480)

478,362

73,012

Earnings per share for Class A and Class B ordinary
shares:

Basic

(1.92)

1.89

0.29

Diluted

(1.92)

1.81

0.28

Earnings per ADS (1 Class A ordinary share equals 1
ADSs):

Basic

(1.92)

1.89

0.29

Diluted

(1.92)

1.81

0.28

Weighted average number of Class A and Class B
ordinary shares outstanding:

Basic

253,874,830

253,044,009

253,044,009

Diluted

253,874,830

266,647,286

266,647,286

Other comprehensive gain/(loss):

Foreign currency translation adjustment

(1,377)

2,260

345

Total comprehensive income/(loss)

(487,857)

480,622

73,357

Total comprehensive income/(loss) attributable to
Qudian Inc.’s shareholders 

(487,857)

480,622

73,357

Note:
(1):The amount includes the change in fair value of the guarantee liabilities accounted in accordance with ASC 815,”Derivative”,  and the change in risk
assurance liabilities accounted in accordance with ASC 450, “Contingencies” and ASC 460, “Guarantees”.

QUDIAN INC.

Unaudited Condensed Consolidated Balance Sheets

As of December 31,

As of March 31,

(In thousands except for number

2020

2021

of shares and per-share data)

(Audited)

(Unaudited)

(Unaudited)

RMB

RMB

US$

ASSETS:

 Current assets:

 Cash and cash equivalents

1,537,558

2,187,502

333,878

 Restricted cash

135,404

234,112

35,732

 Short-term investments

5,042,314

5,079,154

775,230

 Short-term loan principal and financing service fee receivables

3,940,461

3,515,293

536,539

 Short-term finance lease receivables

179,613

128,830

19,663

 Short-term contract assets

92,813

50,077

7,643

 Other current assets

762,313

1,006,670

153,649

 Total current assets

11,690,476

12,201,638

1,862,334

 Non-current assets:

 Long-term finance lease receivables

28,771

11,795

1,800

 Operating lease right-of-use assets

210,898

296,253

45,217

 Investment in equity method investee

349,276

381,287

58,196

 Long-term investments

209,868

243,668

37,191

 Property and equipment, net

302,969

359,955

54,940

 Intangible assets

8,478

8,926

1,362

 Long-term contract assets

23,094

10,317

1,575

 Deferred tax assets, net

154,960

119,138

18,184

 Other non-current assets

419,242

425,464

64,938

 Total non-current assets

1,707,556

1,856,803

283,403

TOTAL ASSETS

13,398,032

14,058,441

2,145,737

QUDIAN INC.

Unaudited Condensed Consolidated Balance Sheets

As of December 31,

As of March 31,

(In thousands except for number

2020

2021

of shares and per-share data)

(Audited)

(Unaudited)

(Unaudited)

RMB

RMB

US$

LIABILITIES AND SHAREHOLDERS’ EQUITY 

 Current liabilities: 

 Short-term lease liabilities

23,763

41,543

6,341

 Accrued expenses and other current liabilities 

336,790

351,417

53,637

 Guarantee liabilities and risk assurance liabilities(1)

31,400

21,583

3,294

 Income tax payable 

80,656

100,054

15,271

 Total current liabilities 

472,609

514,597

78,543

 Non-current liabilities: 

 Deferred tax liabilities, net

10,923

18,564

2,833

 Convertible senior notes

822,005

827,555

126,310

 Long-term lease liabilities

80,236

152,184

23,228

 Long-term borrowings and interest payables  

102,415

145,312

22,179

 Total non-current liabilities 

1,015,579

1,143,615

174,550

 Total liabilities 

1,488,188

1,658,212

253,093

 Shareholders’ equity: 

 Class A Ordinary shares 

132

132

20

 Class B Ordinary shares 

44

44

7

 Treasury shares 

(371,551)

(368,681)

(56,272)

 Additional paid-in capital 

4,007,260

4,014,320

612,704

 Accumulated other comprehensive loss 

(51,420)

(49,160)

(7,503)

 Retained earnings 

8,315,379

8,793,741

1,342,187

 Total Qudian Inc. shareholders’ equity 

11,899,844

12,390,396

1,891,143

 Non-controlling interests

10,000

9,833

1,501

Total equity

11,909,844

12,400,229

1,892,644

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 

13,398,032

14,058,441

2,145,737

Note:
(1) The amount includes the balance of the guarantee liabilities accounted in accordance with ASC 815,”Derivative”, and the balance of risk assurance
liabilities accounted in accordance with ASC 450, “Contingencies” and ASC 460, “Guarantees”.

QUDIAN INC.

Unaudited Reconciliation of GAAP And Non-GAAP Results

Three months ended March 31,

2020

2021

(In thousands except for number

(Unaudited)

(Unaudited)

(Unaudited)

of shares and per-share data)

RMB

RMB

US$

Total net income/(loss) attributable to Qudian Inc.’s shareholders

(486,480)

478,362

73,012

Add: Share-based compensation expenses 

13,652

9,930

1,516

Less: Convertible bonds buyback income

434,693

Non-GAAP net income/(loss) attributable to Qudian Inc.’s shareholders

(907,521)

488,292

74,528

Non-GAAP net income/(loss) per share—basic

(3.57)

1.93

0.29

Non-GAAP net income/(loss) per share—diluted

(3.57)

1.85

0.28

Weighted average shares outstanding—basic

253,874,830

253,044,009

253,044,009

Weighted average shares outstanding—diluted

253,874,830

266,647,286

266,647,286

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Source: Qudian Inc.