FinVolution (FINV) Q4 2025 Earnings Transcript

<p>Image source: The Motley Fool.</p>
<h2>DATE</h2>
<p>Monday, March 16, 2026 at 8:30 p.m. ET</p>
<h2>Call participants</h2>
<ul>
<li> <p class="yf-1fy9kyt">Chief Executive Officer — Tiezheng Li</p></li>
<li> <p class="yf-1fy9kyt">Chief Financial Officer — Jiayuan Xu</p></li>
<li> <p class="yf-1fy9kyt">Investor Relations — Yam Cheng</p></li>
</ul>
<h2>Full Conference Call Transcript</h2>
<p>Mr. Tiezheng Li, our CEO; and Mr. Jiayuan Xu, our CFO, will start the call with their prepared remarks and conclude with a Q&amp;A section. During this call, we will be referring to several non-GAAP financial measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For information about these non-GAAP measures and reconciliation to non-GAAP measures, please refer to our earnings press release. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.</p>
<p>Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filings with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Finally, we have posted a slide presentation on our IR website, providing details of our results for the quarter. I will now turn the call over to our CEO, Mr. Tiezheng. Tiezheng, please go ahead.</p>
<p>Tiezheng Li: Thanks, Yam. Welcome to our fourth quarter and full year 2025 earnings call. [Technical Difficulty]</p>
<p>Operator: Pardon me, everyone. It looks like we have lost the audio. Please standby. Please proceed.</p>
<p>Tiezheng Li: Thanks, Yam. Welcome to our fourth quarter and full year 2025 earnings call. 2025 was a significant year for us. It was FinVolution's 18th anniversary, much like a person stepping into adulthood, our company has grown from a passionate credit pioneer in China into a regional platform bridging the credit gap across Asia and beyond. This journey has been more than just about scaling. We've learned, adapt and built something valuable and lasting. 2025's challenging macro environment tested our resilience, but it also reaffirmed our strategic direction to advance our international expansion. To conclude the year, we delivered full year group revenue of RMB 13.6 billion, up 3.8% year-over-year.</p>
<p>Net profit also rose to RMB 2.5 billion, a 6.6% increase from last year. The resilient financial performance was achieved despite the regulatory uncertainty in China in the second half of the year, which tempered the full year transaction volume to RMB 200 billion, down 2.9% year-over-year. Our local excellence global outlook strategy has unlocked diversification value and brought much needed resilience to our platform. In 2025, our international business grew significantly. Our volume increased by 38.6% and revenue rose by 32.0% year-over-year. Most notably, international business contributed 31% of revenue for the quarter, significantly higher than 21% just a year ago.</p>
<p>As set out before, we target to grow this number to 50% in 2030, and we are confidently on track to achieve this goal. Today, we operate across both developing markets and most recently developed market with our recent entry into Australia. Underpinning this momentum is the quite evolution of our international strategy itself. In our early expansion, we focus on disciplined execution in each individual market. But as we scale across the region, we have learned that strength also lies in connection. We have deepened our capabilities at the platform level instead of each country operating as a stand-alone effort.</p>
<p>We systematically captured the expertise, relationships and capabilities we developed in one market and recycle them to accelerate the derisk entry into the next. This means leveraging proven regulatory experience, product development, advanced risk analytics, centralized funding and regional ecosystem partnership across borders. This LEGO+ strategy transformed our international portfolio from a collection of local wins into an integrated platform with compounded platform level advantages. Today, we manage our business through 2 distinct lenses. The first is our mature market, China, which serves as our foundation for consistent profitability and cash generation. The second is our international markets, which include Indonesia, the Philippines and now Australia.</p>
<p>These markets are characterized by high growth, scalable opportunities and increasing contributions to our overall portfolio. Now I would like to walk you through the key achievements and updates across both segments. First, our mature market, China. New regulations reshaped the operating landscape in the fourth quarter, as discussed in our Q3 earnings session. We prioritized risk over loan origination in Q4. That means tightened underwriting and enhanced risk controls. The result is a near-term moderation of loan origination volume to RMB 38.7 billion and loan balance to RMB 68.3 billion in the fourth quarter. These deliberate efforts began to pay off with risk containment. Vintage loss for new loan originations stabilized at 3.0%.</p>
<p>Outstanding loan portfolio saw risk trending up in line with expectation with CM2 increased from 0.61% to 0.77% for the quarter. As we run down our existing loan book upon repayment and originate new loans at higher credit standards, we saw the overall portfolio risk start stabilizing in December. As we gradually exit the regulatory side with a heavily rich loan portfolio, compliance infrastructure and risk models, long-term profitability would eventually normalize. We anticipate a phase of industry consolidation once the full effect of the regulation is reflected, and we are well positioned to seize the opportunities.</p>
<p>Within our portfolio, China will continue to provide the scale and cash flow foundation that allows us to invest confidently in our growth overseas. Second, our international markets, including Indonesia, the Philippines and now Australia, we have reached an encouraging milestones for Southeast Asia. Both Indonesia and the Philippines achieved full year profitability and contributed over USD 15 million in combined operating profit. Behind this financial outcome is a validation of a respectful locally attuned approach of our international playbook. Our highly localized approach drove strong user growth. We doubled our unique user base to 5.9 million across Indonesia and the Philippines for the full year.</p>
<p>We also penetrated deeper into the consumer base with diverse product customized around local consumption preference. For example, our Buy Now, Pay Later solutions have been well received by consumers and ecosystem partners across online and offline channels. In the fourth quarter, we entered the Australian market with the acquisition of a respected lending platform, Fundo. This new foray is a well-considered move that draws on our experience in maturing regulatory regime in China and operational excellence in overseas market. First, our evolving experience in China has prepared for a mature regulatory environment. Over the years, we have navigated China's transition from high-growth emerging regulation towards a more rigorous consumer-focused framework.</p>
<p>Our operating model has similarly matured towards a lower risk, more sustainable approach. This experience has equipped us with the regulatory maturity, compliance discipline and consumer-first mindset that align closely with the expectation of developed economies like Australia. Second, we have proven track record of building profitable businesses from the ground up overseas. We have successfully executed the 0 to 1 journey, not just once, but in multi-international markets, scaling operations to profitability. This capability in launching, localizing and scaling businesses abroad gives us strong conviction in our ability to replicate success in Australia. Moving on to respect tech innovation, a core part of how we build... [Technical Difficulty]</p>
<p>Operator: Pardon me, everyone. We have lost the speaker's connection, please stand by while we get the back-up line connected. Your line is open, please proceed.</p>
<p>Tiezheng Li: It's embedded directly into the application flow, breaking the journey into a clear logical steps and offering real-time guidance at each stage. The impact has been tangible. We are seeing fewer viewers drops off, higher completion rates and better overall conversation. It's a refinement that may sound small, but it meaningfully improves how user experience our platform. Localization and support of local communities also play a key role in our success overseas. In Q4, we launched an emergency humanitarian response following the severe flooding that struck Indonesia in late November 2025. We established emergency kitchens and fully equipped sanitation facilities to benefit approximately 1,800 affected residents across 6 locations in Sumatra.</p>
<p>Our ESG efforts like this have driven an increase in our S&amp;P CSA score for 7 consecutive years, reflecting our belief that how we grow is as important as how much we grow. Our commitment to responsible stewardship extends to our shareholders. We accelerated our buyback program this year with USD 107 million repurchased in 2025. It's a historical record since our IPO. This commitment is personal as well. In December, our Chairman and the management team recently invested an additional USD 1.9 million of their own capital in share buyback, a gesture of deep confidence in this journey we are on together. In addition of buyback, we are also announcing approximately USD 74.5 million in dividend for 2025.</p>
<p>That translates to total shareholder return of approximately $182 million, equivalent to 50% payout. As we entered 2026, we do so with clarity, not certainty. We will manage our China business with patience, nurture our international segments with focus and continue investing in the technologies and partnerships that make sustainable growth possible. Our long-term vision remains to build a truly global FinVolution. Thank you for being part of this journey with us. I will now turn the call over to our CFO, Jiayuan Xu, for a deeper look at the numbers.</p>
<p>Jiayuan Xu: Thank you, Tiezheng, and hello, everyone. Let me go through our key results for the fourth quarter and full year. Please refer to our earnings press release for further details. On a group level, our fourth quarter results reflect the near-term impact of our discipined China strategy and continued investment in international expansion. Group net revenue was RMB 3 billion. In 2025, China economy remained largely stable with GDP growth of 5%, maintained within reasonable range while in pursuit of high-quality development. On the industry front, the regulatory authorities released multiple new guidance for banks, consumer finance and the macro lending companies during the quarter, which aimed at lowering the overall financing cost.</p>
<p>As the industry reconfigured its assets and funding in line with the new regulatory framework, we saw contraction in loan volume and pickup in risk in the second half of 2025. We are refining our underwriting parameters to focus on the high-quality borrowers and have gradually praised our marginal assets that used to be credible before the new regulation. This provided protection to the unit economics. Our IRR remained stable. As Tiezheng mentioned, the vintage loss of the newly originated cohort began to stabilize around 3% in Q4. More importantly, early risk indicators began to show sign of peaking in the middle of December with day 1 and 30 collection rate coming down afterwards.</p>
<p>We continue to deepen our engagement with funding partners as the funding supply of dynamics start to normalize. In Q4, we added new funding partners and further reduced funding cost by 20 basis points quarter-on-quarter to 3.4%. Overall, our take rate held steady at around 3%. Closing the quarter, we booked RMB 2.1 billion revenue for China. In our international markets, we maintained a strong growth momentum in Q4 with the consolidation of our new Australia business, complemented by broad-based performance across our established markets in Indonesia and the Philippines. From a regional macro perspective, we navigated a period of moderate economic growth with accelerated GDP growth in Indonesia, offset by slower growth in the Philippines due to seasonal flows.</p>
<p>Overall, we delivered robust results. Our international transaction volume reached RMB 4.1 billion or USD 0.6 billion for the quarter, up 41% year-over-year. And the unique borrowers grew to 3.8 million, a 133.8% increase year-over-year. Across the region, we are benefiting from a clearly regulatory environment. In Indonesia, the regulatory clarity provided by July's announcement to maintain the interest rate cap provided a stable framework. We proactively increased our customer acquisition investment, which drove transaction volume to a historical high of USD 0.3 billion, equivalent to 10% growth quarter-over-quarter. In the Philippines, a new interest rate cap is scheduled to take effect in April 2026.</p>
<p>We believe this upcoming change will favor players with strong technology and operational capabilities, areas we are. We are already preparing in advance to accommodate the new pricing structure, driving on our relevant experience navigating similar regulatory transactions in multiple markets. We are confident in managing a smooth adaptation even as we anticipate some near-term moderation during the transaction period. We continued to upgrade customer quality and expand our diversified product offerings to credible consumers. During the quarter, we have added 1.6 million new borrowers, up 26% quarter-over-quarter. In Indonesia, our off-line consumption finance initiatives boost customer quality and engagement.</p>
<p>Buy Now Pay Later solutions in mobile phone stores and other small ticket items drove an influx of new users, growing new borrower base by more than 3x year-over-year. In the Philippines, embedded e-commerce partnerships now contribute 43% of the country's volume compared to 30% a year ago. Total transaction volume in the Philippines reached USD 0.2 billion, a 64% of growth year-over-year. On new market, our recent entry into Australia marks a significant strategic expansion int