UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2021

 

 

Commission File Number: 001-38328

 

 

LexinFintech Holdings Ltd.

 

27/F CES Tower

No. 3099 Keyuan South Road

Nanshan District, Shenzhen 518057

The People's Republic of China

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F     ___X____          Form 40-F     _________

 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):________________

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):________________

 

 

 

 

---

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

LexinFintech Holdings Ltd.

 

 

 

Date: August 25, 2021

 

---

 

 

Exhibit Index

Exhibit 99.1—Press Release

 

 

 

Exhibit 99.1

LexinFintech Holdings Ltd. Reports Second Quarter 2021

Unaudited Financial Results

SHENZHEN, China, Aug. 25, 2021 (GLOBE NEWSWIRE)/-- LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (NASDAQ: LX), a leading online consumption and finance platform for new generation consumers and users in China, today announced its unaudited financial results for the quarter ended June 30, 2021.

“We are pleased to announce a quarter where key financial metrics¹ scaled new highs. Number of active users rose 24% year over year to 8.4 million, driving up loan origination by 47.6% to RMB60.6 billion. Total loan outstanding also achieved an all-time record, rising 46.2% year over year to RMB90.5 billion,” said Mr. Jay Wenjie Xiao, Lexin’s chairman and chief executive officer. “But it’s no time to stay content and complacent. Recent regulatory changes have sought to reshape the operating environment of financial institutions and their technology partners. We have decided therefore to lower full year guidance on total loan originations to RMB230 billion from RMB240-250 billion .”

“We will slow down our pace, and step up the focus on asset quality and profitability of our business model. We have been making adjustments to our business, to ensure compliance as well as to further strengthen customer acquisition, funding structure, operations and risk management. Any impact will be transitory and manageable,” continued Mr. Xiao. “At the same time, we will also continue to build up Lexin’s capability in serving China's new generation consumers and tapping into new growth opportunities.”

“Our credit quality has remained stable for new loan originations,” said Mr. Jayden Yang Qiao, Lexin’s chief risk officer. “Our vintage charge-off rates² for the loans originated during the latest 12 months were estimated to be around 3.5% and 90 day+ delinquency ratio³ was 1.85% as of June 2021. In addition, as you can see from the graphs disclosed with our latest earnings release, our first payment default rate (30 day+)⁴ for new loan originations have stayed well under 1%.”

“We are proud of our performance in the second quarter,” said Kris Qian Qiao, Lexin’s acting chief financial officer. “Total operating revenue rose 10.5% to RMB3.3 billion, setting a record level. Net income reached an all-time high as well, increasing by 87.7% to RMB787 million. The results reflect our prudent risk management and cost management. Refining risk strategy and improving operational efficiency remain our top goals. They will steer Lexin through any market uncertainties.”

Page 1 of 13

---

 

Second Quarter 2021 Operational Highlights:

User base continues to grow with active user numbers in the quarter hitting a new record high.

Loan facilitation business sees both loan originations and outstanding principal balance of loans hitting record highs.

New Consumption efforts rapidly scaling up at an accelerating pace, in particular the buy-now pay-later service Maiya.

Credit performance and credit quality remain stable.

Other operational highlights.

Page 2 of 13

---

 

Second Quarter 2021 Financial Highlights

Second Quarter 2021 Financial Results

Operating revenue increased from RMB2,958 million in the second quarter of 2020 to RMB3,269 million in the second quarter of 2021. This increase in operating revenue was due to the increases in credit-oriented services income and platform-based services income for the quarter, driven by continuing increases in the number of active users on our platform, partially offset by a decrease in online direct sales and services income.

Online direct sales decreased by 21.6% from RMB522 million in the second quarter of 2020 to RMB409 million in the second quarter of 2021. This decrease was primarily due to the decrease in the number of e-commerce orders during the second quarter of 2021.

Credit-oriented services income increased by 12.1% from RMB1,969 million in the second quarter of 2020 to RMB2,208 million in the second quarter of 2021. The increase was primarily due to the increase of loan facilitation and servicing fees-credit oriented and the increase of interest and financial services income and other revenues, partially offset by the decrease in guarantee income.

Loan facilitation and servicing fees-credit oriented increased by 71.2% from RMB931 million in the second quarter of 2020 to RMB1,595 million in the second quarter of 2021. This increase was primarily due to the increase in off-balance sheet loans originated under credit-oriented model as a result of the continuing growth of our business, with the expansion of partnerships with institutional funding partners.

Guarantee income decreased by 71.2% from RMB706 million in the second quarter of 2020 to RMB204 million in the second quarter of 2021. The decrease was primarily due to the decrease of loan origination and outstanding balances of the off-balance sheet loans funded by certain Institutional Funding Partners, which are accounted for as guarantee liabilities under ASC 460, Guarantees.

Page 3 of 13

---

 

Interest and financial services income and other revenues increased by 23.5% from RMB332 million in the second quarter of 2020 to RMB410 million in the second quarter of 2021, which was consistent with the increase in the origination of on-balance sheet loans in the second quarter of 2021.

Platform-based services income increased by 47.9% from RMB419 million in the second quarter of 2020 to RMB620 million in the second quarter of 2021. This increase was primarily contributed by an increase in the loan facilitation and servicing fees-performance based.

Loan facilitation and servicing fees-performance based increased by 38.0% from RMB394 million in the second quarter of 2020 to RMB543 million in the second quarter of 2021. This increase was primarily due to an increase in the origination of off-balance sheet loans under the performance-based model within platform-based services, driven by continuing increases in the number of active users on our platform.

Cost of sales decreased by 17.8% from RMB520 million in the second quarter of 2020 to RMB427 million in the second quarter of 2021, which is consistent with the decrease of online direct sales revenue.

Funding cost decreased by 24.3% from RMB163 million in the second quarter of 2020 to RMB124 million in the second quarter of 2021, which was consistent with the decrease of the funding debts to fund the on-balance sheet loans. The decrease in funding debts was mainly due to the shortened weighted average tenor for on-balance sheet loans.

Processing and servicing cost increased by 31.8% from RMB356 million in the second quarter of 2020 to RMB470 million in the second quarter of 2021. This increase was primarily due to an increase in risk management and collection expenses, an increase in credit assessment cost, and an increase in fees to third-party payment platforms, partially offset by a decrease in fees to third party insurance companies and guarantee companies.

Provision for credit losses of financing receivables decreased by 7.7% from RMB121 million in the second quarter of 2020 to RMB112 million in the second quarter of 2021. The credit losses have reflected the most recent performance in relation to the Company’s on-balance sheet loans and the Company has continued to implement prudent credit assessment and risk management policies and procedures.

Provision for credit losses of contract assets and receivables increased by 130% from RMB60.8 million in the second quarter of 2020 to RMB140 million in the second quarter of 2021. This increase was mainly due to the significant increase in off-balance sheet loans originated as a result of the continuing growth of our business.

Provision for credit losses of contingent liabilities of guarantee decreased by 56.4% from RMB769 million in the second quarter of 2020 to RMB335 million in the second quarter of 2021. The decrease was primarily due to the decrease of loan origination of the off-balance sheet loans funded by certain Institutional Funding Partners, which are accounted for as guarantee liabilities under ASC 460, Guarantees.

Gross profit increased by 71.7% from RMB968 million in the second quarter of 2020 to RMB1,661 million in the second quarter of 2021. The increase in the gross profit is primarily due to the significant increase in platform-based services income and credit-oriented services income, the decrease in funding cost and provision for credit losses of contingent liabilities of guarantee, partially offset by the increase in processing and servicing cost and provision for credit losses of contract assets and receivables.

Sales and marketing expenses increased by 51.1% from RMB327 million in the second quarter of 2020 to RMB495 million in the second quarter of 2021. This increase was primarily due to an increase in online advertising cost, and an increase in salaries and personnel related costs.

Page 4 of 13

---

 

Research and development expenses decreased by 3.1% from RMB135 million in the second quarter of 2020 to RMB130 million in the second quarter of 2021. This decrease was primarily due to a decrease in salaries and personnel related costs.

General and administrative expenses increased by 6.2% from RMB114 million in the second quarter of 2020 to RMB121 million in the second quarter of 2021. This increase was primarily due to an increase in professional service fees.

Change in fair value of financial guarantee derivatives was a loss of RMB19.1 million in the second quarter of 2021, as compared to a gain of RMB79.2 million in the second quarter of 2020. The loss was primarily due to the re-measurement of the expected loss rates and changes in the balances of the underlying outstanding off-balance sheet loans at the balance sheet date.

Change in fair value of loans at fair value was a gain of RMB17.8 million in the second quarter of 2021. Starting from the second quarter of 2020, for the loans we acquired/purchased from the relevant funding partners during the period, we account for them using fair value option pursuant to ASC 825, Financial Instruments, and record them as “Loans at fair value”. Changes in fair value of these loans are reported net and recorded as “Change in fair value of loans at fair value”.

Income tax expense increased by 97% from RMB76.6 million in the second quarter of 2020 to RMB151 million in the second quarter of 2021. The increase was consistent with the increase of the taxable income from the same period of 2020.

Net income increased by 87.7% from RMB419 million in the second quarter of 2020 to RMB787 million in the second quarter of 2021.

Adjusted net income attributable to ordinary shareholders of the Company increased by 87.9% from RMB453 million in the second quarter of 2020 to RMB851 million in the second quarter of 2021.

Please click here to view our credit quality curves:

http://ml.globenewswire.com/Resource/Download/0779696d-7d8d-4045-9b41-6b961fea13af

http://ml.globenewswire.com/Resource/Download/1e317694-c926-4bd2-a01e-cbf05c173dd6

http://ml.globenewswire.com/Resource/Download/ed6259c4-6566-4cdc-8ae3-79db5be7b256

 

Regulatory Update

On August 20, 2021, the Standing Committee of the National People's Congress of China promulgated the Personal Information Protection Law of the People’s Republic of China, or the Personal Information Protection Law, which will take effect on November 1, 2021. The Personal Information Protection Law imposes additional compliance requirements on top of the existing laws and regulations on personal information protection with more significant legal responsibilities. As the Personal Information Protection Law was recently promulgated and has not yet taken effect, we cannot assure you that the personal information protection measures taken by us will be considered sufficient under the law due to factors including the uncertainties of the interpretation and implementation of the Personal Information Protection Law. To the extent our personal information protection measures may be considered insufficient, we may be required to make further adjustments to our business practices to ensure full compliance with the law, which may increase our compliance costs, subject us to heightened risks and challenges, and adversely affect our business, financial condition, and results of operations.

Page 5 of 13

---

 

Outlook

Based on Lexin’s preliminary assessment of the current market conditions, the Company expects total loan originations for fiscal year 2021 to be around RMB230 billion, revised down from between RMB240 billion and RMB250 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 7:00 AM U.S. Eastern time on August 25, 2021 (7:00 PM Beijing/Hong Kong time on August 25, 2021).

Participants who wish to join the conference call should register online at:

http://apac.directeventreg.com/registration/event/6393426

Please note the Conference ID number of 6393426.

Once registration is completed, participants will receive the dial-in information for the conference call, an event passcode, and a unique registrant ID number.

Participants joining the conference call should dial-in at least 10 minutes before the scheduled start time.

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 1, 2021, by dialing the following telephone numbers:

 

 

About LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd. is a leading online consumption and finance platform for new generation consumers and users in China. The Company provides a comprehensive range of consumption, financial and business services including financial technology services, “buy now pay later” (“BNPL”) services, and membership benefits through its ecommerce platform Fenqile, BNPL product Maiya, and membership platform Le Card. The Company works with financial institutions and brands both online and offline to provide a comprehensive consumption ecosystem catering to the needs of young professionals in China. Lexin utilizes advanced technologies such as big data, cloud computing and artificial intelligence throughout the Company's services and operations, which include risk management, loan facilitation, and the near-instantaneous matching of users’ funding requests with offers from the Company's many funding partners, and other consumption and financial services.

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

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

Page 6 of 13

---

 

Use of Non-GAAP Financial Measures Statement

In evaluating our business, we consider and use adjusted net income/(loss) attributable to ordinary shareholders of the Company, non-GAAP EBIT, adjusted net income/(loss) per ordinary share and per ADS attributable to ordinary shareholders of the Company, 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/(loss) attributable to ordinary shareholders of the Company as net income/(loss) attributable to ordinary shareholders of the Company excluding share-based compensation expenses, interest expense associated with convertible notes and investment income/(loss) and we define non-GAAP EBIT as net income/(loss) excluding income tax expense/(benefit), share-based compensation expenses, interest expense, net and investment income/(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/(loss) attributable to ordinary shareholders of the Company enables our management to assess our operating results without considering the impact of share-based compensation expenses, interest expense associated with convertible notes, and investment income/(loss). Non-GAAP EBIT, on the other hand, enables our management to assess our operating results without considering the impact of income tax expense/(benefit), share-based compensation expenses, interest expense, net and investment income/(loss). We also believe that the use of these non-GAAP financial measures facilitates 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/(loss) attributable to ordinary shareholders of the Company and non-GAAP EBIT is that they do not reflect all items of income and expense that affect our operations. Share-based compensation expenses, interest expense associated with convertible notes, income tax expense/(benefit), interest expense, net and investment income/(loss) have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted net income/(loss) attributable to ordinary shareholders of the Company 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 RMB6.4566 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 30, 2021. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Page 7 of 13

---

 

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:

Patricia Cheng

Tel: +86 (755) 3637-8888 ext. 8135

E-mail: patriciacheng@lexin.com

 

Media inquiries:

Limin Chen

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

E-mail: liminchen@lexin.com

SOURCE LexinFintech Holdings Ltd.

Page 8 of 13

---

 

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Balance Sheets

 

 

Page 9 of 13

---

 

 

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Statements of Operations

 

Page 10 of 13

---

 

 

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income/(loss)

 

Page 11 of 13

---

 

 

LexinFintech Holdings Ltd.

Unaudited Reconciliations of GAAP and Non-GAAP Results

 

 

 

(1)     To exclude the tax effects related to the investment (income)/loss.

Page 12 of 13

---

 

LexinFintech Holdings Ltd.

Unaudited Reconciliations of GAAP and Non-GAAP Results

 

 

Page 13 of 13