Good day, ladies and gentlemen. Thank you for standing by and welcome to the Jaiyin Group Second Quarter 2026 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. Sam Lee from Investor Relations of Jiayin Group. Please proceed.

Thank you, operator. Hello, everyone. Thank you all for joining us on today's conference call to discuss Jiayin Group's financial results for the second quarter of 2026. We released our earnings results earlier today. The press release is available on the company's website as well as from Newswire Services. On the call with me today are Mr. Yan Dinggui, Chief Executive Officer. and Mr. Fan Chunlin, Chief Financial Officer. 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. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with SEC. The company does not assume any obligation to update any forward-looking statement, except as required under applicable law. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP financial measures to GAAP financial measures. Please note that unless otherwise stated, all figures mentioned during the conference call are in Chinese. With that, let me now turn the call over to our CEO, Mr. Yan Dinggui. Mr. Yan will deliver his remarks in Chinese, and I will follow up with corresponding English translations. Please go ahead, Mr. Yan.

Hello, everyone.

Thank you for joining Jiayin Group's second quarter of 2026 Earnings Conference Call.

According to human resources statistics, in the second quarter, our citizens' short-term consumer loan balance fell by about 1.9 billion yuan in the end of the first quarter. The policy of managing the industry continues to fall, affecting individual matters, and the cooperation between institutions is more urgent. In this context, the company is adapting to the changes in the industry, and speed up strategic adjustments to the business structure. In this quarter, the company achieved a total transaction rate of

According to the statistics from the People's Bank of China, the outstanding balance of short-term household consumer loan in China decreased by approximately RMB 190 billion in the second quarter compared to the end of the first quarter. As industry regulatory compliance requirements continue to take effect, influenced by isolated industry events, institutional funding partners have adopted a more cautious approach. Against this backdrop, the company proactively adapted to changes in the industry and accelerated the strategic adjustment of our business structure. During the quarter, the company achieved transaction volume of RMB 9.5 billion, representing a year-over-year decrease of approximately 74.4%. Driven by both the industry-wide contraction and our strategic adjustment, we recorded a net loss of approximately RMB 180 million for the quarter.

For the impact it has had on the mobility tightening, we have taken the initiative to reduce the risk threshold, stabilize, and reduce the risk. We have maintained the core quality of our customers, and at the same time increased the recovery rate. The 30-day recovery rate has been steadily improved, and by the end of the second quarter,

In response to impacts brought by industry-wide liquidity tightening, we proactively reduced our risk exposure and steadily mitigated existing portfolio risk, concentrating our focus on our core base of high-quality borrowers. At the same time, we intensified our collection efforts, and the 30-day collection rate improved consecutively quarter on quarter. As of the end of the second quarter, the 90-plus-day delinquency rate stood at 2.21%, remaining stable on a sequential basis.

围绕战略转型与结构升级,海外业务是我们的重点锚点。 印尼合作伙伴二级度业务规模同比增长58%,完比增长10%。 通过升级风险策略框架或推进分客群精心化运营, and Huo Ke Feibing. The cooperation network with the local financial institutions is also in continuous expansion. The second quarter of the Mexican market has increased by 36%. Huo Ke's efficiency and risk control capabilities have increased steadily. For the long-term development goals of overseas business, we have conducted a full-scale upgrade of our strategy and team. The plan is to continue to grow with Southeast Asia as the basic brand, and the development of new markets such as Northeast Asia, Central Asia,

Our international business serves as a key anchor in driving our strategic transformation and structural upgrades. In the second quarter, our Indonesian partners' business volume increased by 58% year-over-year and 10% sequentially. By upgrading our risk strategy framework and advancing refined borrower segmentation, we significantly improved our customer acquisition cost efficiency and further expanded our partnership network with local financial institutions. In Mexico, business volume increased by 36% sequentially in the second quarter, with continued improvements in borrower acquisition efficiency and asset quality. To achieve our long-term vision for our overseas business, we have comprehensively upgraded both our strategy and execution team. Moving forward, we plan to continue to deepen our presence in Southeast Asia as our core anchor market, while taking a prudent approach to market research and expansion in emerging regions, such as East Africa and Central Asia, thereby advancing our global expansion in a structured and disciplined manner.

Technology recovery is an important direction for our strategic transformation. The company is accelerating the technological upgrade from service to technology output. In this period, the company's self-sufficient service platform has been completed and built. Zhe Wang, Zhe Wang,

Technology empowerment is a critical pillar of our strategic transformation, and we are accelerating our technology upgrades to transition from a loan facilitation service provider to a more comprehensive technology service provider. During the quarter, the company's proprietary Fuxi platform has completed the key development in the infrastructure layer , and core skills deployment, covering all key operational processes throughout the credit lifecycle. Specifically, the end-to-end skill for credit assessment modeling has been implemented at scale, compressing the traditional model optimization cycle from three to five days down to a matter of hours, with risk identification accuracy metrics, including model AUC and KS scores, significantly outperforming human benchmarks. Looking ahead, we will focus on building a customer data platform tailored for financial institutions, enabling existing borrower segmentation and targeting capabilities, with full integration into our automated marketing platform, establishing a standardized and scalable framework for technology service delivery.

The implementation of the implementation of the implementation of the implementation of the implementation of the implementation of the implementation of the In addition, AI applications have been fully embedded into the company's core operational value chain. End-to-end AI coverage has now been implemented

in key operational scenarios, such as customer service and loan application intake, completely replacing human agents in select functions. On the risk management front, we have developed our proprietary strategy assistance agent by combining large language models with traditional machine learning, driving the upgrade of risk strategy development from expert modeling with manual calculation to AI-assisted expert modeling with automated machine calculation. Consequently, our risk strategy iteration efficiency has improved by more than tenfold, and accuracy in key scenarios has increased by over 20%. Benefiting from the workforce efficiency gains brought by AI, we are actively optimizing our organizational structure. AI is evolving from a standalone tool into a systemic capability. Supporting the company in maintaining operational efficiency and Kao's competitiveness during this period of business adjustment.

On the anti-fraud front, during the first half of this year the industry experienced a rapid evolution of fraudulent and illicit activities in the industry.

were characterized by sophisticated disguising and masking tactics and showed a clear trend towards organized operations, causing growing losses to institutions across the sector. To address this, we accelerated the iteration of our multimodal risk strategy system to precisely identify behavioral differences between genuine users and proxy-based fraud operations. As of the end of June, we had cumulatively blocked The comprehensive consideration of the external financial environment and the current development needs, the company has decided to postpone the launch of the third quarter's HG and to suspend this year's HG.

In light of the uncertain macroeconomic operating environment and the current strategic development priorities,

The company has decided to refrain from issuing guidance for the third quarter and to suspend our dividend for this fiscal year. By maintaining flexibility in our capital allocation and operational pace, we will focus internal resources on business transformation and risk mitigation. Notably, as of the end of the second quarter, the company's cash and cash equivalents increased to RMB 504 million. providing a strong financial buffer to navigate through the industry cycle and ensure sound future development. With that, I will now turn the call over to our CFO, Mr. Fan Chunlin. Please go ahead.

Thank you, Mr. Yan, and hello, everyone. Thank you for joining our call today. I will now review our financial highlights for the quarter. Please note that all numbers will be in RMB. and all percentage changes refer to year-over-year comparisons unless otherwise noted. As Mr. Yan noted earlier, we remained disciplined in our execution during the second quarter and delivered the transaction volume in line with our previous guidance. Transaction volume was $9.5 billion, representing a decrease of 74.4% from the same period, 2025. Our net revenue was $636.9 million, representing a decrease of 60.9% from the same period of 2025. Moving on to costs, facilitation and servicing expense was $549.3 million, representing an increase of 92.7% from the same period of 2025, primarily due to the increase in average outstanding loan balance for which the company provided guaranteed services. Allowance for uncollectible receivables, counter-assets, prepaid expenses, and other current assets and others was $51.3 million, compared with $32.5 million for the same period of 2025, primarily due to increased guaranteed services the company provided. Sales and marketing expense was $221.8 million, representing a decrease of 68.8% from the same period of 2025, primarily due to decreased borrow acquisition expenses and commission expenses. General and administrative expense was 66.9 million, representing a decrease of 39.5% from the same period of 2025, primarily due to a decrease in share-based compensation. R&D expense was 94.2 million, representing a decrease of 13.1% from the same period of 2025, primarily due to a decrease in share-based compensation. Non-GAAP loss from operations was 225.7 million, compared with 737.6 million non-GAAP income from operations in the same period of 2025. Our net loss for the second quarter was 183.6 million compared with 519.1 million net income in the same period of 2025. Our basic and diluted net loss per share was 0.89 compared with 2.46 basic and diluted net income per share in the second quarter of 2025. Basic and diluted net loss per ADS were 3.56 Thank you. To ask a question,

Please press star 1 and 1 on your telephone. To cancel your request, please press star 1 and 1 again. There are no questions. I will return the call to Sam for closing remarks. Please go ahead.

Thank you, operator, and thank you all for participating on today's call. We appreciate your interest and look forward to reporting to you again next quarter on our progress.

You all again, this concludes the call. You may now disconnect.