Weidai Ltd. Announces Fourth Quarter and Full Year 2018 Financial Results

HANGZHOU, China, March 26, 2019 /PRNewswire/ -- Weidai Ltd. ("Weidai" or the "Company") (NYSE: WEI), a leading auto-backed financing solution provider in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Financial Highlights:

• Net revenues were RMB993.5 million (US$144.5 million) in the fourth quarter of 2018, a decrease of 4.2% from RMB1,036.7 million in the previous quarter.
• Loan facilitation service fees were RMB844.7 million (US$122.9 million) in the fourth quarter of 2018, compared to RMB844.5 million in the previous quarter.
• Post-facilitation service fees were RMB84.2 million (US$12.2 million) in the fourth quarter of 2018, a decrease of 9.0% from RMB92.5 million in the previous quarter.
• Net income was RMB110.0 million (US$16.0 million) in the fourth quarter of 2018, compared to RMB187.3 million in the previous quarter.
• Adjusted net income^[1] was RMB133.2 million (US$19.4 million) in the fourth quarter of 2018, compared to RMB215.1 million in the previous quarter.

Full Year 2018 Financial Highlights:

• Net revenues were RMB3,913.5 million (US$569.2 million) in 2018, an increase of 10.4% from RMB3,545.4 million in 2017.
• Loan facilitation service fees were RMB3,155.7 million (US$459.0 million) in 2018, an increase of 17.2% from RMB2,692.0 million in 2017.
• Post-facilitation service fees were RMB342.1 million (US$49.7 million) in 2018, an increase of 13.9% from RMB300.2 million in 2017.
• Net income was RMB604.6 million (US$87.9 million) in 2018, an increase of 27.3% from RMB474.8 million in 2017.
• Adjusted net income^[1] was RMB711.2 million (US$103.4 million) in 2018, an increase of 38.0% from RMB515.5 million in 2017.

Fourth Quarter and Full Year 2018 Operational Highlights:

Loan volume

The following table sets forth the volume of loans we facilitated and originated (including loans funded by institutional funding partners) for the periods indicated:

Loan balance

Total loan balance was RMB19.9 billion (US$2.9 billion) as of December 31, 2018, compared to RMB20.4 billion as of September 30, 2018.

Fourth Quarter 2018 Financial Results

Net revenues decreased by 4.2% to RMB993.5 million (US$144.5 million) in the fourth quarter of 2018 from RMB1,036.7 million in the previous quarter, primarily due to a decrease in total loan balance during the quarter. The Company's take rate^[2] remained relatively stable at 5.0% in the fourth quarter of 2018, compared to 5.1% in the previous quarter.

• Loan facilitation service fees remained relatively stable at RMB844.7 million (US$122.9 million) in the fourth quarter of 2018, compared to RMB844.5 million in the previous quarter.
• Post-facilitation service fees decreased by 9.0% to RMB84.2 million (US$12.2 million) in the fourth quarter of 2018, from RMB92.5 million in the previous quarter. The decrease was primarily due to changes in product mix.
• Other revenues increased by 36.7% to RMB48.9 million (US$7.1 million) in the fourth quarter of 2018, from RMB35.8 million in the previous quarter, primarily due to performance-based fees the Company received in connection with its collaboration with a financial institution for some of its loan products. The increase was partially offset by a decrease in the average rates of late payment penalties and loan collection fees the Company charged as it continued to optimize its collection policies.
• Net financing income decreased by 69.1% to RMB21.3 million (US$3.1 million) in the fourth quarter of 2018, from RMB68.9 million in the previous quarter, primarily due to changes in the Company's collaborative arrangements with institutional funding partners, and thus a greater proportion of loans funded by institutional funding partners in the fourth quarter of 2018 were not recorded on the Company's balance sheet.

Provision for loans and advances were RMB326.6 million (US$47.5 million) in the fourth quarter of 2018, compared to RMB186.1 million in the previous quarter. Provision for loans and advances as a percentage of total loan volume increased substantially from 0.5% in the second quarter of 2018 to 1.1% in the third quarter of 2018, and further to 1.9% in the fourth quarter of 2018, driven primarily by macroeconomic headwinds that negatively impacted small and micro enterprises. In the fourth quarter of 2018, the general macroeconomic environment  in China deteriorated significantly which resulted in the Company recording additional allowance for loans and advances after taking into consideration current economic factors. As of December 31, 2018, NPL balance^[3] increased by 38.3% from as of September 30, 2018, while allowance for acquired non-performing loans increased by 53.1%.

Operating costs and expenses were RMB625.3 million (US$90.9 million) in the fourth quarter of 2018, compared to RMB640.7 million in the previous quarter. Operating costs and expenses as a percentage of net revenues increased from 61.8% in the third quarter of 2018 to 62.9% in the fourth quarter of 2018.

• Provision for financial guarantee liabilities arises out of the Company's off-balance sheet loan facilitations where the Company provided financial guarantees. Provision for financial guarantee liabilities was RMB21.7 million (US$3.2 million) in the fourth quarter of 2018. Prior to the fourth quarter of 2018, the amount of provision for financial guarantee liabilities was not material.
• Origination and servicing expenses decreased by 3.3% to RMB413.8 million (US$60.2 million) for the fourth quarter of 2018 from RMB428.0 million in the previous quarter, primarily due to continued cost optimization efforts, including closing of certain underperforming service centers and termination of certain employees. Origination and servicing expenses as a percentage of net revenues increased to 41.6% in the fourth quarter of 2018 from 41.3% in the third quarter of 2018.
• Sales and marketing expenses decreased by 49.1% to RMB39.2 million (US$5.7 million) for the fourth quarter of 2018 from RMB77.0 million in the previous quarter. The decrease was primarily attributable to the Company's initial public offering in the United States in November 2018, which significantly enhanced Weidai's brand awareness and raised its profile, enabling the Company to engage in fewer marketing activities and increasingly leverage word-of-mouth marketing.
• General and administrative expenses increased by 11.4% to RMB112.9 million (US$16.4 million) for the fourth quarter of 2018 from RMB101.4 million in the previous quarter. The increase was primarily due to Weidai's corporate anniversary celebration and related expenses. General and administrative expenses for the fourth quarter of 2018 also included RMB3.9 million (US$0.6 million) IPO-related expenses, compared to RMB6.9 million in the previous quarter.
• Research and development expenses increased by 10.0% to RMB37.8 million (US$5.5 million) in the fourth quarter of 2018 from RMB34.3 million in the previous quarter, primarily due to costs related to the development and upgrading of the Company's technology infrastructure.

Share-based compensation expenses were RMB23.2 million (US$3.4 million) in the fourth quarter of 2018, compared to RMB27.8 million in the previous quarter.

Income tax expenses were RMB21.5 million (US$3.1 million) for the fourth quarter of 2018, compared to RMB79.1 million in the previous quarter. The decrease was primarily attributable to tax planning relating to the allocation of tax benefits between the Company's VIE and subsidiaries. In the fourth quarter of 2018, certain of the Company's subsidiaries were qualified as high and new technology enterprises, entitling them to a 15% preferential tax rate from 2018 to 2020.

Net income was RMB110.0 million (US$16.0 million) for the fourth quarter of 2018, compared to RMB187.3 million in the previous quarter.

Net income and comprehensive income attributable to ordinary shareholders was RMB108.7 million (US$15.8 million) in the fourth quarter of 2018, compared to RMB184.8 million in the previous quarter.

Adjusted net income was RMB133.2 million (US$19.4 million) in the fourth quarter of 2018, compared to RMB215.1 million in the previous quarter. 

Full Year 2018 Financial Results

Net revenues increased by 10.4% to RMB3,913.5 million (US$569.2 million) in 2018 from RMB3,545.4 million in 2017, primarily due to an increase in loan facilitation service fees and post-facilitation service fees. The Company's take rate increased to 19.6% in 2018 from 17.7% in 2017.

• Loan facilitation service fees increased by 17.2% to RMB3,155.7 million (US$459.0 million) in 2018 from RMB2,692.0 million in 2017. The increase was primarily attributable to product mix changes that resulted in a higher blended take rate.
• Post-facilitation service fees increased by 13.9% to RMB342.1 million (US$49.7 million) in 2018 from RMB300.2 million in 2017. The increase was primarily attributable to product mix changes that resulted in a higher blended take rate.
• Other revenues decreased by 37.8% to RMB189.7 million (US$27.6 million) in 2018 from RMB305.0 million in 2017, primarily due to a decrease in loan collection fees, as the Company continued to optimize its collection policies.
• Net financing income decreased by 6.7% to RMB246.6 million (US$35.9 million) in 2018 from RMB264.2 million in 2017, primarily due to reduced take rate of on-balance sheet loans.

Provision for loans and advances were RMB751.6 million (US$109.3 million) in 2018, compared to RMB484.1 million in 2017. The increase was primarily due to (i) an increase in delinquency rates as a result of industry-wide turmoil, and macroeconomic headwinds that negatively impacted small and micro enterprises, and (ii) the significant deterioration of the general macroeconomic environment in China which resulted in the Company recording additional allowance for loans and advances after taking into consideration current economic factors. Provision for loans and advances as a percentage of net revenues increased to 19.2% in 2018 from 13.7% in 2017.

Operating costs and expenses increased by 1.7% to RMB2,519.5 million (US$366.4 million) in 2018 from RMB2,476.5 million in 2017. Operating costs and expenses as a percentage of net revenues decreased from 69.9% in 2017 to 64.4% in 2018.

• Provision for financial guarantee liabilities provision for financial guarantee liabilities was RMB21.7 million (US$3.2 million) in 2018.
• Origination and servicing expenses decreased by 1.5% to RMB1,757.9 million (US$255.7 million) in 2018, from RMB1,784.9 million in 2017, primarily due to continued cost optimization efforts, including closing of certain underperforming service centers and termination of certain employees. Origination and servicing expenses as a percentage of net revenues decreased to 44.9% in 2018 from 50.5% in 2017.
• Sales and marketing expenses decreased by 19.3% to RMB221.1 million (US$32.2 million) in 2018 from RMB273.8 million in 2017. The decrease was primarily attributable to Weidai's enhanced brand awareness and profile as a public company, which has enabled the Company to engage in fewer marketing activities and increasingly leverage word-of-mouth marketing.
• General and administrative expenses increased by 19.8% to RMB379.4 million (US$55.2 million) in 2018 from RMB316.8 million in 2017. The increase was primarily due to (i) increases in salaries and benefits for headquarters' management, finance and administrative personnel primarily due to salary increases and increase in headcounts, and (ii) IPO-related expenses.
• Research and development expenses increased by 38.0% to RMB139.3 million (US$20.3 million) in 2018 from RMB101.0 million in 2017, primarily due to (i) an increase in staff salaries and benefits, and an increase in the number of technology personnel, and (ii) costs related to the development and upgrading of the Company's technology infrastructure.

Share-based compensation expenses were RMB106.6 million (US$15.5 million) in 2018, compared to RMB40.7 million in 2017.

Income tax expenses were RMB159.6 million (US$23.2 million) in 2018, compared to RMB193.2 million in 2017.

Net income was RMB604.6 million (US$87.9 million) in 2018, compared to RMB474.8 million in 2017. 

Net income and comprehensive income attributable to ordinary shareholders was RMB721.6 million (US$105.0 million) in 2018, compared to RMB466.2 million in 2017.

Adjusted net income was RMB711.2 million (US$103.4 million) in 2018, compared to RMB515.5 million in 2017.    

Selected Fourth Quarter and Full Year 2018 Operational Results

The following table sets forth the delinquency rates for all outstanding loans as of December 31, 2018 (excluding (i) loans that were charged off and (ii) loan products that were discontinued^[4]):

The following table sets forth the delinquency rates for all outstanding loans as of December 31, 2018 (including loan products that were discontinued):

The following chart displays the M3+ Delinquency Rates by Vintage^[5] for all continuing loans facilitated through the Company's online marketplace:

Please click here to view our vintage curve:
https://photos.prnasia.com/prnh/20190326/2414317-1

Initial Public Offering

On December 14, 2018, the underwriters exercised their over-allotment options to purchase 456,427 American depositary shares ("ADSs") from the Company. Each ADS represents one Class A ordinary share of the Company. Together with the over-allotment exercise, the final offering size of the Company's initial public offering totaled US$50 million.

After the exercise of over-allotment options, the Company has 70,447,177 ordinary shares outstanding, comprised of 35,375,777 Class A ordinary shares and 35,071,400 Class B ordinary shares.  

Conference Call

The Company's management will host an earnings conference call at 8:00 AM U.S. Eastern Time on March 27, 2019 (8:00 PM Beijing/Hong Kong time on March 27, 2019).

Dial-in details for the earnings conference call are as follows:

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for "Weidai".

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until April 3, 2019, by dialing the following telephone numbers:

Use of Non-GAAP Financial Measures

The Company uses adjusted net income, a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that adjusted net income helps identify underlying trends in its business by excluding the impact of share-based compensation expenses. The Company believes that adjusted net income provides useful information about its operating results, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making.

Adjusted net income is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as an analytical tool, and when assessing the Company's operating performance, cash flows or liquidity, investors should not consider it in isolation, or as a substitute for net income, cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

For more information on this non-GAAP financial measure, please see the table captioned "Reconciliations of GAAP and Non-GAAP results" set forth at the end of this press release.

About Weidai Ltd.

Weidai Ltd. is a pioneer and leading auto-backed financing solution provider in China supported by sophisticated and effective risk management system and technology. The Company transforms used automobiles, a type of "non-standard" collateral, into investable assets, to provide accessible credit for China's small and micro enterprises, and connects the borrowers with both online investors and institutional funding partners through its platform.

For more information, please visit http://weidai.investorroom.com/.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.8755 to US$1.00, the noon buying rate on December 31, 2018 set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. 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," "target," "confident" and similar statements. Weidai 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 Weidai's beliefs and expectations, are forward-looking statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited the following: Weidai's goal and strategies; Weidai's expansion plans; Weidai's future business development, financial condition and results of operations; Weidai's expectations regarding demand for, and market acceptance of, its solutions and services; Weidai's expectations regarding keeping and strengthening its relationships with borrowers, investors and financial institutions and other platform participants; general economic and business conditions; Weidai's assumptions underlying or related to any of the foregoing regulations and governmental policies relating to the online consumer finance industry in China; and Weidai's ability to meet the standards necessary to maintain listing of its ADSs on the NYSE, including its ability to cure any non-compliance with the NYSE's continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Weidai does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Christensen
Mr. Christian Arnell 
Tel: +86-10-5900-1548 
E-mail: [email protected]

In US:
Christensen 
Ms. Linda Bergkamp 
Tel: +1-480-614-3004
E-mail: [email protected]

SOURCE Weidai Ltd.

Related Links

http://weidai.investorroom.com