Hexindai Reports Unaudited First Quarter of Fiscal Year 2020 Financial Results

Author: Hexindai Inc. / 2023-07-23 21:14 / Source: Hexindai Inc.

Hexindai Reports Unaudited First Quarter of Fiscal Year 2020 Financial Results

BEIJING,Sept. 18,2019 -- Hexindai Inc. (NASDAQ: HX) ("Hexindai" or the "Company"),a fast-growing consumer lending marketplace in China,today announced its unaudited financial results for the quarter ended June30,2019.

Throughout the release,each ADS represents one ordinary share.Fiscal yearrefers to the 12 monthsendedMarch 31.

First Quarter of Fiscal Year 2020 Operational Highlights

Total loan volume facilitated[1]was US$ 28.2 million (RMB192.3 million) during the first quarter of fiscal year 2020,a decrease of 93.5% from the first quarter of fiscal year 2019.

Gross billing amount (net of VAT)[2]was US$4.7 million during the first quarter of fiscal year 2020,a decrease of 90.7% from the first quarter of fiscal year 2019.

Gross billing ratio (net of VAT)[3]for credit loans was 16.7% during the first quarter of fiscal year 2020,an increase from 11.7% during the first quarter of fiscal year 2019.

Number of borrowers[4] was 18,546 during the first quarter of fiscal year 2020,a decrease of 36.0% from the first quarter of fiscal year 2019.

Number of investors[5] was 9,534 during the first quarter of fiscal year 2020,a decrease of 85.9% from the first quarter of fiscal year 2019.

First Quarter of Fiscal Year 2020 Unaudited Financial Highlights

Net revenue was US$4.9 million during the first quarter of fiscal year 2020,a decrease of 90.5% from the first quarter of fiscal year 2019.

Operating costs and expenseswere US$12.6 million during the first quarter of fiscal year 2020,a decrease of 18.9% from the first quarter of fiscal year 2019.

Net loss was US$7.2 million during the first quarter of fiscal year 2020,compared to net income of US$29.7 million in first quarter of fiscal year 2019.

Basic loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15,compared to basic earnings per ordinary shares ("EPS") of US$0.62 in first quarter of fiscal year 2019.

Diluted loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15,compared to diluted EPS of US$0.56 in first quarter of fiscal year 2019.

Adjusted net loss attributable to Hexindai Inc.'s shareholders (Non-GAAP) in the first quarter of fiscal year 2020 was US$7.0 million,compared to adjusted net income attributable to Hexindai Inc.'s shareholders (Non-GAAP) of US$29.9 million in the first quarter of fiscal year 2019.

Adjusted EBIT (Non-GAAP) in the first quarter of fiscal year 2020 was (US$5.8) million,compared to US$36.6 million in the first quarter of fiscal year 2019.

[1] Total loan volume facilitated is defined as the total principal amount of loans facilitated on our marketplaceand referred to other third-parties during the relevant period. We started to provide recommendation services by referring certain borrowers to financial partners since December 2018.

[2] "Gross billing amount" is defined as the sum of (i) the aggregated loan facilitation fees charged to borrowers before cash incentives,and (ii) the recommendation service fees received from financial partners during the relevant period,net of value added tax. It differs from the revenue recognized at the time of recognition. For traditional individual credit loan transactions,as the loan facilitation service fees are charged upfront upon the release of funds to borrowers,the gross billing amount equals the loan facilitation service revenue. For individual credit loans launched in the third quarter of the fiscal year ended March 31,2018,as the service fees are charged each period,the gross billing amount equals the gross accumulative loan facilitation service revenue recognized over the estimated term of the credit loan. For recommendation services,the gross billing amount equals the recommendation service fees.

[3] "Gross billing ratio" is defined as the gross billing amount divided by loan volume facilitated,presented as a percentage. It is an operation metric we believe is a more accurate indicator of profitability.

[4] Refers to borrowers who recorded successful borrowing activity on our online marketplaceand referred to other third-parties during the relevant period. We started to provide recommendation services by referring certain borrowers to financial partners since December 2018.

[5] Refers to individual investors who made loan investments on our online marketplace during the relevant period.

Through Hexindai's platform,the total loan volume facilitated was approximatelyUS$3.1 billion (RMB20.7 billion) from the inception of its business in March 2014 through June 30,2019.

Mr. Xiaobo An,Founder,Chairman and Chief Executive Office of Hexindai,commented: "The first quarter of fiscal year 2020 marked the beginning of a transition period for us as an uncertain regulatory environment continues to hang over the P2P industry. Facing a challenging market,we began strategically repositioning our business during the quarter by developing a loan assistance business alongside our P2P business. This will further diversify revenue streams and ensure growth of our overall business going forward,regardless of what regulatory environment finally emerges for the P2P industry. We already have the key capabilities needed to efficiently run this new business with our extensive experience in borrower acquisition,solid risk management capabilities,and strong operational capabilities. We are very pleased with the initial results from this new business. Loan volume funded by institutional partners during the quarter accounted for approximately 20% of total loans facilitated during the quarter."

"This loan assistance business will cater to the growing demand from our partner institutions for loans that are short-term and in small amounts,which closely matches the profile of the high-quality microfinancing loans we facilitate. We spent the past several months carefully customizing and fine-tuning our risk management system using the enormous amounts of data generated by our legacy P2P products to ensure it continues to be highly-effective at assessing borrowers for our microfinancing loan products. While the ramp-up period for our new loan assistance business was not quick enough to offset the decline of our P2P business,which continues to be negatively impacted by a challenging industry environment,net revenue has begun to gradually recover,increasing sequentially by 18.6%. I am pleased with the progress we've made during the quarter while we make the transition of our business and am fully confident that this will allow us to create value for our users and shareholders and position us to generate long-term sustainable growth."

FirstQuarter of Fiscal Year 2020Unaudited Financial Results

Net revenue

Net revenue during the first quarter of fiscal year 2020 was US$4.9million,a decrease of 90.5% compared to US$51.7 million during the same quarter of fiscal year 2019. The decrease was primarily due to the significant decrease in the volume of credit loans facilitated through Hexindai's marketplace,which decreased from US$0.5 billion (RMB2.9 billion) in the first quarter of fiscal year 2019to US$28.2 million (RMB0.2 billion) in the same quarter of fiscal year 2020. The decrease in the volume of credit loans facilitated through the Company's marketplace was primarily due to (i) the reduction in the amount of investment available for credit loans resulting from tightened industry regulation causing the suspension or shut down of some peers,which negatively impacted investors' sentiment and confidence across the industry,and (ii) the decline in the number of borrowers due to the Company's application of stricter internal control,including credit background investigations with heightened diligence and cooperation with third-party credit reporting agencies to further develop the Company's credit check system. Since the Company derives its revenue mainly from charging service fees from borrowers after successful facilitation of loans,the decline in both the amount of investment and the number of borrowers resulted in the decrease in revenue in the first quarter of fiscal year 2020.

Operating costs and expenses

Total operating expenses during the first quarter of fiscal year 2020 were US$12.6 million,a decrease of 18.9% from US$15.6 million in the same quarter of last fiscal year. The decrease was primarily due to a decrease in sales and marketing expenses.

Service and development expenses

Service and development expenses during the firstquarter of fiscal year 2020 were US$1.9million,an increaseof 42.3% from US$1.4million during the same quarter of last fiscal year. The increase was mainly due to an increase in employee expenses.

Sales and marketing expenses

Sales and marketing expenses during the firstquarter of fiscal year 2020were US$7.5million,adecrease of 35.5% from US$11.7million during the same quarter of last fiscal year.The decrease was primarily due toa decrease in advertising expenses.

General and administrative expenses

General and administrative expenses during the firstquarter of fiscal year 2020 were US$2.3million,remained stable when compared to the same period of last fiscal year.

Finance cost

Finance cost during the first quarter of fiscal year 2020 were US$0.6 million,compared to nil during the same period of last fiscal year. The increase was mainly due to the interests expenses for senior notes.

Share-based compensation

Share-based compensation during the first quarter of fiscal year 2020 was US$0.2 million,remained stable when compared to the same period of last fiscal year.

Net (loss) income

As a result of the foregoing,the net loss was US$7.2 million during the first quarter of fiscal year 2020,compared to net income of US$29.7 million in first quarter of fiscal year 2019.

Net (loss) income attributable to Hexindai Inc.'s shareholders and (loss) earnings per ordinary shares

Net loss attributable to the Company's shareholders was US$7.2 million during the first quarter of fiscal year 2020,compared to net income attributable to the Company's shareholders of US$29.7 million in the same period of fiscal year 2019. Accordingly,basic loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15,compared to basic EPS of US$0.62 in the same period of fiscal year 2019. Diluted loss per ordinary shares in the first quarter of fiscal year 2020 was US$0.15,compared to diluted EPS of US$0.56 in the same period of fiscal year 2019.

Adjusted net (loss) income attributable to Hexindai Inc.'s shareholders and adjusted(loss) earnings per ordinary shares

Adjusted net loss attributable to the Company's shareholders,which excluded share-based compensation expenses,was US$7.0 million in the first quarter of fiscal year 2020,compared to adjusted net income attributable to the Company's shareholders of US$29.9 million in the same period of fiscal year 2019. Accordingly,the adjusted basic loss per ordinary shares was US$0.14 in the first quarter of fiscal year 2020,compared to the adjusted basic EPS of US$0.62 in the same period of fiscal year 2019. The adjusted diluted loss per ordinary shares was US$0.14 in the first quarter of fiscal year 2020,compared to the adjusted diluted EPS of US$0.56 in the same period of fiscal year 2019.

Cash and Cash Flow

As of June 30,2019,the Company had cash and cash equivalents of US$25.9 million. Net cash used in operating activities for the first quarter of fiscal year 2020 was US$9.4 million,compared to net cash provided by operating activities of US$23.4 million in the same quarter of last fiscal year. The decrease in operating cash flow was mainly due to decreased net income during the three months ended June 30,2019.Net cash used in investing activities for the first quarter of fiscal year 2020 was US$19.4 million,compared to US$2.5 million in the same quarter of last fiscal year. The increase in investing cash flow was due to the payment of long-term investment and increased investment in loan principal. Net cash used in financing activities for the first quarter of fiscal year 2020 was US$2.5 million,compared to net cash provided by financing activities of US$0.5 million in the same quarter of last fiscal year. The decrease in financing activities was mainly due to ordinary shares repurchase.

Use of Non-GAAP Financial Measures

We usedadjusted net (loss) income,adjusted (loss) earnings per ordinary sharesand adjusted EBIT,non-GAAP financial measures,in evaluating our operating results and for financial and operational decision-making purposes. "Adjusted net (loss) income" is net (loss) income before share-based compensation expenses. "Adjusted EBIT" is earnings before interest,income taxes and share-based compensation. We believedthat the adjusted net (loss) income,adjusted (loss) earnings per ordinary sharesand adjusted EBIT provideduseful information about our operating results,enhance the overall understanding of our past performance and prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

The non-GAAP measures werenot defined under US GAAP and wasnot presented in accordance with US GAAP. These non-GAAP financial measures hadlimitations 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 income(loss),cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with US GAAP.

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

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

Exchange Rate Information

Our business was conducted in China,and our financial records were maintained in RMB,our functional currency. However,we used the U.S. dollar as our reporting currency; therefore,periodic reports made to shareholders will include current period amounts translated into U.S. dollars using the then-current exchange rates,for the convenience of the readers. The financial information was first prepared in RMB and then was translated into U.S. dollars at period-end exchange rates in the H.10 statistical release of the Federal Reserve Board as to assets and liabilities and average exchange rates as to revenue and expenses. Capital accounts were translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments were included as a component of accumulated other comprehensive income(loss) in shareholders' equity. We make no representation that any RMB or U.S. dollar amounts could have been,or could be,converted into U.S. dollars or RMB,as the case may be,at any particular rate,or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade.

Recent Developments

In July 2019,Hexindai announced it will further diversify its business by launching a new e-commerce installment financing service "Hexin Installments". Hexindai plans to cooperate with institutional funding partners to provide installment financing for consumers through this service. The Company will attract and acquire users leveraging its effective online acquisition channels. Hexindai's powerful risk management system and technological infrastructure will create a solid foundation for the new platform to grow.

In August 2019,Hexindai-backed Indonesian online lending platform,Musketeer Group Inc. ("Musketeer"),completed registration for its P2P lending platform with the Indonesian Financial Services Authority (OJK). Only a limited number of qualified online lenders in Indonesia have been able to register with the OJK.

Conference Call

The Company will host a conference call to discuss the earnings at 8:00 a.m. Eastern Time on Wednesday,September 18,2019 (8:00 p.m. Beijing/Hong Kong Time on the same day).

Dial-in numbers for the live conference call are as follows:

International

+65 6713-5090

U.S. Toll Free

+1 866-519-4004

Mainland China

4006-208038

Hong Kong Toll Free

8009-06601

Passcode:

A telephone replay of the call will be available two hours after the conclusion of the conference call through 9:59 p.m. Beijing/Hong Kong Time,September 26,2019.

Dial-in numbers for the replay are as follows:

International Dial-in

+61 2-8199-0299

U.S. Toll Free

+1 855-452-5696

Passcode:

1727727

A live and archived webcast of the conference call will be available on the Investor Relations section of Hexindai's website at http://ir.hexindai.com/.

About Hexindai Inc.

Hexindai Inc. (NASDAQ: HX) ("Hexindai" or the "Company") is a fast-growing consumer lending marketplace based in Beijing,China facilitating loans to meet the increasing consumption demand of the emerging middle class in China. Hexindai provides borrowers with convenient and ready access to credit through loan assistanceand online marketplace. Hexindai's strong user acquisition capabilities,cutting-edge risk management system,and strategic relationships with respected financial institutions allow it to maintain high customer satisfaction,enhance user stickiness,and drive growth.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934,as amended. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "potential," "continue," "ongoing," "targets," "guidance" and similar statements. The Company 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. Any statements that are not historical facts,including statements about the Company's beliefs and expectations,are forward-looking statements that involve factors,risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include,but not limited to the following: the Company's goals and strategies; its future business development,financial condition and results of operations; the expected growth of the credit industry,and marketplace lending in particular,in China; the demand for and market acceptance of its marketplace's products and services; its ability to attract and retain borrowers and investors on its marketplace; its relationships with its strategic cooperation partners; competition in its industry; and relevant government policies and regulations relating to the corporate structure,business and industry. Further information regarding these and other risks,uncertainties or factors is included in the Company's filings with the SEC. All information provided in this announcement is current as of the date of this announcement,and the Company does not undertake any obligation to update such information,except as required under applicable law.

For more information,please visit ir.hexindai.com

For investor inquiries,please contact:

Hexindai

Investor Relations

Tel: +86-10-5357 9038

Email: ir@hexindai.com

Christensen

In China

Mr. Christian Arnell

Phone: +86-10- 5900-1548

E-mail: carnell@christensenir.com

In US

Mr. Tip Fleming

Phone: +1-917-412-3333

Email:tfleming@Christensenir.com

HEXINDAI INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

June 30,

March 31,

2019

USD

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

25,881,578

57,372,128

Accounts receivable and contract assets

739,509

418,639

Loans receivable-current,net of provision for loan losses

29,026,113

36,554,913

Interest receivable

3,546

Prepayments and other assets

2,871,612

3,334,965

TOTAL CURRENT ASSETS

58,522,358

97,680,645

Loans receivable-non-current,net of provision for loan losses

50,468,578

39,810,461

Long term investments

30,789,836

30,836

Property,equipment and software,net

1,296,624

1,253,723

Right-of-use assets

2,098,299

Deferred tax assets

3,614,605

3,721,177

TOTALASSETS

146,790,300

173,255,842

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Interests payable

600,000

Accrued expenses and other current liabilities

1,764,760

2,791,099

Consideration payable

14,289,371

Deferred revenue-current

148,205

110,726

Lease liabilities-current

1,567,780

Taxes payable

7,416,533

9,371,530

TOTAL CURRENT LIABILITIES

11,497,278

26,562,726

Note payable

20,000,000

20,000

Lease liabilities-non-current

535,930

Deferred revenue-non-current

193,459

189,958

TOTAL LIABILITIES

32,226,667

46,752,684

SHAREHOLDERS' EQUITY:

Ordinary shares ($0.0001 par value,500,000 shares

authorized,49,847,350 and 49,625,303 shares issued as of

June 30,2019 and March 31,2019; 48,681,467 and

49,204,083 shares outstanding as of June 30,2019 and

March 31,respectively)

4,985

4,963

Additional paid-in capital

60,196,828

59,806,865

Treasury stock (1,165,883 and 421,220 shares as of June 30,respectively)

(3,988,370)

(1,320,468)

Retained earnings

62,608,345

69,768,756

Accumulated other comprehensive loss

(4,258,155)

(1,756,958)

TOTAL SHAREHOLDERS' EQUITY

114,563,633

126,503,158

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

146,842

HEXINDAI INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

For Three Months Ended June 30,

2019

2018

USD

REVENUE

Loan facilitation,post-origination and other service

3,694,104

51,447,278

Interest income

1,341,547

749,727

Tax and surcharges

(117,117)

(545,508)

NET REVENUE

4,918,534

51,651,497

OPERATING COSTS AND EXPENSES

Service and development

1,941,517

1,364,568

Sales and marketing

7,524,148

11,665,104

General and administrative

2,331,413

2,313,793

Finance cost

629,913

Share-based compensation

194,584

214,278

Total operating costs and expenses

12,621,575

15,557,743

(LOSS) INCOME FROM OPERATIONS

(7,703,041)

36,093,754

OTHER INCOME

Other income

1,154,348

484,977

Other expense

(4,077)

(19,909)

Total other income,150,271

465,068

(LOSS) INCOME BEFORE INCOME TAXES

(6,552,770)

36,558,822

INCOME TAXES EXPENSES

607,641

6,880,207

NET (LOSS) INCOME

(7,160,411)

29,678,615

OTHER COMPREHENSIVE LOSS

Foreign currency translation adjustment

(2,501,198)

(6,004,778)

COMPREHENSIVE (LOSS) INCOME

(9,661,609)

23,673,837

Net (loss) income per share attributable to Hexindai's shareholders

Basic

(0.15)

0.62

Diluted

(0.15)

0.56

Weighted average shares used in calculation of net income per share

Basic

48,591,927

47,999,127

Diluted

48,927

53,011,074

HEXINDAI INC.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(UNAUDITED)

For Three Months Ended June 30,

2019

2018

USD

Net (loss) income attributable to Hexindai Inc.'s shareholders

(7,615

Add: Share-based compensation expenses*

194,278

Adjusted net (loss) income attributable to Hexindai Inc.'s shareholders

(6,965,827)

29,892,893

Weighted average number of shares outstanding*-basic

48,127

Weighted average number of shares outstanding*-diluted

48,074

(Loss) earnings per ordinary shares*-basic

(0.15)

0.62

Adjustment related to share based compensation expenses*-basic

0.01

Adjusted (loss) earnings per ordinary share*-basic

(0.14)

0.62

(Loss) earnings per ordinary shares*-diluted

(0.15)

0.56

Adjustment related to share based compensation expenses*-diluted

0.01

Adjusted (loss) earnings per ordinary shares*-diluted

(0.14)

0.56

Net (loss) income attributable to Hexindai Inc.'s shareholders

(7,615

Add: Interest expense (income)

560,964

(203,513)

Income tax expenses

607,641

6,207

Share-based compensation expenses*

194,278

Adjusted EBIT

(5,797,222)

36,569,587

* Share-based compensation expenses are not tax deductible under relevant tax laws and regulations in our tax jurisdiction.

The following table presents our summary operating data for three months ended June 30,2019 and 2018.

For Three Months Ended June 30,

2019

2018

Growth Rates[3]

(RMB)

(US$)

(RMB)

(US$)

Three months ended

June 30,2019 compared

to June 30,2018

Loan volume facilitated

(in thousands,except percentages and numbers)

Credit loan principal

192,321

28,202

2,940,672

461,123

-93.5%

Number of transactions facilitated [1]

Credit loan transactions

18,546

28,992

Average individual transaction amount

Credit loan transactions

101

Gross billing amount (net of VAT)

Credit loan

32,160

4,716

344,695

54,051

-90.7%

Gross billing ratio (net of VAT)

Credit loan

16.7%

11.7%

Number of borrowers

Credit loan transactions

18,979

28,979

-36.0%

Number of investors

Credit loan transactions [2]

8,784

58,596

Credit and secured loan transactions

750

9,011

Total

9,534

67,607

-85.9%

[1] Number of loan transactions facilitated is defined as the total number of loans facilitated on our marketplace and referred to other third-parties during the relevant

period. We started to provide recommendation services by referring certain borrowers to financial partners since December 2018.

[2] Refers to individual investors who exclusively invested in credit loan transactions during the relevant period.

[3] Growth rates are calculated by RMB and exclude the impact from exchange rates in different reporting periods to reflect a real growth rate.

The following table sets forth our revenue breakdown for the periods indicated:

For Three Months Ended June 30,

2019

2018

Revenue[1]

US$

Loan facilitation service

3,577,785

54,051,878