X Financial Reports Third Quarter 2020 Unaudited Financial Results

SHENZHEN,China,Dec. 2,2020 -- X Financial (NYSE: XYF) (the "Company" or "we"),a leading technology-driven personal finance company in China,today announced its unaudited financial results for the third quarter ended September 30,2020.

Third Quarter 2020 Financial Highlights

Total net revenue was RMB559.8 million (US$82.5 million),representing a decrease of 34.5% year-over-year and an increase of 44.3% quarter-over-quarter.

Loss from operations was RMB101.4 million (US$14.9 million),compared with income from operations of RMB214.7 million in the same period of 2019 and loss from operations of RMB341.5 million in the previous quarter.

Net loss attributable to X Financial shareholders was RMB113.0 million (US$16.6 million),compared with net income attributable to X Financial shareholders of RMB169.6 million in the same period of 2019 and net loss attributable to X Financial shareholders of RMB343.7 million in the previous quarter.

Non-GAAP[1] adjusted net loss attributable to X Financial shareholders was RMB111.7 million (US$16.5 million),compared with non-GAAP adjusted net income attributable to X Financial shareholders of RMB208.0 million in the same period of 2019 and non-GAAP adjusted net loss attributable to X Financial shareholders of RMB325.9 million in the previous quarter.

Net loss per basic and diluted American depositary share ("ADS")[2] was RMB2.10 (US$0.31) and RMB2.10 (US$0.31),respectively,compared with net income per basic and diluted American depositary share ("ADS") of RMB3.24 and RMB3.12,in the same period of 2019.

Non-GAAP adjusted net loss per basic and adjusted diluted ADS was RMB2.10 (US$0.31),and RMB2.10 (US$0.31),compared with non-GAAP adjusted net income per basic and adjusted diluted ADS of RMB3.96 and RMB3.84,in the same period of 2019.

Third Quarter 2020 Operational Highlights

The total loan facilitation amount[3] was RMB8,027 million,representing a decrease of 25.3% from RMB10,750 million in the same period of 2019 and an increase of 30.4% from RMB6,153 million in the second quarter of 2020.

The loan facilitation amount of Xiaoying Credit Loan[4] was RMB6,847 million,representing a decrease of 15.3% from RMB8,086 million in the same period of 2019 and an increase of 49.4% from RMB4,583 million in the second quarter of 2020. Xiaoying Credit Loan accounted for 85.3% of the Company's total loan facilitation amount,compared with 75.2% in the same period of 2019.

The total outstanding loan balance[5] as of September 30,2020 was RMB12,280 million,compared with RMB19,606 million as of September 30,2019 and RMB12,185 million as of June 30,2020.

The average loan amount per transaction[6] of Xiaoying Term Loan[7] was RMB9,041,representing a decrease of 29.6% from RMB12,848 in the same period of 2019 and an increase of 8.2% from RMB8,356 for the second quarter of 2020.

The delinquency rates for all outstanding loans that are past due for 31-90 days and 91–180 days as of September 30,2020 were 2.13% and 4.62%,compared with 3.53% and 9.44%,as of June 30,2020,and 2.95% and 4.50%,as of September 30,2019.

The number of cumulative borrowers,each of whom made at least one transaction on the Company's lending platform,2020 was 6,326,338.

Total cumulative registered users reached 51.1 million as of September 30,2020.

Institutional funding accounted for 100.0% of the total loan facilitation amount,compared with 97.4% in the second quarter of 2020.

[1] The Company uses in this press release the following non-GAAP financial measures: (i) adjusted net income (loss),(ii) adjusted net income (loss) attributable to X Financial shareholders,(iii) adjusted net income (loss) per basic ADS,and (iv) adjusted net income (loss) per diluted ADS,each of which excludes share-based compensation expense. For more information on non-GAAP financial measure,please see the section of "Use of Non-GAAP Financial Measures Statement" and the table captioned "Unaudited Reconciliations of GAAP and Non-GAAP Results" set forth at the end of this press release.

[2] Each American depositary share ("ADS") represents six ClassA ordinary shares. On November 19,a ratio change that has the same effect as a 1-for-3 reverse ADS split took effect,and as a result,one ADS currently represents six Class A ordinary shares.

[3] Represents the total amount of loans that X Financial facilitated during the relevant period.

[4] X Financial integrated Xiaoying Card Loan and Xiaoying Preferred Loan into one general product category,Xiaoying Credit Loan,in 2018.

[5] Represents the total amount of loans outstanding for loans X Financial facilitated at the end of the relevant period. Loans that are delinquent for more than 180 days are charged-off and are excluded in the calculation of delinquency rate by balance,except for Xiaoying Housing Loan. Xiaoying Housing Loan is a secured loan product and the Company is entitled to payment by exercising its rights to the collateral. X Financial does not charge off Xiaoying Housing Loans delinquent for more than 180 days and such loans are included in the calculation of delinquency rate by balance.

[6] Calculated by dividing the total loan facilitation amount by the number of loans facilitated during the relevant period.

[7] Xiaoying Term Loan refers to the loans with fixed repayment periods including Xiaoying Credit Loan,Xiaoying Housing Loan,and Internet Channel.

Mr. Justin Tang,the Founder,Chief Executive Officer and Chairman of the Company,commented,"Despite the impact from COVID-19 and the tightened regulatory environment in China,we delivered encouraging operational and financial results in the third quarter. Thanks to the solid recovery in loan facilitation amount ofXiaoying Credit Loan,our total loan facilitation amount increased by 30.4% quarter-over-quarter to RMB8,027 million."

"We continued to adhere to our prudent risk management approach. The delinquency rates for all outstanding loans that are past due for 31-90 days and 91–180 days as of September 30,2020 decreased further to 2.13% and 4.62%,2020. As the epidemic continues to ease and the macro economic environment recovers gradually in China,our credit risk profile continues to improve."

"Based on the solid progress we have made on the operational front,we improved both our top and bottom lines. Our total net revenue increased by 44.3% quarter-over-quarter and net loss attributable to X Financial shareholders narrowed to RMB113.0 million from RMB343.7 million in the previous quarter,demonstrating our strong capability to navigate in an uncertain regulatory environment and challenging economy."

"In August 2020,the Supreme People's Court of the PRC lowered the ceiling of the private lending interest rate protected by law. We believe this new policy is currently only applicable to private lending,which mainly refers to loans made to individuals or companies by private organizations or individuals instead of financial institutions. The regulation does put pressure on the whole lending sector,but it's not directly applicable to our business at this moment as we are a financial institution regulated by local financial regulatory authorities."

"Recently,the Chinese government also planned to impose tighter regulations on small loans offered online by microloan companies. The regulators have started seeking public opinion on the interim measures for the administration of online small lending businesses. The new ruling will significantly affect the fundamentals of the online small lending industry with requirements on borrowing limits,fund leverage,prohibition of multi-regional lending and other measures. It is expected that the new regulations will be finalized by the end of this year. Due to the low visibility caused by regulatory uncertainties,it is difficult for companies in this sector to precisely evaluate its impact on their businesses at this moment but they will need to adjust their strategies and bring substantial changes to their operations over a transitional period of one to three years to comply with the new policies."

"Despite all the challenges ahead,we will continue to expand and improve our offerings to cater to the growing demand for personal financing in China. We are on track to apply for an online microcredit license and will keep a close watch on the evolving market dynamics and regulatory environment. We have experienced reforms and navigated difficult periods before,and emerged stronger as a key player in this industry. We are confident that we are capable of making strategic adjustments in a timely way to fit into the new business environment."

Mr. Simon Cheng,President of the Company,added,"We continued to expand our cooperation with financial institutions. In the third quarter,we successfully achieved 100% institutional funding for the new loans facilitated through our platform,compared with 97.4% in the previous quarter. Both the total available credit lines and the number of financial institutional partners have continued to expand. Our risk management capabilities and proven record have been fully recognized by our financial institutional partners."

"Our exit from the P2P business has progressed in an orderly manner. The outstanding loan balance of the P2P business continued to decrease from RMB1.6 billion as of June 30,2020 to RMB0.4 billion as of September 30,2020 and further decreased to RMB0.3 billion as of October 31,2020. Protecting the interests of our investors is always our top priority and we believe it helps us minimize regulatory risks and establish a solid foundation of trust and integrity in the personal finance sector."

"During the third quarter,our number of active borrowers continued to grow to 692,997,representing an increase of 10.8% from 625,707 in the previous quarter,mainly due to an increase in the number of active borrowers of Xiaoying Credit Loan. This is further acknowledgement of the high value and quality of the loan products we offer to borrowers,as well as the traction and growth momentum we gained as the market continues to gradually recover."

"Overall,we will continue to strengthen our cooperation and relationships with financial institutions and keep diversifying our institutional funding sources. With China's steady economic rebound and implementation of favorable policies to support domestic consumption,we are confident in our execution capabilities to create long-term value for our investors and shareholders."

Mr. Frank Fuya Zheng,Chief Financial Officer of the Company,"We are pleased to have seen gradual recovery during the third quarter,thanks to the overall improving market conditions and our continuous efforts to enhance the top line growth and reduce costs across various parts of our business."

"We continued to strengthen our risk management capabilities and focused on expanding the quality of our borrower base. The improvement in our credit risk profile has brought a significant decrease of RMB56.3 million in the bad debt provisions for accounts receivable and loans receivable in the third quarter when compared with the previous quarter. Together with other cost control initiatives,we successfully narrowed the net loss for the quarter. So far into the fourth quarter,we are seeing more positive signs on the borrower side. As of October 31,the delinquency rates for all outstanding loans that are past due for 31-90 days and 91–180 days further dropped to 1.94% and 3.84%,an outstanding performance showing the high effectiveness of our risk control model and improvements in the quality of our borrowers."

"In addition,our efforts to expand and deepen our cooperation with financial institutional partners continued to bear fruit. The total number of financial institutions which we cooperate with continued to increase during the third quarter,and at the same time,we also managed to reduce overall funding costs in this quarter. We will continue to engage with more financial institutions to further optimize our cost structure. In the meantime,we continued to diversify our partnerships with third-party financial guarantee companies."

"In conclusion,we will continue to closely monitor regulations and market conditions,and ensure we will adapt quickly in response to anypotentialimpact on our business due to changes in the macro environment. In addition,we will continue to provide more attractive loan products,further improve the credit quality of our borrower base and explore additional cooperation opportunities with financial institutions to capture untapped growth in the personal finance industry."

Third Quarter 2020 Financial Results

Total net revenue decreased by 34.5% to RMB559.8 million (US$82.5 million) from RMB854.3 million in the same period of 2019,primarily due to a decline in total loan facilitation amount in this quarter when compared with the same period of 2019.

Loan facilitation service fees under the direct model decreased by 37.7% to RMB350.4 million (US$51.6 million) from RMB562.1 million in the same period of 2019,primarily due to the combined effect of (i) a decrease in the amount of loans facilitated through direct model compared with the same period of 2019,and (ii) a change in the product mix.

Loan facilitation service fees under the intermediary modelwas RMB3.0 million (US$0.4 million),compared with RMB50.2 million in the same period of 2019,primarily due to the fact that substantially all of the institutional investors invested their funds in the loans facilitated under direct model and/or trust model,depending on their investment strategies.

Post-origination servicefees decreased by 37.1% to RMB49.5 million (US$7.3 million) from RMB78.8 million in the same period of 2019,as a result of the cumulative effect of decreased volume of loans facilitated in the previous quarters. Revenues from post-origination services are recognized on a straight-line basis over the term of the underlying loans as the services are being provided.

Financing incomeincreased by 1.8% to RMB138.8 million (US$20.4 million) from RMB136.4 million in the same period of 2019,primarily due to an increase in average loan balances held by the Company. These loans do not qualify for sales accounting,and the service fees are recognized as financing income over the life of the underlying financing using the effective interest method.

Other revenue decreased by 32.6% to RMB18.1 million (US$2.7 million) from RMB26.9 million in the same period of 2019,primarily due to a decrease in penalty fees for late or early repayment and commission fees for introducing borrowers to other platforms.

Origination and servicing expenses increased by 19.9% to RMB561.2 million (US$82.7 million) from RMB468.2 million in the same period of 2019,primarily due to the following factors: (i) an increase in collection expenses resulting from a more active policy taken to address the impact of COVID-19,and (ii) an increase in interest expenses related to financing income. Meanwhile,to better reflect the origination and servicing expenses incurred in connection with the loans facilitated through the Consolidated Trusts,the management fees paid to third-party trust companies,amounting to RMB15.2 million compared with RMB5.5 million in the same period of 2019,have been reclassifiedfrom general and administrative expenses to origination and servicing expenses. The comparative figures have been reallocated to conform with the current period's classification.

General and administrative expenses decreased by 37.1% to RMB35.8 million (US$5.3 million) from RMB56.9 million in the same period of 2019,primarily due to a decrease in share-based compensation expenses.

Sales and marketing expenses decreased by 85.0% to RMB3.9 million (US$0.6 million) from RMB25.9 million in the same period of 2019,primarily due to a reduction in promotional and advertising expenses since the outbreak of COVID-19.

Reversal of provision for contingent guarantee liabilities was RMB19.4 million (US$2.9 million) primarily attributable to the decrease in estimated default of the loans subject to guarantee liabilities facilitated in prior periods.

Provision for accounts receivable and contract assetsdecreased by 71.2% to RMB24.3 million (US$3.6 million) from RMB84.7 million in the same period of 2019,primarily due to the combined effect of (i) a decrease in accounts receivable and contract assets,and (ii) a decrease in the estimated default rates.

Provision for loans receivable was RMB58.1 million (US$8.6 million),compared with RMB3.9 million in the same period of 2019,primarily due to an increase in loans receivable from credit loans and revolving loans.

Loss from operationwas RMB101.4 million (US$14.9 million),compared with income from operation ofRMB214.7 million in the same period of 2019.

Loss before income taxes and loss from equity in affiliateswas RMB108.2 million (US$15.9 million),compared with income before income taxes and gain from equity in affiliates of RMB188.1 million in the same period of 2019.

Income tax expenses was RMB1.6 million (US$0.2 million),compared with RMB26.5 million in the same period of 2019,primarily due to a decrease in the taxable income.

Net loss attributable to X Financial shareholderswas RMB113.0 million (US$16.6 million),compared with net income attributable to X Financial shareholders of RMB169.6 million in the same period of 2019.

Non-GAAP adjusted net loss attributable to X Financial shareholders was RMB111.7 million (US$16.5 million),compared with non-GAAP adjusted net income attributable to X Financial shareholders of RMB208.0 million in the same period of 2019.

Net loss per basic and diluted ADS was RMB2.10 (US$0.31),compared with net income per basic and diluted ADS of RMB1.08 and RMB3.12,in the same period of 2019.

Non-GAAP adjusted net loss per basic and diluted ADSwas RMB2.10 (US$0.31),compared with non-GAAP adjusted net income per basic and diluted ADS of RMB3.96 and RMB3.84,in the same period of 2019.

Cash and cash equivalentswas RMB324.3 million (US$47.8 million) as of September 30,compared with RMB333.5 million as of June 30,2020.

Business Outlook

Given the ongoing regulatory changes,all market players are taking a more prudent risk management approach and theCompany is in the process of reassessing its institutional cooperators. Based on the Company's preliminary assessment,the deposits paid to its institutional cooperators are subject to impairment risks. Consequently,the Company is unable to reasonably determine a near-term outlook for its business.

Conference Call

X Financial's management team will host an earnings conference call at 7:00 AM U.S. Eastern Time on Wednesday,December 2,2020 (8:00 PM Beijing / Hong Kong Time on the same day).

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

United States:

1-888-346-8982

Hong Kong:

852-301-84992

Mainland China:

4001-201203

International:

1-412-902-4272

Passcode:

X Financial

Please dial in ten minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following numbers until December 9,2020:

United States:

1-877-344-7529

International:

1-412-317-0088

Passcode:

10150253

Additionally,a live and archived webcast of the conference call will be available at http://ir.xiaoyinggroup.com.

About X Financial

X Financial (NYSE: XYF) (the "Company") is a leading technology-driven personal finance company inChinafocused on meeting the huge demand for credit from individuals and small-to-medium-sized enterprise owners. The Company's proprietary big data-driven risk control system,WinSAFE,builds risk profiles of prospective borrowers using a varietydata-driven credit assessment methodology to accurately evaluate a borrower's value,payment capability,payment attitude and overall creditworthiness. X Financial has established a strategic partnership with ZhongAn Online P&C Insurance Co.,Ltd. in multiple areas of its business operations to directly complement its cutting-edge risk management and credit assessment capabilities. ZhongAn Online P&C Insurance Co.,Ltd. provides credit insurance onX Financial'sinvestment products which significantly enhances investor confidence and allows the Company to attract a diversified and low-cost funding base from individuals,enterprises and financial institutions to support its growth. X Financial leverages financial technology to provide convenient,efficient,and secure investment services to a wide range of high-quality borrowers and mass affluent investors which complements traditional financial institutions and helps to promote the development of inclusive finance inChina.

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

Use of Non-GAAP Financial Measures Statement

In evaluating our business,we consider and use non-GAAP measures as supplemental measures to review and assess our operating performance. We present the non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. We also believe that the use of the non-GAAP financial measures facilitates investors' assessment of our operating performance.

We use in this press release the following non-GAAP financial measures: (i) adjusted net income,(ii) adjusted net income attributable to X Financial shareholders,(iii) adjusted net income per basic ADS,and (iv) adjusted net income per diluted ADS,each of which excludes share-based compensation expense. These non-GAAP financial measuresare not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools,and when assessing our operating performance,investors should not consider them in isolation,or as a substitute forthe financial information prepared and presented in accordance with U.S. GAAP.

We mitigate these limitations by reconciling the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures,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.

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

New Accounting Pronouncements

In June 2016,the FASB issued Accounting Standard Update ("ASU") No. 2016-13,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience,current conditions,and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses,as well as the credit quality and underwriting standards of the Group's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. The Company have adopted the new standard effective January 1,using a modified retrospective basis under which prior comparative periods are not restated. The impact of the adoption of this guidance on the Group's consolidated statements of comprehensive income after tax amounts to RMB17.2 million as of January 1,2020.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted,all translations from RMB to U.S. dollars are made at a rate of RMB 6.7896 to US$1.00,the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of September 30,2020.

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 contact:

X Financial

Mr. Frank Fuya Zheng

E-mail: ir@xiaoying.com

Christensen

In China

Mr. Eric Yuan

Phone: +86-10-5900-1548

E-mail: eyuan@christensenir.com

In US

Ms. Linda Bergkamp

Phone: +1-480-614-3004

Email: lbergkamp@christensenir.com

X Financial

Unaudited Condensed Consolidated Balance Sheets

(In thousands,except for share and per share data)

As of December 31,2019

As of September 30,2020

RMB

RMB

USD

ASSETS

Cash and cash equivalents

1,005,980

324,251

47,757

Restricted cash

514,323

758,207

111,672

Accounts receivable and contract assets,net of

allowance for doubtful accounts

771,154

306,369

45,123

Loans receivable from Xiaoying Credit Loans and

Revolving Loans,net

289,553

1,002,131

147,598

Loans at fair value

2,782,333

1,839,056

270,864

Deposits to institutional cooperators

518,720

1,850,925

272,612

Prepaid expenses and other current assets

707,450

523,697

77,132

Financial guarantee derivative

719,962

503,284

74,126

Deferred tax assets,net

465,441

576,978

84,980

Long term investments

292,142

302,044

44,486

Property and equipment,net

20,139

13,121

1,933

Intangible assets,net

35,127

37,786

5,565

Loan receivable from Xiaoying Housing Loans,net

89,536

60,011

8,839

Other non-current assets

68,772

40,058

5,900

TOTAL ASSETS

8,280,632

8,137,918

1,198,587

LIABILITIES

Payable to investors

3,006,349

3,259,161

480,023

Guarantee liabilities

17,475

10,119

1,490

Financial guarantee derivative

-

51,675

7,611

Short-term bank borrowings

-

322,495

47,498

Accrued payroll and welfare

63,649

49,210

7,248

Other tax payable

58,086

39,311

5,790

Income tax payable

340,996

294,006

43,302

Deposit payable to channel cooperators

108,923

24,733

3,643

Accrued expenses and other liabilities

274,440

315,104

46,410

Other non-current liabilities

42,300

18,200

2,681

Deferred tax liabilities

1,309

573

84

TOTAL LIABILITIES

3,913,527

4,384,587

645,780

Commitments and Contingencies

Equity:

Common shares

201

201

30

Additional paid-in capital

2,987,363

3,043,185

448,213

Retained earnings

1,311,194

658,163

96,937

Other comprehensive income

67,101

50,494

7,437

Total X Financial shareholders' equity

4,365,859

3,752,043

552,617

Non-controlling interests

1,246

1,288

190

TOTAL EQUITY

4,367,105

3,753,331

552,807

TOTAL LIABILITIES AND EQUITY

8,587

X Financial

Unaudited Condensed Consolidated Statements of Comprehensive Income

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands,except for share and per share data)

2019

2020

2020

2019

2020

2020

RMB

RMB

USD

RMB

RMB

USD

Net revenues

Loan facilitation service-Direct Model

562,066

350,381

51,606

1,662,568

793,967

116,939

Loan facilitation service-Intermediary Model

50,186

2,959

436

221,137

41,190

6,067

Post-origination service

78,768

49,514

7,293

248,326

162,452

23,927

Financing income

136,353

138,826

20,447

214,344

441,171

64,977

Other revenue

26,901

18,120

2,669

76,571

37,881

5,579

Total net revenue

854,274

559,800

82,451

2,422,946

1,476,661

217,489

Operating costs and expenses:

Origination and servicing

468,226

561,241

82,662

1,231,021

1,520,781

223,987

General and administrative

56,914

35,791

5,271

164,904

142,846

21,039

Sales and marketing

25,854

3,874

571

83,299

30,771

4,532

(Reversal of) provision for contingent guarantee liabilities

-

(19,438)

(2,863)

-

2,152

317

Provision for accounts receivable and contract assets

84,659

24,346

3,586

188,915

134,722

19,842

Provision for loans receivable

3,923

58,135

8,562

44,390

211,501

31,151

(Reversal of) credit losses for other financial assets

-

(2,718)

(400)

-

6,879

1,013

Total operating costs and expenses

639,576

661,231

97,389

1,712,529

2,049,652

301,881

Income (loss) from operations

214,698

(101,431)

(14,938)

710,417

(572,991)

(84,392)

Interest income,net

7,286

5,752

847

12,692

15,990

2,355

Foreign exchange gain (loss)

692

8,984

1,323

(159)

8,911

1,312

Investment loss

-

-

-

(12,538)

-

-

Change in fair value of financial guarantee derivative

(84,690)

(26,579)

(3,915)

(198,952)

(143,621)

(21,153)

Fair value adjustments related to Consolidated Trusts

49,079

3,245

478

130,930

(43,416)

(6,394)

Other income (loss),net

1,042

1,798

265

10,028

10,789

1,589

Income (loss) before income taxes and gain (loss) from equity in affiliates

188,107

(108,231)

(15,940)

652,418

(724,338)

(106,683)

Incometaxbenefit (expense)

(26,514)

(1,576)

(232)

27,358

72,912

10,739

Gain (loss) from equity in affiliates

7,983

(3,224)

(475)

15,027

(1,564)

(230)

Net income (loss)

169,576

(113,031)

(16,647)

694,803

(652,990)

(96,174)

Less: net income (loss) attributable to non-controlling interests

-

(7)

(1)

200

41

6

Net income (loss) attributable to X Financial shareholders

169,024)

(16,646)

694,603

(653,031)

(96,180)

Net income (loss)

169,174)

Other comprehensive income,net of tax of nil:

Foreign currency translation adjustments

4,644

(26,816)

(3,950)

7,375

(16,607)

(2,446)

Comprehensive income (loss)

174,220

(139,847)

(20,597)

702,178

(669,597)

(98,620)

Less: comprehensive income (loss) attributable to non controlling interests

-

(7)

(1)

200

41

6

Comprehensive income (loss) attributable to X Financial shareholders

174,840)

(20,596)

701,978

(669,638)

(98,626)

Net income per share—basic

0.54

(0.35)

(0.05)

2.23

(2.03)

(0.30)

Net income per share—diluted

0.52

(0.35)

(0.05)

2.18

(2.03)

(0.30)

Net income per ADS—basic

3.24

(2.10)

(0.31)

13.38

(12.18)

(1.79)

Net income per ADS—diluted

3.12

(2.10)

(0.31)

13.08

(12.18)

(1.79)

Weighted average number of ordinary shares outstanding—basic

316,387,394

321,262,508

321,508

311,794,242

320,563

320,563

Weighted average number of ordinary shares outstanding—diluted

323,103,017

327,099,971

327,971

318,509,865

326,751,026

326,026

X Financial

Unaudited Reconciliations of GAAP and Non-GAAP Results

Three Months Ended September 30,except for share and per share data)

2019

2020

2020

2019

2020

2020

RMB

RMB

USD

RMB

RMB

USD

GAAP net income (loss)

169,174)

Add: Share-based compensation expenses (net of tax of nil)

38,421

1,292

190

119,574

55,448

8,167

Non-GAAP adjusted net income (loss)

207,997

(111,739)

(16,457)

814,377

(597,542)

(88,007)

Net income (loss) attributable to X Financial shareholders

169,180)

Add: Share-based compensation expenses (net of tax of nil)

38,167

Non-GAAP adjusted net income (loss) attributable to X Financial shareholders

207,732)

(16,456)

814,177

(597,583)

(88,013)

Non-GAAP adjusted net income (loss) per share—basic

0.66

(0.35)

(0.05)

2.61

(1.86)

(0.27)

Non-GAAP adjusted net income (loss) per share—diluted

0.64

(0.35)

(0.05)

2.56

(1.86)

(0.27)

Non-GAAP adjusted net income (loss) per ADS—basic

3.96

(2.10)

(0.31)

15.66

(11.16)

(0.54)

Non-GAAP adjusted net income (loss) per ADS—diluted

3.84

(2.10)

(0.31)

15.36

(11.16)

(0.54)

Weighted average number of ordinary shares outstanding—basic

316,026

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