Hexindai Reports Third Quarter of Fiscal Year 2018 Financial Results

BEIJING, Febr. 13, 2018 /PRNewswire/ -- Hexindai Inc. (NASDAQ: HX) ("Hexindai" or the "Company"), a fast-growing consumer lending marketplace in China, today announced its unaudited financial results for the third quarter ended December 31, 2017.

On November 3, 2017, the Company completed its initial public offering ("IPO") and issued 5,036,950 American Depositary Shares ("ADS") at US$10 per ADS for an aggregate offering price of US$ 50,369,500. Throughout the release, each ADS represents one ordinary share. Fiscal year refers to the 12 months ended March 31.

Third Quarter of Fiscal Year 2018 Operational Highlights

• Total loan volume facilitated ⁽¹⁾ was US$388.7 million (RMB2.6 billion) during the third quarter of fiscal year 2018, an increase of 187.1% from the third quarter of fiscal year 2017.
• Gross billing amount (net of VAT)⁽²⁾ was US$46.9 million during the third quarter of fiscal year 2018, an increase of 483.8% from the third quarter of fiscal year 2017.
• Gross billing ratio (net of VAT)⁽³⁾ for credit loans was 12.1% during the third quarter of fiscal year 2018, an increase from 7.4% during the third quarter of fiscal year 2017.
• Number of borrowers ⁽⁴⁾ was 32,417 during the third quarter of fiscal year 2018, an increase of 285.3% from the third quarter of fiscal year 2017.
• Number of investors ⁽⁵⁾ was 57,846 during the third quarter of fiscal year 2018, an increase of 132.0% from the third quarter of fiscal year 2017.

Hexindai's platform had facilitated approximately US$2.2 billion (RMB14.0 billion) in loan principal from the inception of its business in March 2014 through December 31, 2017.

Third Quarter of Fiscal Year 2018 Financial Highlights

• Net revenue was US$43.3 million during the third quarter of fiscal year 2018, an increase of 575.9% from the third quarter of fiscal year 2017.
• Operating expenses were US$11.7 million during the third quarter of fiscal year 2018, an increase of 209.9% from the third quarter of fiscal year 2017.
• Net income was US$26.9 million during the third quarter of fiscal year 2018, a significant increase of 1589.1% from the third quarter of fiscal year 2017.
• Adjusted net income attributable to Hexindai Inc.'s shareholder (non-GAAP) in the third quarter of fiscal year 2018 was US$27.6 million, increased by 1632.6% from US$1.6 million in the third quarter of fiscal year 2017.
• Basic EPS in the third quarter of fiscal year 2018 was US$0.58 compared to US$0.04 in the same period of fiscal year 2017.
• Diluted EPS in the third quarter of fiscal year 2018 was US$0.52 compared to US$0.04 in the same period of fiscal year 2017.

Nine Months Ended December 31, 2017 Operational Data

Loan volume

Total loan volume facilitated during the nine months ended December 31, 2017 was US$844.9 million (RMB5.7 billion), an increase of 124.4% from US$378.8 million (RMB2.5 billion) during the same period of fiscal year 2017.

Number of borrowers

Number of borrowers was 67,850 during the nine months ended December 31, 2017, an increase of 237.8% from the same period of fiscal year 2017.

Number of investors

Number of investors was 100,845 during the nine months ended December 31, 2017, an increase of 126.4% from the same period of fiscal year 2017.

"We delivered another solid quarter of financial and operational growth," commented Mr. Xinming Zhou, Chief Executive Officer of Hexindai. "Loan volumes continued to grow at a triple-digit pace as did the number of investors and borrowers on our platform. The percentage of loan volume acquired through online channels reached another historic high of 24% during the quarter, more than double the 10% from last quarter. We continue to deepen our cooperative agreements with other third-party acquisition channels and are benefiting from the trust and reliability that being a publicly listed company generates. Last month we began holding investor education seminars across China to introduce current and prospective investors on our platform to our advanced risk management systems, development strategy and insurance policies among other topics which we believe will help further increase trust in our platform and strengthen our brand equity. We will continue to invest in enhancing our IT infrastructure and increasing operational efficiency to reinforce our competitive advantage in China's rapidly growing consumer lending marketplace."

Third Quarter of Fiscal Year 2018 Unaudited Financial Results

Net revenue

Net revenue during the third quarter of fiscal year 2018 was US$43.3 million, an increase of 575.9% compared to US$6.4 million during the same quarter of fiscal year 2017. The increase was primarily due to the significant increase in the volume of credit loans facilitated through Hexindai's marketplace, which increased from RMB0.7 billion (US$0.1 billion) in the third quarter of fiscal year 2017 to RMB2.6 billion (US$0.4 billion) in the same quarter of fiscal year 2018. The increase in the volume of credit loans facilitated through our marketplace was driven by an increase in the number of credit loan borrowers from 8,403 in the third quarter of fiscal year 2017 to 32,417 in the same quarter of fiscal year 2018. The increase in net revenues was also due to the increase in gross billing ratio (net of VAT) for credit loans from 7.4% in the third quarter of fiscal year 2017 to 12.1% in the same quarter of fiscal year 2018. The risk reserve liability charge decreased from US$1.6 million in the three months ended December 31, 2016 to nil in the three months ended December 31, 2017 as our risk reserve liability policy has been discontinued and replaced by a third party insurance arrangement since February 1, 2017, there was no risk reserve liability charge in the three months ended December 31, 2017, which also contributed to the increase of net revenue.

Operating expenses

Total operating expenses during the third quarter of fiscal year 2018 were US$11.7 million, an increase of 209.9% from US$3.8 million in the same quarter of last fiscal year. The significant increase was primarily due to increase in sales and marketing expenses and general and administrative expenses.

Sales and marketing expenses

Sales and marketing expenses during the third quarter of fiscal year 2018 were US$5.5 million, an increase of 288.3% from US$1.4 million during the same quarter of last fiscal year. The increase was primarily due to an increase in employee expenses and a series of promotional and brand image campaigns to enhance the Company's brand recognition and acquire more customers.

Service and development expenses

Service and development expenses during the third quarter of fiscal year 2018 were US$3.2 million, an increase of 114.8% from US$1.5 million during the same quarter of last fiscal year. The increase was primarily attributable to an increase in employee expenses, platform maintenance fees and custodian bank account management fees which were in line with growth in the volume of loans facilitated through the Company's platform.

General and administrative expenses

General and administrative expenses during the third quarter of fiscal year 2018 were US$3.0 million, an increase of 245.6% from US$0.9 million during the same period of last fiscal year. The increase was primarily attributable to an increase in employee expenses, professional service fees and the share-based compensation expenses.

Net income

As a result of the foregoing, a significant increase of 1589.1% in our net income, which increased from US$1.6 million during the third quarter of fiscal year 2017 to US$26.9 million during the same quarter of fiscal year 2018.

Adjusted net income attributable to Hexindai Inc.'s shareholder and adjusted EPS

Adjusted net income attributable to the Company's shareholders, which excluded share-based compensation expenses, increased by 1632.6% to US$27.6 million in the third quarter of fiscal year 2018 from US$1.6 million in the same quarter of fiscal year 2017. Accordingly, the adjusted earnings per basic share increased to US$0.60 in the third quarter of fiscal year 2018 from US$0.04 in the same period of fiscal year 2017 and the adjusted earnings per diluted share increased to US$0.54 in the third quarter of fiscal year 2018 from US$ 0.04 in the same quarter of fiscal year 2017.

Nine Months Ended December 31, 2017 Unaudited Financial Results

Net revenue

Net revenue during the nine months ended December 31, 2017 was US$79.6 million, an increase of 414.8% from US$15.5 million during the same period of last fiscal year. The increase was primarily due to the significant increase in the volume of credit loans facilitated through Hexindai's marketplace, which increased from RMB1.5 billion (US$0.2 billion) in the nine months ended December 31, 2016 to RMB5.6 billion (US$0.8 billion) in the nine months ended December 31, 2017. The increase in the volume of credit loans facilitated through our marketplace was driven by an increase in the number of credit loan borrowers from 19,724 in the nine months ended December 31, 2016 to 67,815 in the nine months ended December 31, 2017. The increase in net revenues was also due to the increase in gross billing ratio (net of VAT) for credit loans from 7.4% in the nine months ended December 31, 2016 to 10.4% in the nine months ended December 31, 2017. The risk reserve liability charge decreased from US$4.0 million in the nine months ended December 31, 2016 to nil in the nine months ended December 31, 2017 as our risk reserve liability policy has been discontinued and replaced by a third party insurance arrangement since February 1, 2017, there was no risk reserve liability charge in the nine months ended December 31, 2017, which also contributed to the increase of net revenue.

Operating expenses

Total operating expenses during the nine months ended December 31, 2017 were US$23.0 million, an increase of 152.4% from US$9.1 million in nine months ended December 31, 2016. The significant increase was primarily due to increase in sales and marketing expenses and general and administrative expenses.

Sales and marketing expenses

Sales and marketing expense during the nine months ended December 31, 2017 were US$11.7 million, an increase of 259.6% from US$3.3 million from the same period of last fiscal year. The increase was primarily due to an increase in employee expenses, a marketing campaign for new products launched in July 2017 and a series of promotional and brand image campaigns to enhance the Company's brand recognition and acquire more customers.

Service and development expenses

Service and development expenses during the nine months ended December 31, 2017 were US$6.4 million, an increase of 66.3% from US$3.9 million during the same period of last fiscal year. The increase was primarily attributable to an increase in employee expenses, platform maintenance fees and custodian bank account management fees which were in line with growth in the volume of loans facilitated through the Company's platform.

General and administrative expenses

General and administrative expenses during the nine months ended December 31, 2017 were US$4.8 million, an increase of 143.8% from US$2.0 million during the same period of last year. The increase was primarily attributable to an increase in employee expenses, professional service fees and the share-based compensation expenses.

Net income

As a result of the foregoing, a significant increase of 1016.3% in our net income, which increased from US$4.3 million during the nine months ended December 31, 2016 to US$48.5 million during the same period of this fiscal year.

Adjusted net income attributable to Hexindai Inc.'s shareholder and adjusted EPS

Adjusted net income attributable to the Company's shareholders, which excluded share-based compensation expenses, increased by 1032.4% to US$49.2 million during the nine months ended December 31, 2017 from US$4.3 million in the nine months ended December 31 2016. Accordingly, the adjusted earnings per basic share increased to US$1.12 during the nine months ended December 31, 2017 from US$0.10 in the same period of last fiscal year and the adjusted earnings per diluted share increased to US$1.07 during the nine months ended December 31, 2017 from US$0.10 in the same period of last fiscal year.

Cash and Cash Flow

As of December 31, 2017, the Company had cash and cash equivalents of US$139.3 million. Net cash provided by operating activities for the nine months ended December 31, 2017 was US$65.0 million, compared to net cash provided by operating activities of US$3.9 million in the same period last fiscal year. The increase in operating cash flow was mainly due to increased net income during nine months ended December 31, 2017. Net cash provided by financing activities for the nine months ended December 31, 2017 was US$52.5 million, compared to net cash provided by financing activities of US$1.1 million in the same period of last fiscal year. The increase in financing activities was mainly due to the net proceeds of US$43.7 million raised from IPO after deducting related costs and expenses.

Business Outlook

Based on the information available as of the date of this press release, Hexindai provides the following outlook, which reflects the Company's current and preliminary view and is subject to change:

Three Months Ending March 31, 2018

• Total loans facilitated will be in the range of US$370.0 million to US$390.0 million.
• Net revenue will be in the range of US$27.0 million to US$29.0 million.
• Adjusted net income will be in the range of US$13.0 million to US$15.0 million.

Fiscal Year Ending March 31, 2018

• Total loans facilitated will be in the range of US$1.22 billion to US$1.24 billion.
• Net revenue will be in the range of US$107.0 million to US$109.0 million.
• Adjusted net income will be in the range of US$62.0 million to US$64.0 million.

Use of Non-GAAP Financial Measures

We used adjusted net income and adjusted EPS, non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes. We believed that the adjusted net income helped identify underlying trends in our business by excluding the impact of share-based compensation expenses, which were non-cash charges. We believed that the adjusted net income provided useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

The adjusted net income was not defined under U.S. GAAP and was not presented in accordance with U.S. GAAP. This non-GAAP financial measure had limitations 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 (loss)/income, cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP.

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

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.

Recent Developments

Expanded Education and Communication Channels with Investors

In October 2017, Hexindai expanded the education and communication channels it has with investors on its official website and mobile app. These channels will help educate investors on recent Company developments, financial tools, risk systems and government regulations while also allowing them to interact with Hexindai management through online Q&A sessions. Hexindai believes that educating its investors and increasing the transparency of its operations and platform will increase trust in the Company and support its healthy and sustainable growth.

Conference Call

The Company will host a conference call to discuss the earnings at 8:00 a.m. Eastern Time on Tuesday, February 13, 2018 (9:00 p.m. Beijing time on the same day).

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

A telephone replay of the call will be available after the conclusion of the conference call through 11:59 p.m. Hong Kong Time, February 21, 2018.

Dial-in numbers for the replay are as follows:

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 its online marketplace. The Company offers borrowers a wide range of products designed based on customer segmentation data and tailored to the specific needs of the emerging middle class in China. Hexindai offers investors various types of investment products with appropriate risk levels and risk-adjusted returns. With its strong O2O capability combining online platform with extensive offline networks, and the advanced risk management system, further safeguarded by the Company's strategic cooperative relationships with a custodian bank and an insurance company, it gains high customer satisfaction and reliance, and realizes fast growth in China.

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

Wendy Xuan
Tel: +86 10 5370 9902 ext. 829
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

The following table presents our summary operating data for three months and nine months ended December 31, 2016 and 2017.

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

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