A：China's consumer credit industry faced structural adjustments under regulatory guidance, with weak demand for consumer credit and pressure on asset quality in the first quarter of 2026.

A：Cuffin Holdings managed the challenges by adhering to compliance, prudence, and high quality as core principles of its operations. It proactively optimized its user and asset mix to enhance the health and long-term resilience of its business.

A：Cuffin Holdings' AI-powered credit decision engine served 167 financial institutions and provided digital credit services to over 64 million credit line users as of the end of the first quarter.

A：The company iterated and optimized underlying risk capabilities across the entire credit life cycle in the first quarter, leading to improvements in risk indicators and operational efficiency.

A：Non-GAAP net income declined by 11.6% sequentially to approximately RMB 950 million in the first quarter, while non-GAAP EPADS on a fully diluted basis decreased by 6.4% to RMB 7.70.

A：The company's efforts in the pre-loan stage to identify high-quality customers and mitigate risks included upgrading income and drawdown prediction models for more accurate assessments. In the in-loan stage, the company refined the behavior scorecard to implement targeted strategies and provide flexible options for high-quality borrowers.

A：The company's collection strategies and efficiency improved with a decrease of about 7% in the one-day delinquency rate in the first quarter. Collection scorecard features were enhanced to better reflect market conditions and user behavior, which resulted in a quarterly average 30-day collection rate of 85.8%, up 1.8 percentage points sequentially.

A：The company maintained a disciplined approach to customer acquisition, with a 17% sequential decrease in overall acquisition costs. Unit acquisition costs remained stable compared to the prior quarter. Marketing spending on high-quality users increased by about 40% sequentially to build a pipeline of high-quality assets and improve portfolio quality.

A：The company managed liquidity and funding costs by increasing the proportion ofABS in the funding mix, which reduced funding costs by approximately 10 basis points sequentially. ABS insurance totaled RMB 2.9 billion, up 16% from the prior quarter. Going forward, the company plans to align the pace of ABS issuance with on-balance sheet loan origination to maximize capital efficiency.

A：The company's technology solutions business continued to deepen collaboration with financial institutions and actively cultivate enterprise-facing technology offerings. This business generated loan volumes of RMB 9.96 billion, representing sevenfold year-over-year growth, validating the company's tax-driven capital-light model across multiple use cases.

A：The AI loan officer is being deployed at the city commercial bank to cover its retail SME and corporate business lines.

A：The company's overarching goal is to fully transform into an AI native organization, with a focus on deep knowledge modeling as central to this strategy.

A：The company is converting all historical documents, strategy, libraries, and operational experience into a structured context to create a truly large knowledge base for large language models.

A：AI coding tools have achieved impressive adoption within the engineering teams, with 98.4% of technical personnel using AI tokens as of May, and key roles consuming tens of millions of tokens per person per day.

A：The company plans to steadily extend its AI leverage to more business scenarios, accelerating its evolution into an AI native organization.

A：The company aims to build a robust international presence by leveraging combined strengths in global capital, advanced technology, and local operational expertise, and by expanding efficiently and operating safely across multiple markets.

A：The 'one co two wins' strategy is centered around the company's core credit business, tech solutions commercialization, and overseas expansion as the two wings, driving sustainable high-quality growth over the long term. The company remains committed to this strategy.

A：In the first quarter, the company faced challenges from a quarter of tough macro conditions and tightening regulatory scrutiny, which caused changes in the industry landscape and participants' behavior.

A：Total net revenue for the first quarter was $3.91 billion, compared to $4.09 billion in the previous quarter and $4.69 billion a year ago.

A：The sequential increase in revenue from platform service capital light was mainly due to better ICASSP take rate resulting from improved risk during the quarter.

A：The average IRR of the loans originated or facilitated was 18.7% compared to 19.5% in the prior quarter.

A：The 90-day delinquency rate was 3.5% in the first quarter versus 2.71% in the previous quarter, and the one-day delinquency rate was 5.7% versus 6.1%.

A：The total new provisions for risk-bearing loans in the first quarter were approximately $1.68 billion, down from $1.92 billion in the previous quarter, primarily due to lower risk value in loan volume. The provision coverage ratio was 391% in the first quarter compared to 481% in the previous quarter.

A：The GAAP net profit for the first quarter was $946 million, compared to $1.07 billion in the previous quarter and $1.93 billion a year ago. The significant year-over-year decline in profitability was mainly due to lower loan volume, lower pricing, higher credit costs, and deteriorating operations.

A：The effective tax rate for the first quarter was 21.6%, higher than the typical ETR of approximately 15%, mainly due to withholding tax on dividend distribution from onshore to offshore and more prudent tax provision under tightened tax regulatory scrutiny. The leverage ratio was 2.4 times in the first quarter compared to 2.7 times in the previous quarter, due to lower respiratory loan balance.

A：The company is maintaining a progressive dividend policy and may start to opportunistically look for an entry point to resume share repurchase despite the unsettled micro and regulatory environment.

A：The business outlook for the upcoming quarter reflects a non-GAAP net income between RMB 900 million and RMB 980 million, indicating a year-on-year decline of 47 to 51 percent. The outlook is subject to material changes and reflects the company's current and preliminary view.

A：The ongoing market consolidation in the consumer finance industry is positive for the industry as it accelerates market consolidation. High-cost platforms that grew their market shares through high prices and covered high risks will exit the market. This sets a higher bar for market participants, and companies with precise user profiling and better risk-based pricing capabilities are likely to gain market share. The company is adopting targeted pricing to optimize user mix and has been acquiring high-quality users and optimizing pricing for existing users with better risk profiles.

A：The company's strategy for serving high-quality users involved investing in user acquisition, which was up by 40% sequentially, resulting in a 25% point jump in the share of high-quality users in new customer loan volume. The company also optimized pricing for existing users with better risk profiles by providing competitive offers and expanded their borrowing capabilities. As a result, the average pricing was down 80 basis points sequentially. High-quality users tend to carry lower risk than regular segments, with higher utilization, more repeat borrowing, steady or long-term demand, and healthier LTV. Going forward, the company plans to continue iterating its models to identify higher-quality users, improve risk performance, and use flexible pricing strategies to drive retention and repeat borrowing, which will further improve LTV for this segment.

A：The company's long-term play is to strengthen its capabilities to serve high-quality users. In the short term, it requires investment, which is a trade-off between near-term profit and long-term sustainable value. By building capabilities to serve high-quality users, the company is reshaping its business model to be healthier and better positioned to navigate complex and fast-changing market environments and pricing outlook.

A：The company increased its investment in targeting high-quality users, resulting in a step-change increase in the share of high-quality customer segments and a decline in pricing trends over the past two quarters. Going forward, the company expects to maintain a relatively steady pace on organizational and offering strategy, with a gradual shift to higher-quality users. The company will continue to optimize pricing strategies for high-quality and regular users to balance risk and profit. Over the longer term, the company will remain flexible and adjust its pricing strategy based on regulatory and market changes while continuing to improve risk models and operational efficiency to strengthen profitability.

A：The company is actively adjusting its segment mix and exploring ways to diversify its business in response to the near-term macro and regulatory environment. It is confident in its ability to meet more credit needs over time as it upgrades its capability in serving high-quality users. In terms of shareholder returns, the company focuses on the healthiness and sustainability of the business rather than the scale. The company maintains a robust balance sheet with a strong capital base to support new business growth and shareholder returns. It continues to generate substantial profit and healthy positive cash flow, which builds up the capital base. Both dividend and buybacks are considered options for the company.

A：The company views dividends as a way to provide shareholders with certainty in an uncertain environment and plans to maintain a progressive dividend policy through flexible adjustments to the dividend payout ratio. They also believe their current valuation is attractive and net asset value exceeds the market cap, which supports a viable option for share buybacks to enhance shareholder returns.

A：The company has implemented a series of risk tightening measures and shifted its customer mix towards higher quality customers, which has led to improvements in asset structure and asset quality. While structural changes and risk management improvements have resulted in a decrease in C to M2 ratio and stable to improving credit metrics, the company remains cautious due to ongoing regulatory uncertainty. They focus on improving user mix, asset health, and operating efficiency rather than chasing volume growth or relaxing risk standards. However, there is a positive outlook for structural growth opportunities with a solid safety margin and dynamic adjustments to approval and credit line rules within a safe range.

A：The company has made structural changes to risk management and user mix, which have yielded clear results. Risk tightening measures implemented since the second half of 2025 have significantly reallocated resources towards acquiring and engaging high-quality users. This has resulted in market improvements in asset structure and asset quality, with risk metrics improving month by month. The company has also been exploring structural growth opportunities, adjusting credit policies, and expanding product offerings to serve long-tail customers better.

A：The overall risk indicators for the domestic market in Q1 show a significant improvement. The C to M2 ratio环比下降了17% to 0.8%. The risk in March has returned to levels seen in July and August of the previous year, and it has been stable and improving in April and May. The company expects that as low-risk new放款占比逐步提升, and existing loans到期, the overall risk will continue to优化, which is a cycle that can be expected to take 2 to 3 quarters. The asset quality in Q1 was thus anticipated and is fully in line with expectations.

A：The company is actively managing customer acquisition costs and has shifted towards more effective channels for acquiring high-quality customers. However, specific details on the current trend in获客成本 and the use of particular channels were not provided in the transcript. The risk performance from new customers was mentioned as part of the ongoing risk management efforts, but a detailed breakdown was not given.

A：The collection strategy has been enhanced by upgrading the c score car, adding new features based on risk tier and recent changes in user behaviors, and by matching collection strategies more precisely. This includes better user outreach and tailored prepayment solutions. As a result, the collection rate has been improving month by month.

A：The expected trend for risk management in the second quarter is to improve further on the risk performance from the first quarter. However, due to regulatory uncertainties and potential temporary industry adjustments as policies take effect, the company will maintain a cautious risk strategy, optimizing marginal assets and acquisition channels to prepare for potential market fluctuations.

A：The overall strategy for customer acquisition this year is to be cautious while aiming for structured growth and improving marketing efficiency. In the first quarter, prudent marketing spending was maintained by reallocating resources, which led to a reduction in acquisition costs for regular segments and a focus on higher quality users. Despite higher upfront costs for quality users, the sequential blend acquisition costs were kept flat thanks to an improved user mix.

A：Customer organization costs are not solely focused on low absolute costs but on the payback period, user lifetime value (LTV), and efficiency based on API channels. The acquisition cost is tied to loan volume, so the focus is on measuring return on investment (ROI) per loan to ensure profitability. The goal is to ensure every dollar spent generates solid returns.

A：Efforts have been made to improve operating efficiency across all functions and to dynamically manage operating resources in alignment with business needs, resulting in an optimized cost structure. For instance, collection costs were reduced by scaling back high-cost strategies and improving collection efficiency. Funding costs were lowered by about ten basis points through optimizing the funding mix with an increased contribution from ABS funding. Going forward, the company plans to maintain stable funding costs and seizeABS issuance windows.

A：The strategy for overseas expansion is a key part of the company's growth plan, with more resources being allocated to this area. Targeted markets with significant credit demand have been identified, particularly in regions such as southeast Asia. Data-driven risk management capabilities are being used to enter new markets, starting with localizing risk models by incorporating local credit and open banking data. Early results in new markets align with expectations, and the company plans to build on this foundation for substantial long-term growth while keeping risk under control.