A：During the second quarter, E Digital experienced a meaningful progress in its transformation, with improvements in the credit environment, a shift towards a technology-driven and light revenue model, and increased AI application across operations. The company is building a broader technology and AI ecosystem to apply AI capabilities across new industries and diversify revenue sources. The CEO mentioned that credit quality was improved, technology and talent investments were made, and AI was further integrated across operations to build a more resilient technology platform and diverse science business.

A：E Digital's specific achievements in the lending business include a continued improvement in credit quality, with a decrease in the non-performing loan balance. In the insurance business, the company expanded the scale and reach of its platform, increased the number of insurance clients, issued more than 918,000 new policies (up 177% year over year), and saw an increase in gross written premiums. The insurance revenue grew 16% year over year, supported by internet insurance distribution and traditional insurance applications.

A：E Digital's AI technology is contributing to its operations by enabling more efficient customer acquisitions and precision marketing, and by supporting other financial services to increase the value of customer relationships. The AI capabilities also facilitate a transition towards a lighter revenue model with reduced reliance on capital and the credit cycle. The results include a record high repeat borrower rate, improved credit recovery, and a decline in delinquency rates. AI is being applied across customer acquisition, service, risk management, compliance, and internal decision-making, leading to practical applications with clear objectives, measurable performance indicators, profit accountability, and human oversight. The deployment of AI is expected to continue expanding, with a focus on data governance, model monitoring, and security controls.

A：The company's strategy for expanding AI capabilities involves leveraging its internally developed AI and engineering expertise, combining it with external innovation through partnerships, investments, and potential acquisitions. This approach has been used to support AI native companies across various application areas.

A：The identified AI native companies are primarily focused on education and entertainment use cases. These sectors are significant because the company believes AI applications will become increasingly important for value creation as the industry evolves beyond current infrastructure focuses, and education and entertainment present strong potential for personalized and differentiated experiences.

A：The company began working with these AI native companies in 2024 when they were at an early stage of development and had limited or no revenue. The company provided early-stage support beyond capital, including assistance with strategy, team development, technology, product definition, distribution, and risk management.

A：The purpose of the warrant and acquisition strategy is to build the AI application portfolio in a disciplined and capital-efficient manner, allowing the company to establish strategic relationships with these companies and increase ownership as they mature and demonstrate further commercial progress.

A：The company is looking to acquire a controlling stake in an interactive entertainment platform that is focused on AI-powered user-generated role-playing content and digital character experiences. This company is a strategic fit because it operates profitably, has a scalable and engaging content ecosystem, and demonstrates strong growth, making it a potential contributor to the company's revenue base.

A：The company's goal is not just to build a portfolio of individual AI investments but to develop an AI ecosystem where technology infrastructure, simple type capabilities, and AI native applications complement each other, creating opportunities for distribution and innovation across multiple application layers.

A：The strategic focus for the remainder of 2026 includes protecting asset quality while transitioning towards a technology-driven and asset-light recorder model, integrating online and offline channels to expand the customer base, improving retention and revenue quality, and continuing to deepen the application of AI through existing operations while selectively expanding the AI ecosystem through partnerships and strategic investments.

A：The company has taken measures to invest in digital insurance and AI capabilities, resulting in technology-related revenue streams. The lending business has stabilized with improved credit conditions, leading to lower provisions for contingent liabilities and a 9% sequential narrowing of the net loss.

A：The year over year decrease in credit solution revenue was primarily reflected in lower loan facilitation volume as the industry implemented new regulatory requirements for online loan facilitation imposed last year.

A：The company is advancing the transition from a capital-intensive risk-taking model to a more asset-light technology-led model by focusing on technology-enabled borrower acquisitions, loan facilitations, and related technology services. This is expected to contribute to a greater diversification of revenue streams with lower reliance on guarantee-related exposure.

A：The company's insurance business had an increase in the number of insurance clients by 14% to approximately 453,000, and gross written premiums increased 2% to 838.9 million RMP. Insurance brokerage revenue decreased by 23% to 67.3 million RMP, but this was supported by the continued expansion of internet insurance distribution and steady growth in traditional insurance operations.

A：The technology service revenues increased by 5.9% compared to the second quarter of 2025, and modestly declined by 2.3% quarter over quarter. The year over year growth reflects increasing contributions from technology services within the non-lending business.

A：Sales and marketing expenses were 126.9 million RMP, up 12% from the first quarter but down 63% year over year. The quarterly increase was mainly due to higher internet-based marketing costs for new customers, while the year over year decrease reflected lower customer acquisition costs. Origination, servicing, and other operating costs were 189.6 million RMP, down 11% on a quarterly basis and up 18% year over year.

A：Provisions for contingent liabilities declined 63% year over year, and the net loss narrowed by 9% compared to the first quarter. The decrease in provisions was mainly due to lower-than-expected net charge-off rates on newly originated loans and lower loan facilitation volumes. The company's operating income grew, but this was partially offset by higher allowances for credit loss and a fair value loss.

A：The company's first priority is maintaining sufficient liquidity to meet customer applications, manage credit volatilities, and support normal operations. It will continue to fund internal AI development and selectively evaluate M&A opportunities. The company authorized a share repurchase program allowing up to 10% of its outstanding ordinary shares to be repurchased over the next 12 months.

A：The company's near-term priorities include stabilizing the core business while preserving financial flexibility in credit solutions. It aims to transform loan facilitation models and advance the transition toward a more asset-light technology-led operating model. In insurance, the focus is on converting more existing clients and driving policy growth. The company will continue to grow its technology revenues by investing in AI applications and evaluating external opportunities under disciplined financial and governance standards.