On November 24, new consumer service platform Lexin (NASDAQ: LX) released its Q3 2020 unaudited earnings report. In the third quarter, Lexin facilitated borrowings of 48.3 billion yuan, a year-on-year increase of 30.6%; revenue of 3.2 billion yuan, gross profit of 980 million yuan, and non-GAAP EBITDA of 500 million yuan.

Unlike the previous lending model, Lexin has shifted from a capital-heavy risk-assured lending model to a risk-free technology-assured lending model.

The financial data show that in the third quarter, Lexin's platform services and technology revenue amounted to 1.13 billion yuan, accounting for 36% of revenue. Among them, the risk-free To B technology revenue of 614 million, a year-on-year surge of 159%. Of the new transaction volume, the proportion of risk-free technology-assisted lending model has expanded to 40%, and this proportion continues to increase.

LeFaCard, a credit payment product under Lexin, and LeCard, a membership-based spending platform, are gaining momentum. The latest data shows that the number of paid membership users, such as LeCard, exceeds 2.7 million, and the number of LeFlower cards opened exceeds 11.38 million, while the total size of Lexin's user base has grown significantly by 69.6% year-on-year to reach 106 million, with the number of active transactional users reaching 7.4 million, an increase of 21.3% year-on-year.

Technology service revenue grew 159% year-on-year

Since the announcement of the transition, Lexin's financial business has shifted to a To B technology service model, and data shows that its To B technology service revenue has reached 614 million, a year-on-year increase of 159%.

Xiao Wenjie, CEO of Lexin, said: "Since this year, Lexin's efforts to To B technology service model has begun to bear fruit, since October, our risk-free, pure technology service model of the transaction volume, accounting for the proportion of new transactions has been more than 50%. Under this model, financial institutions bear the risk, we can get a better quality return, more in line with the regulatory direction, and in the long run will also make the company's business model become lighter and the growth space become larger."

At present, Lexin's self-developed products and models can already provide partners with services in customer acquisition, risk control, operation and system construction.

In terms of customer acquisition, Lexin has developed a customized customer acquisition service system based on the RTA model, which can help financial institutions formulate user profiles, screen effective users, and **** the same marketing, etc. At present, Lexin has already helped its partner financial institutions to increase the conversion rate of user registration by 10-30% compared to the previous one, and to increase the conversion rate of credit by 20-50%. The company's business model is based on the idea that the company's business model is a "one-stop-shop".

In terms of risk control, Lexin's "LeTu" risk portrait product can y integrate and process the data within and outside the Lexin system, helping financial partners to increase the credit pass rate by 20% and reduce the risk by more than 50%; the "Negative Entropy" risk operation platform is the core risk control capability. Risk operation platform as the core risk control capabilities, services, including banks, consumer To B risk operation service carrier, for financial institutions to provide anti-fraud deployment, decision flow configuration, federal learning, risk pricing, such as gold, small loans, including more than 100 licensed financial institutions.

In terms of Internet operations, Lexin can help financial institutions to provide product construction, user operations, data services and other basic services; in terms of technical system construction, and financial institutions to cooperate in customizing the credit business system, intelligent risk control system, asset management system, etc., and provide underlying data and basic management support for the system.

Financial data show that in the third quarter, Lexin invested 118 million in research and development. Lexin said that risk-free To B technology services have become its key direction of strength, and will continue to increase technical investment.

In addition, financial data show that Lexin contributed to the borrowing amount of 48.3 billion in the third quarter, up 30.6% year-on-year, and the platform contributed to the borrowing of an average nominal annualized interest rate of 15%; the end of the quarter, the management of the balance of 67.4 billion in the loan, an increase of 31% year-on-year.

It is worth mentioning that Lexin's nominal annualized interest rate of 15% is lower than the latest judicial protection cap of 15.4% for private lending rates. In terms of asset quality, Lexin's overdue rate of over 90 days was 2.6%, and the FDP7 overdue rate also dropped to 1.82% from 2.32% in the previous quarter.

Three major products*** with the same force of new consumption

In addition to technological services, Lexin has also demonstrated its development potential in the field of new consumption, and has launched a new consumption platform strategy. In the third quarter, Lexin's orders totaled 84.4 million, a year-on-year increase of 49.9%.

Xiao Wenjie said, Lexin will continue to explore in the field of new consumption, around the new consumption to launch various innovative products and services, and is expected to complete the pre-epidemic given the annual 170-180 billion yuan transaction volume target.

At present, Lexin has built a new consumer service life centered on the installment consumption brand Installment Le, the digital full-scene installment consumption product Lehuaca, and the membership consumption service brand Lekaca, opening up the online and offline scenes.

Data show that this year's double 11, installment music, music flower card, music card three platforms throughout the day to facilitate the amount of online and offline orders, compared with last year's growth of 90%. Le card from October to the present has launched the National Day dining benefits, double 11 "Le card treat" and other rounds of dining preferences, which was launched during the double 11 "Le card treat" activities average daily turnover increased by 81% compared to October.

Specifically, during the reporting period, Installment Le launched a more open version, supporting users to jump from Installment Le Mall to Taobao, Jinduoduo and other platforms to complete the shopping, with thousands of new consumer brands, the introduction of Jingdong Mall, Xiaomi Yuping, Kaura Haihaisuo, NetEase Yanxuan, etc. Data shows that on the day of Double 11 this year, the average transaction value of the campaign "Le Card treats" increased by 81% compared to October. Data show that on the day of Double 11 this year, the promotion began only 46 seconds, installment Le Mall order amount exceeded 100 million.

Le card and other membership products cumulative service user number of more than 2.7 million, with the number of brand rights and interests of more than 4,000, membership service fee income of more than 27.6 million yuan, an increase of 14% year-on-year. It has covered branded interests such as catering and fresh food, reading and learning, travel and tourism, e-commerce, life services, audio and video games, customized interests, and co-branded memberships.

Credit payment product Lehuaca opened 11.38 million in the third quarter and completed a total of 69.76 million transactions, an increase of 70.4% over last year. So far this year, Lehuaca has served 6.12 million offline merchants, created 210 million orders, and completed a transaction volume of 49.6 billion yuan by driving offline online.

Lexin, also known as Installment Le in its earliest days, was founded in August 2013 as an online shopping mall for installment shopping. Now Lexin has created a new consumer service ecosystem that integrates installment consumption, membership consumption, and financial technology.

In terms of share repurchase, up to now, Lexin CEO Xiao Wenjie, President Wu Yi, and other executives have contributed about $12.9 million to buy about 1.85 million Lexin ADSs (American Depositary Shares) in the open market.