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LexinFintech Holdings Ltd. Reports First Quarter 2019 Unaudited Financial Results

May 17, 2019

SHENZHEN, China, May 17, 2019 (GLOBE NEWSWIRE) -- LexinFintech Holdings Ltd. (“Lexin” or the “Company”) (NASDAQ: LX), a leading online consumer finance platform for educated young adults in China, today announced its unaudited financial results for the quarter ended March 31, 2019.

First Quarter 2019 Operational Highlights:

-- Total outstanding principal balance of loans1 reached RMB35.0 billion as of March 31, 2019, representing an increase of 64.7% from RMB21.3 billion as of March 31, 2018. -- Total loan originations1 in the first quarter of 2019 reached RMB20.1 billion, an increase of 35.6% from RMB14.8 billion in the first quarter of 2018. -- The GMV2 of our e-commerce channel amounted to RMB1.7 billion, representing an increase of 41.8% from RMB1.2 billion in the first quarter of 2018. -- The weighted average tenor of loans originated on our platform in the first quarter of 2019 was approximately 12.5 months. The weighted average APR3 was 26.2% for the first quarter of 2019. -- Total number of registered users reached 42.2 million as of March 31, 2019, representing an increase of 59.6% from 26.4 million as of March 31, 2018; and users with credit line reached 11.6 million as of March 31, 2019, up by 41.6% from 8.2 million as of March 31, 2018. -- Number of active users4 in the first quarter of 2019 reached 3.2 million, representing an increase of 22.4% from 2.6 million in the first quarter of 2018. Number of new active users in the first quarter of 2019 was 705 thousand, representing an increase of 59.6% from 441 thousand in the first quarter of 2018. -- 90 day+ delinquency ratio5 was 1.42% as of March 31, 2019.

1 Outstanding principal balance and originations of loans represent the outstanding principal balance and originations of both on- and off-balance sheet loans.

2 GMV refers to the total value of transactions completed for products or services purchased on the e-commerce channel of our platform, net of returns.

3 APR is the annualized percentage rate of all-in interest costs and fees to the borrower over the net proceeds received by the borrower. Weighted average APR is weighted by loan origination amount for each loan originated in the period.

4 Active users refer to, for a specified period, users who made at least one transaction during that period through our platform or through our third-party partners’ platforms using credit line granted by us.

5 90 day+ delinquency ratio refers to outstanding principal balance of on- and off-balance sheet loans that were 90 to 179 calendar days past due as a percentage of the total outstanding principal balance of on- and off-balance sheet loans on our platform as of a specific date. Loans that are charged off are not included in the delinquency rate calculation.

First Quarter 2019 Financial Highlights:

-- Total operating revenue reached RMB2.0 billion. Financial services income reached RMB1.3 billion, representing an increase of 23.9% from the first quarter of 2018. Loan facilitation and servicing fees reached RMB911 million, representing an increase of 342% from the first quarter of 2018. -- Gross profit reached RMB907 million, representing an increase of 101% from the first quarter of 2018. -- Net income was RMB583 million, representing an increase of 228% from the first quarter of 2018. -- Non-GAAP EBIT6 was RMB742 million, representing an increase of 197% from the first quarter of 2018. -- Adjusted net income6 was RMB622 million, representing an increase of 203% from the first quarter of 2018. Adjusted net income per ADS6 was RMB3.44 on a fully diluted basis.

6 Non-GAAP EBIT, adjusted net income, adjusted net income per ordinary share and per ADS are non-GAAP financial measures. For more information on non-GAAP financial measures, please see the section of “Use of Non-GAAP Financial Measures Statement” and the tables captioned “Unaudited Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

“I am excited to report another quarter of strong performance, which has been driven by our three key advantages of diversified funding sources, financial technology, and consumption scenarios,” said Mr. Jay Wenjie Xiao, Lexin’s chairman and chief executive officer. “We are looking forward to going beyond consumer finance services in the years to come. We will continue to focus on our customer cohort, the educated young adults, and cater to their consumption needs by offering even more relevant services,” continued Mr. Xiao.

“We continue to see strong year-on-year growth in our business in the first quarter,” said Mr. Craig Yan Zeng, Lexin’s chief financial officer. “In the first quarter, Lexin’s gross profit reached RMB907 million and our non-GAAP EBIT reached RMB742 million, representing an increase of 101% and 197% from the same period in 2018. Our adjusted net income also increased by 203% to RMB622 million as a result of our strong performance.”

“Credit performance and credit quality continues to be strong,” said Mr. Ryan Huanian Liu, Lexin’s chief risk officer. “Our vintage charge-off rate7 is just over 2.0%, and our 90 day+ delinquency rate was 1.42% as of March 31, 2019. We expect the strong performance to continue in the future.”

7 Vintage charge-off rate refers to, with respect to on- and off-balance sheet loans originated during a specified time period, which we refer to as a vintage, the total outstanding principal balance of the loans that are charged off during a specified period, divided by the total initial principal of the loans originated in such vintage.

First Quarter 2019 Financial Results:

Operating revenue increased from RMB1.6 billion in the first quarter of 2018 to RMB2.0 billion in the first quarter of 2019. This increase in operating revenues was due to the increase in financial services income for the quarter, driven by continuing increases in the number of active users and the average total outstanding principal balance of total on-balance sheet and off-balance sheet loans, and the increase in online direct sales and services income for the quarter.

Financial services income increased by 23.9% from RMB1.0 billion in the first quarter of 2018 to RMB1.3 billion in the first quarter of 2019. This increase was primarily contributed by the increase in loan facilitation and servicing fees, partially offset by the decrease in interest and financial services income.

Loan facilitation and servicing fees increased by 342% from RMB206 million in the first quarter of 2018 to RMB911 million in the first quarter of 2019. This increase was primarily due to significant increase in off-balance sheet loans originated as a result of the continuing growth of our business as well as business model adjustments made to Juzi Licai in the second quarter of 2018. All new loans funded by individual investors on Juzi Licai under this new business model have been accounted for as off-balance sheet loans, commencing from late April 2018. Prior to that, loans funded by individual investors on Juzi Licai were accounted for as on-balance sheet loans. As a result, revenues generated from loan facilitation and servicing increased significantly.

Interest and financial services income decreased by 55.2% from RMB784 million in the first quarter of 2018 to RMB351 million in the first quarter of 2019 due to a decrease in on-balance sheet loans originated on our platform as a result of the aforementioned business model adjustments in the second quarter of 2018.

Funding cost decreased by 44.6% from RMB257 million in the first quarter of 2018 to RMB142 million in the first quarter of 2019, which is consistent with the decrease in interest and financial services income.

Processing and servicing cost increased by 77.0% from RMB65.9 million in the first quarter of 2018 to RMB117 million in the first quarter of 2019. This increase was primarily due to an increase in salaries and personnel related costs, an increase in risk management expenses and an increase in fees to third-party payment platforms.

Provision for credit losses of financing receivables decreased by 46.8% from RMB287 million in the first quarter of 2018 to RMB153 million in the first quarter of 2019, which is consistent with the decrease in the on-balance sheet loans originated on our platform. The Company is continuing to improve its credit assessment and risk management capabilities to enhance its collection efforts while maintaining credit risks at a reasonable level.

Gross profit increased by 101% from RMB452 million in the first quarter of 2018 to RMB907 million in the first quarter of 2019. The significant increase in the gross profit margin is primarily due to the significant increase of loan facilitation and servicing fees resulting from the enlarged proportion of the off-balance sheet loans, which have higher gross profit margin than interest and financial services income generated from on-balance sheet loans.

Sales and marketing expenses increased by 92.3% from RMB102 million in the first quarter of 2018 to RMB195 million in the first quarter of 2019. This increase was primarily due to an increase in online promotional fees and advertising costs, an increase in share-based compensation expenses allocated to sales and marketing expenses, and an increase in salaries and personnel related costs.

Research and development expenses increased by 37.8% from RMB68.1 million in the first quarter of 2018 to RMB93.8 million in the first quarter of 2019. This increase was primarily due to an increase in share-based compensation expenses allocated to research and development expenses, and an increase in salaries and personnel related costs.

General and administrative expenses increased by 48.7% from RMB58.6 million in the first quarter of 2018 to RMB87.2 million in the first quarter of 2019. This increase was primarily due to an increase in share-based compensation expenses allocated to general and administrative expenses, and an increase in salaries and personnel related costs.

Gain on guarantee liabilities, net for the first quarter of 2019 was RMB104 million, which resulted from releasing of liabilities through our performance of the guarantee for loans funded by individual investors on Juzi Licai that are covered by risk safeguard scheme set up in late April 2018.

Change in fair value of financial guarantee derivatives, net for the first quarter of 2018 was a loss of RMB8.1 million, compared to a gain of RMB50.5 million in the first quarter of 2019. The increase was primarily due to realization of gains through our performance of the guarantee, which is consistent with the continuing increases of underlying off-balance sheet loans originated on our platform since early 2018.

Income tax expense for the first quarter of 2019 was RMB118 million, compared to income tax expense of RMB41.4 million in the first quarter of 2018. The increase was primarily due to the significant increase of our taxable income from the same period of 2018.

Net income for the first quarter of 2019 was RMB583 million, representing an increase of 228% from RMB178 million in the first quarter of 2018.

Adjusted net income for the first quarter of 2019 was RMB622 million, representing an increase of 203% from RMB205 million in the first quarter of 2018.

Please click here to view our vintage curve:

http://ml.globenewswire.com/Resource/Download/4dad8d2b-ebeb-4693-a4d7-cfa8fb017b0e

Outlook

Based on Lexin’s preliminary assessment of the current market conditions, the Company continues to expect total loan originations for the fiscal year 2019 to be approximately RMB90 billion to RMB100 billion. This is Lexin’s current and preliminary view, which is subject to changes and uncertainties.

Conference Call

The Company’s management will host an earnings conference call at 7:00 AM U.S. Eastern time on May 17, 2019 (7:00 PM Beijing/Hong Kong time on May 17, 2019).

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

United States: 1 845 675 0437 or 1 866 519 4004 International: 65 6713 5090 Hong Kong: 800 906 601 or 852 3018 6771 China: 400 6208 038 or 800 8190 121 Participants should dial-in at least 5 minutes before the scheduled start time and use the following passcode: Passcode: 8899945

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.lexin.com.

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until May 24, 2019, by dialing the following telephone numbers:

United States: 1 855 452 5696 or 1 646 254 3697 International: 61 2 8199 0299 Replay Access Code: 8899945

About LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd. is a leading online consumer finance platform for educated young adults in China. As one of China’s leading financial technology companies, Lexin integrates its e-commerce-driven installment finance platform, Fenqile, with advanced risk management technologies, the Company’s Dingsheng asset distribution technology platform, and the Company’s Juzi Licai online investment platform for individual investors, to create a comprehensive consumer finance ecosystem. The Company utilizes technologies including big data, cloud computing and artificial intelligence to enable the near-instantaneous matching of user funding requests with offers from the Company’s more than 30 funding partners, which include commercial banks, consumer finance companies, and other licensed financial institutions.

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

To follow us on Twitter, please go to: https://twitter.com/LexinFintech.

Use of Non-GAAP Financial Measures Statement

In evaluating our business, we consider and use adjusted net income and non-GAAP EBIT, two non-GAAP measures, as supplemental measures to review and assess our operating performance. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define adjusted net income as net income excluding share-based compensation expenses and non-GAAP EBIT as net income excluding income tax expense, share-based compensation expenses, and interest expense, net.

We present these non-GAAP financial measures because it is used by our management to evaluate our operating performance and formulate business plans. Adjusted net income enables our management to assess our operating results without considering the impact of share-based compensation expenses. Non-GAAP EBIT, on the other hand, enables our management to assess our operating results without considering the impact of income tax expense, share-based compensation expenses, and interest expense, net. We also believe that the use of these non-GAAP financial measures facilitate investors’ assessment of our operating performance. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP.

These non-GAAP financial measures have limitations as an analytical tool. One of the key limitations of using adjusted net income and non-GAAP EBIT is that they do not reflect all items of income and expense that affect our operations. Share-based compensation expenses, income tax expense, and interest expense, net have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted net income and non-GAAP EBIT. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling the non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure, 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.

Exchange Rate Information Statement

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.7112 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on March 29, 2019. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Lexin’s beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as “will,” expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the expectation of its collection efficiency and delinquency, business outlook and quotations from management in this announcement, contain forward-looking statements. Lexin 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. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Lexin’s goal and strategies; Lexin’s expansion plans; Lexin’s future business development, financial condition and results of operations; Lexin’s expectation regarding demand for, and market acceptance of, its credit and investment management products; Lexin’s expectations regarding keeping and strengthening its relationship with borrowers, institutional funding partners, merchandise suppliers and other parties it collaborates with; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Lexin’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Lexin does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

LexinFintech Holdings Ltd.

IR inquiries:

Tony Hung

Tel: +86 (755) 3637-8888 ext. 6258

E-mail: IR@lexin.com

Media inquiries:

Limin Chen

Tel: +86 (755) 3637-8888 ext. 6993

E-mail: liminchen@lexin.com

SOURCE LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except for share and per share data) As of ---------------------------------------------------- December 31, 2018 March31,2019 ----------------- -------------------------------- RMB RMB US$ ASSETS Current assets Cash and cash equivalents 1,148,292 1,341,417 199,877 Restricted cash 1,266,536 1,554,073 231,564 Restricted time deposits 344,212 210,000 31,291 Short‑term financing receivables, net 5,140,634 4,027,899 600,176 Accrued interest receivable 82,943 66,465 9,904 Prepaid expenses and other current assets 923,827 1,007,286 150,090 Amounts due from related parties - 2,230 332 Risk safeguard fund receivable, net 395,025 514,954 76,731 Contract assets and service fees receivable, net 946,293 1,142,136 170,184 Inventories, net 57,196 56,143 8,366 Total current assets 10,304,958 9,922,603 1,478,515 ----------------- ---------- ------------------- Non‑current assets Restricted cash 82,306 98,752 14,715 Long‑term financing receivables, net 1,283,036 1,019,810 151,956 Risk safeguard fund receivable, net 116,208 139,977 20,857 Contract assets and service fees receivable, net 291,784 284,517 42,394 Property, equipment and software, net 82,420 92,569 13,793 Long‑term investments 186,073 192,083 28,621 Deferred tax assets 94,598 99,371 14,807 Other assets* 29,192 156,545 23,326 Total non‑current assets 2,165,617 2,083,624 310,469 TOTAL ASSETS 12,470,575 12,006,227 1,788,984 ----------------- ---------- ------------------- LIABILITIES Current liabilities Accounts payable 135,848 143,979 21,454 Amounts due to related parties 14,569 8,829 1,316 Short‑term borrowings 438,010 230,749 34,383 Short‑term funding debts 4,646,041 3,752,367 559,120 Accrued interest payable 182,280 117,808 17,554 Risk safeguard fund payable 456,276 546,998 81,505 Accrued expenses and other current liabilities* 2,145,689 2,055,698 306,309 Total current liabilities 8,018,713 6,856,428 1,021,641 ----------------- ---------- ------------------- Non‑current liabilities Long‑term funding debts 157,887 210,894 31,424 Deferred tax liabilities 187,183 167,071 24,894 Other long-term liabilities* - 52,188 7,776 Total non‑current liabilities 345,070 430,153 64,094 TOTAL LIABILITIES 8,363,783 7,286,581 1,085,735 ----------------- ---------- ------------------- SHAREHOLDERS’ EQUITY Class A Ordinary Shares 160 164 24 Class B Ordinary Shares 66 64 10 Additional paid‑in capital 2,328,716 2,368,123 352,861 Statutory reserves 200,262 200,262 29,840 Accumulated other comprehensive loss (14,308 ) (23,847 ) (3,553 ) Retained earnings 1,591,896 2,174,880 324,067 TOTAL SHAREHOLDERS’ EQUITY 4,106,792 4,719,646 703,249 ----------------- ---------- ------------------- TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 12,470,575 12,006,227 1,788,984 ----------------- ---------- ------------------- ________________________________________________ * The Company has adopted Accounting Standards Update No. 2016-02, Leases, beginning January 1, 2019 on a modified retrospective basis. As a result, the Company recognized approximately RMB100 million of right-of-use assets recorded in other assets, and corresponding short-term leasing liabilities recorded in accrued expenses and other current liabilities and long-term leasing liabilities recorded in other long-term liabilities respectively on the consolidated balance sheet as of March 31, 2019. The Company elected not to recognize lease assets and liabilities for leases with a term of 12 months or less. The adoption had no impact on the Company’s consolidated statements of operations for the quarter ended March 31, 2019 or the opening balances of retained earnings as of January 1, 2019.

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Statement of Operations

For the Three Months EndedMarch31, (In thousands, except for share and per share data) --------------------------------------- 2018 2019 ----------- ------------------------- RMB RMB US$ Operating revenue: Online direct sales 542,899 624,909 93,114 Services and others 30,094 54,699 8,150 Online direct sales and services income 572,993 679,608 101,264 ----------- ----------- ----------- Interest and financial services income 784,381 351,290 52,344 Loan facilitation and servicing fees 206,042 910,562 135,678 Other revenue 50,302 27,946 4,164 Financial services income 1,040,725 1,289,798 192,186 ----------- ----------- ----------- Total operating revenue 1,613,718 1,969,406 293,450 ----------- ----------- ----------- Operating cost: Cost of sales (548,723 ) (628,002 ) (93,575 ) Funding cost (257,026 ) (142,272 ) (21,199 ) Processing and servicing cost (65,934 ) (116,719 ) (17,392 ) Provision for credit losses of financing receivables (286,791 ) (152,517 ) (22,726 ) Provision for credit losses of contract assets and service fees (3,623 ) (22,461 ) (3,347 ) receivable Total operating cost (1,162,097 ) (1,061,971 ) (158,239 ) ----------- ----------- ----------- Gross profit 451,621 907,435 135,211 ----------- ----------- ----------- Operating expenses: Sales and marketing expenses (101,510 ) (195,183 ) (29,083 ) Research and development expenses (68,093 ) (93,848 ) (13,984 ) General and administrative expenses (58,641 ) (87,210 ) (12,995 ) Total operating expenses (228,244 ) (376,241 ) (56,062 ) ----------- ----------- ----------- Gain on guarantee liabilities, net - 103,677 15,448 Interest expense, net (3,639 ) (2,458 ) (366 ) Change in fair value of financial guarantee derivatives, net (8,075 ) 50,496 7,524 Others, net 7,625 17,610 2,624 Income before income tax expense 219,288 700,519 104,379 ----------- ----------- ----------- Income tax expense (41,428 ) (117,535 ) (17,513 ) ----------- ----------- ----------- Net income 177,860 582,984 86,866 ----------- ----------- ----------- Net income per ordinary share Basic 0.54 1.66 0.25 Diluted 0.49 1.61 0.24 Net income per ADS Basic 1.07 3.32 0.49 Diluted 0.98 3.22 0.48 Weighted average number of ordinary shares outstanding Basic 331,158,139 351,642,939 351,642,939 Diluted 361,428,816 361,647,253 361,647,253

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income

For theThree (In thousands, except for share and per share data) MonthsEndedMarch31, ------------------------------ 2018 2019 ------- - ------------------- RMB RMB US$ Net income 177,860 582,984 86,866 Other comprehensive loss Foreign currency translation adjustments, net of nil tax (43,249 ) (9,539 ) (1,421 ) ------- - ------- - ------ - Total comprehensive income 134,611 573,445 85,445 ------- - ------- - ------ -

LexinFintech Holdings Ltd.

Unaudited Reconciliations of GAAP and Non-GAAP Results

For theThree MonthsEndedMarch31, (In thousands) ------------------------------------- 2018 2019 ----------- ------------------------ RMB RMB US$ Reconciliation of Adjusted Net Income to Net Income Net income 177,860 582,984 86,866 ----------- ----------- ----------- Add: Share-based compensation expenses 27,311 39,407 5,872 ----------- ----------- ----------- Adjusted net income 205,171 622,391 92,738 ----------- ----------- ----------- Adjusted net income per ordinary share Basic 0.62 1.77 0.26 Diluted 0.57 1.72 0.26 Adjusted net income per ADS Basic 1.24 3.54 0.53 Diluted 1.14 3.44 0.51 Weighted average number of ordinary shares outstanding Basic 331,158,139 351,642,939 351,642,939 Diluted 361,428,816 361,647,253 361,647,253

LexinFintech Holdings Ltd.

Unaudited Reconciliations of GAAP and Non-GAAP Results

For theThree (Inthousands) MonthsEndedMarch31, 2018 2019 ------- ---------------- RMB RMB US$ Reconciliations of Non-GAAP EBIT to Net Income Net income 177,860 582,984 86,866 ------- ------- ------- Add: Income tax expense 41,428 117,535 17,513 Share-based compensation expenses 27,311 39,407 5,872 Interest expense, net 3,639 2,458 366 ------- ------- ------- Non-GAAP EBIT 250,238 742,384 110,617 ------- ------- -------