Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Entity Registrant Name | 360 Finance, Inc. |
Entity Central Index Key | 0001741530 |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Dec. 31, 2019 |
Entity File Number | 001-38752 |
Entity Incorporation, State or Country Code | KY |
Amendment Flag | false |
Entity Address, Address Line One | 7/F Lujiazui Finance Plaza |
Entity Address, Address Line Two | No. 1217 Dongfang Road |
Entity Address, Address Line Three | Pudong New Area |
Entity Address, City or Town | Shanghai |
Entity Address, Postal Zip Code | 200122 |
Entity Address, Country | CN |
Current Fiscal Year End Date | --12-31 |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Emerging Growth Company | false |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
ADS | |
Title of 12(b) Security | American depositary shares, eachrepresenting two Class A ordinary shares |
Trading Symbol | QFIN |
Security Exchange Name | NASDAQ |
Ordinary shares | |
Entity Common Stock, Shares Outstanding | 293,420,800 |
Class A ordinary shares | |
Title of 12(b) Security | Class A ordinary shares, par valueUS$0.00001 per share* |
No Trading Symbol Flag | true |
Entity Common Stock, Shares Outstanding | 253,600,214 |
Class B ordinary shares | |
Entity Common Stock, Shares Outstanding | 39,820,586 |
Business Contact | |
Entity Address, Address Line One | 7/F Lujiazui Finance Plaza |
Entity Address, Address Line Two | No. 1217 Dongfang Road |
Entity Address, Address Line Three | Pudong New Area |
Entity Address, City or Town | Shanghai |
Entity Address, Postal Zip Code | 200122 |
Entity Address, Country | CN |
Contact Personnel Name | Jiang Wu |
City Area Code | +86 10 |
Local Phone Number | 5244 7655 |
Contact Personnel Email Address | wujiang-jk@360jinrong.net |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 2,108,123 | $ 302,813 | ¥ 1,445,802 |
Restricted cash (including RMB 6,142 and RMB 354,104 from the consolidated trusts as of December 31, 2018 and 2019 respectively) | 1,727,727 | 248,172 | 567,794 |
Security deposit prepaid to third-party guarantee companies | 932,983 | 134,015 | 795,700 |
Funds receivable from third party payment service providers | 118,860 | 17,073 | 142,622 |
Accounts receivable and contract assets, net (net of allowance of RMB 82,515 and RMB 189,829 as of December 31, 2018 and 2019, respectively) | 2,332,364 | 335,023 | 1,791,745 |
Financial assets receivable, net (net of allowance of RMB 56,656 and RMB 164,563 as of December 31, 2018 and 2019, respectively) | 1,912,554 | 274,721 | 1,193,621 |
Amounts due from related parties (net of allowance of RMB 18,055 and RMB 68,567 as of December 31, 2018 and 2019, respectively) | 478,767 | 68,771 | 484,286 |
Loans receivable, net (including RMB 493,883 and RMB 9,099,099 from the consolidated trusts as of December 31, 2018 and 2019 respectively) | 9,239,565 | 1,327,180 | 811,433 |
Prepaid expenses and other assets (including RMB 4,000 and RMB 95,840 from the consolidated trusts as of December 31, 2018 and 2019 respectively) | 652,545 | 93,732 | 109,016 |
Total current assets | 19,503,488 | 2,801,500 | 7,342,019 |
Non-current assets: | |||
Accounts receivable and contract assets, net-noncurrent (net of allowance of RMB nil and RMB 1,763 as of December 31, 2018 and 2019, respectively) | 19,508 | 2,802 | |
Financial assets receivable, net-noncurrent (net of allowance of RMB nil and RMB 6,240 as of December 31, 2018 and 2019, respectively) | 59,270 | 8,514 | |
Property and equipment, net | 17,113 | 2,458 | 6,869 |
Intangible assets | 3,512 | 504 | 847 |
Deferred tax assets | 697,348 | 100,168 | |
Other non-current assets | 55,362 | 7,952 | |
Total non-current assets | 852,113 | 122,398 | 7,716 |
TOTAL ASSETS | 20,355,601 | 2,923,898 | 7,349,735 |
Current liabilities: | |||
Payable to investors of the consolidated trusts-current | 4,423,717 | 635,427 | 300,341 |
Accrued expenses and other current liabilities | 720,918 | 103,554 | 518,955 |
Amounts due to related parties | 55,622 | 7,990 | 78,767 |
Short term loans | 200,000 | 28,728 | |
Guarantee liabilities | 2,946,855 | 423,289 | 1,399,174 |
Income tax payable | 1,056,219 | 151,716 | 432,066 |
Other tax payable | 263,856 | 37,901 | 164,478 |
Total current liabilities: | 9,667,187 | 1,388,605 | 2,893,781 |
Deferred tax liabilities | 15,758 | ||
Payable to investors of the consolidated trusts-noncurrent | 3,442,500 | 494,484 | |
Other long-term liabilities | 31,184 | 4,479 | |
Total non-current liabilities: | 3,473,684 | 498,963 | 15,758 |
TOTAL LIABILITIES | 13,140,871 | 1,887,568 | 2,909,539 |
Commitments and Contingencies (Note 12) | |||
SHAREHOLDERS' EQUITY | |||
Ordinary shares ($0.00001 par value per share, 5,000,000,000 shares authorized, 287,652,707 shares issued and outstanding as of December 31, 2018, and 302,707,339 shares issued and 293,420,800 shares outstanding as of December 31, 2019, respectively) | 20 | 3 | 20 |
Additional paid-in capital | 5,117,184 | 735,037 | 4,866,756 |
Accumulated (deficit)/Retained earnings | 2,071,332 | 297,528 | (430,263) |
Other comprehensive income | 24,906 | 3,577 | 3,683 |
TOTAL 360 FINANCE INC EQUITY | 7,213,442 | 1,036,145 | 4,440,196 |
Non-controlling interests | 1,288 | 185 | |
TOTAL EQUITY | 7,214,730 | 1,036,330 | 4,440,196 |
TOTAL LIABILITIES AND EQUITY | ¥ 20,355,601 | $ 2,923,898 | ¥ 7,349,735 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands, $ in Thousands | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018CNY (¥)shares |
Restricted Cash | ¥ 1,727,727 | ¥ 567,794 |
Accounts receivable and contract assets, allowance | 189,829 | 82,515 |
Financial assets receivable, allowance | 164,563 | 56,656 |
Amounts due from related parties, allowance | 68,567 | 18,055 |
Loans receivable, net | 9,239,565 | 811,433 |
Prepaid expenses and other current assets | ¥ 652,545 | ¥ 109,016 |
Ordinary shares, authorized (in shares) | shares | 5,000,000,000 | 5,000,000,000 |
Ordinary shares, issued (in shares) | shares | 302,707,339 | 287,652,707 |
Ordinary shares, outstanding (in shares) | shares | 293,420,800 | 287,652,707 |
Consolidated Trusts | ||
Restricted Cash | ¥ 354,104 | ¥ 6,142 |
Loans receivable, net | 9,099,099 | 493,883 |
Prepaid expenses and other current assets | 95,840 | 4,000 |
Accounts receivable and contract assets, net-noncurrent, allowance | 1,763 | 0 |
Financial assets receivable, net-noncurrent, allowance | ¥ 6,240 | ¥ 0 |
COMBINED AND CONSOLIDATED STATE
COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | ||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | ¥ 9,219,847 | $ 1,324,348 | ¥ 4,447,018 | ¥ 788,144 | |||
Operating costs and expenses: | |||||||
Origination and servicing (including costs charged by related parties of RMB 9,877, RMB 59,027 and RMB 47,203 for the years ended December 31, 2017, 2018 and 2019, respectively) | 1,083,372 | 155,617 | 666,067 | 121,821 | |||
Funding costs | 344,999 | 49,556 | 71,617 | 14,437 | |||
Sales and marketing (including expenses charged by related parties of RMB 54,955, RMB 66,345 and RMB 57,319 for the years ended December 31, 2017, 2018 and 2019, respectively) | 2,851,519 | 409,595 | 1,321,950 | 345,576 | |||
General and administrative (including expenses charged by related parties of RMB 17,512, RMB 32,509 and RMB 24,540 for the years ended December 31, 2017, 2018 and 2019, respectively) | 428,189 | 61,505 | 560,702 | 45,852 | |||
Provision for loans receivable | 486,991 | 69,952 | 44,474 | 12,406 | |||
Provision for financial assets receivable (including provision generated from related parties of RMB nil, RMB 5,912 and RMB 15,236 for the years ended December 31, 2017, 2018 and 2019, respectively) | 166,176 | 23,870 | 53,989 | 16,273 | |||
Provision for accounts receivable and contract assets (including provision charged by related parties of RMB nil, RMB 12,138 and RMB 35,276 for the years ended December 31, 2017, 2018 and 2019, respectively) | 230,280 | 33,078 | 83,707 | 21,180 | |||
Expense on guarantee liabilities (including provision charged by related parties of RMB 67,587 for the year ended December 31, 2019) | 734,730 | 105,537 | |||||
Total operating costs and expenses | 6,326,256 | 908,710 | 2,802,506 | 577,545 | |||
Income from operations | 2,893,591 | 415,638 | 1,644,512 | 210,599 | |||
Interest income (expense), net | (41,707) | (5,991) | 10,026 | 2,422 | |||
Foreign exchange loss | (24,875) | (3,573) | (2,563) | ||||
Other income, net | 140,278 | 20,150 | 7,696 | 22 | |||
Income before income tax expense | 2,967,287 | 426,224 | 1,659,671 | 213,043 | |||
Income tax expense | (465,983) | (66,934) | (466,360) | (48,178) | |||
Net (loss) income | 2,501,304 | 359,290 | 1,193,311 | 164,865 | |||
Net loss attributable to non-controlling interests | 291 | 42 | |||||
Deemed dividend | ¥ | (3,097,733) | ||||||
Net (loss) income attributable to ordinary shareholders of the Company | ¥ 2,501,595 | $ 359,332 | ¥ (1,904,422) | ¥ 164,865 | |||
Net (loss) income per ordinary share attributable to ordinary shareholders of 360 Finance, Inc. | |||||||
Basic (in CNY per share) | (per share) | ¥ 8.66 | $ 1.24 | ¥ (9.39) | ¥ 0.83 | |||
Diluted (in CNY per share) | (per share) | ¥ 8.31 | $ 1.19 | ¥ (9.39) | ¥ 0.83 | |||
Weighted average shares used in calculating net (loss) income per ordinary share | |||||||
Basic (in shares) | 288,827,604 | 288,827,604 | 202,751,277 | 198,347,168 | |||
Diluted (in shares) | 300,938,470 | 300,938,470 | 202,751,277 | 198,347,168 | |||
ADS | |||||||
Net (loss) income per ordinary share attributable to ordinary shareholders of 360 Finance, Inc. | |||||||
Basic (in CNY per share) | (per share) | ¥ 17.32 | $ 2.48 | ¥ (18.78) | ¥ 1.66 | |||
Diluted (in CNY per share) | (per share) | ¥ 16.62 | $ 2.38 | ¥ (18.78) | ¥ 1.66 | |||
Credit driven services | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | ¥ 8,013,391 | [1] | $ 1,151,052 | ¥ 4,170,271 | [1] | ¥ 703,747 | [1] |
Loan facilitation and servicing fees-capital heavy | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | 6,273,131 | 901,079 | 3,807,242 | 647,350 | |||
Financing income | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | 1,309,616 | 188,115 | 267,844 | 50,966 | |||
Releasing of guarantee liabilities | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | 285,407 | 40,996 | 25,169 | 331 | |||
Other services fees | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | 145,237 | 20,862 | 70,016 | 5,100 | |||
Platform services | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | 1,206,456 | 173,296 | 276,747 | [1] | 84,397 | [1] | |
Loan facilitation and servicing fees-capital light | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | 814,581 | 117,007 | 58,348 | ||||
Referral services fees | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | 375,551 | 53,945 | 211,087 | ¥ 84,397 | |||
Other services fees | |||||||
Revenue, net of value-added tax and related surcharges: | |||||||
Total net revenue | ¥ 16,324 | $ 2,344 | ¥ 7,312 | ||||
[1] | Starting from 2019, the Group reports revenue streams in two categories—Credit driven services and Platform services, to provide more relevant information. The Group also revised the comparative period presentation to conform to current period classification (Note 2 revenue recognition). |
COMBINED AND CONSOLIDATED STA_2
COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥)category | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2017USD ($) | |
Revenue from related parties | ¥ 1,037,480 | ¥ 502,614 | ¥ 86,311 | |
Origination and servicing costs charged by related parties | 47,203 | 59,027 | 9,877 | |
Sales and marketing expenses charged by related parties | 57,319 | 66,345 | 54,955 | |
General and administrative expenses charged by related parties | 24,540 | 32,509 | 17,512 | |
Provision for financial asset receivable from related parties | 15,236 | 5,912 | 0 | |
Provision for accounts receivable and contract assets from related parties | 35,276 | 12,138 | 0 | |
Provision charged by related parties | ¥ 67,587 | |||
Number of categories of revenue streams | category | 2 | |||
Credit driven services | ||||
Revenue from related parties | $ | $ 0 | |||
Loan facilitation and servicing fees-capital heavy | ||||
Revenue from related parties | ¥ 791,482 | 305,566 | ||
Loan facilitation and servicing fees-capital light | ||||
Revenue from related parties | 48,747 | 0 | 0 | |
Referral services fees | ||||
Revenue from related parties | ¥ 197,018 | ¥ 196,013 | ¥ 84,303 |
COMBINED AND CONSOLIDATED STA_3
COMBINED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
COMBINED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS | ||||
Net income | ¥ 2,501,304 | $ 359,290 | ¥ 1,193,311 | ¥ 164,865 |
Other comprehensive income, net of tax of nil: | ||||
Foreign currency translation adjustment | 21,223 | 3,048 | 3,683 | |
Other comprehensive income | 21,223 | 3,048 | 3,683 | |
Total comprehensive income | 2,522,527 | 362,338 | 1,196,994 | 164,865 |
Net loss attributable to non-controlling interests | 291 | 42 | ||
Deemed dividend | (3,097,733) | |||
Comprehensive income (loss) attributable to ordinary shareholders | ¥ 2,522,818 | $ 362,380 | ¥ (1,900,739) | ¥ 164,865 |
COMBINED AND CONSOLIDATED STA_4
COMBINED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
COMBINED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS | |||
Other comprehensive income, tax | $ 0 | $ 0 | $ 0 |
COMBINED AND CONSOLIDATED STA_5
COMBINED AND CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ¥ in Thousands, $ in Thousands | Ordinary sharesIPOCNY (¥)shares | Ordinary sharesCNY (¥)shares | Parent Company's investmentCNY (¥) | Additional Paid-in capitalIPOCNY (¥) | Additional Paid-in capitalCNY (¥) | Accumulated (deficit)/Retained earningsCNY (¥) | Other Comprehensive incomeCNY (¥) | Non-controlling InterestsCNY (¥) | IPOCNY (¥) | CNY (¥)shares | USD ($)shares | ||
Balance at Dec. 31, 2016 | ¥ (20,716) | ¥ (20,716) | |||||||||||
Parent company's capital contribution | ¥ 590,000 | 590,000 | |||||||||||
Net income (loss) | 164,865 | 164,865 | |||||||||||
Balance at Dec. 31, 2017 | 590,000 | 144,149 | 734,149 | ||||||||||
Parent company's capital contribution | 210,000 | 210,000 | |||||||||||
Share-based compensation | ¥ 607,381 | 607,381 | |||||||||||
Reorganization effect | ¥ (800,000) | 800,000 | |||||||||||
Issuance of ordinary shares | ¥ 0 | [1] | ¥ 14 | [1] | ¥ 297,860 | (14) | ¥ 297,860 | ||||||
Issuance of ordinary shares (in shares) | shares | 6,200,000 | 198,347,168 | |||||||||||
Deemed dividend to shareholders upon issuance of Series A and A+ preferred share (note 10) | (1,330,024) | (1,767,709) | (3,097,733) | ||||||||||
Conversion of convertible redeemable preferred shares to ordinary shares upon IPO | ¥ 6 | [1] | ¥ 4,491,539 | ¥ 4,491,545 | |||||||||
Conversion of convertible redeemable preferred shares to ordinary shares upon IPO (in shares) | shares | 83,105,539 | ||||||||||||
Other comprehensive income | ¥ 3,683 | 3,683 | |||||||||||
Net income (loss) | 1,193,311 | 1,193,311 | |||||||||||
Balance at Dec. 31, 2018 | ¥ 20 | [1] | 4,866,756 | (430,263) | 3,683 | ¥ 4,440,196 | |||||||
Balance (in shares) at Dec. 31, 2018 | shares | 287,652,707 | 287,652,707 | 287,652,707 | ||||||||||
Share-based compensation | 250,428 | ¥ 250,428 | |||||||||||
Issuance of ordinary shares (in shares) | shares | 5,768,093 | ||||||||||||
Other comprehensive income | 21,223 | 21,223 | $ 3,048 | ||||||||||
Contribution by non-controlling interests | ¥ 1,579 | 1,579 | |||||||||||
Net income (loss) | 2,501,595 | (291) | 2,501,304 | 359,290 | |||||||||
Balance at Dec. 31, 2019 | ¥ 20 | [1] | ¥ 5,117,184 | ¥ 2,071,332 | ¥ 24,906 | ¥ 1,288 | ¥ 7,214,730 | $ 1,036,330 | |||||
Balance (in shares) at Dec. 31, 2019 | shares | 293,420,800 | 302,707,339 | 302,707,339 | ||||||||||
[1] | The amount less than RMB 1 is rounded to zero. |
COMBINED AND CONSOLIDATED STA_6
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Cash Flows from Operating Activities: | ||||
Net income | ¥ 2,501,304 | $ 359,290 | ¥ 1,193,311 | ¥ 164,865 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||
Depreciation and amortization | 7,642 | 1,098 | 3,760 | 1,306 |
Share-based Compensation | 250,428 | 35,972 | 607,381 | |
Provision for loan principal, financial assets receivables and other receivables | 883,447 | 126,899 | 182,170 | 49,859 |
Changes in operating assets and liabilities | ||||
Funds receivable from third party payment service providers | 23,762 | 3,413 | (10,143) | (124,757) |
Accounts receivable and contract assets | (755,132) | (108,468) | (1,536,211) | (363,040) |
Financial assets receivable | (929,143) | (133,463) | (971,571) | (264,962) |
Prepaid expenses and other assets | (536,218) | (77,024) | (61,811) | (27,477) |
Security deposit prepaid to third-party guarantee companies | (137,283) | (19,719) | (795,700) | |
Deferred tax | (713,106) | (102,431) | 91,294 | (67,612) |
Other non-current assets | (55,362) | (7,952) | ||
Amounts due to (from) related parties | (49,298) | (7,081) | (383,164) | (5,976) |
Guarantee liabilities | 1,547,680 | 222,310 | 1,098,232 | 295,174 |
Income tax payable | 624,153 | 89,654 | 316,741 | 115,325 |
Other tax payable | 99,378 | 14,275 | 133,149 | 31,229 |
Accrued expenses and other current liabilities | 206,700 | 29,691 | 417,678 | 85,092 |
Other long-term liabilities | 31,184 | 4,479 | ||
Interest receivable/ payable | (27,061) | (3,887) | ||
Net cash (used in) provided by operating activities | 2,973,075 | 427,056 | 285,116 | (110,974) |
Cash Flows from Investing Activities: | ||||
Purchase of property and equipment and intangible assets | (25,558) | (3,671) | (8,551) | (7,109) |
Investment in loans receivable | (26,339,327) | (3,783,408) | (4,943,341) | (2,769,592) |
Collection of investment in loans receivable | 17,504,444 | 2,514,356 | 5,279,541 | 1,572,432 |
Net cash (used in) provided by investing activities | (8,860,441) | (1,272,723) | 327,649 | (1,204,269) |
Cash Flows from Financing Activities: | ||||
Proceeds from issuance of ordinary share upon IPO | 327,236 | |||
Payment of IPO costs | (4,838) | (695) | (25,103) | |
Capital contributions from shareholder | 210,000 | 590,000 | ||
Proceeds from series B convertible redeemable preferred shares | 1,393,812 | |||
Proceeds from short term loans | 1,700,000 | 244,190 | ||
Repayment of short term loans | (1,500,000) | (215,462) | ||
Loans from Qibutianxia | 300,000 | 43,092 | 500,000 | 810,500 |
Loans payment to shareholder | (300,000) | (43,092) | (1,240,050) | (147,500) |
Cash received from investors of the consolidated trusts | 8,360,230 | 1,200,872 | 600,000 | 1,012,499 |
Cash paid to investors of the consolidated trusts | (847,534) | (121,741) | (1,308,465) | |
Net cash provided by financing activities | 7,707,858 | 1,107,164 | 457,430 | 2,265,499 |
Effect of foreign exchange rate changes | 1,762 | 253 | (13,028) | |
Net increase in cash and cash equivalents | 1,822,254 | 261,750 | 1,057,167 | 950,256 |
Cash, cash equivalents, and restricted cash, beginning of year | 2,013,596 | 289,235 | 956,429 | 6,173 |
Cash, cash equivalents, and restricted cash, end of year | 3,835,850 | 550,985 | 2,013,596 | 956,429 |
Supplemental disclosures of cash flow information: | ||||
Income taxes paid | (557,295) | (80,050) | (58,325) | (464) |
Interest paid (not including interest paid to investors of consolidated trusts) | (65,776) | (9,448) | ||
Issuance of series A and series A+ convertible redeemable preferred shares as deemed dividend | 3,097,733 | |||
Reconciliation to amounts on the combined and consolidated balance sheets: | ||||
Total cash, cash equivalents, and restricted cash | ¥ 3,835,850 | $ 550,985 | ¥ 2,013,596 | ¥ 956,429 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES 360 Finance, Inc. (the “Company”) was incorporated in Cayman Islands with limited liability on April 27, 2018. The Company, its subsidiaries, its consolidated variable interest entities (“VIEs”) (collectively the “Group”) are engaged in providing online consumer finance products to the borrowers funded primarily by institutional funding partners through a digital consumer finance platform. The Company’s significant subsidiaries and its consolidated VIEs as of December 31, 2019 are as follows: Date of Place of Incorporation Incorporation Subsidiaries HK Qirui International Technology Company Limited (“HK Qirui”) June 14, 2018 Hong Kong Shanghai Qiyue Information & Technology Co., Ltd.(“Qiyue”) August 7, 2018 PRC VIEs Shanghai Qiyu Information & Technology Co., Ltd. (“Qiyu”) July 25, 2016 PRC Fuzhou 360 Online Microcredit Co., Ltd.(“Fuzhou Microcredit”) March 30, 2017 PRC Fuzhou 360 Financing Guarantee Co., Ltd. (“Fuzhou Guarantee”) June 29, 2018 PRC Shanghai 360 Financing Guarantee Co., Ltd. ("Shanghai Guarantee") May 20, 2019 PRC History of the Group and reorganization under identical common ownership The Group started its business in 2016 through Qiyu, a limited liability company in the People’s Republic of China (“PRC”). In March 2017, Fuzhou Microcredit was founded mainly to obtain the online microcredit lending license to conduct online microcredit lending business. Fuzhou Guarantee and Shanghai Guarantee were founded in 2018 and 2019 respectively to provide financial guarantee service mainly. Qiyu and Fuzhou Microcredit are wholly owned by Beijing Qibutianxia Technology Co., Ltd. (“Qibutianxia”) which is ultimately controlled by Mr. Hongyi Zhou. On April 27, 2018, the Company was incorporated by the same shareholders of Qibutianxia in Cayman Island in connection with a group reorganization (“Reorganization”). In September 2018, the Company undertook a series of transactions to redomicile its business from the PRC to the Cayman Islands as part of the Reorganization, in preparation of its overseas initial public offering. The transactions include 1) establishing intermediary companies of HK Qirui and Qiyue ("WFOE") for the purpose of establishing a VIE structure of the Group, and 2) issuing ordinary shares and convertible redeemable preferred shares to the shareholders of Qibutianxia in the same proportions as the percentage of equity interest they held in Qibutianxia by the time of Reorganization, and 3) entering into VIE agreements which effectively provided control to the WFOE over the operations of the VIEs. As the shareholding percentages and rights of each shareholder were the same in Qibutianxia and the Company, the Reorganization was accounted for as a reorganization of entities under common ownership. As a result, the combined and consolidated financial statements are prepared using historical cost basis as if the corporate structure of the Company had been in existence since the beginning of the periods presented. And the financial information for the period/year prior to the formation of the Company in April 2018 represents the carved out financial statements from Qibutianxia. The accompanying combined and consolidated financial statements include allocations for various general administrative expenses of Qibutianxia which related to the Group’s business. These expenses consist primarily of payroll of senior management and shared rental expenses. These allocations were made using a proportionate cost allocation method. The payroll expenses were allocated based on the actual time spent on the provision of services attributable to the Group, and the shared rental expenses were allocated based on the actual usage of the building among each business of Qibutianxia. The management believes these allocations are reasonable. Total expenses allocated from Qibutianxia to the Group are RMB 17,512, RMB 32,015 and RMB 3,230 for the years ended 2017, 2018 and 2019, respectively. 1. ORGANIZATION AND PRINCIPAL ACTIVITIES – continued The VIE arrangement PRC laws and regulations prohibit or restrict foreign control of companies involved in provision of internet content and certain finance business. To comply with these foreign ownership restrictions, the Company operates substantially all of its service through its VIEs in the PRC. The VIEs hold leases and other assets necessary to provide services and generate the majority of the Company's revenues. To provide the Company effective control over the VIEs and the ability to receive substantially all of the economic benefits of the VIEs, a series of contractual arrangements were entered into amongst WFOE, VIEs and their beneficial shareholders. Agreements that were entered to provide the Company effective control over the VIEs Powers of Attorney Pursuant to these powers of attorney, Qibutianxia, the shareholder of Qiyu, authorized the WFOE or any person it designates to act as its attorney-in-fact to exercise all of its rights as a shareholder of Qiyu, including, but not limited to, the right to convene and attend shareholders’ meetings, vote on any resolution that requires a shareholder vote, such as the appointment and removal of directors, supervisors and officers, as well as the sale, transfer and disposal of all or part of the equity interests owned by Qibutianxia in Qiyu. The power of attorney will remain effective for the duration of the existence of Qibutianxia. Exclusive Option Agreement Pursuant to the exclusive option agreement entered into among WFOE, Qiyu and Qibutianxia. Qibutianxia irrevocably grants the WFOE an exclusive option to purchase or designate one or more persons to purchase, all or part of its equity interests in Qiyu, and Qiyu irrevocably grants the WFOE an exclusive option to purchase all or part of its assets, subject to applicable PRC laws. The WFOE or its designated person may exercise such options at the lowest price permitted under applicable PRC laws. Qibutianxia and Qiyu will undertake that, without the WFOE’s prior written consent, they will not, among other things, (i) create any pledge or encumbrance on any of Qiyu’s assets (ii) transfer or otherwise dispose of Qiyu’s assets, (iii) change Qiyu’s registered capital, (iv) amend Qiyu’s articles of association, (v) dispose of Qiyu’s assets or beneficial interest or (vi) merge Qiyu with any other entity. Unless WFOE terminates this agreement in advance, this agreement will remain effective for 10 years and will be automatically renewed for in a 10-year cycle unless such renewal was objected by the WFOE in writing. Other parties to this agreement may not terminate this agreement unilaterally. 1. ORGANIZATION AND PRINCIPAL ACTIVITIES – continued The VIE arrangement – continued Agreements that were entered to transfer economic benefits to the Company Exclusive Consultation and Services Agreement Pursuant to the exclusive consultation and services agreement between the WFOE and Qiyu, the WFOE has the exclusive right to provide Qiyu with the consulting and technical services required by Qiyu’s business. Qiyu shall pay the WFOE service fee at the amount which is adjusted at the WFOE’s sole discretion. To guarantee Qiyu’s performance of its obligations thereunder, Qibutianxia would pledge its equity interests in Qiyu to the WFOE pursuant to the equity interest pledge agreement. Unless the WFOE terminates this agreement in advance, this agreement will remain effective for 10 years and will be automatically renewed for in a 10-year cycle unless such renewal was objected by the WFOE in writing. Loan Agreement Pursuant to the loan agreement among the WFOE, Qiyu and Qibutianxia, the WFOE is entitled to provide interest-free loans from time to time to Qibutianxia for the purpose of Qiyu’s business operation and development. Each of the loans made under this loan agreement has no fixed term, and unless otherwise agreed, the WFOE shall unilaterally decide when to withdraw the loans, provided that a one month notice is given. The loan agreement shall remain in effect during Qiyu’s term (and any renewable term provided by the PRC law), and shall automatically terminate after the WFOE and/or other entities designated by the WFOE fully exercise all their rights under the exclusive option agreement. Equity Pledge Agreement Pursuant to the equity pledge agreement, Qibutianxia shall pledge 100% equity interests in Qiyu to the WFOE to guarantee the performance by Qibutianxia of its obligations under the exclusive option agreement and the powers of attorney, as well as the performance by Qiyu of its obligations under the exclusive option agreement, the powers of attorney and the exclusive consultation and service agreement (collectively, “Master Agreements”). In the event of a breach by Qiyu or Qibutianxia of contractual obligations under the Master Agreements, the WFOE, as pledgee, will have the right to dispose of the pledged equity interests in Qiyu. Qibutianxia will also undertake that, without the prior written consent of the WFOE, it will not dispose of, create or allow any encumbrance on the pledged equity interests. The Company also has some other sets of VIE contractual arrangements. The arrangements with its significant VIEs include 1) the arrangement among the WFOE, Fuzhou Microcredit, and Qibutianxia; 2) the arrangement among the WFOE, Fuzhou Guarantee and a fully owned subsidiary of Qibutianxia and 3) the arrangement among the WFOE, Shanghai Guarantee and two fully owned subsidiaries of Qibutianxia. These sets of the contractual agreements are substantially similar to the set with Qiyu as described above. 1. ORGANIZATION AND PRINCIPAL ACTIVITIES – continued The VIE arrangement – continued Risks in relation to VIE structure The Company believes that the contractual arrangements with Qiyu, Fuzhou Microcredit, Fuzhou Guarantee, Shanghai Guarantee and their shareholders, Qibutianxia, are in compliance with existing PRC laws and regulations and are valid, binding and enforceable and will not result in any violation of PRC laws or regulations and the PRC regulatory authorities may take a contrary view. If the legal structure and contractual arrangements were found to be in violation of any existing PRC laws and regulations, the regulatory authorities may exercise their discretion and: ● revoke the business and operating licenses of the Company’s PRC subsidiaries or consolidated affiliated entities; ● restrict the rights to collect revenues from any of the Company’s PRC subsidiaries; ● discontinue or restrict the operations of any related-party transactions among the Company’s PRC subsidiaries or consolidated affiliated entities; ● require the Company’s PRC subsidiaries or consolidated affiliated entities to restructure the relevant ownership structure or operations; ● take other regulatory or enforcement action is, including levying fines that could be harmful to the Company’s business; or ● impose additional conditions or requirements with which the Company may not be able to comply. The imposition of any of these penalties may result in a material adverse effect on the Company's ability to conduct its business. In addition, if the imposition of any of these penalties causes the Company to lose the rights to direct the activities of the VIEs or the right to receive substantially all of their economic benefits, the Company would no longer be able to consolidate the financial results of the VIEs. These contractual arrangements allow the Company to effectively control Qiyu, Fuzhou Microcredit, Fuzhou Guarantee and Shanghai Guarantee, and to derive substantially all of the economic benefits from them. Accordingly, the Company treats Qiyu, Fuzhou Microcredit; Fuzhou Guarantee and Shanghai Guarantee as VIEs. Because the Company is the primary beneficiary, the Company has consolidated the financial results of the VIEs. 1. ORGANIZATION AND PRINCIPAL ACTIVITIES – continued The VIE arrangement – continued Risks in relation to VIE structure – continued The following financial statement amounts and balances of the VIEs were included in the accompanying combined and consolidated financial statements after elimination of intercompany transactions and balances. The table below does not include the financial information of the consolidated trusts (see note 2 “Consolidated Trusts”): December 31, December 31, 2018 2019 RMB RMB ASSETS Cash and cash equivalents 1,108,779 1,829,395 Restricted cash 561,652 1,373,623 Funds receivable from third party payment service providers 142,622 118,860 Accounts receivable and contract assets, net 1,791,745 2,113,831 Financial assets receivable, net 1,193,621 1,764,738 Security deposit prepaid to third-party guarantee companies 795,700 932,983 Amounts due from related parties 484,286 478,767 Loans receivable, net 317,551 139,144 Prepaid expenses and other assets 105,016 507,907 Property and equipment, net 6,869 16,773 Intangible assets 847 1,933 Deferred tax assets — 704,589 Accounts receivable and contract assets, net-non current — 19,508 Financial assets receivable, net-non current — 59,270 Other non-current assets — 55,362 Total Assets 6,508,688 10,116,683 LIABILITIES Short term loans — 200,000 Guarantee liabilities 1,399,174 2,840,941 Accrued expenses and other current liabilities 506,735 680,987 Income tax payable 431,998 1,037,964 Other tax payable 164,181 206,291 Amounts due to related parties 74,733 55,622 Deferred tax liabilities 15,758 — Other long-term liabilities — 31,184 Total liabilities 2,592,579 5,052,989 Year ended Year ended Year ended December 31, 2017 December 31, 2018 December 31, 2019 RMB RMB RMB Net revenue 777,353 4,375,412 7,318,362 Net income 167,425 1,247,147 1,707,839 1. ORGANIZATION AND PRINCIPAL ACTIVITIES – continued The VIE arrangement – continued Risks in relation to VIE structure – continued Year ended Year ended Year ended December 31, 2017 December 31, 2018 December 31, 2019 RMB RMB RMB Net cash (used in) provided by operating activities (110,884) 303,626 2,010,741 Net cash used in investing activities (287,994) (199,576) 134,286 Net cash provided by (used in) financing activities 1,253,000 (543,052) 198,242 The consolidated VIEs contributed 99%, 98% and 79% of the Group's consolidated revenue for the years ended December 31, 2017, 2018 and 2019, respectively. As of December 31, 2018 and 2019, the consolidated VIEs accounted for an aggregate of 89% and 50%, respectively, of the consolidated total assets, and 89% and 38%, respectively, of the consolidated total liabilities. There are no consolidated assets of the VIEs that are collateral for the obligations of the VIEs and their subsidiaries and can only be used to settle the obligations of the VIEs and their subsidiaries. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs ever need financial support, the Company or its subsidiaries may, at its option and subject to statutory limits and restrictions, provide financial support to its VIEs through loans to the shareholder of the VIEs. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 10 for disclosure of restricted net assets. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying combined and consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Basis of consolidation The accompanying combined and consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries, and consolidated VIEs. All inter-company transactions and balances have been eliminated. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Consolidated Trusts Loans funded by the institutional funding partners in the Group’s loan facilitation business are typically disbursed to the borrowers directly from such partners. However, due to the need of certain institutional funding partners, loans from such funding partners are funded and disbursed indirectly through trusts and asset management plans (collectively the "Trusts"). Since November 2017, several Trusts were formed by third-party trust companies and asset management companies, who administer the Trusts. The Trusts fund loans facilitated by the Group using the funds received from its beneficiaries to the borrowers facilitated by the Group. The Trusts provide the returns to its beneficiaries through interest payments made by the borrowers. The borrowers are charged with the interests by the Trusts. For the majority of trust, the Group is either entitled to the residual profit in the Trusts or the Group has provided guarantee to the Trusts by agreeing to repurchase any loans that are delinquent for 30 to 90 days from which the Group absorbs the credit risk of the Trusts resulting from borrowers’ delinquencies. The Group determined that the residual profit or the guarantee represents a variable interest in the Trusts through which the Group has the right to receive benefits or the obligation to absorb losses from the Trusts that could potentially be significant to the Trusts. Since the Trusts only invest in the loans facilitated by the Group and the Group continues to service the loans through a service agreement post origination and has the ability to direct default mitigation activities, the Group has the power to direct the activities of the Trusts that most significantly impact the economic performance of the Trusts. As a result, the Group is considered the primary beneficiary of the Trusts and consolidated the Trusts’ assets, liabilities, results of operations and cash flows. In 2019, the Group also received letter of approval for listing and transferring assets based securities (“ABS”) on both Shanghai Stock Exchange and Shenzhen Stock Exchange within the issue scale of RMB 5,000,000 for each, respectively. As of December 31, 2019, the beneficial rights of RMB 2,300,000 in trusts held by Qiyu were transferred to trust beneficial right asset backed special plans (the “ABS plans”). The ABS plans were securitized and listed on Shanghai Stock Exchange and Shenzhen Stock Exchange, with terms of two years. The Group purchased the whole subordinated tranche securities amounting RMB 184,000 to provide credit enhancement and senior tranche securities amounting RMB 17,500, representing 8% and 1% of the total face value of the securities respectively. External institutional funding partners purchased senior tranche securities amounting RMB 2,098,500 representing 91% of the total securities which was recorded as "payable to investors of the consolidated trusts - noncurrent" with the balance of RMB 2,086,946 on the consolidated balance sheet as of December 31, 2019. As of December 31,2018 and 2019, the loans held by the Trusts are all personal loans made to the individual borrowers with an original term up to 12 months. The interest rates of these loans ranged from 9% to 36%. The loans receivable balance associated with the Trusts represents the outstanding loans made to the borrowers from the Trusts. As of December 31, 2018 and 2019, the balance of delinquent loans repurchased by the Group from the consolidated trusts are RMB 20,579 and RMB 89,938, respectively. For the years ended 31, 2018 and 2019, the Group repurchased the balance of RMB 114,238 and RMB 18,014 performing loans upon liquidation of certain consolidated trusts per the contracts agreed with the counterparty, respectively. For the years ended December 31, 2017, 2018 and 2019, the provision for loan losses of RMB 5,647, RMB 33,141 and RMB 464,379 were charged to the combined and consolidated statements of comprehensive income, respectively. There were RMB nil, RMB 19,777 and RMB 142,882 of loans written off for the years ended December 31, 2017, 2018 and 2019, respectively. Interest on loans receivable is accrued and credited to income as earned. The Group determines a loan’s past due status by the number of days that have elapsed since a borrower has failed to make a contractual loan payment. Accrual of interest is generally discontinued when the loan principal and interest are deemed to be uncollectible. In general, loans receivable is identified as uncollectible when it is determined to be not probable that the balance can be collected. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Consolidated Trusts – continued The following financial statement amounts and balances of the consolidated trusts were included in the accompanying combined and consolidated financial statements after elimination of intercompany transactions and balances: December 31, 2018 December 31, 2019 RMB RMB ASSETS Restricted cash 6,142 354,104 Loans receivable, net 493,883 9,099,099 Prepaid expenses and other assets 4,000 95,840 Total Assets 504,025 9,549,043 December 31, 2018 December 31, 2019 RMB RMB LIABILITIES Payable to investors of the consolidated trusts-current 300,341 4,423,717 Amounts due to related parties 4,034 — Accrued expenses and other current liabilities 385 19,460 Other tax payable 268 25,431 Payable to investors of the consolidated trusts-noncurrent — 3,442,500 Total liabilities 305,028 7,911,108 Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Net revenue 10,791 70,621 1,279,203 Net (loss) income (2,560) (32,708) 469,825 Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Net cash (used in) provided by operating activities (90) (8,749) 382,620 Net cash (used in) provided by investing activities (916,275) 527,223 (8,989,137) Net cash provided by (used in) financing activities 1,012,499 (708,466) 7,512,696 The consolidated trusts contributed 1%, 2% and 14% of the Group's consolidated revenue for the years ended 2017, 2018 and 2019, respectively. As of December 31, 2018 and December 31, 2019, the consolidated trusts accounted for an aggregate of 7% and 47%, respectively, of the consolidated total assets, and 10% and 60% respectively, of the consolidated total liabilities. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company to provide financial support to the consolidated trusts. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Consolidated Trusts – continued The Group believes that the assets of the consolidated trusts could only be used to settle the obligations of the consolidated trusts. Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates. Significant accounting estimates reflected in the Group’s financial statements include revenue recognition, financial assets receivable and guarantee liabilities, allowance for loans receivable, allowance for uncollectible accounts receivable and contract assets, allowance for financial assets receivable, and valuation allowance for deferred tax assets. Revenue recognition Through its app and channel partners, the Group provides services through its facilitation of loan transactions between the borrowers and the institutional funding partners through the use of two business models. The first business model involves the Group providing credit driven services through facilitating loans that are guaranteed by the Group directly or through third-party guarantee companies and insurance companies (referred to as "off-balance capital heavy loans" hereafter), or providing loans through the Consolidated Trusts and Fuzhou Microcredit. In either cases, the Group ultimately bears all the credit risks when the borrowers default. The second business model involves the Group providing platform services through facilitating loans with no or partial guarantee provided by the Group (referred to as "capital light loans" hereafter) and referral services. In these cases, the Group bears limited credit risks when the borrowers default. The loans facilitated under both models are with terms of 1~24 months (the majority are within the terms of 1~12 months) and with principal of up to RMB 200. Loan facilitation and servicing fees The Group earns loan facilitation and service fees from both off-balance capital heavy loans and capital light loans. The Group's services mainly consist of: 1) Performing credit assessment on the borrowers on its mobile platform based on its credit analysis and matching the institutional funding partners to potential qualified borrowers and facilitating the execution of loan agreements between the parties, referred to as "loan facilitation services" and; 2) Providing repayment processing services for the institutional funding partners over the loan term, referred to as “Post Origination Services” Based on the agreements entered into between the Group’s institutional funding partners and borrowers, the Group determined that it is not the legal lender or borrower in the loan origination and repayment process. Accordingly, the Group does not record loans receivable and payable arising from the loan between the funding partner and the borrowers. In 2017, the service fees were collected from the borrowers on a monthly basis through the loan period. Starting from 2018, to stay in compliance with regulatory requirements, particularly the Circular 141 which came into effect in December 2017, the Group started to charge service fees directly from funding partners based on the contractual agreements. In 2019, the Group started cooperating with insurance companies to provide guarantee for the loans between the borrowers and institutional funding partners. The Group charges guarantee fees from the borrower, including insurance premium collected on behalf of the insurance company. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Loan facilitation and servicing fees – continued For the loans the Group is entitled to the full service fee regardless of whether the borrowers choose to early repay or not, the Group has the unconditional right to the consideration. For the loans facilitated with borrowers who have the option of early repayment and upon termination they do not have the obligation to pay the remaining monthly service fees or not have to pay the excessive portion if the total fees are more than 36% of the origination principal on an annualized basis, the Group's right to consideration for the service fees of facilitation service is conditional on whether or not the borrowers repay in advance. For off-balance capital heavy loans, the Group enjoys a fixed rate of service fees. For capital light loans, the service fee rate the Group entitled to is subject to adjustment based on the actual default rate of the underlying loans. Under the off-balance capital heavy loans, the Group also provides a guarantee service to its institutional funding partners whereas in the event of default, the institutional funding partners are entitled to receive unpaid interest and principal from the Group. Given that the Group effectively takes on all of the credit risk of the borrowers and are compensated by the service fees charged, the guarantee is deemed as a service and the guarantee exposure is recognized as a stand-ready obligation in accordance with ASC Topic 460, Guarantees (see accounting policy for Guarantee Liabilities). Under the capital light model, the Group either provides no guarantee or partial guarantee service. Under the partial guarantee scenario, the Group agrees with each institutional funding partner a fixed upper limit of guarantee amount the Group is liable of. If the accumulated defaulted loan amount exceeds the agreed upper limit, the excess portion is borne by the institutional funding partner. The Group has adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified ASC 606 on January 1, 2018 using the full retrospective method which requires the Group to present its financial statements for all periods as if Topic 606 had been applied to all prior periods. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Group applies the following steps: ● Step 1: Identify the contract (s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition Loan facilitation and servicing fees – continued The Group determines that both the institutional funding partners and the borrowers are its customers because they both receive services provided by the Group pursuant to the contractual terms among the Group, the borrowers and the institutional funding partners. For each loan facilitated on the platform, the Group considers the loan facilitation service, post origination service and guarantee service (not applicable for arrangements where the Group does not provide guarantee service) as three separate services. Of which, the guarantee service is accounted for in accordance with ASC Topic 460, Guarantees, at fair value. Revenue from the guarantee services is recognized once the Group is released from the underlying risk (see accounting policy for Guarantee Liabilities).While the post-origination service is within the scope of ASC Topic 860, the ASC Topic 606 revenue recognition model is applied due to the lack of definitive guidance in ASC Topic 860. The loan facilitation service and post-origination service are two separate performance obligations under ASC 606, as these two deliverables are distinct in that customers can benefit from each service on its own and the Group's promises to deliver the services are separately identifiable from each other in the contract. The Group determines the total transaction price to be the service fees chargeable from the borrowers or the institutional funding partners. The Group's transaction price includes variable considerations in the form of prepayment risk of the borrowers and service fee allocation rate under capital light model under certain agreements. The Group estimates the prepayment risk of borrowers using the expected value approach on the basis of historical information and current trends of the collection percentage of the borrowers. The service fee allocated to the Group under capital light model would be fluctuated along with the actual default rate of the loans facilitated. The Group uses the service fee allocation rate applicable to the estimated default rate of the underlying loans. The transaction price is allocated amongst the guarantee service, if any, and the other two performance obligations. The Group first allocates the transaction price to the guarantee liabilities, if any, in accordance with ASC Topic 460, Guarantees which requires the guarantee to be measured initially at fair value based on the stand-ready obligation. Then the remaining considerations are allocated to the loan facilitation services and post origination services using their relative standalone selling prices consistent with the guidance in ASC 606. The Group does not have observable standalone selling price information for the loan facilitation services or post origination services because it does not provide loan facilitation services or post origination services on a standalone basis. There is no direct observable standalone selling price for similar services in the market reasonably available to the Group. As a result, the estimation of standalone selling price involves significant judgment. The Group uses expected cost plus margin approach to estimate the standalone selling prices of loan facilitation services and post-origination services as the basis of revenue allocation. In estimating its standalone selling price for the loan facilitation services and post origination services, the Group considers the cost incurred to deliver such services, profit margin for similar arrangements, customer demand, effect of competitors on the Group’s services, and other market factors. For each type of service, the Group recognizes revenue when (or as) the entity satisfies the service/ performance obligation by transferring the promised service (that is, an asset) to customers. Revenues from loan facilitation services are recognized at the time a loan is originated between the institutional funding partners and the borrowers and the principal loan balance is transferred to the borrowers, at which time the facilitation service is considered completed. Revenues from post origination services are recognized on a straight-line basis over the term of the underlying loans as the post-origination services are a series of distinct services that are substantially the same and that have the same pattern of transfer to the institutional funding partners. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Revenue from releasing of guarantee liabilities Revenues from guarantee services are recognized at the expiry of the guarantee term. For the years ended December 2017, 2018 and 2019, revenue from guarantee liabilities were RMB 331, RMB 25,169 and RMB 285,407, respectively, which were previously reported as part of other service fee revenues in 2017 and 2018. Incentives The Group provides incentives to the borrowers by providing coupons which can only be used as a reduction of repayment and ultimately reduced the service fees received by the Group. Because the borrower does not enter into any enforceable commitment by picking up the coupons, no contract arises from the coupons. Therefore the Group records the incentives as a deduction to revenue upon redemption. Financing income The Group provides loans through the Consolidated Trusts and Fuzhou Microcredit. The interest rate charged to the borrowers are fixed. The Group recognized revenue under “financing income” the fees and interests charged to the borrowers over the lifetime of the loans using the effective interest method. Referral service fees The Group provides the referral services to other platforms, by referring to them the borrowers who have not passed the Group's credit assessment. Specifically, the Group receives a fixed rate of referral fee from the platforms once the borrowers are accepted by the other funding providers on those platforms. The revenue is recognized once the referral is completed as confirmed by those platforms. For the years ended December 31, 2017, 2018 and 2019, RMB 84,397 , RMB 211,087 and RMB 375,551 were generated from the referral service, respectively, which were previously reported as part of other service fee revenues in 2017 and 2018. The Group recorded the receivables derived from of referral service fees in prepaid expenses and other assets on its consolidated balance sheets. Other service fees Other service fees mainly pertain to the revenue from late fees from borrowers under off-balance capital heavy loans and capital light loans. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Other service fees – continued The following table presents the disaggregation of revenue for the years ended December 31, 2017, 2018 and 2019: Year ended Year ended Year ended Year ended December December December December 31, 2017 31, 2018 31, 2019 31, 2019 RMB RMB RMB USD Credit driven services 703,747 4,170,271 8,013,391 1,151,052 Loan facilitation and servicing fees-capital heavy 647,350 3,807,242 6,273,131 901,079 Revenue from loan facilitation services 552,313 3,058,084 4,396,300 631,489 Revenue from post-origination services 95,037 749,158 1,876,831 269,590 Financing income 50,966 267,844 1,309,616 188,115 Revenue from releasing of guarantee liabilities 331 25,169 285,407 40,996 Other services fees 5,100 70,016 145,237 20,862 Platform services 84,397 276,747 1,206,456 173,296 Loan facilitation and servicing fees-capital light — 58,348 814,581 117,007 Revenue from loan facilitation services — 49,549 672,982 96,668 Revenue from post-origination services — 8,799 141,599 20,339 Referral services fees 84,397 211,087 375,551 53,945 Other services fees — 7,312 16,324 2,344 Total net revenue 788,144 4,447,018 9,219,847 1,324,348 Accounts receivable and Contract Assets, net For the loans the Group is entitled to the full service fee regardless of whether the borrowers choose to early repay or not, the Group has the unconditional right to the consideration and an accounts receivable is recorded for the monthly service fees allocated to loan facilitation service that have already been delivered in relation to loans facilitated on the Group's platform when recognizing revenue from loan facilitation service. For the loans facilitated with borrowers who have the option of early repayment and upon termination they do not have the obligation to pay the remaining monthly service fees or do not have to pay the excessive portion if the total fees are more than 36% of the origination principal on an annualized basis, the Group's right to consideration for the service fees of facilitation service is conditional on whether or not the borrowers repay in advance. In these instances, the Group records a corresponding contract asset when recognizing revenue from loan facilitation service. Accounts receivable and contract assets are stated at the historical carrying amount net of write-offs and allowance for collectability in accordance with ASC Topic 310. The Group established an allowance for uncollectible accounts receivable and contract assets based on estimates, which incorporate historical experience and other factors surrounding the credit risk of specific type of customers which is essentially the expected net default rates used in determining the fair value of guarantee liabilities. The Group evaluates and adjusts its allowance for uncollectible accounts receivable and contract assets on a quarterly basis or more often as necessary. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Accounts receivable and Contract Assets, net – continued Uncollectible accounts receivable and contract assets are written off when the consideration entitled to be received by the Group is due and a settlement is reached for an amount that is less than the outstanding historical balance or when the Group has determined the balance will not be collected. Contract assets and accounts receivable are identified as uncollectible when the underlying loan is determined to be not probable that the balance can be collected. The Group will write off contract assets and accounts receivable and the corresponding provisions if the underlying loan is deemed uncollectible. The Group's accounts receivable as of December 31, 2018 and 2019 are as follows: Allowance for Accounts uncollectible Accounts As of December 31, 2018 receivable Accounts receivable receivable, net Accounts receivable from loan facilitation service 1,849,796 (77,152) 1,772,644 Accounts receivable from post facilitation service 13,546 (4,184) 9,362 Total 1,863,342 (81,336) 1,782,006 Allowance for Accounts uncollectible Accounts As of December 31, 2019 receivable Accounts receivable receivable, net Accounts receivable from loan facilitation service 2,371,709 (184,425) 2,187,284 Accounts receivable from post facilitation service 24,092 (273) 23,819 Total 2,395,801 (184,698) 2,211,103 The movement of allowance for uncollectible accounts receivables for the years ended December 31, 2017, 2018 and 2019 are as follows: Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2017 provision year 2017 Accounts receivable from loan facilitation service — 17,528 — 17,528 Accounts receivable from post facilitation service — — — — Total — 17,528 — 17,528 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Accounts receivable and Contract Assets, net – continued Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2018 provision year 2018 Accounts receivable from loan facilitation service 17,528 64,895 (5,271) 77,152 Accounts receivable from post facilitation service — 4,702 (518) 4,184 Total 17,528 69,597 (5,789) 81,336 Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Accounts receivable from loan facilitation service 77,152 171,602 (64,329) 184,425 Accounts receivable from post facilitation service 4,184 12,779 (16,690) 273 Total 81,336 184,381 (81,019) 184,698 The Group's contract assets as of December 31, 2018 and 2019 are as follows: Allowance for uncollectible Contract assets, As of December 31, 2018 Contract assets Contract assets net Contract assets from loan facilitation service 7,634 (758) 6,876 Contract assets from post facilitation service 3,284 (421) 2,863 Total 10,918 (1,179) 9,739 Allowance for uncollectible Contract assets, As of December 31, 2019 Contract assets Contract assets net Contract assets from loan facilitation service 143,685 (6,662) 137,023 Contract assets from post facilitation service 3,977 (231) 3,746 Total 147,662 (6,893) 140,769 The movement of allowance for uncollectible contract assets for the years ended December 31, 2017, 2018 and 2019 are as follows: Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2017 provision year 2017 Contract assets from loan facilitation service 106 1,075 (18) 1,163 Contract assets from post facilitation service 2 2,577 — 2,579 Total 108 3,652 (18) 3,742 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Accounts receivable and Contract Assets, net – continued Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2018 provision year 2018 Contract assets from loan facilitation service 1,163 1,053 (1,458) 758 Contract assets from post facilitation service 2,579 918 (3,076) 421 Total 3,742 1,971 (4,534) 1,179 Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Contract assets from loan facilitation service 758 8,895 (2,991) 6,662 Contract assets from post facilitation service 421 1,728 (1,918) 231 Total 1,179 10,623 (4,909) 6,893 The Group's accounts receivable and contract assets generated from related parties and recorded in amounts due from related parties as of December 31, 2019 are as follows: Accounts Allowance for Accounts receivable uncollectible receivable and contract accounts receivable and contract As of December 31, 2019 assets and contract assets Assets, net Accounts receivable from loan facilitation service 131,743 (9,648) 122,095 Accounts receivable from post facilitation service 1,950 (481) 1,469 Contract assets from loan facilitation service 47,028 (2,062) 44,966 Contract assets from post facilitation service 795 (144) 651 Total 181,516 (12,335) 169,181 The movement of allowance for uncollectible accounts receivables and contract assets generated from related parties and recorded in amounts due from related parties for the year ended December 31, 2019 are as follows: Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Accounts receivable from loan facilitation service 9,437 18,698 (18,487) 9,648 Accounts receivable from post facilitation service 1,515 6,947 (7,981) 481 Contract assets from loan facilitation service 219 7,680 (5,837) 2,062 Contract assets from post facilitation service 18 1,951 (1,825) 144 Total 11,189 35,276 (34,130) 12,335 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Accounts receivable and Contract Assets, net – continued The Group did not recognize any contract liabilities during the periods presented. The amount of the transaction price allocated to performance obligations that are unsatisfied as of December 31, 2018 and 2019 are RMB 774,452 and RMB 978,811, respectively, all of which pertain to post-origination service. Remaining unsatisfied performance obligations that will be recognized as revenue by the Group within the following 12 months are 100% and 99% of the remaining performance obligations as of December 31, 2018 and 2019 respectively, with the remainder recognized thereafter. The Group used practical expedient in applying full retrospective method on completed contracts in transiting to ASC 606. For completed contracts that have variable consideration, the Group used the transaction price at the date the contract was completed rather than estimating variable consideration amounts in the comparative reporting periods. The Group determines that acquisition cost paid for funding partners based on the amount of investment represents costs to obtain a contract qualifying for capitalization since these payments are directly related to sales achieved during a period. Such cost was not material during the periods presented. Revenue recognized for years ended December 31, 2017, 2018 and 2019 from performance obligations satisfied (or partially satisfied) in prior periods pertaining to adjustments to variable consideration due to the change of estimated prepayment rate and service fee allocation rate was immaterial. The Group is subject to value-added tax and other surcharges including education surtax and urban maintenance and construction tax, on the services provided in the PRC. The Group has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by the governmental authority. Such taxes excluded from revenues are RMB 61,744, RMB 379,762 and RMB 547,344, respectively, for the years ended December 31, 2017, 2018 and 2019. Cash and cash equivalents Cash and cash equivalents mainly consist of funds in banks, which are highly liquid and are unrestricted as to withdrawal or use. Restricted cash Restricted cash represents: (i) Deposit to funding banks which is used to secure timely loan repayment. As of December 31, 2018 and 2019, the amount of restricted cash related to deposit to |
LOANS RECEIVABLE, NET
LOANS RECEIVABLE, NET | 12 Months Ended |
Dec. 31, 2019 | |
LOANS RECEIVABLE, NET | |
LOANS RECEIVABLE, NET | 3. LOANS RECEIVABLE, NET Loans receivable consists of the following: December 31, December 31, 2018 2019 RMB RMB Loans receivable 837,328 9,591,204 Less allowance for loan losses (25,895) (351,639) Loans receivable, net 811,433 9,239,565 The following table presents the aging of loans as of December 31, 2018 and 2019: 0-30 days 31-60 days over 6 0 days Total amount past due past due past due past due Current Total loans December 31, 2018 (RMB) 6,584 3,101 18,558 28,243 809,085 837,328 December 31, 2019 (RMB) 90,420 55,992 — 146,412 9,444,792 9,591,204 3. LOANS RECEIVABLE, NET – continued The Group has not recorded any financing income on an accrual basis for the loans that are past due for more than 60 days in 2019 (90 days in 2018). Loans are returned to accrual status if they are brought to non-delinquent status or have performed in accordance with the contractual terms for a reasonable period of time and, in the Group’s judgment, will continue to make periodic principal and interest payments as scheduled. For the years ended December 31, 2017, 2018 and 2019, the Group has charged off loans receivable of RMB nil, RMB 31 million and RMB 162 million, respectively. Movement of allowance for loan losses is as follows: Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Balance at beginning of year — 12,406 25,895 Provision for loan losses 12,406 44,474 486,991 Gross write-off — (30,985) (161,976) Recoveries — — 729 Balance at end of year 12,406 25,895 351,639 The following table presents nonaccrual loan principal as of December 31, 2018 and 2019: December 31, December 31, 2018 2019 RMB RMB Nonaccrual loan principal 14,888 — Less allowance for loan losses (14,726) — Nonaccrual loans, net 162 — |
SHORT-TERM LOANS
SHORT-TERM LOANS | 12 Months Ended |
Dec. 31, 2019 | |
SHORT-TERM LOANS | |
SHORT-TERM LOANS | 4. SHORT-TERM LOANS Short-term loans as of December 31, 2019 represents bank borrowings of RMB 200,000 obtained from domestic commercial banks. The short-term loan of RMB 100,000 bears interest rates of one year Loan Prime Rate (“LPR”) plus 1.45%, RMB 35,000 applying a fixed rate of 5.95%, and RMB 65,000 applying a fixed rate of 5.45%. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES December 31, December 31, 2018 2019 RMB RMB User traffic direction fees 276,024 217,932 Payable for third-party service fee 88,498 145,834 Payable to institutional funding partners (i) 67,434 212,279 Accrued payroll and welfare 54,552 92,502 Lease liability — 21,020 Others 32,447 31,351 Total 518,955 720,918 (i) Payable to institutional funding partners mainly include amounts collected from the borrowers but have not been transferred to the institutional funding partners due to holiday breaks. |
RELATED PARTY BALANCES AND TRAN
RELATED PARTY BALANCES AND TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
RELATED PARTY BALANCES AND TRANSACTIONS | 6. RELATED PARTY BALANCES AND TRANSACTIONS The table below sets forth the major related parties and their relationships with the Group, with which the Group entered into transactions during the years ended December 31, 2017, 2018 and 2019: Name of related parties Relationship with the group Beijing Qifutong Technology Co., Ltd. (“Qifutong”) An affiliate of Qihoo 360, ultimately controlled by Mr. Zhou, the Chairman of the Group Beijing Qibutianxia Technology Co., Ltd. (“Qibutianxia”) Entity controlled by Mr. Zhou, the Chairman of the Group Ningbo Siyinjia Investment management co. Ltd. ("Ningbo Siyinjia") Entity controlled by Mr. Zhou, the Chairman of the Group Beijing Qicaitianxia Technology Co., Ltd. (“Qicaitianxia”) Entity controlled by Mr. Zhou, the Chairman of the Group Beijing Qihu Technology Co., Ltd. (“Qihu”) An affiliate of Qihoo 360, ultimately controlled by Mr. Zhou, the Chairman of the Group Jinshang Consumer Finance Inc. (“Jinshang”) An affiliate of an entity controlled by Mr. Zhou, the Chairman of the Group Youdaojingwei Assets Management Co.Ltd. ("Youdaojingwei") Entity controlled by Mr. Zhou, the Chairman of the Group Beijing Zixuan Information Technology Co., Ltd. (“Beijing Zixuan”) Entity controlled by Mr. Zhou, the Chairman of the Group Xixian New Area Financial Asset Exchange Co., Ltd (“Xixian”) Entity controlled by Mr. Zhou, the Chairman of the Group Shareholders Shareholders of the Group Others Entities controlled by Mr. Zhou, the Chairman of the Group The Group entered into the following transactions with its related parties: For the years ended December 31, 2017, 2018 and 2019, services provided by the related parties were RMB 82,344, RMB 157,881 and RMB 129,061 respectively. Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Bandwidth service fee charged by Qihu — 18,530 46,191 Referral service fee charged by Qihu 10,814 13,158 47,640 Labor cost charged by Xixian — — 10,657 Referral service fee charged by Qifutong 43,214 43,688 7,905 Corporate expenses allocated from Qibutianxia 17,512 32,015 3,230 Interests charged by Youdaojingwei for funds provided 9,877 40,497 — Rental expenses charged by Qifeixiangyi — — 5,074 Others 927 9,993 8,364 Total 82,344 157,881 129,061 6. RELATED PARTY BALANCES AND TRANSACTIONS – continued For the years ended December 31, 2017, 2018 and 2019, services provided to the related parties were RMB 86,311, RMB 502,614 and RMB 1,037,480 respectively. Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Referral service fee charged to Qicaitianxia 84,303 196,013 197,018 Loan facilitation services fee charged from Jinshang — 134,884 59,871 Loan facilitation services fee charged from Beijing Zixuan — 128,970 517,776 Post-origination services fee charged from Jinshang — 33,153 43,497 Post-origination services fee charged from Beijing Zixuan — 8,559 215,019 Others 2,008 1,035 4,299 Total 86,311 502,614 1,037,480 Beijing Zixuan is the subsidiary of Qibutianxia which is ultimately controlled by Mr. Zhou. Beijing Zixuan runs a P2P platform, referring individual investors as the funding partners to the Group's platform. Jinshang is an affiliate of an entity controlled by Mr. Zhou and provides funds to the borrowers through the Group's platform. Historically, the Group directly collected service fees from the borrowers. Started from 2018, the Group contractually changed its payment flow model by collecting service fees from Beijing Zixuan/Jinshang instead of from borrowers. The amounts from Beijing Zixuan and Jinshang represent the loan facilitation service and post-origination service fees charged from them. As of December 31, 2018 and 2019, amounts due from related parties were RMB 484,286 and RMB 478,767, respectively, and details are as follows: December 31, December 31, 2018 2019 RMB RMB Jinshang 215,937 50,666 Beijing Zixuan 187,964 404,416 Qicaitianxia 78,441 1,050 Shareholders(1) — 20,459 Qifutong 1,550 1,000 Others(2) 394 1,176 Total 484,286 478,767 (1) The balance as of December 31, 2019 represents the ADS registration fees incurred on behalf of certain shareholders that are to be reimbursed from them. (2) There was a short-term borrowing of RMB 300 million from Qibutianxia to Qiyu in 2019, the borrowing was repaid in April 2019, and thus no balance existed at the year end. 6. RELATED PARTY BALANCES AND TRANSACTIONS. – continued As of December 31, 2018 and 2019, amounts due to related parties were RMB 78,767 and RMB 55,622 respectively, and details are as follows: December 31, December 31, 2018 2019 RMB RMB Qibutianxia 51,682 1,842 Qihu 14,434 39,836 Xixian — 6,318 Qifutong 4,920 — Youdaojingwei 4,034 — Qicaitianxia 2,413 5,552 Ningbo Siyinjia 300 — Beijing Zixuan 90 — Others 894 2,074 Total 78,767 55,622 Qibutianxia provided joint back to back guarantee to certain third party guarantee companies for the loans facilitated by the Group. The amounts of loans under such arrangement are RMB 13,981,761 and RMB 22,831,912 as of December 31, 2018 and 2019 respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | 7. INCOME TAXES PRC Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), domestically-owned enterprises and foreign-invested enterprises are subject to a uniform tax rate of 25 %. In November 2018, Qiyu received its “high and new technology enterprises” status and was entitled to a reduced EIT rate of 15% from 2018 to 2020. In August 2019, one of the Group’s subsidiary received the enterprise income tax preferential treatment related to western region development policy and was entitled to a preferential tax rate of 15%. Besides, as the subsidiary falls into the scope of newly established financial technology enterprise, the local government exempts 40% of EIT. 7. INCOME TAXES – continued PRC The current and deferred portion of income tax expenses included in the combined and consolidated statements of operations, which were all attributable to the Group’s PRC entities are as follows: Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Current tax 115,790 375,066 1,179,089 Deferred tax (67,612) 91,294 (713,106) Total 48,178 466,360 465,983 Reconciliation between the income tax at PRC statutory tax rate and income tax expense is as follows: Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Income before income tax benefit 213,043 1,659,671 2,967,287 Statutory tax rate in the PRC 25 % 25 % 25 % Income tax at statutory tax rate 53,261 414,918 741,822 Effect of different tax rate of subsidiary operation in other jurisdiction — 5,424 3,875 Non-deductible expenses 23 151,987 63,070 Preferential tax rate and local tax exemption — (84,120) (202,095) Effect of enacted tax rate change of deferred tax assets/liabilities — — (95,048) Research and development super-deduction (5,106) (21,849) (47,846) Valuation allowance movement — — 2,205 Income tax expense 48,178 466,360 465,983 The effect of the preferential tax rates on the income per share is as follows: Years Ended December 31, (Amounts in Thousands Except Per Share Data ) 2017 2018 2019 RMB RMB RMB Tax saving amount due to preferential tax rates — 84,120 297,143 Income per share effect-basic — 0.41 1.03 Income per share effect-diluted — 0.41 0.99 7. INCOME TAXES – continued PRC Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the deferred tax assets and deferred tax liabilities are as follows: December 31, December 31, 2018 2019 RMB RMB Deferred tax assets Guarantee liabilities 386,781 1,182,114 Advertising expenses 148,613 290,720 Provision for accounts receivable and contract assets 34,695 236,252 Provision for loan losses 14,220 84,452 Accrued expenses 13,990 — Net operating loss carry forwards 5,056 10,746 Total deferred tax assets 603,355 1,804,284 Deferred tax liabilities Uncollected revenues (619,113) (1,106,936) Total deferred tax liabilities (619,113) (1,106,936) Net deferred tax assets (liabilities) (15,758) 697,348 Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2018 and 2019, no allowance has been recorded for the deferred tax assets. As of December 31, 2019, the Group had net operating loss carryforwards in PRC entities of RMB 42,985, which can be carried forward to offset taxable income. The carryforward period for net operating losses under the EIT Law is five years. The net operating loss carryforwards of the Group will expire in 2023 with RMB 20,223 and in 2024 with RMB 22,762 respectively. Other than the expiration, there are no other limitations or restrictions upon the Group’s ability to use these operating loss carryforwards. The authoritative guidance requires that the Group recognizes the impact of a tax position in the financial statements if that position is more likely than not of being sustained upon audit by the tax authority, based on the technical merits of the position. Under PRC laws and regulations, arrangements and transactions among related parties may be subject to examination by the PRC tax authorities. If the PRC tax authorities determine that the contractual arrangements among related companies do not represent a price under normal commercial terms, they may make adjustments to the companies’ income and expenses. A transfer pricing adjustment could result in additional tax liabilities. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB 0.1 million is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. Aggregate undistributed earnings of the Group’s PRC subsidiaries and VIE that are available for distribution was RMB 1,954,077 and 4,264,093 as of December 31, 2018 and 2019 respectively. 7. INCOME TAXES – continued PRC – continued In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. In addition, under tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in the FIE, or 10%, if the investor holds less than 25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC subsidiaries unless the Company has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be postponed indefinitely. The Group plans to indefinitely reinvest undistributed profits earned from its China subsidiaries in its operations in the PRC. Therefore, no withholding income taxes for undistributed profits of the Group’s subsidiaries have been provided as of December 31, 2018 and 2019. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting basis over tax basis in a domestic subsidiary. However, recognition is not required in situations where the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the enterprise expects that it will ultimately use that means. The Group completed its feasibility analysis on a method, which the Group will ultimately execute if necessary to repatriate the undistributed earnings of the VIE without significant tax costs. As such, the Group does not accrue deferred tax liabilities on the earnings of the VIE given that the Group will ultimately use the means. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED COMPENSATION. | |
SHARE-BASED COMPENSATION | 8. SHARE-BASED COMPENSATION Share incentive plan In May 2018, the shareholders and board of directors of the Company adopted the Share Incentive Plan (the "2018 plan") for the granting of share options and restricted shares to employees, directors and consultants to reward them for services to the Company and to provide incentives for future service. Under the 2018 plan, the maximum aggregate number of shares which may be issued is 25,336,096 ordinary shares, plus an annual increase equal to 1.0% of the total number of the then issued and outstanding shares. The share options expire 10 years from the date of grant. In November 2019, the Company's board of directors and shareholders approved the 2019 Share Incentive Plan (the "2019 Plan") for the granting of share options and restricted shares to employees, directors and consultants to reward them for services to the Company and to provide incentives for future service. Under the 2019 plan, the maximum aggregate number of shares which may be issued is 1.0% of the total number of the issued and outstanding shares on January 1, 2019, plus an annual increase equal to 1.0% of the total number of the then issued and outstanding shares. The share options expire 10 years from the date of grant. Stock options On May 20 and November 20, 2018, the Company granted 24,627,493 and 690,023 stock options, respectively, with an exercises price of US$0.00001 per share to certain employees, directors and officers. The stock options shall vest over a period from immediate to 4 years . The grant date fair value per option was RMB 48.64 and RMB 60.77, respectively. The Company did not grant any stock options in the year ended December 31, 2019. The Company used the binomial model to estimate the fair value of the options granted on the respective grant dates with assistance from an independent valuation firm. The fair value of options approximates the fair value of underlying ordinary shares as the exercise price is nominal. 8. SHARE-BASED COMPENSATION Stock options The fair value per option was estimated at the date of grant using the following assumptions: Year ended, December 31, 2018 RMB Average risk-free rate of interest 3.18 % Estimated volatility rate 51.32 % - 53.49 % Dividend yield 0.00 % Time to maturity 10 years Exercise price USD 0.00001 The risk-free rate of interest is based on the yield of US Treasury Strip Bond as of the valuation date. The expected volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies for the period before valuation date and with similar span as the expected expiration term. The fair value of ordinary share underlying the options has been determined by considering a number of objective and subjective factors such as operating and financial performance, round of financing investment, discount for lack of marketability and general and industry specific economic outlook, amongst other factors. A summary of option activity during period from January 1, 2019 to December 31, 2019 is as follows: Weighted Weighted Average Number of Average Remaining Aggregate Options Exercise Price Contract Life Intrinsic Value USD Years RMB Options outstanding at January 1, 2019 25,244,577 0.00001 7.89 1,346,041 Options forfeited in 2019 (1,741,363) 0.00001 6.79 — Options exercised in 2019 (5,470,244) 0.00001 6.87 (186,043) Options outstanding at December 31, 2019 18,032,970 0.00001 6.91 613,301 Options exercisable at December 31, 2019 8,411,583 0.00001 6.69 286,078 Options vested or expected to be vested at December 31, 2019 18,032,970 0.00001 6.91 613,301 As of December 31, 2019, there was RMB 319,912 of unrecognized compensation cost related to share options that are expected to be recognized over a weighted-average vesting period of 0.91 years. Restricted Shares On May 20, August 20 and November 20, 2019, the Company's board of directors approved to grant 2,003,301 restricted shares. The restricted shares granted shall vest in accordance with contractual schedules over a period from three to five years . 8. SHARE-BASED COMPENSATION Restricted Shares A summary of the restricted shares for the year ended December 31, 2019 was stated below: Weighted-Average Number of Grant-Date Restricted Shares Fair Value Outstanding at January 1, 2019 — — Granted 2,003,301 36.18 Forfeited (438,627) 50.12 Vested (297,849) 41.16 Outstanding at December 31, 2019 1,266,825 30.18 The fair value of the restricted shares was determined by the closing sales price of the shares on the grant date. The total fair value of the restricted shares vested for the years ended December 31, 2019 was RMB 12,258. As of December 31, 2019, there was RMB 37,181 of unrecognized compensation cost related to restricted shares that are expected to be recognized over a weighted-average vesting period of 1.46 years. The Company recognizes the compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting period. Total share-based compensation expense of share-based awards granted to employees and directors was as follows: Year ended, Year ended, December 31, 2018 December 31, 2019 RMB RMB Origination and servicing expenses 150,177 55,601 Sales and marketing expenses 15,700 6,805 General and administrative expenses 441,504 188,022 Total 607,381 250,428 |
ORDINARY SHARES AND PREFERRED S
ORDINARY SHARES AND PREFERRED SHARES | 12 Months Ended |
Dec. 31, 2019 | |
ORDINARY SHARES AND PREFERRED SHARES | |
ORDINARY SHARES AND PREFERRED SHARES | 9. ORDINARY SHARES AND PREFERRED SHARES On April 27, 2018, the Company was authorized to issue 50,000,000 shares of common stock, at par value of USD 0.001 per share. And 1 share was issued and outstanding on that date. On May 16, 2018, the board approved a share split of 1 to 100, and re-designation of common stock to Class A ordinary shares. As a result, 5,000,000,000 shares was authorized at par value of USD 0.00001 per share. As part of the Reorganization which occurred in September 2018, an aggregate number of 198,347,168 ordinary shares was issued. At the same time, the 100 shares outstanding before the Reorganization was surrendered to the Company. The ordinary shares include 16,512,156 Class A ordinary shares, 39,820,586 Class B ordinary shares and 142,014,426 Class C ordinary shares. Each Class A and each Class C ordinary share is entitled to one vote and each Class B ordinary share is entitled to twenty votes on all matters that are subject to shareholder vote. All classes of ordinary shares are entitled to the same dividend right. Class B and Class C ordinary shares could be converted into Class A ordinary shares, at the option of the holders, on one-for-one basis. All Class B ordinary shares are beneficially owned by Mr. Zhou, the Chairman of the Company. All Class C ordinary shares were automatically converted to Class A ordinary shares immediately as of completion of the IPO. On December 14, 2018, the Company completed its IPO on the NASDAQ Global Market. In this offering, 3,100,000 ADSs, representing 6,200,000 Class A Ordinary Shares, were issued at a price of US$16.50 per ADS. The aggregate proceeds received by the Company from the IPO, net of issuance costs, were approximately RMB 297,860 (USD 43,308). Before the Reorganization occurred in September 2018, there are several rounds of financing into Qibutianxia with some equity interest having preference rights. In 2016 before Qiyu was established, RMB 100,000 equity interest were subscribed by the shareholders who have the preference rights (Series A preferred equity interest). In April 2017, RMB 722,770 equity interest were subscribed by the shareholders who have the preference rights. And in January 2018, RMB 1,451,300 equity interest were subscribed by the shareholders who have the preference rights. Collectively, these equity interest issued in 2017 and 2018 were grouped as Series A+ preferred equity interest. Upon Reorganization in September 2018, in addition to the 198,347,168 ordinary shares issued, the Company issued an aggregate of 10,375,744 Series A convertible redeemable preferred shares and 47,792,100 Series A+ convertible redeemable preferred shares to the preferred equity interest holders, all in the same proportion, in exchange for their equity interest in the carved entities of Qiyu, Fuzhou Microcredit and Fuzhou Guarantee. The preference rights held by the shareholders of Series A and Series A+ convertible redeemable preferred shares are substantially the same as the interest they held in Qibutianxia. At the same time, the Company issued 24,937,695 Series B convertible redeemable preferred shares to certain third party new investors for a total cash consideration of USD 203,500 (RMB 1,393,812). Upon issuance, the Company determined that redemption was not probable and did not accrete the Preferred Shares to the redemption value. Immediately upon the completion of the IPO, all outstanding convertible redeemable preferred shares were automatically converted into Class A ordinary shares on a one-for-one basis. As of December 31, 2018, there were 287,652,707 ordinary shares outstanding, par value $0.00001 per share, being the sum of 247,832,121 Class A ordinary shares and 39,820,586 Class B ordinary shares. As of December 31, 2019, there were 293,420,800 ordinary shares outstanding, par value $0.00001 per share, being the sum of 253,600,214 Class A ordinary shares and 39,820,586 Class B ordinary shares. |
STATUTORY RESERVES AND RESTRICT
STATUTORY RESERVES AND RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | 10. STATUTORY RESERVES AND RESTRICTED NET ASSETS In accordance with the PRC laws and regulations, the PRC entities of the Group are required to make appropriation to certain statutory reserves, namely general reserve, enterprise expansion reserve, and staff welfare and bonus reserve, all of which are appropriated from net profit as reported in their PRC statutory accounts. The PRC entities of the Group are required to appropriate at least 10% of their after-tax profits to the general reserve until such reserve has reached 50% of their respective registered capital. 10. STATUTORY RESERVES AND RESTRICTED NET ASSETS – continued Appropriations to the enterprise expansion reserve and the staff welfare and bonus reserve are to be made at the discretion of the board of directors of the PRC entities of the Group. There are no appropriations to these reserves by the PRC entities of the Group for the years ended December 31, 2018 and 2019. As a result of PRC laws and regulations and the requirement that distributions by the PRC entities of the Group can only be paid out of distributable profits computed in accordance with the PRC GAAP, the PRC entities of the Group restricted from transferring a portion of their net assets to the Group. Amounts restricted include paid-in capital, capital reserve and statutory reserves of the PRC entities of the Group. As of December 31, 2018 and 2019, the aggregated amounts of paid-in capital, capital reserve and statutory reserves represented the amount of net assets of the relevant entity in the Group not available for distribution amounted to RMB 1,713,462 and 2,615,880 , respectively (including the statutory reserve fund of RMB 12,462 and RMB 14,880 as of December 31, 2018 and 2019). |
LEASE
LEASE | 12 Months Ended |
Dec. 31, 2019 | |
LEASE | |
LEASE | 11. LEASE Operating lease as lessee The Group enters into operating leases primarily for general office space. The Group’s leases typically have original terms not exceeding 5 years. These leases have remaining lease terms of 1 year to 3 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. Lease costs are included in general and administrative expenses. Operating lease expenses were RMB 5,432, RMB 8,455 and RMB 20,139 for the years ended December 31, 2017, 2018 and 2019, respectively. Supplemental cash flow information related to leases was as follows: Year ended, December 31, 2019 RMB Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 22,896 Right-of-use assets obtained in exchange for lease obligations: Operating leases 29,667 The following table shows ROU assets and lease liabilities as of December 31, 2019 (except lease term and discount rate): Year ended, December 31, 2019 RMB Right-of-use assets 55,362 Operating lease liabilities-current 21,020 Operating lease liabilities-non current 31,184 Year ended, December 31, 2019 RMB Weighted-average remaining lease term 2.27 Weighted-average discount rate 9.88 % 11. LEASE Operating lease as lessee The maturities of operating lease liabilities as of December 31, 2019 under ASC 842, are as follows: Years ending RMB 2020 26,157 2021 26,260 2022 5,177 2023 269 2024 and thereafter — Total undiscounted lease payments 57,863 Imputed interest (5,659) Total lease liabilities 52,204 As of December 31, 2019, the Group had additional operating leases for office rent, which will commence on February 16, 2020 with lease terms of 3 years. The undiscounted maturities of operating leases as of December 31, 2018 under ASC 840, are as follows: Years ending RMB 2019 13,118 2020 8,009 2021 4,280 2022 1,353 2023 and thereafter 336 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Contingencies Historically the Group has provided guarantees to certain institutional funding partners through a subsidiary that does not hold a financing guarantee license. In October 2019, The China Banking and Insurance Regulatory Commission, promulgated a new regulation pursuant to which this structure, may not deemed appropriate. The Company is in the process of restructuring the business, the plan of which includes providing guarantees through licensed entities, in order to comply with the prevailing laws and regulations. As of December 31, 2019, the outstanding loan balance under this guarantee model amounted to RMB 13 billion, constituting 17% of total outstanding loan balance facilitated by the Group (excluding loans delinquent for more than 180 days). The new regulation is silent with respect to any grace period that may be permitted to undertake the restructuring. Management has concluded, with the advice of the Group's legal counsel, that it is not reasonably possible to estimate any potential financial exposure the group may have as a result of operating the business during this intermediate time period, due to the substantial uncertainties regarding the interpretation and application of the relevant laws and regulations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS Starting from January 2020, a novel strain of coronavirus, COVID-19, has spread worldwide. Since then, the resulting significant economic disruptions to the Chinese economy, and depending on the length and severity of this epidemics impact to the economy, have been and may continue to have an adverse effect on default rates and credit drawdowns. The extent to which COVID-19 impacts the business and financial results of the Group depends on future developments, which are uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and actions to contain COVID-19 or mitigate its impact, among others. The financial impact on the Group, if any, of COVID-19 cannot be reasonably estimated at this time, and the Group will continue to closely monitor the impact of the COVID-19 outbreak. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
NET INCOME (LOSS) PER SHARE | |
NET INCOME (LOSS) PER SHARE | 14. NET INCOME (LOSS) PER SHARE For the years ended December 31, 2017, 2018 and 2019, for the purpose of calculating net (loss) income per share as a result of the Reorganization as described in Note 1, the number of shares used in the calculation reflects the outstanding shares of the Company as if the Reorganization took place from the earliest date. Basic and diluted net income (loss) per share for each of the periods presented were calculated as follows: Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Numerator: Net income attributable to shareholders of the Company 164,865 1,193,311 2,501,595 Deemed dividend to shareholders upon issuance of Series A and A+ preferred share (note 9) — (3,097,733) — Net income (loss) attributable to Class A and Class B ordinary shareholders for computing basic and diluted net loss per share 164,865 (1,904,422) 2,501,595 Denominator: Weighted average Class A and Class B ordinary shares outstanding used in computing basic income (loss) per ordinary share 198,347,168 202,751,277 288,827,604 Plus: incremental weighted average ordinary shares from assumed exercise of stock options and restricted shares using the treasury stock method — — 12,110,866 Weighted average Class A and Class B ordinary shares outstanding used in computing diluted income (loss) per ordinary share 198,347,168 202,751,277 300,938,470 Basic net income (loss) per share 0.83 (9.39) 8.66 Diluted net income (loss) per share 0.83 (9.39) 8.31 For the year ended December 31, 2018, stock options to purchase ordinary shares that were anti-dilutive and excluded from the calculation of diluted net loss per share of the Company were 2,679,463 on a weighted average basis. In addition, 21,857,895 number of Preferred Shares calculated on a weighted average basis were excluded from the calculation of diluted net loss per share in 2018 as their inclusion would have been anti-dilutive. For the year ended December 31, 2019, no options or RSUs were excluded from the calculation of diluted EPS due to the anti-dilutive effect. |
ADDITIONAL INFORMATION - FINANC
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I | 12 Months Ended |
Dec. 31, 2019 | |
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I | |
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I | 360 FINANCE, INC. ADDITIONAL INFORMATION - FINANCAL STATEMENT SCHEDULE I Under PRC regulations, foreign-invested companies in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. The Company’s PRC subsidiaries and VIEs are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund general reserve funds unless such reserve funds have reached 50% of its respective registered capital. These reserves are not distributable in the form of cash dividends to the Company. In addition, the share capital of the Company’s PRC subsidiaries and VIEs are considered restricted due to restrictions on the distribution of share capital. The following Schedule I has been provided pursuant to the requirements of Rules 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information as to the financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited combined and consolidated financial statements have been presented as the restricted net assets of the Company’s PRC subsidiaries and VIEs which may not be transferred to the Company in the forms of loans, advances or cash dividends without the consent of PRC government authorities as of December 31, 2019, was more than 25% of the Company’s combined and consolidated net assets as of December 31, 2019. CONDENSED BALANCE SHEETS (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”)) 2018 2019 2019 RMB RMB USD ASSETS Cash and cash equivalents 336,154 6,905 992 Amount due from subsidiaries 1,363,117 1,659,444 238,364 Investments in subsidiaries and VIEs 2,766,538 5,566,790 799,618 TOTAL ASSETS 4,465,809 7,233,139 1,038,974 LIABILITIES AND EQUITY LIABILITIES Accrued expenses and other current liabilities 11,632 5,582 802 Amount due to subsidiaries 13,981 14,115 2,027 TOTAL LIABILITIES 25,613 19,697 2,829 EQUITY Ordinary shares ( $0.00001 par value; 5,000,000,000 shares authorized,287,652,707 shares issued 20 20 3 Additional paid-in capital 4,866,756 5,117,184 735,037 Accumulated (deficit)/ Retained earnings (430,263) 2,071,332 297,528 Other comprehensive income 3,683 24,906 3,577 TOTAL EQUITY 4,440,196 7,213,442 1,036,145 TOTAL LIABILITIES AND EQUITY 4,465,809 7,233,139 1,038,974 360 FINANCE, INC. ADDITIONAL INFORMATION - FINANCAL STATEMENT SCHEDULE I CONDENSED STATEMENTS OF OPERATIONS (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”)) Year ended Year ended Year ended December 31, December 31, December 31, 2018 2019 2019 RMB RMB USD Operating costs and expenses (10,367) (12,922) (1,856) Interest income 187 712 102 Foreign exchange losses (11,518) (491) (71) Other income, net — 453 65 Net loss before taxes and income from equity in subsidiaries and VIEs (21,698) (12,248) (1,760) Equity in earnings of subsidiaries and VIEs 1,215,009 2,513,843 361,092 Net income before taxes 1,193,311 2,501,595 359,332 Income tax expenses — — — Net income attributable to shareholders of the Company 1,193,311 2,501,595 359,332 Deemed dividend (3,097,733) — — Net (loss) income attributable to ordinary shareholders of the Company (1,904,422) 2,501,595 359,332 360 FINANCE, INC. ADDITIONAL INFORMATION - FINANCAL STATEMENT SCHEDULE I CONDENSED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”)) Year ended Year ended Year ended December 31, December 31, December 31, 2018 2019 2019 RMB RMB USD Net income attributable to shareholders of the Company 1,193,311 2,501,595 359,332 Other comprehensive income, net of tax of nil: Foreign currency translation adjustment 3,683 21,223 3,048 Other comprehensive income 3,683 21,223 3,048 Total comprehensive income 1,196,994 2,522,818 362,380 Deemed dividend (3,097,733) — — Comprehensive (loss) income attributable to ordinary shareholders (1,900,739) 2,522,818 362,380 360 FINANCE, INC. CONDENSED STATEMENTS OF CASH FLOWS ADDITIONAL INFORMATION - FINANCAL STATEMENT SCHEDULE I (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“USD”)) Year ended Year ended Year ended December 31, December 31, December 31, 2018 2019 2019 RMB RMB USD Cash Flows from Operating Activities: Net income attributable to shareholders of the Company 1,193,311 2,501,595 359,332 Adjustments to reconcile net income to net cash used in operating activities: Equity in earnings of subsidiaries and VIEs (1,215,009) (2,513,843) (361,092) Changes in operating assets and liabilities Accrued expenses and other current liabilities 8,559 (3,070) (441) Amounts due from subsidiaries (1,346,627) (276,960) (39,783) Net cash used in operating activities (1,359,766) (292,278) (41,984) Cash Flows from Investing Activities: Investments in subsidiaries — (35,652) (5,121) Net cash used in Investing Activities — (35,652) (5,121) Cash Flows from Financing Activities: Proceeds from issuance of ordinary share upon IPO 327,236 — — Payment of IPO costs (12,100) (3,080) (442) Proceeds from series B convertible redeemable preferred shares 1,393,812 — — Net cash provided by (used in) financing activities 1,708,948 (3,080) (442) Effect of foreign exchange rate changes (13,028) 1,761 253 Net increase (decrease) in cash and cash equivalents 336,154 (329,249) (47,294) Cash, cash equivalents, and restricted cash, beginning of year — 336,154 48,286 Cash, cash equivalents, and restricted cash, end of year 336,154 6,905 992 Notes to condensed financial statements 1. 360 Finance, Inc. was founded in April 2018 in Cayman Islands. The condensed full year result of the Company has been prepared assuming the Reorganization (see Note 1 in the combined and consolidated financial statements) was in effect from January 1, 2018. 2. The condensed financial statements of 360 Finance, Inc. have been prepared using the same accounting policies as set out in the combined and consolidated financial statements except that the equity method has been used to account for investments in subsidiaries and VIEs. Such investment in subsidiaries and VIEs are presented on the balance sheets as interests in subsidiaries and VIEs and the profit of the subsidiaries and VIEs is presented as equity in profit of subsidiaries and VIEs on the statement of operations. 3. As of December 31, 2018 and 2019, there were no material contingencies, significant provisions of long-term obligations of the Company, except for those which have been separately disclosed in the consolidated financial statements. 4. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The footnote disclosure certain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying Combined and Consolidated Financial Statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The accompanying combined and consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). |
Basis of consolidation | Basis of consolidation The accompanying combined and consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries, and consolidated VIEs. All inter-company transactions and balances have been eliminated. |
Consolidated Trusts | Consolidated Trusts Loans funded by the institutional funding partners in the Group’s loan facilitation business are typically disbursed to the borrowers directly from such partners. However, due to the need of certain institutional funding partners, loans from such funding partners are funded and disbursed indirectly through trusts and asset management plans (collectively the "Trusts"). Since November 2017, several Trusts were formed by third-party trust companies and asset management companies, who administer the Trusts. The Trusts fund loans facilitated by the Group using the funds received from its beneficiaries to the borrowers facilitated by the Group. The Trusts provide the returns to its beneficiaries through interest payments made by the borrowers. The borrowers are charged with the interests by the Trusts. For the majority of trust, the Group is either entitled to the residual profit in the Trusts or the Group has provided guarantee to the Trusts by agreeing to repurchase any loans that are delinquent for 30 to 90 days from which the Group absorbs the credit risk of the Trusts resulting from borrowers’ delinquencies. The Group determined that the residual profit or the guarantee represents a variable interest in the Trusts through which the Group has the right to receive benefits or the obligation to absorb losses from the Trusts that could potentially be significant to the Trusts. Since the Trusts only invest in the loans facilitated by the Group and the Group continues to service the loans through a service agreement post origination and has the ability to direct default mitigation activities, the Group has the power to direct the activities of the Trusts that most significantly impact the economic performance of the Trusts. As a result, the Group is considered the primary beneficiary of the Trusts and consolidated the Trusts’ assets, liabilities, results of operations and cash flows. In 2019, the Group also received letter of approval for listing and transferring assets based securities (“ABS”) on both Shanghai Stock Exchange and Shenzhen Stock Exchange within the issue scale of RMB 5,000,000 for each, respectively. As of December 31, 2019, the beneficial rights of RMB 2,300,000 in trusts held by Qiyu were transferred to trust beneficial right asset backed special plans (the “ABS plans”). The ABS plans were securitized and listed on Shanghai Stock Exchange and Shenzhen Stock Exchange, with terms of two years. The Group purchased the whole subordinated tranche securities amounting RMB 184,000 to provide credit enhancement and senior tranche securities amounting RMB 17,500, representing 8% and 1% of the total face value of the securities respectively. External institutional funding partners purchased senior tranche securities amounting RMB 2,098,500 representing 91% of the total securities which was recorded as "payable to investors of the consolidated trusts - noncurrent" with the balance of RMB 2,086,946 on the consolidated balance sheet as of December 31, 2019. As of December 31,2018 and 2019, the loans held by the Trusts are all personal loans made to the individual borrowers with an original term up to 12 months. The interest rates of these loans ranged from 9% to 36%. The loans receivable balance associated with the Trusts represents the outstanding loans made to the borrowers from the Trusts. As of December 31, 2018 and 2019, the balance of delinquent loans repurchased by the Group from the consolidated trusts are RMB 20,579 and RMB 89,938, respectively. For the years ended 31, 2018 and 2019, the Group repurchased the balance of RMB 114,238 and RMB 18,014 performing loans upon liquidation of certain consolidated trusts per the contracts agreed with the counterparty, respectively. For the years ended December 31, 2017, 2018 and 2019, the provision for loan losses of RMB 5,647, RMB 33,141 and RMB 464,379 were charged to the combined and consolidated statements of comprehensive income, respectively. There were RMB nil, RMB 19,777 and RMB 142,882 of loans written off for the years ended December 31, 2017, 2018 and 2019, respectively. Interest on loans receivable is accrued and credited to income as earned. The Group determines a loan’s past due status by the number of days that have elapsed since a borrower has failed to make a contractual loan payment. Accrual of interest is generally discontinued when the loan principal and interest are deemed to be uncollectible. In general, loans receivable is identified as uncollectible when it is determined to be not probable that the balance can be collected. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Consolidated Trusts – continued The following financial statement amounts and balances of the consolidated trusts were included in the accompanying combined and consolidated financial statements after elimination of intercompany transactions and balances: December 31, 2018 December 31, 2019 RMB RMB ASSETS Restricted cash 6,142 354,104 Loans receivable, net 493,883 9,099,099 Prepaid expenses and other assets 4,000 95,840 Total Assets 504,025 9,549,043 December 31, 2018 December 31, 2019 RMB RMB LIABILITIES Payable to investors of the consolidated trusts-current 300,341 4,423,717 Amounts due to related parties 4,034 — Accrued expenses and other current liabilities 385 19,460 Other tax payable 268 25,431 Payable to investors of the consolidated trusts-noncurrent — 3,442,500 Total liabilities 305,028 7,911,108 Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Net revenue 10,791 70,621 1,279,203 Net (loss) income (2,560) (32,708) 469,825 Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Net cash (used in) provided by operating activities (90) (8,749) 382,620 Net cash (used in) provided by investing activities (916,275) 527,223 (8,989,137) Net cash provided by (used in) financing activities 1,012,499 (708,466) 7,512,696 The consolidated trusts contributed 1%, 2% and 14% of the Group's consolidated revenue for the years ended 2017, 2018 and 2019, respectively. As of December 31, 2018 and December 31, 2019, the consolidated trusts accounted for an aggregate of 7% and 47%, respectively, of the consolidated total assets, and 10% and 60% respectively, of the consolidated total liabilities. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company to provide financial support to the consolidated trusts. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Consolidated Trusts – continued The Group believes that the assets of the consolidated trusts could only be used to settle the obligations of the consolidated trusts. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates. Significant accounting estimates reflected in the Group’s financial statements include revenue recognition, financial assets receivable and guarantee liabilities, allowance for loans receivable, allowance for uncollectible accounts receivable and contract assets, allowance for financial assets receivable, and valuation allowance for deferred tax assets. |
Revenue recognition | Revenue recognition Through its app and channel partners, the Group provides services through its facilitation of loan transactions between the borrowers and the institutional funding partners through the use of two business models. The first business model involves the Group providing credit driven services through facilitating loans that are guaranteed by the Group directly or through third-party guarantee companies and insurance companies (referred to as "off-balance capital heavy loans" hereafter), or providing loans through the Consolidated Trusts and Fuzhou Microcredit. In either cases, the Group ultimately bears all the credit risks when the borrowers default. The second business model involves the Group providing platform services through facilitating loans with no or partial guarantee provided by the Group (referred to as "capital light loans" hereafter) and referral services. In these cases, the Group bears limited credit risks when the borrowers default. The loans facilitated under both models are with terms of 1~24 months (the majority are within the terms of 1~12 months) and with principal of up to RMB 200. Loan facilitation and servicing fees The Group earns loan facilitation and service fees from both off-balance capital heavy loans and capital light loans. The Group's services mainly consist of: 1) Performing credit assessment on the borrowers on its mobile platform based on its credit analysis and matching the institutional funding partners to potential qualified borrowers and facilitating the execution of loan agreements between the parties, referred to as "loan facilitation services" and; 2) Providing repayment processing services for the institutional funding partners over the loan term, referred to as “Post Origination Services” Based on the agreements entered into between the Group’s institutional funding partners and borrowers, the Group determined that it is not the legal lender or borrower in the loan origination and repayment process. Accordingly, the Group does not record loans receivable and payable arising from the loan between the funding partner and the borrowers. In 2017, the service fees were collected from the borrowers on a monthly basis through the loan period. Starting from 2018, to stay in compliance with regulatory requirements, particularly the Circular 141 which came into effect in December 2017, the Group started to charge service fees directly from funding partners based on the contractual agreements. In 2019, the Group started cooperating with insurance companies to provide guarantee for the loans between the borrowers and institutional funding partners. The Group charges guarantee fees from the borrower, including insurance premium collected on behalf of the insurance company. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Loan facilitation and servicing fees – continued For the loans the Group is entitled to the full service fee regardless of whether the borrowers choose to early repay or not, the Group has the unconditional right to the consideration. For the loans facilitated with borrowers who have the option of early repayment and upon termination they do not have the obligation to pay the remaining monthly service fees or not have to pay the excessive portion if the total fees are more than 36% of the origination principal on an annualized basis, the Group's right to consideration for the service fees of facilitation service is conditional on whether or not the borrowers repay in advance. For off-balance capital heavy loans, the Group enjoys a fixed rate of service fees. For capital light loans, the service fee rate the Group entitled to is subject to adjustment based on the actual default rate of the underlying loans. Under the off-balance capital heavy loans, the Group also provides a guarantee service to its institutional funding partners whereas in the event of default, the institutional funding partners are entitled to receive unpaid interest and principal from the Group. Given that the Group effectively takes on all of the credit risk of the borrowers and are compensated by the service fees charged, the guarantee is deemed as a service and the guarantee exposure is recognized as a stand-ready obligation in accordance with ASC Topic 460, Guarantees (see accounting policy for Guarantee Liabilities). Under the capital light model, the Group either provides no guarantee or partial guarantee service. Under the partial guarantee scenario, the Group agrees with each institutional funding partner a fixed upper limit of guarantee amount the Group is liable of. If the accumulated defaulted loan amount exceeds the agreed upper limit, the excess portion is borne by the institutional funding partner. The Group has adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified ASC 606 on January 1, 2018 using the full retrospective method which requires the Group to present its financial statements for all periods as if Topic 606 had been applied to all prior periods. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Group applies the following steps: ● Step 1: Identify the contract (s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition Loan facilitation and servicing fees – continued The Group determines that both the institutional funding partners and the borrowers are its customers because they both receive services provided by the Group pursuant to the contractual terms among the Group, the borrowers and the institutional funding partners. For each loan facilitated on the platform, the Group considers the loan facilitation service, post origination service and guarantee service (not applicable for arrangements where the Group does not provide guarantee service) as three separate services. Of which, the guarantee service is accounted for in accordance with ASC Topic 460, Guarantees, at fair value. Revenue from the guarantee services is recognized once the Group is released from the underlying risk (see accounting policy for Guarantee Liabilities).While the post-origination service is within the scope of ASC Topic 860, the ASC Topic 606 revenue recognition model is applied due to the lack of definitive guidance in ASC Topic 860. The loan facilitation service and post-origination service are two separate performance obligations under ASC 606, as these two deliverables are distinct in that customers can benefit from each service on its own and the Group's promises to deliver the services are separately identifiable from each other in the contract. The Group determines the total transaction price to be the service fees chargeable from the borrowers or the institutional funding partners. The Group's transaction price includes variable considerations in the form of prepayment risk of the borrowers and service fee allocation rate under capital light model under certain agreements. The Group estimates the prepayment risk of borrowers using the expected value approach on the basis of historical information and current trends of the collection percentage of the borrowers. The service fee allocated to the Group under capital light model would be fluctuated along with the actual default rate of the loans facilitated. The Group uses the service fee allocation rate applicable to the estimated default rate of the underlying loans. The transaction price is allocated amongst the guarantee service, if any, and the other two performance obligations. The Group first allocates the transaction price to the guarantee liabilities, if any, in accordance with ASC Topic 460, Guarantees which requires the guarantee to be measured initially at fair value based on the stand-ready obligation. Then the remaining considerations are allocated to the loan facilitation services and post origination services using their relative standalone selling prices consistent with the guidance in ASC 606. The Group does not have observable standalone selling price information for the loan facilitation services or post origination services because it does not provide loan facilitation services or post origination services on a standalone basis. There is no direct observable standalone selling price for similar services in the market reasonably available to the Group. As a result, the estimation of standalone selling price involves significant judgment. The Group uses expected cost plus margin approach to estimate the standalone selling prices of loan facilitation services and post-origination services as the basis of revenue allocation. In estimating its standalone selling price for the loan facilitation services and post origination services, the Group considers the cost incurred to deliver such services, profit margin for similar arrangements, customer demand, effect of competitors on the Group’s services, and other market factors. For each type of service, the Group recognizes revenue when (or as) the entity satisfies the service/ performance obligation by transferring the promised service (that is, an asset) to customers. Revenues from loan facilitation services are recognized at the time a loan is originated between the institutional funding partners and the borrowers and the principal loan balance is transferred to the borrowers, at which time the facilitation service is considered completed. Revenues from post origination services are recognized on a straight-line basis over the term of the underlying loans as the post-origination services are a series of distinct services that are substantially the same and that have the same pattern of transfer to the institutional funding partners. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Revenue from releasing of guarantee liabilities Revenues from guarantee services are recognized at the expiry of the guarantee term. For the years ended December 2017, 2018 and 2019, revenue from guarantee liabilities were RMB 331, RMB 25,169 and RMB 285,407, respectively, which were previously reported as part of other service fee revenues in 2017 and 2018. Incentives The Group provides incentives to the borrowers by providing coupons which can only be used as a reduction of repayment and ultimately reduced the service fees received by the Group. Because the borrower does not enter into any enforceable commitment by picking up the coupons, no contract arises from the coupons. Therefore the Group records the incentives as a deduction to revenue upon redemption. Financing income The Group provides loans through the Consolidated Trusts and Fuzhou Microcredit. The interest rate charged to the borrowers are fixed. The Group recognized revenue under “financing income” the fees and interests charged to the borrowers over the lifetime of the loans using the effective interest method. Referral service fees The Group provides the referral services to other platforms, by referring to them the borrowers who have not passed the Group's credit assessment. Specifically, the Group receives a fixed rate of referral fee from the platforms once the borrowers are accepted by the other funding providers on those platforms. The revenue is recognized once the referral is completed as confirmed by those platforms. For the years ended December 31, 2017, 2018 and 2019, RMB 84,397 , RMB 211,087 and RMB 375,551 were generated from the referral service, respectively, which were previously reported as part of other service fee revenues in 2017 and 2018. The Group recorded the receivables derived from of referral service fees in prepaid expenses and other assets on its consolidated balance sheets. Other service fees Other service fees mainly pertain to the revenue from late fees from borrowers under off-balance capital heavy loans and capital light loans. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Other service fees – continued The following table presents the disaggregation of revenue for the years ended December 31, 2017, 2018 and 2019: Year ended Year ended Year ended Year ended December December December December 31, 2017 31, 2018 31, 2019 31, 2019 RMB RMB RMB USD Credit driven services 703,747 4,170,271 8,013,391 1,151,052 Loan facilitation and servicing fees-capital heavy 647,350 3,807,242 6,273,131 901,079 Revenue from loan facilitation services 552,313 3,058,084 4,396,300 631,489 Revenue from post-origination services 95,037 749,158 1,876,831 269,590 Financing income 50,966 267,844 1,309,616 188,115 Revenue from releasing of guarantee liabilities 331 25,169 285,407 40,996 Other services fees 5,100 70,016 145,237 20,862 Platform services 84,397 276,747 1,206,456 173,296 Loan facilitation and servicing fees-capital light — 58,348 814,581 117,007 Revenue from loan facilitation services — 49,549 672,982 96,668 Revenue from post-origination services — 8,799 141,599 20,339 Referral services fees 84,397 211,087 375,551 53,945 Other services fees — 7,312 16,324 2,344 Total net revenue 788,144 4,447,018 9,219,847 1,324,348 Accounts receivable and Contract Assets, net For the loans the Group is entitled to the full service fee regardless of whether the borrowers choose to early repay or not, the Group has the unconditional right to the consideration and an accounts receivable is recorded for the monthly service fees allocated to loan facilitation service that have already been delivered in relation to loans facilitated on the Group's platform when recognizing revenue from loan facilitation service. For the loans facilitated with borrowers who have the option of early repayment and upon termination they do not have the obligation to pay the remaining monthly service fees or do not have to pay the excessive portion if the total fees are more than 36% of the origination principal on an annualized basis, the Group's right to consideration for the service fees of facilitation service is conditional on whether or not the borrowers repay in advance. In these instances, the Group records a corresponding contract asset when recognizing revenue from loan facilitation service. Accounts receivable and contract assets are stated at the historical carrying amount net of write-offs and allowance for collectability in accordance with ASC Topic 310. The Group established an allowance for uncollectible accounts receivable and contract assets based on estimates, which incorporate historical experience and other factors surrounding the credit risk of specific type of customers which is essentially the expected net default rates used in determining the fair value of guarantee liabilities. The Group evaluates and adjusts its allowance for uncollectible accounts receivable and contract assets on a quarterly basis or more often as necessary. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Accounts receivable and Contract Assets, net – continued Uncollectible accounts receivable and contract assets are written off when the consideration entitled to be received by the Group is due and a settlement is reached for an amount that is less than the outstanding historical balance or when the Group has determined the balance will not be collected. Contract assets and accounts receivable are identified as uncollectible when the underlying loan is determined to be not probable that the balance can be collected. The Group will write off contract assets and accounts receivable and the corresponding provisions if the underlying loan is deemed uncollectible. The Group's accounts receivable as of December 31, 2018 and 2019 are as follows: Allowance for Accounts uncollectible Accounts As of December 31, 2018 receivable Accounts receivable receivable, net Accounts receivable from loan facilitation service 1,849,796 (77,152) 1,772,644 Accounts receivable from post facilitation service 13,546 (4,184) 9,362 Total 1,863,342 (81,336) 1,782,006 Allowance for Accounts uncollectible Accounts As of December 31, 2019 receivable Accounts receivable receivable, net Accounts receivable from loan facilitation service 2,371,709 (184,425) 2,187,284 Accounts receivable from post facilitation service 24,092 (273) 23,819 Total 2,395,801 (184,698) 2,211,103 The movement of allowance for uncollectible accounts receivables for the years ended December 31, 2017, 2018 and 2019 are as follows: Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2017 provision year 2017 Accounts receivable from loan facilitation service — 17,528 — 17,528 Accounts receivable from post facilitation service — — — — Total — 17,528 — 17,528 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Accounts receivable and Contract Assets, net – continued Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2018 provision year 2018 Accounts receivable from loan facilitation service 17,528 64,895 (5,271) 77,152 Accounts receivable from post facilitation service — 4,702 (518) 4,184 Total 17,528 69,597 (5,789) 81,336 Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Accounts receivable from loan facilitation service 77,152 171,602 (64,329) 184,425 Accounts receivable from post facilitation service 4,184 12,779 (16,690) 273 Total 81,336 184,381 (81,019) 184,698 The Group's contract assets as of December 31, 2018 and 2019 are as follows: Allowance for uncollectible Contract assets, As of December 31, 2018 Contract assets Contract assets net Contract assets from loan facilitation service 7,634 (758) 6,876 Contract assets from post facilitation service 3,284 (421) 2,863 Total 10,918 (1,179) 9,739 Allowance for uncollectible Contract assets, As of December 31, 2019 Contract assets Contract assets net Contract assets from loan facilitation service 143,685 (6,662) 137,023 Contract assets from post facilitation service 3,977 (231) 3,746 Total 147,662 (6,893) 140,769 The movement of allowance for uncollectible contract assets for the years ended December 31, 2017, 2018 and 2019 are as follows: Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2017 provision year 2017 Contract assets from loan facilitation service 106 1,075 (18) 1,163 Contract assets from post facilitation service 2 2,577 — 2,579 Total 108 3,652 (18) 3,742 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Accounts receivable and Contract Assets, net – continued Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2018 provision year 2018 Contract assets from loan facilitation service 1,163 1,053 (1,458) 758 Contract assets from post facilitation service 2,579 918 (3,076) 421 Total 3,742 1,971 (4,534) 1,179 Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Contract assets from loan facilitation service 758 8,895 (2,991) 6,662 Contract assets from post facilitation service 421 1,728 (1,918) 231 Total 1,179 10,623 (4,909) 6,893 The Group's accounts receivable and contract assets generated from related parties and recorded in amounts due from related parties as of December 31, 2019 are as follows: Accounts Allowance for Accounts receivable uncollectible receivable and contract accounts receivable and contract As of December 31, 2019 assets and contract assets Assets, net Accounts receivable from loan facilitation service 131,743 (9,648) 122,095 Accounts receivable from post facilitation service 1,950 (481) 1,469 Contract assets from loan facilitation service 47,028 (2,062) 44,966 Contract assets from post facilitation service 795 (144) 651 Total 181,516 (12,335) 169,181 The movement of allowance for uncollectible accounts receivables and contract assets generated from related parties and recorded in amounts due from related parties for the year ended December 31, 2019 are as follows: Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Accounts receivable from loan facilitation service 9,437 18,698 (18,487) 9,648 Accounts receivable from post facilitation service 1,515 6,947 (7,981) 481 Contract assets from loan facilitation service 219 7,680 (5,837) 2,062 Contract assets from post facilitation service 18 1,951 (1,825) 144 Total 11,189 35,276 (34,130) 12,335 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue recognition – continued Accounts receivable and Contract Assets, net – continued The Group did not recognize any contract liabilities during the periods presented. The amount of the transaction price allocated to performance obligations that are unsatisfied as of December 31, 2018 and 2019 are RMB 774,452 and RMB 978,811, respectively, all of which pertain to post-origination service. Remaining unsatisfied performance obligations that will be recognized as revenue by the Group within the following 12 months are 100% and 99% of the remaining performance obligations as of December 31, 2018 and 2019 respectively, with the remainder recognized thereafter. The Group used practical expedient in applying full retrospective method on completed contracts in transiting to ASC 606. For completed contracts that have variable consideration, the Group used the transaction price at the date the contract was completed rather than estimating variable consideration amounts in the comparative reporting periods. The Group determines that acquisition cost paid for funding partners based on the amount of investment represents costs to obtain a contract qualifying for capitalization since these payments are directly related to sales achieved during a period. Such cost was not material during the periods presented. Revenue recognized for years ended December 31, 2017, 2018 and 2019 from performance obligations satisfied (or partially satisfied) in prior periods pertaining to adjustments to variable consideration due to the change of estimated prepayment rate and service fee allocation rate was immaterial. The Group is subject to value-added tax and other surcharges including education surtax and urban maintenance and construction tax, on the services provided in the PRC. The Group has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by the governmental authority. Such taxes excluded from revenues are RMB 61,744, RMB 379,762 and RMB 547,344, respectively, for the years ended December 31, 2017, 2018 and 2019. |
Cash and cash equivalents and Restricted cash | Cash and cash equivalents Cash and cash equivalents mainly consist of funds in banks, which are highly liquid and are unrestricted as to withdrawal or use. Restricted cash Restricted cash represents: (i) Deposit to funding banks which is used to secure timely loan repayment. As of December 31, 2018 and 2019, the amount of restricted cash related to deposit to the funding banks is RMB 561,652 and RMB 1,373,623 , respectively. (ii) Cash held by the trusts and assets management plans through segregated bank accounts which can only be used to invest in loans or other securities as stipulated in the trust agreement. The trusts have a maximum operating period of two years . The cash in the trusts is not available to fund the general liquidity needs of the Group. |
Security deposit prepaid to third-party guarantee companies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Security deposit prepaid to third-party guarantee companies Security deposit prepaid to third-party guarantee companies represents deposit prepaid to licensed third-party vendors the Group cooperates with to provide guarantee to secure timely loan repayment for institutional funding partners. |
Funds receivable from third party payment service providers | Funds receivable from third party payment service providers The Group opened accounts with third party online payment service providers to collect and transfer the loan funds and interest to funding partners or borrowers. The Group also uses such accounts to collect the transaction fee and service fee, and repay and collect the default loan principal and interest. The balance of funds receivable from third party payment service providers mainly includes (a) Funds provided by Fuzhou Microcredit but not yet transferred to the borrowers by third party payment service providers due to the settlement time lag; (b) Repayment of loan principal and interest amounts received from the borrowers but not yet transferred to the investors by third party payment service providers due to the settlement time lag; and, (c) Accumulated amounts of transaction fee, service fee received, payment and collection of default loan and interest at the balance sheet date. |
Fair value | Fair value Fair value is considered to be the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Fair value – continued Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The carrying values of financial instruments, which consist of cash and cash equivalents, restricted cash, security deposits, accounts receivable and contract assets, financial assets receivable, funds receivable from third party payment service providers, loans receivable, short term loan, payable to investors of the consolidated trusts, and amounts due from/to related parties are recorded at cost which approximates their fair value due to the short-term nature of these instruments. The Group does not have any assets or liabilities that are recorded at fair value subsequent to initial recognition on a recurring or non-recurring basis during the periods presented. |
Loans receivable | Loans receivable Loans receivable represents loans facilitated through the consolidated trusts and Fuzhou Microcredit. Loans receivable are recorded as receivable, reduced by a valuation allowance estimated as of the balance sheet date. The allowance for loan losses is determined at a level believed to be reasonable to absorb probable losses inherent in the portfolio as of each balance sheet date. The allowance is provided based on an assessment performed on a portfolio basis. All loans are assessed collectively depending on factors such as delinquency rate, size, and other risk characteristics of the portfolio. The Group charges off loans receivable as a reduction to the allowance for loans receivable when the loan principal and interest are deemed to be uncollectible. In general, loans receivable is identified as uncollectible when it is determined to be not probable that the balance can be collected. |
Property and equipment, net | Property and equipment, net Furniture and equipment are recorded at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Leasehold improvements Over the shorter of the lease term or expected useful lives Electronic equipment 5 years Furniture and office equipment 5 years Gains and losses from the disposal of furniture and equipment are recognized in the combined and consolidated statements of operations. Depreciation expense on property and equipment for the years ended December 31, 2017, 2018 and 2019 were RMB 1,277, RMB 3,406 and RMB 6,837, respectively. |
Guarantee liabilities | Guarantee liabilities For the loans facilitated through the loan facilitation business, the Group provides a guarantee service to its funding partners whereas in the event of default, the institutional funding partners are entitled to receive unpaid interest and principal from the Group. In general, any unpaid interest and principal are paid when the borrower does not repay as scheduled. For accounting purposes, at loan inception, the Group recognizes a stand-ready liability representing the fair value of guarantee liability in accordance with ASC Topic 460. From February 2018, to follow the recent regulation change, particularly the Circular 141 which came into effect in December 2017, the Group began to involve third-party licensed vendors including financing guarantee companies and insurance companies to provide guarantee for new loans facilitated for certain funding partners. Under the cooperation with financing guarantee companies, these guarantee companies initially reimburses the loan principal and interest to the institutional funding partners upon borrower's default. Although the Group does not have direct contractual obligation to the institutional funding partners for defaulted principal and interest, the Group provides back to back guarantee to the licensed guarantee companies. As agreed in the back to back guarantee contract, the Group would pay the licensed guarantee companies for actual losses incurred based on defaulted principal and interest. Under the cooperation with insurance companies, the Company is obligated to provide funding in the form of security deposit with the insurance companies which is used to compensate the institutional funding partners for borrowers' default. Given that the Group effectively takes on all of the credit risk of the borrowers, the Group recognizes a stand ready obligation for its guarantee exposure in accordance with ASC Topic 460. Under capital light model, in the condition of no guarantee service provided, the Group does not take any credit risk and not record any guarantee liabilities associated with those loans. Besides, in the condition of partial guarantee, the amount of guarantee exposure is immaterial for the year ended December 31 2019. At the inception of each loan, the Group recognizes the guarantee liability at fair value in accordance with ASC 460-10, which incorporates the expectation of potential future payments under the guarantee and takes into both non-contingent and contingent aspects of the guarantee. Subsequent to the loan's inception, the guarantee liability is composed of two components: (i) ASC Topic 460 component; and (ii) ASC Topic 450 component. The liability recorded based on ASC Topic 460 is determined on a loan by loan basis and it is reduced when the Group is released from the underlying risk, i.e. as the loan is repaid by the borrower or when the investor is compensated in the event of a default. This component is a stand ready obligation which is not subject to the probable threshold used to record a contingent obligation. When the Group is released from the stand ready liability upon expiration of the underlying loan, the Group records a corresponding amount as "Revenue from releasing of guarantee liabilities " in the combined and consolidated statement of comprehensive income. The other component is a contingent liability determined based on probable loss considering the actual historical performance and current conditions, representing the obligation to make future payouts under the guarantee liability in excess of the stand-ready liability, measured using the guidance in ASC Topic 450. The ASC Topic 450 contingent component is determined on a collective basis and loans with similar risk characteristics are pooled into cohorts for purposes of measuring incurred losses. The ASC 450 contingent component is recognized as part of expense on guarantee liabilities in the combined and consolidated statement of comprehensive income. At all times the recognized liability (including the stand ready liability and contingent liability) is at least equal to the probable estimated losses of the guarantee portfolio. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Guarantee liabilities – continued The movement of guarantee liabilities during 2018 and 2019 is as follows: RMB As of January 1, 2018 300,942 Provision at the inception of new loans 2,059,392 Net payout (1) (935,991) Release on expiration (25,169) As of December 31, 2018 1,399,174 As of January 1, 2019 1,399,174 Provision at the inception of new loans 3,979,475 Net payout(1) (2,881,118) Expense on guarantee liabilities 734,730 Release on expiration (285,406) As of December 31, 2019 2,946,855 (1) Net payout represents the amount paid upon borrowers’ default net of subsequent recoveries from the borrowers during a given period. As of December 31, 2018 and 2019, the contractual amounts of the outstanding loans subject to guarantee by the Group is estimated to be RMB 40,770,719 and RMB 47,189,538 respectively. The approximate term of guarantee compensation service ranged from 1 month to 24 months, as of both December 31, 2018 and 2019. As of December 31, 2018 and 2019, the contractual amounts of the outstanding loans not subject to guarantee by the Group were estimated to be RMB 960,839 and RMB 4,002,754. |
Financial assets receivable | Financial assets receivable Financial assets receivable is recognized at loan inception which is equal to the stand-ready liability recorded at fair value in accordance with ASC 460-10-30-2(b) and considers what premium would be required by the Group to issue the same guarantee service in a standalone arm’s-length transaction. The fair value recognized at loan inception is estimated using a discounted cash flow model based on the expected net payouts by incorporating a markup margin. The Group estimates its expected net payouts according to the product mix, default rates, loan terms and discount rate. The financial assets receivable is accounted for as a financial asset, and reduced upon the receipt of the service fee payment from the borrowers. At each reporting date, the Group estimates the future cash flows and assesses whether there is any indicator of impairment. If the carrying amounts of the financial assets receivable exceed the expected cash to be received, an impairment loss is recorded for the financial assets receivable not recoverable and is recorded in the combined and consolidated income statement. Impairment losses of RMB 16,273, RMB 48,072 and RMB 150,940 were recorded in the combined and consolidated statements of operations during the years ended December 31, 2017, 2018 and 2019. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Financial assets receivable – continued The Group's financial assets receivable as of December 31, 2018 and 2019 are as follows: December 31, December 31, 2018 2019 RMB RMB Financial assets receivable 1,250,277 2,142,627 Allowance for uncollectible receivables (56,656) (170,803) Financial assets receivable, net 1,193,621 1,971,824 The movement of financial assets receivable for the years ended December 31, 2017, 2018 and 2019 is as follows: Year ended Year ended Year ended December 31, 2017 December 31, 2018 December 31, 2019 RMB RMB RMB Balance at beginning of year 5,160 286,380 1,250,277 Addition in the current year 452,182 1,881,072 3,650,311 Collection in the current year (170,947) (909,501) (2,721,168) Write-off (15) (7,674) (36,793) Balance at end of year 286,380 1,250,277 2,142,627 The movement of allowance for uncollectible receivables for the years ended December 31, 2017, 2018 and 2019 is as follows: Year ended Year ended Year ended December 31, 2017 December 31, 2018 December 31, 2019 RMB RMB RMB Balance at beginning of year — 16,258 56,656 Current year net provision 16,273 48,072 150,940 Write-off (15) (7,674) (36,793) Balance at end of year 16,258 56,656 170,803 The Group's financial assets receivable generated from related parties and recorded in amounts due from related parties as of December 31, 2019 are as follows: December 31, 2019 RMB Financial assets receivable 130,765 Allowance for uncollectible receivables (13,633) Financial assets receivable, net 117,132 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Financial assets receivable – continued The movement of financial assets receivable generated from related parties and recorded in amounts due from related parties for the years ended December 31, 2019 is as follows: Year ended December 31, 2019 RMB Balance at beginning of year 125,936 Addition in the current year 329,164 Collection in the current year (316,926) Write-off (7,409) Balance at end of year 130,765 The movement of allowance for uncollectible receivables generated from related parties and recorded in amounts due from related parties for the years ended December 31, 2019 is as follows: Year ended December 31, 2019 RMB Balance at beginning of year 5,806 Current year net provision 15,236 Write-off (7,409) Balance at end of year 13,633 |
Origination and servicing expense | Origination and servicing expense Origination and servicing expense represents cost of services which consists primarily of variable expenses and vendor costs, and costs related to risk management, credit assessment, borrower and system support, payment processing services and third-party collection agencies with facilitating and servicing loans. Origination expense includes expense related to the Group's borrower referral program under which the Group provides cash incentives to existing borrowers who have successfully referred a new borrower/borrowers to the Group. Such cash reward is offered when the new borrower makes a drawdown. As the cash reward is directly associated with the new borrower acquisition, the Group accounted for it as origination expense to facilitate the loans. The Group recorded RMB 2.5 million, RMB 12.5 million and RMB 14.7 million of cash reward for the years ended December 31, 2017, 2018 and 2019, respectively . |
Sales and marketing expenses | Sales and marketing expenses Sales and marketing expenses primarily consist of variable marketing and promotional expenses and general brand and awareness building, including fees paid to channel partners for directing user traffic to the Group. Salaries and benefits expenses related to the Group’s sales and marketing personnel and other expenses related to the Group’s sales and marketing team are also included in the sales and marketing expenses. For the years ended December 31, 2017, 2018 and 2019, the advertising expenses were RMB 341,768, RMB 1,254,315 and RMB 2,725,812 , respectively. |
Funding costs | Funding costs Funding cost consists of interest expense the Group pays to institutional funding partners of the Consolidated Trusts and the asset backed securities, trust issuance and costs incurred by the trusts. Funding costs were previously reported as part of Origination and servicing expense and General and administrative expenses in 2017 and 2018. |
Government grant | Government grant Government grants are primarily referred to the amounts received from various levels of local governments from time to time which are granted for general corporate purposes and to support its ongoing operations in the region. The grants are determined at the discretion of the relevant government authority and there are no restrictions on their use. The government subsidies are recorded as other income in the period the cash is received. The government grants received by the Group is RMB 26, RMB 7,695 and RMB 128,147 for the years ended December 31, 2017, 2018 and 2019, respectively. |
Income taxes | Income taxes Current income taxes are provided on the basis of net profit (loss) for financial reporting purposes, adjusted for income and expenses which are not assessable or deductible for income tax purposes, in accordance with the laws of the relevant tax jurisdictions. Deferred income taxes are provided using assets and liabilities method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized to the extent that these assets are more likely than not to be realized. In making such a determination, the management consider all positive and negative evidence, including future reversals of projected future taxable income and results of recent operation. In order to assess uncertain tax positions, the Group applies a more likely than not threshold and a two-step approach for the tax position measurement and financial statement recognition. Under the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Group recognizes interest and penalties, if any, under accrued expenses and other current liabilities on its combined and consolidated balance sheet and under other expenses in its combined and consolidated statement of comprehensive loss. The Group did not have any significant unrecognized uncertain tax positions as of and for the years ended December 31, 2018 and 2019. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued |
Value added taxes ("VAT") | Value added taxes (“VAT”) The consolidated trusts are subject to VAT at the rate of 3%, while the other entities under the Group are subject to VAT at the rate of 6% as general taxpayers, and related surcharges on revenue generated from providing services. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in the line item of other tax payable on the consolidated balance sheet. |
Certain risks and concentrations | Certain risks and concentrations As of December 31, 2017, 2018 and 2019, substantially all of the Group's cash and cash equivalents as well as restricted cash were held in major financial institutions located in the PRC, which management considers to be of high credit quality. Three major institutional funding partners of the Group funded loans which individually generated greater than 10% of total revenues for the years ended December 31, 2017, 2018 and 2019. |
Share-based compensation | Share-based compensation Share-based payment transactions with employees, such as stock options and restricted shares, are measured based on the grant date fair value of the awards, with the resulting expense generally recognized on a straight-line basis in the combined and consolidated statements of operations over the period during which the employee is required to perform service in exchange for the award. The Group has elected to account for forfeitures as they occur. |
Foreign currency translation | Foreign currency translation The reporting currency of the Group is the Renminbi ("RMB").The Group's operations are principally conducted through the companies located in the PRC where the RMB is the functional currency. The functional currency of the other major entities incorporated outside of PRC is the United States dollar (“USD”). Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than functional currency are translated into functional currency at the exchange rates prevailing at the balance sheet date. Transactions in currencies other than functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing on the transaction date. Transaction gains and losses are included in earnings as foreign exchange gains (losses). The combined and consolidated financial statements of the Group are translated from the functional currency into reporting currency. Assets and liabilities denominated in foreign currencies are translated using the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated at the appropriate historical rates. Revenues, expenses, gains and losses are translated using the periodic average exchange rates. The resulting foreign currency translation adjustment are recorded in other comprehensive income (loss). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued |
Convenience translation | Convenience translation The Group's business is primarily conducted in China and all of the revenues are denominated in RMB. The financial statements of the Group are stated in RMB. Translations of balances in the combined and consolidated balance sheets, and the related combined and consolidated statements of operations, shareholders' equity and cash flows from RMB into US dollars as of and for the year ended December 31, 2019 are solely for the convenience of the readers and were calculated at the rate of USD1.00=RMB 6.9618, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2019 No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into USD at that rate or at any other rate. |
Employee defined contribution plan | Employee defined contribution plan Full time employees of the Group in the PRC participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that the Group makes contributions to the government for these benefits based on a certain percentage of the employee’s salaries. The Group has no legal obligation for the benefits beyond the contributions. The total amount that was expensed as incurred was RMB 13,862, RMB 36,365 and RMB 71,433 for the years ended December 31, 2017, 2018 and 2019, respectively. |
Income (Loss) per share | Income (Loss) per share Basic income (loss) per ordinary share is computed by dividing net income (loss) attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the period assuming the ordinary shares were issued and outstanding from the earliest period presented. The Company's convertible redeemable preferred shares are participating securities as the convertible redeemable preferred shares participate in undistributed earnings on an as-if-converted basis. Accordingly, the Company uses the two-class method of computing earnings per share. For year ended December 31, 2018, two-class method was not applicable as the Group had a net loss attributable to ordinary shareholders due to the deemed dividend recognized (refer to note 9) while the convertible redeemable preferred shares do not have contractual obligations to share in the losses of the Group. Diluted income (loss) per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares. Ordinary share equivalents are excluded from the computation in income periods should their effects be anti-dilutive. The Group had restricted shares and share options, which could potentially dilute basic earnings per share in the future. Diluted income (loss) per share is computed using the two-class method or the as-if converted method, whichever is more dilutive. |
Segment reporting | Segment reporting The Group uses management approach to determine operation segment. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker (“CODM”) for making decisions, allocation of resource and assessing performance. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Segment reporting – continued The Group’s CODM has been identified as the Chief Executive Officer who reviews the combined and consolidated results of operations when making decisions about allocating resources and assessing performance of the Group. The Group operates and manages its business as a single operating segment. Substantially all of the Group's long-lived assets are located in the PRC and substantially all of the Group's revenues are derived from within the PRC. Therefore, no geographical segments are presented. |
Operating leases | Operating leases The Group accounts for operating leases in accordance with ASC 842, Leases (“ASC 842") after the adoption on January 1, 2019. The Group determines if a contract contains a lease based on whether it has the right to obtain substantially all of the economic benefits from the use of an identified asset and whether it has the right to direct the use of an identified asset in exchange for consideration, which relates to an asset the Group does not own. As part of the lease agreements, the Group may include options to extend or terminate the lease when it is reasonably certain that the Group will exercise those options. Right of use (“ROU”) assets represent the Group’s right to use an underlying asset for the lease term and lease liabilities represent the Group’s obligation to make lease payments arising from the lease. ROU assets are initially measured based on the lease liability, adjusted for any initial direct costs, any lease payments made prior to lease commencement and for any lease incentives, and are included in other assets (long term) on the Group’s consolidated balance sheets. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date, and are included in accrued expenses and other current liabilities (short term) and other long-term liabilities on the Group’s consolidated balance sheets. The discount rate used to determine the present value of the future lease payments is the Group’s incremental borrowing rate, because the interest rate implicit in most of the Group’s leases is not readily determinable. The Group’s incremental borrowing rate represents the rate would be incurred to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. Operating lease expense is recorded on a straight-line basis over the lease term. The Company does not possess any leases that have variable lease payments or residual value guarantees. |
Recent accounting pronouncements | Recent accounting pronouncements For the year ended December 31, 2019, the Group’s total operating revenue exceeded US$1.35 billion. Therefore, the Group no longer qualified as an emerging growth company as of December 31, 2019, pursuant to the Jumpstart Our Business Startups Act of 2012. In 2019, the Group has adopted all applicable accounting standards which have been effective for public companies for the year beginning on January 1, 2019, for the preparation of the financial information for the year ended December 31, 2019. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Recent accounting pronouncements – continued Recently Adopted Accounting Guidance In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. The Group adopted the new leases standard on January 1, 2019 utilizing the modified retrospective transition method, under which amounts in prior periods presented were not restated. As part of that adoption, the Group has elected the package of three practical expedients, which includes the following: an entity may elect not to reassess whether expired or existing contracts contain a lease under the revised definition of a lease; an entity may elect not to reassess the lease classification for expired or existing leases; and an entity may elect not to reassess whether previously capitalized initial direct costs would qualify for capitalization. The Group has elected not to utilize the hindsight expedient in determining the lease term, and not to record leases with an initial term of 12 months or less on its consolidated balance sheet. Lease expense is recognized over the expected term on a straight-line basis. Upon adoption, the Group recorded RMB 33,258 of right-of-use assets in other assets lease liabilities Recent Accounting Guidance Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which has subsequently been amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11 and ASU 2020-03. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of the Group's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2019, including final periods within those fiscal years. For all other public business entities, the guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early application of the pending content that links to this paragraph is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Group will adopt the new standard effective January 1, 2020, using the modified retrospective transition method. ASC 326 establishes a new accounting principle which requires gross accounting for guarantee liability. That is, to record both a guarantee obligation and an allowance for credit losses, calculated using the CECL impairment model, in addition to the guarantee obligation under ASC 460. As a result, at inception of the guarantee, the Group will recognize both a stand-ready guarantee liability under ASC 460 with an associated financial assets receivable, and a contingent guarantee liability with an allowance for credit losses under CECL model. Subsequent to the initial recognition, the ASC 460 stand-ready guarantee is recognized into guarantee revenue over the term of the guarantee, while the contingent guarantee is reduced by the payouts made by the Group to compensate the investors upon borrowers' default. The adoption of ASC 326 is expected to reduce the beginning balance of retained earnings as of January 1, 2020 by approximately 1.8 billion without taking into consideration of effect of income tax. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Recent accounting pronouncements – continued Recent Accounting Guidance Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements by removing, modifying, or adding certain disclosures. The ASU eliminates such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and valuation processes for Level 3 fair value measurements. The ASU adds new disclosure requirements for Level 3 measurements. The new guidance is effective January 1, 2020 and permits early adoption of either the entire standard or only the provisions that eliminate or modify the requirements. The Group does not expect the adoption of this guidance will have a significant impact on its disclosures. In December 2019, the FASB issued ASU 2019-12, a new accounting standard update to simplify the accounting for income taxes. The new guidance removes certain exceptions for recognizing deferred taxes for investments, performing intra period allocation and calculating income taxes in interim periods. It also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The Group is currently evaluating the impact of the new guidance on its consolidated financial statements and related disclosures. |
ORGANIZATION AND PRINCIPAL AC_2
ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
Schedule of significant subsidiaries and its consolidated VIEs | Date of Place of Incorporation Incorporation Subsidiaries HK Qirui International Technology Company Limited (“HK Qirui”) June 14, 2018 Hong Kong Shanghai Qiyue Information & Technology Co., Ltd.(“Qiyue”) August 7, 2018 PRC VIEs Shanghai Qiyu Information & Technology Co., Ltd. (“Qiyu”) July 25, 2016 PRC Fuzhou 360 Online Microcredit Co., Ltd.(“Fuzhou Microcredit”) March 30, 2017 PRC Fuzhou 360 Financing Guarantee Co., Ltd. (“Fuzhou Guarantee”) June 29, 2018 PRC Shanghai 360 Financing Guarantee Co., Ltd. ("Shanghai Guarantee") May 20, 2019 PRC |
Schedule of financial information of VIEs | December 31, December 31, 2018 2019 RMB RMB ASSETS Cash and cash equivalents 1,108,779 1,829,395 Restricted cash 561,652 1,373,623 Funds receivable from third party payment service providers 142,622 118,860 Accounts receivable and contract assets, net 1,791,745 2,113,831 Financial assets receivable, net 1,193,621 1,764,738 Security deposit prepaid to third-party guarantee companies 795,700 932,983 Amounts due from related parties 484,286 478,767 Loans receivable, net 317,551 139,144 Prepaid expenses and other assets 105,016 507,907 Property and equipment, net 6,869 16,773 Intangible assets 847 1,933 Deferred tax assets — 704,589 Accounts receivable and contract assets, net-non current — 19,508 Financial assets receivable, net-non current — 59,270 Other non-current assets — 55,362 Total Assets 6,508,688 10,116,683 LIABILITIES Short term loans — 200,000 Guarantee liabilities 1,399,174 2,840,941 Accrued expenses and other current liabilities 506,735 680,987 Income tax payable 431,998 1,037,964 Other tax payable 164,181 206,291 Amounts due to related parties 74,733 55,622 Deferred tax liabilities 15,758 — Other long-term liabilities — 31,184 Total liabilities 2,592,579 5,052,989 Year ended Year ended Year ended December 31, 2017 December 31, 2018 December 31, 2019 RMB RMB RMB Net revenue 777,353 4,375,412 7,318,362 Net income 167,425 1,247,147 1,707,839 Year ended Year ended Year ended December 31, 2017 December 31, 2018 December 31, 2019 RMB RMB RMB Net cash (used in) provided by operating activities (110,884) 303,626 2,010,741 Net cash used in investing activities (287,994) (199,576) 134,286 Net cash provided by (used in) financing activities 1,253,000 (543,052) 198,242 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of disaggregation of revenue | Year ended Year ended Year ended Year ended December December December December 31, 2017 31, 2018 31, 2019 31, 2019 RMB RMB RMB USD Credit driven services 703,747 4,170,271 8,013,391 1,151,052 Loan facilitation and servicing fees-capital heavy 647,350 3,807,242 6,273,131 901,079 Revenue from loan facilitation services 552,313 3,058,084 4,396,300 631,489 Revenue from post-origination services 95,037 749,158 1,876,831 269,590 Financing income 50,966 267,844 1,309,616 188,115 Revenue from releasing of guarantee liabilities 331 25,169 285,407 40,996 Other services fees 5,100 70,016 145,237 20,862 Platform services 84,397 276,747 1,206,456 173,296 Loan facilitation and servicing fees-capital light — 58,348 814,581 117,007 Revenue from loan facilitation services — 49,549 672,982 96,668 Revenue from post-origination services — 8,799 141,599 20,339 Referral services fees 84,397 211,087 375,551 53,945 Other services fees — 7,312 16,324 2,344 Total net revenue 788,144 4,447,018 9,219,847 1,324,348 |
Schedule of accounts receivables | Allowance for Accounts uncollectible Accounts As of December 31, 2018 receivable Accounts receivable receivable, net Accounts receivable from loan facilitation service 1,849,796 (77,152) 1,772,644 Accounts receivable from post facilitation service 13,546 (4,184) 9,362 Total 1,863,342 (81,336) 1,782,006 Allowance for Accounts uncollectible Accounts As of December 31, 2019 receivable Accounts receivable receivable, net Accounts receivable from loan facilitation service 2,371,709 (184,425) 2,187,284 Accounts receivable from post facilitation service 24,092 (273) 23,819 Total 2,395,801 (184,698) 2,211,103 |
Schedule of movement of allowance for uncollectible accounts receivables | Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2017 provision year 2017 Accounts receivable from loan facilitation service — 17,528 — 17,528 Accounts receivable from post facilitation service — — — — Total — 17,528 — 17,528 Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2018 provision year 2018 Accounts receivable from loan facilitation service 17,528 64,895 (5,271) 77,152 Accounts receivable from post facilitation service — 4,702 (518) 4,184 Total 17,528 69,597 (5,789) 81,336 Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Accounts receivable from loan facilitation service 77,152 171,602 (64,329) 184,425 Accounts receivable from post facilitation service 4,184 12,779 (16,690) 273 Total 81,336 184,381 (81,019) 184,698 |
Schedule of contract assets | Allowance for uncollectible Contract assets, As of December 31, 2018 Contract assets Contract assets net Contract assets from loan facilitation service 7,634 (758) 6,876 Contract assets from post facilitation service 3,284 (421) 2,863 Total 10,918 (1,179) 9,739 Allowance for uncollectible Contract assets, As of December 31, 2019 Contract assets Contract assets net Contract assets from loan facilitation service 143,685 (6,662) 137,023 Contract assets from post facilitation service 3,977 (231) 3,746 Total 147,662 (6,893) 140,769 |
Schedule of movement of allowance uncollectible contract assets | Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2017 provision year 2017 Contract assets from loan facilitation service 106 1,075 (18) 1,163 Contract assets from post facilitation service 2 2,577 — 2,579 Total 108 3,652 (18) 3,742 Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2018 provision year 2018 Contract assets from loan facilitation service 1,163 1,053 (1,458) 758 Contract assets from post facilitation service 2,579 918 (3,076) 421 Total 3,742 1,971 (4,534) 1,179 Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Contract assets from loan facilitation service 758 8,895 (2,991) 6,662 Contract assets from post facilitation service 421 1,728 (1,918) 231 Total 1,179 10,623 (4,909) 6,893 |
Schedule of estimated useful lives for property and equipment | Leasehold improvements Over the shorter of the lease term or expected useful lives Electronic equipment 5 years Furniture and office equipment 5 years |
Schedule of movement of guarantee liabilities | RMB As of January 1, 2018 300,942 Provision at the inception of new loans 2,059,392 Net payout (1) (935,991) Release on expiration (25,169) As of December 31, 2018 1,399,174 As of January 1, 2019 1,399,174 Provision at the inception of new loans 3,979,475 Net payout(1) (2,881,118) Expense on guarantee liabilities 734,730 Release on expiration (285,406) As of December 31, 2019 2,946,855 (1) Net payout represents the amount paid upon borrowers’ default net of subsequent recoveries from the borrowers during a given period. |
Schedule of financial assets receivable | December 31, December 31, 2018 2019 RMB RMB Financial assets receivable 1,250,277 2,142,627 Allowance for uncollectible receivables (56,656) (170,803) Financial assets receivable, net 1,193,621 1,971,824 |
Schedule of movement of financial assets receivable | Year ended Year ended Year ended December 31, 2017 December 31, 2018 December 31, 2019 RMB RMB RMB Balance at beginning of year 5,160 286,380 1,250,277 Addition in the current year 452,182 1,881,072 3,650,311 Collection in the current year (170,947) (909,501) (2,721,168) Write-off (15) (7,674) (36,793) Balance at end of year 286,380 1,250,277 2,142,627 |
Schedule of movement of allowance for uncollectible receivables | Year ended Year ended Year ended December 31, 2017 December 31, 2018 December 31, 2019 RMB RMB RMB Balance at beginning of year — 16,258 56,656 Current year net provision 16,273 48,072 150,940 Write-off (15) (7,674) (36,793) Balance at end of year 16,258 56,656 170,803 |
Due From Related Parties | |
Summary of accounts receivable and contract assets | Accounts Allowance for Accounts receivable uncollectible receivable and contract accounts receivable and contract As of December 31, 2019 assets and contract assets Assets, net Accounts receivable from loan facilitation service 131,743 (9,648) 122,095 Accounts receivable from post facilitation service 1,950 (481) 1,469 Contract assets from loan facilitation service 47,028 (2,062) 44,966 Contract assets from post facilitation service 795 (144) 651 Total 181,516 (12,335) 169,181 |
Summary of movement of allowance for uncollectible accounts receivables and contract assets | Opening Ending balance as of Current Write off in balance as of January 1, year net the current December 31, 2019 provision year 2019 Accounts receivable from loan facilitation service 9,437 18,698 (18,487) 9,648 Accounts receivable from post facilitation service 1,515 6,947 (7,981) 481 Contract assets from loan facilitation service 219 7,680 (5,837) 2,062 Contract assets from post facilitation service 18 1,951 (1,825) 144 Total 11,189 35,276 (34,130) 12,335 |
Schedule of financial assets receivable | December 31, 2019 RMB Financial assets receivable 130,765 Allowance for uncollectible receivables (13,633) Financial assets receivable, net 117,132 |
Schedule of movement of financial assets receivable | Year ended December 31, 2019 RMB Balance at beginning of year 125,936 Addition in the current year 329,164 Collection in the current year (316,926) Write-off (7,409) Balance at end of year 130,765 |
Schedule of movement of allowance for uncollectible receivables | Year ended December 31, 2019 RMB Balance at beginning of year 5,806 Current year net provision 15,236 Write-off (7,409) Balance at end of year 13,633 |
Consolidated Trusts | |
Schedule of financial statements | December 31, 2018 December 31, 2019 RMB RMB ASSETS Restricted cash 6,142 354,104 Loans receivable, net 493,883 9,099,099 Prepaid expenses and other assets 4,000 95,840 Total Assets 504,025 9,549,043 December 31, 2018 December 31, 2019 RMB RMB LIABILITIES Payable to investors of the consolidated trusts-current 300,341 4,423,717 Amounts due to related parties 4,034 — Accrued expenses and other current liabilities 385 19,460 Other tax payable 268 25,431 Payable to investors of the consolidated trusts-noncurrent — 3,442,500 Total liabilities 305,028 7,911,108 Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Net revenue 10,791 70,621 1,279,203 Net (loss) income (2,560) (32,708) 469,825 Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Net cash (used in) provided by operating activities (90) (8,749) 382,620 Net cash (used in) provided by investing activities (916,275) 527,223 (8,989,137) Net cash provided by (used in) financing activities 1,012,499 (708,466) 7,512,696 |
LOANS RECEIVABLE, NET (Tables)
LOANS RECEIVABLE, NET (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LOANS RECEIVABLE, NET | |
Schedule of loans receivable | December 31, December 31, 2018 2019 RMB RMB Loans receivable 837,328 9,591,204 Less allowance for loan losses (25,895) (351,639) Loans receivable, net 811,433 9,239,565 |
Schedule of aging of loans | 0-30 days 31-60 days over 6 0 days Total amount past due past due past due past due Current Total loans December 31, 2018 (RMB) 6,584 3,101 18,558 28,243 809,085 837,328 December 31, 2019 (RMB) 90,420 55,992 — 146,412 9,444,792 9,591,204 |
Schedule of movement of allowance for loan losses | Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Balance at beginning of year — 12,406 25,895 Provision for loan losses 12,406 44,474 486,991 Gross write-off — (30,985) (161,976) Recoveries — — 729 Balance at end of year 12,406 25,895 351,639 |
Schedule of nonaccrual loan principal | December 31, December 31, 2018 2019 RMB RMB Nonaccrual loan principal 14,888 — Less allowance for loan losses (14,726) — Nonaccrual loans, net 162 — |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | December 31, December 31, 2018 2019 RMB RMB User traffic direction fees 276,024 217,932 Payable for third-party service fee 88,498 145,834 Payable to institutional funding partners (i) 67,434 212,279 Accrued payroll and welfare 54,552 92,502 Lease liability — 21,020 Others 32,447 31,351 Total 518,955 720,918 (i) Payable to institutional funding partners mainly include amounts collected from the borrowers but have not been transferred to the institutional funding partners due to holiday breaks. |
RELATED PARTY BALANCES AND TR_2
RELATED PARTY BALANCES AND TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY BALANCES AND TRANSACTIONS | |
Schedule of major related parties and their relationships with the Group | The table below sets forth the major related parties and their relationships with the Group, with which the Group entered into transactions during the years ended December 31, 2017, 2018 and 2019: Name of related parties Relationship with the group Beijing Qifutong Technology Co., Ltd. (“Qifutong”) An affiliate of Qihoo 360, ultimately controlled by Mr. Zhou, the Chairman of the Group Beijing Qibutianxia Technology Co., Ltd. (“Qibutianxia”) Entity controlled by Mr. Zhou, the Chairman of the Group Ningbo Siyinjia Investment management co. Ltd. ("Ningbo Siyinjia") Entity controlled by Mr. Zhou, the Chairman of the Group Beijing Qicaitianxia Technology Co., Ltd. (“Qicaitianxia”) Entity controlled by Mr. Zhou, the Chairman of the Group Beijing Qihu Technology Co., Ltd. (“Qihu”) An affiliate of Qihoo 360, ultimately controlled by Mr. Zhou, the Chairman of the Group Jinshang Consumer Finance Inc. (“Jinshang”) An affiliate of an entity controlled by Mr. Zhou, the Chairman of the Group Youdaojingwei Assets Management Co.Ltd. ("Youdaojingwei") Entity controlled by Mr. Zhou, the Chairman of the Group Beijing Zixuan Information Technology Co., Ltd. (“Beijing Zixuan”) Entity controlled by Mr. Zhou, the Chairman of the Group Xixian New Area Financial Asset Exchange Co., Ltd (“Xixian”) Entity controlled by Mr. Zhou, the Chairman of the Group Shareholders Shareholders of the Group Others Entities controlled by Mr. Zhou, the Chairman of the Group |
Schedule of transactions with related parties | Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Bandwidth service fee charged by Qihu — 18,530 46,191 Referral service fee charged by Qihu 10,814 13,158 47,640 Labor cost charged by Xixian — — 10,657 Referral service fee charged by Qifutong 43,214 43,688 7,905 Corporate expenses allocated from Qibutianxia 17,512 32,015 3,230 Interests charged by Youdaojingwei for funds provided 9,877 40,497 — Rental expenses charged by Qifeixiangyi — — 5,074 Others 927 9,993 8,364 Total 82,344 157,881 129,061 |
Schedule of services provided to the related parties | Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Referral service fee charged to Qicaitianxia 84,303 196,013 197,018 Loan facilitation services fee charged from Jinshang — 134,884 59,871 Loan facilitation services fee charged from Beijing Zixuan — 128,970 517,776 Post-origination services fee charged from Jinshang — 33,153 43,497 Post-origination services fee charged from Beijing Zixuan — 8,559 215,019 Others 2,008 1,035 4,299 Total 86,311 502,614 1,037,480 |
Schedule of amounts due from related parties | December 31, December 31, 2018 2019 RMB RMB Jinshang 215,937 50,666 Beijing Zixuan 187,964 404,416 Qicaitianxia 78,441 1,050 Shareholders(1) — 20,459 Qifutong 1,550 1,000 Others(2) 394 1,176 Total 484,286 478,767 (1) The balance as of December 31, 2019 represents the ADS registration fees incurred on behalf of certain shareholders that are to be reimbursed from them. (2) There was a short-term borrowing of RMB 300 million from Qibutianxia to Qiyu in 2019, the borrowing was repaid in April 2019, and thus no balance existed at the year end. |
Schedule of amounts due to related parties | December 31, December 31, 2018 2019 RMB RMB Qibutianxia 51,682 1,842 Qihu 14,434 39,836 Xixian — 6,318 Qifutong 4,920 — Youdaojingwei 4,034 — Qicaitianxia 2,413 5,552 Ningbo Siyinjia 300 — Beijing Zixuan 90 — Others 894 2,074 Total 78,767 55,622 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of current and deferred portion of income tax expenses | Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Current tax 115,790 375,066 1,179,089 Deferred tax (67,612) 91,294 (713,106) Total 48,178 466,360 465,983 |
Schedule of reconciliation between the income tax at PRC statutory tax rate and income tax expense | Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Income before income tax benefit 213,043 1,659,671 2,967,287 Statutory tax rate in the PRC 25 % 25 % 25 % Income tax at statutory tax rate 53,261 414,918 741,822 Effect of different tax rate of subsidiary operation in other jurisdiction — 5,424 3,875 Non-deductible expenses 23 151,987 63,070 Preferential tax rate and local tax exemption — (84,120) (202,095) Effect of enacted tax rate change of deferred tax assets/liabilities — — (95,048) Research and development super-deduction (5,106) (21,849) (47,846) Valuation allowance movement — — 2,205 Income tax expense 48,178 466,360 465,983 |
Schedule of the effect of preferential tax rates on the income per share | Years Ended December 31, (Amounts in Thousands Except Per Share Data ) 2017 2018 2019 RMB RMB RMB Tax saving amount due to preferential tax rates — 84,120 297,143 Income per share effect-basic — 0.41 1.03 Income per share effect-diluted — 0.41 0.99 |
Schedule of components of the deferred tax assets and deferred tax liabilities | December 31, December 31, 2018 2019 RMB RMB Deferred tax assets Guarantee liabilities 386,781 1,182,114 Advertising expenses 148,613 290,720 Provision for accounts receivable and contract assets 34,695 236,252 Provision for loan losses 14,220 84,452 Accrued expenses 13,990 — Net operating loss carry forwards 5,056 10,746 Total deferred tax assets 603,355 1,804,284 Deferred tax liabilities Uncollected revenues (619,113) (1,106,936) Total deferred tax liabilities (619,113) (1,106,936) Net deferred tax assets (liabilities) (15,758) 697,348 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED COMPENSATION. | |
Schedule of assumptions | Year ended, December 31, 2018 RMB Average risk-free rate of interest 3.18 % Estimated volatility rate 51.32 % - 53.49 % Dividend yield 0.00 % Time to maturity 10 years Exercise price USD 0.00001 |
Summary of option activity | Weighted Weighted Average Number of Average Remaining Aggregate Options Exercise Price Contract Life Intrinsic Value USD Years RMB Options outstanding at January 1, 2019 25,244,577 0.00001 7.89 1,346,041 Options forfeited in 2019 (1,741,363) 0.00001 6.79 — Options exercised in 2019 (5,470,244) 0.00001 6.87 (186,043) Options outstanding at December 31, 2019 18,032,970 0.00001 6.91 613,301 Options exercisable at December 31, 2019 8,411,583 0.00001 6.69 286,078 Options vested or expected to be vested at December 31, 2019 18,032,970 0.00001 6.91 613,301 |
Summary of the restricted shares | Weighted-Average Number of Grant-Date Restricted Shares Fair Value Outstanding at January 1, 2019 — — Granted 2,003,301 36.18 Forfeited (438,627) 50.12 Vested (297,849) 41.16 Outstanding at December 31, 2019 1,266,825 30.18 |
Schedule of compensation costs | Year ended, Year ended, December 31, 2018 December 31, 2019 RMB RMB Origination and servicing expenses 150,177 55,601 Sales and marketing expenses 15,700 6,805 General and administrative expenses 441,504 188,022 Total 607,381 250,428 |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASE | |
Schedule of supplemental cash flow information related to leases | Year ended, December 31, 2019 RMB Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 22,896 Right-of-use assets obtained in exchange for lease obligations: Operating leases 29,667 |
Schedule of ROU assets and lease liabilities | Year ended, December 31, 2019 RMB Right-of-use assets 55,362 Operating lease liabilities-current 21,020 Operating lease liabilities-non current 31,184 |
Schedule of weighted-average remaining lease term and weighted-average discount rate | Year ended, December 31, 2019 RMB Weighted-average remaining lease term 2.27 Weighted-average discount rate 9.88 % |
Schedule of maturities of operating lease liabilities | The maturities of operating lease liabilities as of December 31, 2019 under ASC 842, are as follows: Years ending RMB 2020 26,157 2021 26,260 2022 5,177 2023 269 2024 and thereafter — Total undiscounted lease payments 57,863 Imputed interest (5,659) Total lease liabilities 52,204 |
Schedule of undiscounted maturities of operating leases under ASC 840 | The undiscounted maturities of operating leases as of December 31, 2018 under ASC 840, are as follows: Years ending RMB 2019 13,118 2020 8,009 2021 4,280 2022 1,353 2023 and thereafter 336 |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
NET INCOME (LOSS) PER SHARE | |
Schedule of basic and diluted net income (loss) per share | Year ended Year ended Year ended December 31, December 31, December 31, 2017 2018 2019 RMB RMB RMB Numerator: Net income attributable to shareholders of the Company 164,865 1,193,311 2,501,595 Deemed dividend to shareholders upon issuance of Series A and A+ preferred share (note 9) — (3,097,733) — Net income (loss) attributable to Class A and Class B ordinary shareholders for computing basic and diluted net loss per share 164,865 (1,904,422) 2,501,595 Denominator: Weighted average Class A and Class B ordinary shares outstanding used in computing basic income (loss) per ordinary share 198,347,168 202,751,277 288,827,604 Plus: incremental weighted average ordinary shares from assumed exercise of stock options and restricted shares using the treasury stock method — — 12,110,866 Weighted average Class A and Class B ordinary shares outstanding used in computing diluted income (loss) per ordinary share 198,347,168 202,751,277 300,938,470 Basic net income (loss) per share 0.83 (9.39) 8.66 Diluted net income (loss) per share 0.83 (9.39) 8.31 |
ORGANIZATION AND PRINCIPAL AC_3
ORGANIZATION AND PRINCIPAL ACTIVITIES - Reorganization and Variable Interest Entity (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reorganization and VIEs | |||
Total expenses allocated from Qibutianxia to the Group | ¥ 3,230 | ¥ 32,015 | ¥ 17,512 |
Exclusive Option Agreement | |||
Reorganization and VIEs | |||
Agreement term (in years) | 10 years | ||
Extended term of agreement (in years) | 10 years | ||
Exclusive Consultation and Services Agreement | |||
Reorganization and VIEs | |||
Agreement term (in years) | 10 years | ||
Extended term of agreement (in years) | 10 years | ||
Loan Agreement | |||
Reorganization and VIEs | |||
Notice Period for Termination of Agreement (in Months) | 1 month | ||
Equity Pledge Agreement | |||
Reorganization and VIEs | |||
Percentage of Equity interest pledged to WFOE | 100.00% |
ORGANIZATION AND PRINCIPAL AC_4
ORGANIZATION AND PRINCIPAL ACTIVITIES - Financial statement amounts and balances of the VIEs (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019USD ($) | |
ASSETS. | |||||
Cash and cash equivalents | ¥ 2,108,123 | ¥ 1,445,802 | ¥ 468,547 | $ 302,813 | |
Restricted cash | 1,727,727 | 567,794 | 487,882 | 248,172 | |
Funds receivable from third party payment service providers | 118,860 | 142,622 | 17,073 | ||
Accounts receivable and contract assets, net | 2,332,364 | 1,791,745 | 335,023 | ||
Financial assets receivable, net | 1,971,824 | 1,193,621 | |||
Security deposit prepaid to third-party guarantee companies | 932,983 | 795,700 | 134,015 | ||
Amounts due from related parties | 478,767 | 484,286 | 68,771 | ||
Loans receivable, net | 9,239,565 | 811,433 | 1,327,180 | ||
Prepaid expenses and other assets (including RMB 4,000 and RMB 95,840 from the consolidated trusts as of December 31, 2018 and 2019 respectively) | 652,545 | 109,016 | 93,732 | ||
Property and equipment, net | 17,113 | 6,869 | 2,458 | ||
Intangible assets | 3,512 | 847 | 504 | ||
Deferred tax assets | 697,348 | 100,168 | |||
Accounts receivable and contract assets, net-non current | 19,508 | 2,802 | |||
Financial assets receivable, net-non current | 59,270 | 8,514 | |||
Other non-current assets | 55,362 | 7,952 | |||
TOTAL ASSETS | 20,355,601 | 7,349,735 | 2,923,898 | ||
LIABILITIES. | |||||
Short term loans | 200,000 | 28,728 | |||
Guarantee liabilities | 2,946,855 | 1,399,174 | 300,942 | 423,289 | |
Accrued expenses and other current liabilities | 720,918 | 518,955 | 103,554 | ||
Income tax payable | 1,056,219 | 432,066 | 151,716 | ||
Other tax payable | 263,856 | 164,478 | 37,901 | ||
Amount due to subsidiaries | 55,622 | 78,767 | 7,990 | ||
Deferred tax liabilities | 15,758 | ||||
Other long-term liabilities | 31,184 | 4,479 | |||
TOTAL LIABILITIES | 13,140,871 | 2,909,539 | $ 1,887,568 | ||
Net cash (used in) provided by operating activities | 2,973,075 | $ 427,056 | 285,116 | (110,974) | |
Net cash used in investing activities | (8,860,441) | (1,272,723) | 327,649 | (1,204,269) | |
Net cash provided by (used in) financing activities | 7,707,858 | $ 1,107,164 | 457,430 | 2,265,499 | |
Consolidated VIEs | |||||
ASSETS. | |||||
Cash and cash equivalents | 1,829,395 | 1,108,779 | |||
Restricted cash | 1,373,623 | 561,652 | |||
Funds receivable from third party payment service providers | 118,860 | 142,622 | |||
Accounts receivable and contract assets, net | 2,113,831 | 1,791,745 | |||
Financial assets receivable, net | 1,764,738 | 1,193,621 | |||
Security deposit prepaid to third-party guarantee companies | 932,983 | 795,700 | |||
Amounts due from related parties | 478,767 | 484,286 | |||
Loans receivable, net | 139,144 | 317,551 | |||
Prepaid expenses and other assets (including RMB 4,000 and RMB 95,840 from the consolidated trusts as of December 31, 2018 and 2019 respectively) | 507,907 | 105,016 | |||
Property and equipment, net | 16,773 | 6,869 | |||
Intangible assets | 1,933 | 847 | |||
Deferred tax assets | 704,589 | ||||
Accounts receivable and contract assets, net-non current | 19,508 | ||||
Financial assets receivable, net-non current | 59,270 | ||||
Other non-current assets | 55,362 | ||||
TOTAL ASSETS | 10,116,683 | 6,508,688 | |||
LIABILITIES. | |||||
Short term loans | 200,000 | ||||
Guarantee liabilities | 2,840,941 | 1,399,174 | |||
Accrued expenses and other current liabilities | 680,987 | 506,735 | |||
Income tax payable | 1,037,964 | 431,998 | |||
Other tax payable | 206,291 | 164,181 | |||
Amount due to subsidiaries | 55,622 | 74,733 | |||
Deferred tax liabilities | 15,758 | ||||
Other long-term liabilities | 31,184 | ||||
TOTAL LIABILITIES | 5,052,989 | 2,592,579 | |||
Net revenue | 7,318,362 | 4,375,412 | 777,353 | ||
Net income | 1,707,839 | 1,247,147 | 167,425 | ||
Net cash (used in) provided by operating activities | 2,010,741 | 303,626 | (110,884) | ||
Net cash used in investing activities | 134,286 | (199,576) | (287,994) | ||
Net cash provided by (used in) financing activities | ¥ 198,242 | ¥ (543,052) | ¥ 1,253,000 | ||
Percentage of consolidated revenues | 79.00% | 79.00% | 98.00% | 99.00% | |
Percentage of consolidated total assets | 50.00% | 50.00% | 89.00% | ||
Percentage of consolidated total liabilities | 38.00% | 38.00% | 89.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Consolidated Trusts (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Nov. 30, 2017 | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Provision for loan losses | ¥ 486,991 | ¥ 44,474 | ¥ 12,406 | |||
Loans written off | (161,976) | (30,985) | 0 | |||
ASSETS. | ||||||
Restricted Cash | 1,727,727 | 567,794 | 487,882 | $ 248,172 | ||
Loans receivable, net | 9,239,565 | 811,433 | 1,327,180 | |||
Prepaid expenses and other assets (including RMB 4,000 and RMB 95,840 from the consolidated trusts as of December 31, 2018 and 2019 respectively) | 652,545 | 109,016 | 93,732 | |||
TOTAL ASSETS | 20,355,601 | 7,349,735 | 2,923,898 | |||
LIABILITIES. | ||||||
Payable to investors of the consolidated trusts-current | 4,423,717 | 300,341 | 635,427 | |||
Amounts due to related parties | 55,622 | 78,767 | 7,990 | |||
Accrued expenses and other current liabilities | 720,918 | 518,955 | 103,554 | |||
Other tax payable | 263,856 | 164,478 | 37,901 | |||
Payable to investors of the consolidated trusts-noncurrent | 3,442,500 | 494,484 | ||||
TOTAL LIABILITIES | 13,140,871 | 2,909,539 | $ 1,887,568 | |||
Net revenue | 9,219,847 | $ 1,324,348 | 4,447,018 | 788,144 | ||
Net cash (used in) provided by operating activities | 2,973,075 | 427,056 | 285,116 | (110,974) | ||
Net cash (used in) provided by investing activities | (8,860,441) | (1,272,723) | 327,649 | (1,204,269) | ||
Net cash provided by (used in) financing activities | 7,707,858 | $ 1,107,164 | 457,430 | 2,265,499 | ||
Consolidated Trusts | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Repurchase of delinquent loans | 89,938 | 20,579 | ||||
Repurchase of performing loans upon liquidation of consolidated trusts | 18,014 | 114,238 | ||||
Provision for loan losses | 464,379 | 33,141 | 5,647 | |||
Loans written off | 142,882 | 19,777 | 0 | |||
ASSETS. | ||||||
Restricted Cash | 354,104 | 6,142 | ||||
Loans receivable, net | 9,099,099 | 493,883 | ||||
Prepaid expenses and other assets (including RMB 4,000 and RMB 95,840 from the consolidated trusts as of December 31, 2018 and 2019 respectively) | 95,840 | 4,000 | ||||
TOTAL ASSETS | 9,549,043 | 504,025 | ||||
LIABILITIES. | ||||||
Payable to investors of the consolidated trusts-current | 4,423,717 | 300,341 | ||||
Amounts due to related parties | 4,034 | |||||
Accrued expenses and other current liabilities | 19,460 | 385 | ||||
Other tax payable | 25,431 | 268 | ||||
Payable to investors of the consolidated trusts-noncurrent | 3,442,500 | |||||
TOTAL LIABILITIES | 7,911,108 | 305,028 | ||||
Net revenue | 1,279,203 | 70,621 | 10,791 | |||
Net income | 469,825 | (32,708) | (2,560) | |||
Net cash (used in) provided by operating activities | 382,620 | (8,749) | (90) | |||
Net cash (used in) provided by investing activities | (8,989,137) | 527,223 | (916,275) | |||
Net cash provided by (used in) financing activities | ¥ 7,512,696 | ¥ (708,466) | ¥ 1,012,499 | |||
Percentage of consolidated revenues | 14.00% | 14.00% | 2.00% | 1.00% | ||
Percentage of consolidated total assets | 47.00% | 47.00% | 7.00% | |||
Percentage of consolidated total liabilities | 60.00% | 60.00% | 10.00% | |||
Consolidated Trusts | Minimum | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Repurchase of loans delinquent period | 30 days | |||||
Percentage of interest rate loans | 9.00% | 9.00% | 9.00% | |||
Consolidated Trusts | Maximum | ||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Repurchase of loans delinquent period | 90 days | |||||
Term of loan | 12 months | 12 months | 12 months | |||
Percentage of interest rate loans | 36.00% | 36.00% | 36.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue recognition and Restricted cash (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||||||
Dec. 31, 2019CNY (¥)item | Dec. 31, 2019USD ($)item | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | ||||
Disaggregation of Revenue [Line Items] | |||||||||
Number of business models | item | 2 | 2 | |||||||
Obligation to pay interest and late fees, maximum threshold percentage | 36.00% | 36.00% | |||||||
Total net revenue | ¥ 9,219,847 | $ 1,324,348 | ¥ 4,447,018 | ¥ 788,144 | |||||
Accounts receivable | |||||||||
Accounts Receivable | ¥ 2,395,801 | ¥ 1,863,342 | |||||||
Allowance for uncollectible accounts receivable | (184,698) | (17,528) | (17,528) | (184,698) | (81,336) | ||||
Account receivable, net | 2,211,103 | 1,782,006 | |||||||
Movement of allowance for uncollectible receivables | |||||||||
Opening balance | 81,336 | 17,528 | |||||||
Current year net provision | 184,381 | 69,597 | 17,528 | ||||||
Write-off in the current year | (81,019) | (5,789) | |||||||
Ending balance | 184,698 | 81,336 | 17,528 | ||||||
Contract assets | |||||||||
Contract assets | 147,662 | 10,918 | |||||||
Allowance for uncollectible Contract assets | (6,893) | (3,742) | (3,742) | (6,893) | (1,179) | ||||
Contract assets, net | 140,769 | 9,739 | |||||||
Movement of allowance for uncollectible contract assets | |||||||||
Opening balance | 1,179 | 3,742 | 108 | ||||||
Current year net provision | 10,623 | 1,971 | 3,652 | ||||||
Write off in the current year | (4,909) | (4,534) | (18) | ||||||
Ending balance | 6,893 | 1,179 | 3,742 | ||||||
Accounts Receivable And Contract Assets | |||||||||
Accounts receivable and contract assets | 181,516 | ||||||||
Allowance for uncollectible accounts receivable and contract assets | (12,335) | ||||||||
Accounts receivable and contract Assets, net | 169,181 | ||||||||
Opening balance as of January 1, 2019 | 11,189 | ||||||||
Current year net provision | 35,276 | ||||||||
Write off in the current year | 34,130 | ||||||||
Ending balance as of December 31, 2019 | 12,335 | 11,189 | |||||||
Performance obligations | 978,811 | 774,452 | |||||||
Finance income, taxes excluded from revenue | ¥ 547,344 | 379,762 | 61,744 | ||||||
Revenue practical expedient, use of transaction price at date when contract with variable consideration was completed | true | true | |||||||
Restricted cash | |||||||||
Restricted cash related to deposit to the funding banks | ¥ 1,373,623 | ¥ 561,652 | |||||||
Operating period | 2 years | 2 years | |||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |||||||||
Accounts Receivable And Contract Assets | |||||||||
Revenue, remaining performance obligation, Expected timing of satisfaction, period | 12 months | ||||||||
Revenue, remaining performance obligation (as a percent) | 100.00% | ||||||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |||||||||
Accounts Receivable And Contract Assets | |||||||||
Revenue, remaining performance obligation, Expected timing of satisfaction, period | 12 months | ||||||||
Revenue, remaining performance obligation (as a percent) | 99.00% | ||||||||
Credit driven services | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | ¥ 8,013,391 | [1] | $ 1,151,052 | 4,170,271 | [1] | 703,747 | [1] | ||
Loan facilitation and servicing fees-capital heavy | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 6,273,131 | 901,079 | 3,807,242 | 647,350 | |||||
Revenue from loan facilitation services | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 4,396,300 | 631,489 | 3,058,084 | 552,313 | |||||
Revenue from post-origination services | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 1,876,831 | 269,590 | 749,158 | 95,037 | |||||
Financing income | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 1,309,616 | 188,115 | 267,844 | 50,966 | |||||
Releasing of guarantee liabilities | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 285,407 | 40,996 | 25,169 | 331 | |||||
Other services fees | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 145,237 | 20,862 | 70,016 | 5,100 | |||||
Platform services | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 1,206,456 | 173,296 | 276,747 | [1] | 84,397 | [1] | |||
Loan facilitation and servicing fees-capital light | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 814,581 | 117,007 | 58,348 | ||||||
Accounts receivable | |||||||||
Allowance for uncollectible accounts receivable | (184,425) | (77,152) | (17,528) | ¥ (184,425) | ¥ (77,152) | ||||
Movement of allowance for uncollectible receivables | |||||||||
Opening balance | 77,152 | 17,528 | |||||||
Current year net provision | 171,602 | 64,895 | 17,528 | ||||||
Write-off in the current year | (64,329) | (5,271) | |||||||
Ending balance | 184,425 | 77,152 | 17,528 | ||||||
Contract assets | |||||||||
Contract assets | 7,634 | ||||||||
Allowance for uncollectible Contract assets | (758) | (758) | (758) | ||||||
Contract assets, net | 6,876 | ||||||||
Movement of allowance for uncollectible contract assets | |||||||||
Opening balance | 758 | ||||||||
Ending balance | 758 | ||||||||
Revenue from loan facilitation services | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 672,982 | 96,668 | 49,549 | ||||||
Revenue from post-origination services | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 141,599 | 20,339 | 8,799 | ||||||
Referral services fees | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | 375,551 | 53,945 | 211,087 | 84,397 | |||||
Other services fees | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Total net revenue | ¥ 16,324 | $ 2,344 | 7,312 | ||||||
Loan facilitation service | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Number of separate services provided for each loan facilitated | item | 3 | 3 | |||||||
Number of separate performance obligations under ASC 606 | item | 2 | 2 | |||||||
Accounts receivable | |||||||||
Accounts Receivable | 2,371,709 | 1,849,796 | |||||||
Allowance for uncollectible accounts receivable | ¥ (184,425) | (77,152) | (184,425) | (77,152) | |||||
Account receivable, net | 2,187,284 | 1,772,644 | |||||||
Movement of allowance for uncollectible receivables | |||||||||
Opening balance | 77,152 | ||||||||
Ending balance | 184,425 | 77,152 | |||||||
Contract assets | |||||||||
Contract assets | 143,685 | ||||||||
Allowance for uncollectible Contract assets | (758) | (758) | (1,163) | (6,662) | (758) | ||||
Contract assets, net | 137,023 | ||||||||
Movement of allowance for uncollectible contract assets | |||||||||
Opening balance | 758 | 1,163 | 106 | ||||||
Current year net provision | 8,895 | 1,053 | 1,075 | ||||||
Write off in the current year | (2,991) | (1,458) | (18) | ||||||
Ending balance | 6,662 | 758 | 1,163 | ||||||
Post facilitation service | |||||||||
Accounts receivable | |||||||||
Accounts Receivable | 24,092 | 13,546 | |||||||
Allowance for uncollectible accounts receivable | (273) | (4,184) | (273) | (4,184) | |||||
Account receivable, net | 23,819 | 9,362 | |||||||
Movement of allowance for uncollectible receivables | |||||||||
Opening balance | 4,184 | ||||||||
Current year net provision | 12,779 | 4,702 | |||||||
Write-off in the current year | (16,690) | (518) | |||||||
Ending balance | 273 | 4,184 | |||||||
Contract assets | |||||||||
Contract assets | 3,977 | 3,284 | |||||||
Allowance for uncollectible Contract assets | (231) | (2,579) | (2,579) | (231) | (421) | ||||
Contract assets, net | 3,746 | ¥ 2,863 | |||||||
Movement of allowance for uncollectible contract assets | |||||||||
Opening balance | 421 | 2,579 | 2 | ||||||
Current year net provision | 1,728 | 918 | 2,577 | ||||||
Write off in the current year | (1,918) | (3,076) | |||||||
Ending balance | ¥ 231 | 421 | ¥ 2,579 | ||||||
Minimum | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Loan terms (In months) | 1 month | 1 month | |||||||
Maximum | |||||||||
Disaggregation of Revenue [Line Items] | |||||||||
Loan terms (In months) | 24 months | 24 months | |||||||
Loan amount | 200 | ||||||||
Accounts Receivable | Loan facilitation service | |||||||||
Accounts Receivable And Contract Assets | |||||||||
Accounts receivable and contract assets | 131,743 | ||||||||
Allowance for uncollectible accounts receivable and contract assets | (9,648) | ||||||||
Accounts receivable and contract Assets, net | 122,095 | ||||||||
Opening balance as of January 1, 2019 | ¥ 9,437 | ||||||||
Current year net provision | 18,698 | ||||||||
Write off in the current year | 18,487 | ||||||||
Ending balance as of December 31, 2019 | 9,648 | 9,437 | |||||||
Accounts Receivable | Post facilitation service | |||||||||
Accounts Receivable And Contract Assets | |||||||||
Accounts receivable and contract assets | 1,950 | ||||||||
Allowance for uncollectible accounts receivable and contract assets | (481) | ||||||||
Accounts receivable and contract Assets, net | 1,469 | ||||||||
Opening balance as of January 1, 2019 | 1,515 | ||||||||
Current year net provision | 6,947 | ||||||||
Write off in the current year | 7,981 | ||||||||
Ending balance as of December 31, 2019 | 481 | 1,515 | |||||||
Contract Assets | Loan facilitation service | |||||||||
Accounts Receivable And Contract Assets | |||||||||
Accounts receivable and contract assets | 47,028 | ||||||||
Allowance for uncollectible accounts receivable and contract assets | (2,062) | ||||||||
Accounts receivable and contract Assets, net | 44,966 | ||||||||
Opening balance as of January 1, 2019 | 219 | ||||||||
Current year net provision | 7,680 | ||||||||
Write off in the current year | 5,837 | ||||||||
Ending balance as of December 31, 2019 | 2,062 | 219 | |||||||
Contract Assets | Post facilitation service | |||||||||
Accounts Receivable And Contract Assets | |||||||||
Accounts receivable and contract assets | 795 | ||||||||
Allowance for uncollectible accounts receivable and contract assets | (144) | ||||||||
Accounts receivable and contract Assets, net | ¥ 651 | ||||||||
Opening balance as of January 1, 2019 | 18 | ||||||||
Current year net provision | 1,951 | ||||||||
Write off in the current year | 1,825 | ||||||||
Ending balance as of December 31, 2019 | ¥ 144 | ¥ 18 | |||||||
[1] | Starting from 2019, the Group reports revenue streams in two categories—Credit driven services and Platform services, to provide more relevant information. The Group also revised the comparative period presentation to conform to current period classification (Note 2 revenue recognition). |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment, net (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment, net | |||
Depreciation expense on property and equipment | ¥ 6,837 | ¥ 3,406 | ¥ 1,277 |
Electronic equipment | |||
Property and equipment, net | |||
Property, Plant and Equipment, Useful Life | 5 years | ||
Furniture and office equipment | |||
Property and equipment, net | |||
Property, Plant and Equipment, Useful Life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Guarantee liabilities (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | |
Movement of guarantee liabilities | |||
Beginning balance | ¥ 1,399,174 | ¥ 300,942 | |
Provision at the inception of new loans | 3,979,475 | 2,059,392 | |
Net payout | (2,881,118) | (935,991) | |
Expense on guarantee liabilities | 734,730 | $ 105,537 | |
Release on expiration | (285,406) | (25,169) | |
Ending balance | 2,946,855 | $ 423,289 | 1,399,174 |
Contractual amounts of outstanding loans subject to guarantee | 47,189,538 | 40,770,719 | |
Contractual amounts of outstanding loans not subject to guarantee | ¥ 4,002,754 | ¥ 960,839 | |
Minimum | |||
Movement of guarantee liabilities | |||
Compensation service period | 1 month | 1 month | 1 month |
Maximum | |||
Movement of guarantee liabilities | |||
Compensation service period | 24 months | 24 months | 24 months |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial assets receivable (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Financial assets receivable | |||||
Financial assets receivable | ¥ 1,250,277 | ¥ 1,250,277 | ¥ 286,380 | ¥ 2,142,627 | ¥ 1,250,277 |
Allowance for uncollectible receivables | (170,803) | (16,258) | (16,258) | (170,803) | (56,656) |
Financial assets receivable, net | 1,971,824 | 1,193,621 | |||
Impairment losses | 150,940 | 48,072 | 16,273 | ||
Movement of financial assets receivable | |||||
Balance at beginning of year | 1,250,277 | 286,380 | 5,160 | ||
Addition in the current year | 3,650,311 | 1,881,072 | 452,182 | ||
Collection in the current year | (2,721,168) | (909,501) | (170,947) | ||
Write-off | (36,793) | (7,674) | (15) | ||
Balance at end of year | 2,142,627 | 1,250,277 | 286,380 | ||
Movement of allowance for uncollectible receivables | |||||
Balance at beginning of year | 56,656 | 16,258 | |||
Current year net provision | 150,940 | 48,072 | 16,273 | ||
Write-off | (36,793) | (7,674) | (15) | ||
Balance at end of year | 170,803 | 56,656 | ¥ 16,258 | ||
Amount Due From Related Parties | |||||
Financial assets receivable | |||||
Financial assets receivable | 125,936 | 125,936 | 130,765 | 125,936 | |
Allowance for uncollectible receivables | (5,806) | (5,806) | (13,633) | ¥ (5,806) | |
Financial assets receivable, net | ¥ 117,132 | ||||
Movement of financial assets receivable | |||||
Balance at beginning of year | 125,936 | ||||
Addition in the current year | 329,164 | ||||
Collection in the current year | (316,926) | ||||
Write-off | (7,409) | ||||
Balance at end of year | 130,765 | 125,936 | |||
Movement of allowance for uncollectible receivables | |||||
Balance at beginning of year | 5,806 | ||||
Current year net provision | 15,236 | ||||
Write-off | (7,409) | ||||
Balance at end of year | ¥ 13,633 | ¥ 5,806 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Origination and servicing expense, Sales and marketing expenses, Government grant and Value added taxes ("VAT") (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019CNY (¥)Institution | Dec. 31, 2018CNY (¥)Institution | Dec. 31, 2017CNY (¥) | |
Product Information [Line Items] | |||
Cash reward | ¥ 14,700 | ¥ 12,500 | ¥ 2,500 |
Advertising expense | 2,725,812 | 1,254,315 | 341,768 |
Government grants received | ¥ 128,147 | ¥ 7,695 | ¥ 26 |
Product Concentration Risk [Member] | Revenue Benchmark [Member] | |||
Product Information [Line Items] | |||
Number of major funding institutions individually generating greater than 10% of total revenues | Institution | 3 | 3 | |
Product Concentration Risk [Member] | Revenue Benchmark [Member] | Minimum | |||
Product Information [Line Items] | |||
Percent of total revenues generated by a major funding institution | 10.00% | 10.00% | |
Consolidated Trusts | |||
Product Information [Line Items] | |||
VAT rate (as a percent) | 3.00% | ||
Other Entities | |||
Product Information [Line Items] | |||
VAT rate (as a percent) | 6.00% |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Convenience translation, Employee defined contribution plan (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019CNY (¥)$ / ¥ | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Convenience translation rate (RMB to USD) | $ / ¥ | 6.9618 | ||
Defined contribution plan cost | ¥ | ¥ 71,433 | ¥ 36,365 | ¥ 13,862 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent accounting pronouncements (Details) ¥ in Thousands, $ in Thousands | Jan. 01, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Recent accounting pronouncements | |||||
Total operating revenue exceeded amount | $ | $ 1,350,000 | ||||
Right-of-use assets | ¥ 55,362 | ||||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | Other Assets, Noncurrent | |||
Lease liabilities | ¥ 52,204 | ||||
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesAndOtherLiabilities us-gaap:OtherLiabilitiesNoncurrent | us-gaap:AccruedLiabilitiesAndOtherLiabilities us-gaap:OtherLiabilitiesNoncurrent | |||
Accumulated (deficit)/Retained earnings | ¥ 2,071,332 | $ 297,528 | ¥ (430,263) | ||
New standard adjustment | ASU 2016-02 Leases (Topic 842) | |||||
Recent accounting pronouncements | |||||
Lease, Practical Expedients, Package [true false] | true | ||||
Right-of-use assets | ¥ 33,258 | ||||
Lease liabilities | ¥ 32,857 |
LOANS RECEIVABLE, NET - Loans r
LOANS RECEIVABLE, NET - Loans receivable (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
LOANS RECEIVABLE, NET | ||||
Loans receivable | ¥ 9,591,204 | ¥ 837,328 | ||
Less allowance for loan losses | (351,639) | (25,895) | ¥ (12,406) | |
Loans receivable, net | ¥ 9,239,565 | $ 1,327,180 | ¥ 811,433 |
LOANS RECEIVABLE, NET - Aging o
LOANS RECEIVABLE, NET - Aging of loans (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Aging of loans | ||
Total amount past due | ¥ 146,412 | ¥ 28,243 |
Current | 9,444,792 | 809,085 |
Total loans | 9,591,204 | 837,328 |
Loans receivable in non accrual status | 14,888 | |
0-30 days past due | ||
Aging of loans | ||
Total amount past due | 90,420 | 6,584 |
31-60 days past due | ||
Aging of loans | ||
Total amount past due | ¥ 55,992 | 3,101 |
Over 60 days past due | ||
Aging of loans | ||
Total amount past due | ¥ 18,558 |
LOANS RECEIVABLE, NET - Movemen
LOANS RECEIVABLE, NET - Movement of allowance for loan losses (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Movement of allowance for loan losses | |||
Balance at beginning of year | ¥ 25,895 | ¥ 12,406 | |
Provision for loan losses | 486,991 | 44,474 | ¥ 12,406 |
Gross write-off | (161,976) | (30,985) | 0 |
Recoveries | 729 | ||
Balance at end of year | ¥ 351,639 | ¥ 25,895 | ¥ 12,406 |
LOANS RECEIVABLE, NET - Nonaccr
LOANS RECEIVABLE, NET - Nonaccrual loan principal (Details) ¥ in Thousands | Dec. 31, 2018CNY (¥) |
LOANS RECEIVABLE, NET | |
Nonaccrual loan principal | ¥ 14,888 |
Less allowance for loan losses | (14,726) |
Nonaccrual loans, net | ¥ 162 |
SHORT-TERM LOANS (Details)
SHORT-TERM LOANS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | |
Short-term Debt [Line Items] | ||
Short term loans from domestic commercial banks | ¥ 200,000 | $ 28,728 |
Variable rate basis | one year Loan Prime Rate | |
Basis spread on variable rate (as a percent) | 1.45% | |
Short-term bank borrowings, one | ||
Short-term Debt [Line Items] | ||
Short term loans from domestic commercial banks | ¥ 100,000 | |
Short-term bank borrowings, two | ||
Short-term Debt [Line Items] | ||
Short term loans from domestic commercial banks | ¥ 35,000 | |
Fixed interest rate (as a percent) | 5.95% | 5.95% |
Short-term bank borrowings, three | ||
Short-term Debt [Line Items] | ||
Short term loans from domestic commercial banks | ¥ 65,000 | |
Fixed interest rate (as a percent) | 5.45% | 5.45% |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |||
User traffic direction fees | ¥ 217,932 | ¥ 276,024 | |
Payable for third-party service fee | 145,834 | 88,498 | |
Payable to institutional funding partners | 212,279 | 67,434 | |
Accrued payroll and welfare | 92,502 | 54,552 | |
Lease liability | 21,020 | ||
Others | 31,351 | 32,447 | |
Total | ¥ 720,918 | $ 103,554 | ¥ 518,955 |
RELATED PARTY BALANCES AND TR_3
RELATED PARTY BALANCES AND TRANSACTIONS - Services provided by the related parties (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transactions | |||
Services received from related party | ¥ 129,061 | ¥ 157,881 | ¥ 82,344 |
Qihu | Bandwidth service fee | |||
Related Party Transactions | |||
Services received from related party | 46,191 | 18,530 | |
Qihu | Referral service fee | |||
Related Party Transactions | |||
Services received from related party | 47,640 | 13,158 | 10,814 |
Xixian | Labor cost | |||
Related Party Transactions | |||
Services received from related party | 10,657 | ||
Qifutong | Referral service fee | |||
Related Party Transactions | |||
Services received from related party | 7,905 | 43,688 | 43,214 |
Qibutianxia | Corporate expenses | |||
Related Party Transactions | |||
Services received from related party | 3,230 | 32,015 | 17,512 |
Youdaojingwei | Interests charged for funds provided | |||
Related Party Transactions | |||
Services received from related party | 40,497 | 9,877 | |
Others | |||
Related Party Transactions | |||
Services received from related party | 8,364 | ¥ 9,993 | ¥ 927 |
Qifeixiangyi | Rental Expenses Charged | |||
Related Party Transactions | |||
Services received from related party | ¥ 5,074 |
RELATED PARTY BALANCES AND TR_4
RELATED PARTY BALANCES AND TRANSACTIONS - Services provided to the related parties (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transactions | |||
Services provided to the related parties | ¥ 1,037,480 | ¥ 502,614 | ¥ 86,311 |
Qicaitianxia | Referral service fee | |||
Related Party Transactions | |||
Services provided to the related parties | 197,018 | 196,013 | 84,303 |
Jinshang | Loan facilitation service | |||
Related Party Transactions | |||
Services provided to the related parties | 59,871 | 134,884 | |
Jinshang | Post facilitation service | |||
Related Party Transactions | |||
Services provided to the related parties | 43,497 | 33,153 | |
Beijing Zixuan | Loan facilitation service | |||
Related Party Transactions | |||
Services provided to the related parties | 517,776 | 128,970 | |
Beijing Zixuan | Post facilitation service | |||
Related Party Transactions | |||
Services provided to the related parties | 215,019 | 8,559 | |
Others | |||
Related Party Transactions | |||
Services provided to the related parties | ¥ 4,299 | ¥ 1,035 | ¥ 2,008 |
RELATED PARTY BALANCES AND TR_5
RELATED PARTY BALANCES AND TRANSACTIONS - Amounts due from related parties (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Related Party Transactions | |||
Amounts due from related parties | ¥ 478,767 | $ 68,771 | ¥ 484,286 |
Short term loans | 200,000 | $ 28,728 | |
Jinshang | |||
Related Party Transactions | |||
Amounts due from related parties | 50,666 | 215,937 | |
Beijing Zixuan | |||
Related Party Transactions | |||
Amounts due from related parties | 404,416 | 187,964 | |
Qicaitianxia | |||
Related Party Transactions | |||
Amounts due from related parties | 1,050 | 78,441 | |
Shareholders | |||
Related Party Transactions | |||
Amounts due from related parties | 20,459 | ||
Qifutong | |||
Related Party Transactions | |||
Amounts due from related parties | 1,000 | 1,550 | |
Others | |||
Related Party Transactions | |||
Amounts due from related parties | ¥ 1,176 | ¥ 394 |
RELATED PARTY BALANCES AND TR_6
RELATED PARTY BALANCES AND TRANSACTIONS - Amounts due to related parties (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Related Party Transactions | |||
Amounts due to related parties | ¥ 55,622 | $ 7,990 | ¥ 78,767 |
Qibutianxia | |||
Related Party Transactions | |||
Amounts due to related parties | 1,842 | 51,682 | |
Amounts of loans under such arrangement | 22,831,912 | 13,981,761 | |
Qihu | |||
Related Party Transactions | |||
Amounts due to related parties | 39,836 | 14,434 | |
Xixian | |||
Related Party Transactions | |||
Amounts due to related parties | 6,318 | ||
Qifutong | |||
Related Party Transactions | |||
Amounts due to related parties | 4,920 | ||
Youdaojingwei | |||
Related Party Transactions | |||
Amounts due to related parties | 4,034 | ||
Qicaitianxia | |||
Related Party Transactions | |||
Amounts due to related parties | 5,552 | 2,413 | |
Ningbo Siyinjia | |||
Related Party Transactions | |||
Amounts due to related parties | 300 | ||
Beijing Zixuan | |||
Related Party Transactions | |||
Amounts due to related parties | 90 | ||
Others | |||
Related Party Transactions | |||
Amounts due to related parties | ¥ 2,074 | ¥ 894 |
INCOME TAXES (Details)
INCOME TAXES (Details) - subsidiary | 1 Months Ended | 12 Months Ended | 36 Months Ended | ||
Aug. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2020 | |
Income tax rate (as a percent) | 25.00% | 25.00% | 25.00% | ||
Subsidiaries [Member] | |||||
Percentage of income tax exempt | 40.00% | ||||
West Development | Subsidiaries [Member] | |||||
Preferential tax rate | 15.00% | ||||
Number of subsidiaries that received west development preference status | 1 | ||||
Qiyu | High And New Technology Enterprises | |||||
Preferential tax rate | 15.00% |
INCOME TAXES - Current and defe
INCOME TAXES - Current and deferred portion of income tax expenses (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
INCOME TAXES | ||||
Current tax | ¥ 1,179,089 | ¥ 375,066 | ¥ 115,790 | |
Deferred tax | (713,106) | 91,294 | (67,612) | |
Income tax expense | ¥ 465,983 | $ 66,934 | ¥ 466,360 | ¥ 48,178 |
INCOME TAXES - Reconciliation (
INCOME TAXES - Reconciliation (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
INCOME TAXES | ||||
Income before income tax benefit | ¥ 2,967,287 | $ 426,224 | ¥ 1,659,671 | ¥ 213,043 |
Statutory tax rate in the PRC | 25.00% | 25.00% | 25.00% | 25.00% |
Income tax at statutory tax rate | ¥ 741,822 | ¥ 414,918 | ¥ 53,261 | |
Effect of different tax rate of subsidiary operation in other jurisdiction | 3,875 | 5,424 | ||
Non-deductible expenses | 63,070 | 151,987 | 23 | |
Preferential tax rate and local tax exemption | (202,095) | (84,120) | ||
Effect of preferential tax rates | (297,143) | (84,120) | ||
Effect of enacted tax rate change of deferred tax assets/liabilities | (95,048) | |||
Research and development superdeduction | (47,846) | (21,849) | (5,106) | |
Valuation allowance movement | 2,205 | |||
Income tax expense | ¥ 465,983 | $ 66,934 | ¥ 466,360 | ¥ 48,178 |
INCOME TAXES - Preferential tax
INCOME TAXES - Preferential tax rates (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
INCOME TAXES | ||
Tax saving amount due to preferential tax rates | ¥ 297,143 | ¥ 84,120 |
Income per share effect-basic | ¥ 1.03 | ¥ 0.41 |
Income per share effect-diluted | ¥ 0.99 | ¥ 0.41 |
INCOME TAXES - Components of th
INCOME TAXES - Components of the deferred tax assets and deferred tax liabilities (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred tax assets | ||
Guarantee liabilities | ¥ 1,182,114 | ¥ 386,781 |
Advertising expenses | 290,720 | 148,613 |
Provision for accounts receivable and contract assets | 236,252 | 34,695 |
Provision for loan losses | 84,452 | 14,220 |
Accrued expenses | 13,990 | |
Net operating loss carry forwards | 10,746 | 5,056 |
Total deferred tax assets | 1,804,284 | 603,355 |
Deferred tax liabilities | ||
Uncollected revenues | (1,106,936) | (619,113) |
Total deferred tax liabilities | (1,106,936) | (619,113) |
Net deferred tax assets | 697,348 | |
Net deferred tax (liabilities) | (15,758) | |
Allowance for deferred tax assets | 0 | 0 |
Net operating loss carryforward | ¥ 42,985 | |
Carryforward period, in years | 5 years | |
Operating loss carryforward expiring in 2023 | ¥ 20,223 | |
Operating loss carryforward expiring in 2024 | 22,762 | |
Undistributed earnings | ¥ 4,264,093 | 1,954,077 |
Withholding income tax rate on dividends (as a percent) | 10.00% | |
Minimum withholding income tax rate on dividends (as a percent) | 5.00% | |
Direct ownership percentage threshold | 25.00% | |
Maximum withholding income tax rate on dividends (as a percent) | 10.00% | |
Withholding income taxes for undistributed profits | ¥ 0 | ¥ 0 |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock options activity (Details) ¥ / shares in Units, ¥ in Thousands | Nov. 20, 2018$ / sharesshares | Nov. 20, 2018¥ / sharesshares | May 20, 2018¥ / sharesshares | Nov. 30, 2019 | May 31, 2018shares | Dec. 31, 2019$ / shares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018$ / shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2019CNY (¥)shares |
Share-based compensation arrangement by share-based payment award | ||||||||||
Options granted (in shares) | shares | 690,023 | 690,023 | 24,627,493 | 0 | ||||||
Exercises price of options granted (per share) | $ / shares | $ 0.00001 | |||||||||
Weighted-average grant date fair value per option | ¥ / shares | ¥ 60.77 | ¥ 48.64 | ||||||||
Fair value assumptions | ||||||||||
Average risk-free rate of interest | 3.18% | |||||||||
Dividend yield | 0.00% | |||||||||
Time to maturity | 10 years | |||||||||
Exercise price | $ / shares | $ 0.00001 | |||||||||
Number of options | ||||||||||
Options outstanding at beginning (in shares) | shares | 25,244,577 | |||||||||
Options granted (in shares) | shares | 690,023 | 690,023 | 24,627,493 | 0 | ||||||
Options forfeited (in shares) | shares | (1,741,363) | |||||||||
Options exercised (in shares) | shares | (5,470,244) | |||||||||
Options outstanding at ending (in shares) | shares | 18,032,970 | 25,244,577 | ||||||||
Options exercisable (in shares) | shares | 8,411,583 | |||||||||
Options vested or expected to be vested (in shares) | shares | 18,032,970 | |||||||||
Weighted Average Exercise Price | ||||||||||
Options outstanding at beginning (per share) | $ / shares | $ 0.00001 | |||||||||
Options granted (per share) | $ / shares | $ 0.00001 | |||||||||
Options forfeited (per share) | $ / shares | 0.00001 | |||||||||
Options exercised (per share) | $ / shares | 0.00001 | |||||||||
Options outstanding at ending (per share) | $ / shares | 0.00001 | $ 0.00001 | ||||||||
Options exercisable (per share) | $ / shares | 0.00001 | |||||||||
Options vested or expected to be vested (per share) | $ / shares | $ 0.00001 | |||||||||
Weighted Average Remaining Contract Life Years | ||||||||||
Options forfeited (in years) | 6 years 9 months 14 days | |||||||||
Options exercised (in years) | 6 years 10 months 13 days | |||||||||
Options outstanding at ending (in years) | 6 years 10 months 28 days | 7 years 10 months 20 days | ||||||||
Options exercisable (in years) | 6 years 8 months 8 days | |||||||||
Options vested or expected to be vested (in years) | 6 years 10 months 28 days | |||||||||
Aggregate Intrinsic Value | ||||||||||
Options outstanding at beginning | ¥ | ¥ 1,346,041 | |||||||||
Options exercised | ¥ | (186,043) | |||||||||
Options outstanding at ending | ¥ | ¥ 613,301 | ¥ 1,346,041 | ||||||||
Options exercisable | ¥ | ¥ 286,078 | |||||||||
Options vested or expected to be vested | ¥ | 613,301 | |||||||||
Minimum | ||||||||||
Fair value assumptions | ||||||||||
Estimated volatility rate | 51.32% | |||||||||
Maximum | ||||||||||
Fair value assumptions | ||||||||||
Estimated volatility rate | 53.49% | |||||||||
Stock options | Maximum | ||||||||||
Share-based compensation arrangement by share-based payment award | ||||||||||
Vesting period (in years) | 4 years | 4 years | ||||||||
Unvested awards granted to employees | ||||||||||
Aggregate Intrinsic Value | ||||||||||
Weighted-average period | 10 months 28 days | |||||||||
Unvested awards granted to employees | Employees | ||||||||||
Aggregate Intrinsic Value | ||||||||||
Unrecognized compensation cost | ¥ | ¥ 319,912 | |||||||||
2018 plan | Stock options | ||||||||||
Share-based compensation arrangement by share-based payment award | ||||||||||
Number of shares available for grant | shares | 25,336,096 | |||||||||
Percentage of annual increase in shares | 1.00% | |||||||||
Expiry period (in years) | 10 years | |||||||||
2019 Plan | Stock options | ||||||||||
Share-based compensation arrangement by share-based payment award | ||||||||||
Maximum aggregate number of shares ( in percentage) | 1.00% | |||||||||
Percentage of annual increase in shares | 1.00% | |||||||||
Expiry period (in years) | 10 years |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted shares (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | Nov. 20, 2019 | Aug. 20, 2019 | May 20, 2019 | Nov. 20, 2019 | Dec. 31, 2019 |
Weighted Average Grant Date Fair Value | |||||
Fair value of the restricted shares vested | ¥ 12,258 | ||||
Restricted Shares | |||||
Number of Restricted Shares | |||||
Granted (in shares) | 2,003,301 | 2,003,301 | |||
Forfeited (in shares) | (438,627) | ||||
Vested (in shares) | (297,849) | ||||
Outstanding at ending (in shares) | 1,266,825 | ||||
Weighted Average Grant Date Fair Value | |||||
Granted (per share) | ¥ 36.18 | ||||
Forfeited (per share) | 50.12 | ||||
Vested (per share) | 41.16 | ||||
Outstanding at ending (per share) | ¥ 30.18 | ||||
Unrecognized compensation cost | ¥ 37,181 | ||||
Weighted-average vesting period | 1 year 5 months 15 days | ||||
Restricted Shares | Minimum | |||||
Weighted Average Grant Date Fair Value | |||||
Weighted-average vesting period | 3 years | 3 years | 3 years | ||
Restricted Shares | Maximum | |||||
Weighted Average Grant Date Fair Value | |||||
Weighted-average vesting period | 5 years | 5 years | 5 years |
SHARE-BASED COMPENSATION - Comp
SHARE-BASED COMPENSATION - Compensation costs (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Recognition of compensation costs | ||
Total compensation costs | ¥ 250,428 | ¥ 607,381 |
Origination and servicing expenses | ||
Recognition of compensation costs | ||
Total compensation costs | 55,601 | 150,177 |
Sales and marketing expenses | ||
Recognition of compensation costs | ||
Total compensation costs | 6,805 | 15,700 |
General and administrative expenses | ||
Recognition of compensation costs | ||
Total compensation costs | ¥ 188,022 | ¥ 441,504 |
ORDINARY SHARES AND PREFERRED_2
ORDINARY SHARES AND PREFERRED SHARES (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | Dec. 14, 2018CNY (¥)shares | Dec. 14, 2018USD ($)$ / sharesshares | May 16, 2018$ / sharesshares | Sep. 30, 2018CNY (¥)shares | Sep. 30, 2018USD ($)shares | Dec. 31, 2019Vote$ / sharesshares | Dec. 31, 2018$ / sharesshares | Apr. 27, 2018$ / sharesshares | Jan. 31, 2018CNY (¥) | Apr. 30, 2017CNY (¥) | Dec. 31, 2016CNY (¥) |
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Common stock, Authorized (in shares) | 5,000,000,000 | 5,000,000,000 | 50,000,000 | ||||||||
Common stock, Par Value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.001 | ||||||||
Common stock, Issued (in shares) | 302,707,339 | 287,652,707 | 1 | ||||||||
Common stock, surrendered (in shares) | 100 | 100 | |||||||||
Common stock, outstanding (in shares) | 293,420,800 | 287,652,707 | 1 | ||||||||
Share split ratio | 0.01 | ||||||||||
Proceeds received from IPO, net of issuance costs | ¥ 297,860 | $ 43,308 | |||||||||
Ordinary shares | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Common stock, Par Value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | |||||||||
Common stock, Issued (in shares) | 293,420,800 | 287,652,707 | |||||||||
Common stock, outstanding (in shares) | 293,420,800 | 287,652,707 | |||||||||
Shares issued (in shares) | 198,347,168 | 198,347,168 | 5,768,093 | 198,347,168 | |||||||
IPO | Ordinary shares | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Shares issued (in shares) | 6,200,000 | ||||||||||
Class A ordinary shares | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Common stock, Authorized (in shares) | 5,000,000,000 | ||||||||||
Common stock, Par Value (in dollars per share) | $ / shares | $ 0.00001 | ||||||||||
Common stock, outstanding (in shares) | 253,600,214 | 247,832,121 | |||||||||
Shares issued (in shares) | 16,512,156 | 16,512,156 | |||||||||
Number of votes per share | Vote | 1 | ||||||||||
Class A ordinary shares | IPO | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Shares issued (in shares) | 6,200,000 | 6,200,000 | |||||||||
Conversion ratio | 1 | ||||||||||
Class B ordinary shares | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Common stock, outstanding (in shares) | 39,820,586 | 39,820,586 | |||||||||
Shares issued (in shares) | 39,820,586 | 39,820,586 | |||||||||
Number of votes per share | Vote | 20 | ||||||||||
Ordinary shares, conversion ratio to Class A ordinary shares | 1 | ||||||||||
Class C ordinary shares | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Shares issued (in shares) | 142,014,426 | 142,014,426 | |||||||||
Number of votes per share | Vote | 1 | ||||||||||
Ordinary shares, conversion ratio to Class A ordinary shares | 1 | ||||||||||
Series A preferred shares | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Shares issued (in shares) | 10,375,744 | 10,375,744 | |||||||||
Preferred equity interest | ¥ | ¥ 100,000 | ||||||||||
Series B preferred shares | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Shares issued (in shares) | 24,937,695 | 24,937,695 | |||||||||
Proceeds from issuance of convertible preferred shares | ¥ 1,393,812 | $ 203,500 | |||||||||
Series A+ preferred shares | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Shares issued (in shares) | 47,792,100 | 47,792,100 | |||||||||
Preferred equity interest | ¥ | ¥ 1,451,300 | ¥ 722,770 | |||||||||
ADS | IPO | |||||||||||
ORDINARY SHARES AND PREFERRED SHARES | |||||||||||
Shares issued (in shares) | 3,100,000 | 3,100,000 | |||||||||
Share price | $ / shares | $ 16.50 |
STATUTORY RESERVES AND RESTRI_2
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | ||
Minimum allocation to fund general reserve funds, after tax profits (as a percent) | 10.00% | |
Maximum allocation to fund general reserve funds, reserve registered capital (as a percent) | 50.00% | |
Amount of Appropriations to reserves | ¥ 0 | ¥ 0 |
Paid-in capital, capital reserve and statutory reserves not available for distribution | 2,615,880 | 1,713,462 |
Statutory reserve fund | ¥ 14,880 | ¥ 12,462 |
LEASE (Details)
LEASE (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Lessee, Lease, Description [Line Items] | |||
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | ||
Lessee, Operating Lease, Existence of Option to Terminate [true false] | true | ||
Operating lease expenses | ¥ 8,455 | ¥ 5,432 | |
Operating lease expenses | ¥ 20,139 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Original term of the lease | 5 years | ||
Remaining lease term | 3 years | ||
Extension term of the lease | 5 years | ||
Termination term of the lease | 1 year |
LEASE - Cash paid for amounts i
LEASE - Cash paid for amounts included in the measurement of lease liabilities (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2019CNY (¥) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows from operating leases | ¥ 22,896 |
Right-of-use assets obtained in exchange for lease obligations, Operating leases | ¥ 29,667 |
LEASE - ROU assets and lease li
LEASE - ROU assets and lease liabilities (Details) ¥ in Thousands | Dec. 31, 2019CNY (¥) |
ROU assets and lease liabilities | |
Right-of-use assets | ¥ 55,362 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent |
Operating lease liabilities-current | ¥ 21,020 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities and Other Liabilities |
Operating lease liabilities-non current | ¥ 31,184 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent |
Weighted-average remaining lease term | 2 years 3 months 7 days |
Weighted-average discount rate | 9.88% |
LEASE - Maturities of operating
LEASE - Maturities of operating lease liabilities and maturities of operating leases (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Maturities of operating lease liabilities | ||
2020 | ¥ 26,157 | |
2021 | 26,260 | |
2022 | 5,177 | |
2023 | 269 | |
Total undiscounted lease payments | 57,863 | |
Imputed interest | (5,659) | |
Lease liabilities | ¥ 52,204 | |
Term of operating leases not yet commenced | 3 years | |
Undiscounted maturities of operating leases, under ASC 840 | ||
2019 | ¥ 13,118 | |
2020 | 8,009 | |
2021 | 4,280 | |
2022 | 1,353 | |
2023 and thereafter | ¥ 336 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES. | ||
Rental expenses under operating leases | ¥ 8,455 | ¥ 5,432 |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
Numerator: | ||||
Net income | ¥ | ¥ 2,501,595 | ¥ 1,193,311 | ¥ 164,865 | |
Net income | 2,501,304 | $ 359,290 | 1,193,311 | 164,865 |
Deemed dividend to shareholders upon issuance of Series A and A+ preferred share (note 10) | ¥ | (3,097,733) | |||
Net (loss) income attributable to ordinary shareholders of the Company | ¥ 2,501,595 | $ 359,332 | ¥ (1,904,422) | ¥ 164,865 |
Denominator: | ||||
Weighted average Class A and Class B ordinary shares outstanding used in computing basic income (loss) per ordinary share | 288,827,604 | 288,827,604 | 202,751,277 | 198,347,168 |
Plus: incremental weighted average ordinary shares from assumed exercise of stock options and restricted shares using the treasury stock method | 12,110,866 | 12,110,866 | ||
Weighted average Class A and Class B ordinary shares outstanding used in computing diluted income (loss) per ordinary share | 300,938,470 | 300,938,470 | 202,751,277 | 198,347,168 |
Basic net income (loss) per share (in CNY per share) | (per share) | ¥ 8.66 | $ 1.24 | ¥ (9.39) | ¥ 0.83 |
Diluted net income (loss) per share (in CNY per share) | (per share) | ¥ 8.31 | $ 1.19 | ¥ (9.39) | ¥ 0.83 |
Stock options | ||||
Denominator: | ||||
Anti-dilutive securities excluded from the calculation of diluted net loss per share | 2,679,463 | |||
Preferred Stock | ||||
Denominator: | ||||
Anti-dilutive securities excluded from the calculation of diluted net loss per share | 21,857,895 | |||
Stock options and restricted stock units | ||||
Denominator: | ||||
Anti-dilutive securities excluded from the calculation of diluted net loss per share | 0 | 0 |
ADDITIONAL INFORMATION - FINA_2
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I (Details) | 12 Months Ended |
Dec. 31, 2019 | |
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I | |
Minimum allocation to fund general reserve funds, after tax profits (as a percent) | 10.00% |
Maximum allocation to fund general reserve funds, reserve registered capital (as a percent) | 50.00% |
Restricted net assets (as a percent) | 25.00% |
ADDITIONAL INFORMATION - FINA_3
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I - CONDENSED BALANCE SHEETS (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018$ / shares | Dec. 31, 2018CNY (¥)shares | Apr. 27, 2018$ / sharesshares | Dec. 31, 2017CNY (¥) | Dec. 31, 2016shares |
ASSETS. | |||||||
Cash and cash equivalents | ¥ 2,108,123 | $ 302,813 | ¥ 1,445,802 | ¥ 468,547 | |||
TOTAL ASSETS | 20,355,601 | 2,923,898 | 7,349,735 | ||||
LIABILITIES. | |||||||
Accrued expenses and other current liabilities | 720,918 | 103,554 | 518,955 | ||||
Amount due to subsidiaries | 55,622 | 7,990 | 78,767 | ||||
TOTAL LIABILITIES | 13,140,871 | 1,887,568 | 2,909,539 | ||||
EQUITY | |||||||
Ordinary shares ($0.00001 par value; 5,000,000,000 shares authorized,287,652,707 shares issued and outstanding as of December 31, 2018 , and 302,707,339 shares issued and 293,420,800 shares outstanding as of December 31, 2019, respectively) | 20 | 3 | 20 | ||||
Additional paid-in capital | 5,117,184 | 735,037 | 4,866,756 | ||||
Accumulated (deficit)/ Retained earnings | 2,071,332 | 297,528 | (430,263) | ||||
Other comprehensive income | 24,906 | 3,577 | 3,683 | ||||
TOTAL 360 FINANCE INC EQUITY | 7,213,442 | 1,036,145 | 4,440,196 | ||||
TOTAL LIABILITIES AND EQUITY | ¥ 20,355,601 | $ 2,923,898 | ¥ 7,349,735 | ||||
Stockholders' Equity, Other Disclosures | |||||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.001 | ||||
Ordinary shares, authorized (in shares) | 5,000,000,000 | 5,000,000,000 | 5,000,000,000 | 50,000,000 | |||
Ordinary shares, issued (in shares) | 302,707,339 | 302,707,339 | 287,652,707 | 1 | |||
Ordinary shares, outstanding (in shares) | 293,420,800 | 293,420,800 | 287,652,707 | 1 | |||
360 Finance, Inc | Reportable legal entities | |||||||
ASSETS. | |||||||
Cash and cash equivalents | ¥ 6,905 | $ 992 | ¥ 336,154 | ||||
Amount due from a subsidiary | 1,659,444 | 238,364 | 1,363,117 | ||||
Investments in subsidiaries and VIEs | 5,566,790 | 799,618 | 2,766,538 | ||||
TOTAL ASSETS | 7,233,139 | 1,038,974 | 4,465,809 | ||||
LIABILITIES. | |||||||
Accrued expenses and other current liabilities | 5,582 | 802 | 11,632 | ||||
Amount due to subsidiaries | 14,115 | 2,027 | 13,981 | ||||
TOTAL LIABILITIES | 19,697 | 2,829 | 25,613 | ||||
EQUITY | |||||||
Ordinary shares ($0.00001 par value; 5,000,000,000 shares authorized,287,652,707 shares issued and outstanding as of December 31, 2018 , and 302,707,339 shares issued and 293,420,800 shares outstanding as of December 31, 2019, respectively) | 20 | 3 | 20 | ||||
Additional paid-in capital | 5,117,184 | 735,037 | 4,866,756 | ||||
Accumulated (deficit)/ Retained earnings | 2,071,332 | 297,528 | (430,263) | ||||
Other comprehensive income | 24,906 | 3,577 | 3,683 | ||||
TOTAL 360 FINANCE INC EQUITY | 7,213,442 | 1,036,145 | 4,440,196 | ||||
TOTAL LIABILITIES AND EQUITY | ¥ 7,233,139 | $ 1,038,974 | ¥ 4,465,809 | ||||
Stockholders' Equity, Other Disclosures | |||||||
Ordinary shares, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | |||||
Ordinary shares, authorized (in shares) | 5,000,000,000 | 5,000,000,000 | 5,000,000,000 | ||||
Ordinary shares, issued (in shares) | 287,652,707 | 302,707,339 | |||||
Ordinary shares, outstanding (in shares) | 293,420,800 | 293,420,800 | 287,652,707 |
ADDITIONAL INFORMATION - FINA_4
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I - CONDENSED STATEMENTS OF OPERATIONS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Operating costs and expenses | ¥ (6,326,256) | $ (908,710) | ¥ (2,802,506) | ¥ (577,545) |
Foreign exchange loss | (24,875) | (3,573) | (2,563) | |
Other income, net | 140,278 | 20,150 | 7,696 | 22 |
Income before income tax expense | 2,967,287 | 426,224 | 1,659,671 | 213,043 |
Income tax expenses | (465,983) | (66,934) | (466,360) | (48,178) |
Net (loss) income | 2,501,304 | 359,290 | 1,193,311 | 164,865 |
Deemed dividend | (3,097,733) | |||
Net (loss) income attributable to ordinary shareholders of the Company | 2,501,595 | 359,332 | (1,904,422) | ¥ 164,865 |
360 Finance, Inc | Reportable legal entities | ||||
Operating costs and expenses | (12,922) | (1,856) | (10,367) | |
Interest income | 712 | 102 | 187 | |
Foreign exchange loss | (491) | (71) | (11,518) | |
Other income, net | 453 | 65 | ||
Net loss before taxes and income from equity in subsidiaries and VIEs | (12,248) | (1,760) | (21,698) | |
Equity in earnings of subsidiaries and VIEs | 2,513,843 | 361,092 | 1,215,009 | |
Income before income tax expense | 2,501,595 | 359,332 | 1,193,311 | |
Net (loss) income | 2,501,595 | 359,332 | 1,193,311 | |
Deemed dividend | (3,097,733) | |||
Net (loss) income attributable to ordinary shareholders of the Company | ¥ 2,501,595 | $ 359,332 | ¥ (1,904,422) |
ADDITIONAL INFORMATION - FINA_5
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I - CONDENSED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | ¥ 2,501,304 | $ 359,290 | ¥ 1,193,311 | ¥ 164,865 |
Other comprehensive income, net of tax of nil: | ||||
Other comprehensive income | 3,683 | |||
Deemed dividend | (3,097,733) | |||
Comprehensive income (loss) attributable to ordinary shareholders | 2,522,818 | 362,380 | (1,900,739) | ¥ 164,865 |
360 Finance, Inc | Reportable legal entities | ||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 2,501,595 | 359,332 | 1,193,311 | |
Other comprehensive income, net of tax of nil: | ||||
Foreign currency translation adjustment | 21,223 | 3,048 | 3,683 | |
Other comprehensive income | 21,223 | 3,048 | 3,683 | |
Total comprehensive income | 2,522,818 | 362,380 | 1,196,994 | |
Deemed dividend | (3,097,733) | |||
Comprehensive income (loss) attributable to ordinary shareholders | ¥ 2,522,818 | $ 362,380 | ¥ (1,900,739) |
ADDITIONAL INFORMATION - FINA_6
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I - CONDENSED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
COMBINED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OR LOSS | |||
Other comprehensive income, tax | $ 0 | $ 0 | $ 0 |
ADDITIONAL INFORMATION - FINA_7
ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I - CONDENSED STATEMENTS OF CASH FLOWS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Cash Flows from Operating Activities: | ||||
Net income | ¥ 2,501,304 | $ 359,290 | ¥ 1,193,311 | ¥ 164,865 |
Changes in operating assets and liabilities | ||||
Prepaid expenses and other assets | (536,218) | (77,024) | (61,811) | (27,477) |
Accrued expenses and other current liabilities | 206,700 | 29,691 | 417,678 | 85,092 |
Net cash (used in) provided by operating activities | 2,973,075 | 427,056 | 285,116 | (110,974) |
Cash Flows from Investing Activities: | ||||
Net cash (used in) provided by investing activities | (8,860,441) | (1,272,723) | 327,649 | (1,204,269) |
Cash Flows from Financing Activities: | ||||
Proceeds from issuance of ordinary share upon IPO | 327,236 | |||
Payment of IPO costs | (4,838) | (695) | (25,103) | |
Proceeds from series B convertible redeemable preferred shares | 1,393,812 | |||
Net cash provided by financing activities | 7,707,858 | 1,107,164 | 457,430 | 2,265,499 |
Effect of foreign exchange rate changes | 1,762 | 253 | (13,028) | |
Net increase in cash and cash equivalents | 1,822,254 | 261,750 | 1,057,167 | 950,256 |
Cash, cash equivalents, and restricted cash, beginning of year | 2,013,596 | 289,235 | 956,429 | 6,173 |
Cash, cash equivalents, and restricted cash, end of year | 3,835,850 | 550,985 | 2,013,596 | ¥ 956,429 |
360 Finance, Inc | Reportable legal entities | ||||
Cash Flows from Operating Activities: | ||||
Net income | 2,501,595 | 359,332 | 1,193,311 | |
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Equity in earnings of subsidiaries and VIEs | (2,513,843) | (361,092) | (1,215,009) | |
Changes in operating assets and liabilities | ||||
Accrued expenses and other current liabilities | (3,070) | (441) | 8,559 | |
Amounts due from subsidiaries | (276,960) | (39,783) | (1,346,627) | |
Net cash (used in) provided by operating activities | (292,278) | (41,984) | (1,359,766) | |
Cash Flows from Investing Activities: | ||||
Purchase of equity method investment | (35,652) | (5,121) | ||
Net cash (used in) provided by investing activities | (35,652) | (5,121) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from issuance of ordinary share upon IPO | 327,236 | |||
Payment of IPO costs | (3,080) | (442) | (12,100) | |
Proceeds from series B convertible redeemable preferred shares | 1,393,812 | |||
Net cash provided by financing activities | (3,080) | (442) | 1,708,948 | |
Effect of foreign exchange rate changes | 1,761 | 253 | (13,028) | |
Net increase in cash and cash equivalents | (329,249) | (47,294) | 336,154 | |
Cash, cash equivalents, and restricted cash, beginning of year | 336,154 | 48,286 | ||
Cash, cash equivalents, and restricted cash, end of year | ¥ 6,905 | $ 992 | ¥ 336,154 |