PPDAI Group Inc. (NYSE:PPDF) Q3 2019 Earnings Conference Call - Final Transcript

Nov 19, 2019 • 08:00 am ET

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PPDAI Group Inc. (NYSE:PPDF) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] The first question comes from Sanjay Sakhrani of KBW. Please go ahead.

Analyst
Steven Kwok

Hi. This is actually Steven Kwok filling in for Sanjay. My first question is just around management's commentary around expansion overseas and also providing technology to financial institutions. Can you guys elaborate on that? And over time, how should we expect that to ramp up and the impacts on the P&L? Thanks.

Executive
Simon Tak Leung Ho

Sure. On the international front, we started operating in Indonesia since the beginning of this year, and we have recently applied to become a fully licensed P2P lender under Indonesian regulations, and we hope to have a favorable result before the end of the year. So, the business is young, but we will definitely report back with further updates going forward. Philippines is another market we have started operating recently as well. And we are also looking into other Asian markets such as in India and in Vietnam as well.

With regards to our financial institutions, this is pretty much an extension of the work we're doing on the funding side. We are partnering with many licensed financial institutions for the -- obviously to help loan facilitations in the platform. At the same time many of them are deficient or do not have the full suite of capabilities for consumer finance, and we are also in there to help them to build their own capabilities in whether it's risk management, servicing [Phonetic] loans, fraud detection, and we are going into work with them to implement these capabilities in-house. So this is a big part of our strategy going forward to work more deeply and closely with financial institutions. Does that answer your question?

Analyst
Steven Kwok

Yes, it does. And as a follow-up, just around the revenue yield, you talked about how the decline is attributable to moving more to the institutional side. Should we expect this to be the run rate going forward? Or are there any further impacts, given that your funding still had a component of the retail side in the third quarter?

Executive
Simon Tak Leung Ho

Yeah. So obviously the -- our loan volume grew sequentially by 14%, revenues softened a little, declining by around 3% quarter-on-quarter. This is really a direct reflection of the lower margin, lower take rate of the loans facilitated by institutions and also the rapid ramp-up in institutional fund in the third quarter from 45% to 75% of total volume, from Q2 to Q3. I do think -- I think most of the take rate decline is behind us and Q3 I would think is a good reflection of our take rate revenue margins since our platform was already majority funded by institutions in the third quarter.

Analyst
Steven Kwok

Great. Thanks for taking my questions.

Executive
Simon Tak Leung Ho

Thanks. Thanks, Steven.

Operator
Operator

[Operator Instructions] The next question comes from Yiran Zhong of Credit Suisse. Please go ahead.

Analyst
Yiran Zhong

Hi. Thank you, management for taking my questions, and congratulations on your latest transformation. I just have a few questions on the latest institutional funding partners. Can you please provide the latest