Weidai Ltd. Announces Full Year 2019 Financial Results

HANGZHOU, China, May 27, 2020 /PRNewswire/ -- Weidai Ltd. ("Weidai" or the "Company") (NYSE: WEI), a leading auto-backed financing solution provider in China, today announced its financial results for the full year ended December 31, 2019, which have not been audited or reviewed by the Company's independent registered accounting firm.

Full Year 2019 Financial Highlights:

    --  Net revenues were RMB3,357.5 million (US$482.3 million) in 2019,
        compared to RMB3,913.5 million in 2018.
    --  Loan service fee was RMB2,955.1 million (US$424.5 million) in 2019,
        compared to RMB3,497.8 million, which was the aggregate of (i) revenues
        from loan facilitation service fees and (ii) revenues from post
        facilitation service fees, in 2018.
    --  Net income was RMB263.2 million (US$37.8 million) in 2019, compared to
        RMB604.6 million in 2018.
    --  Adjusted net income([1]) was RMB328.0 million (US$47.1 million) in 2019,
        compared to RMB711.2 million in 2018.

                        [1] Adjusted net income, a non-
                         GAAP financial measure, is defined
                         as net income before share-based
                         compensation expenses.

Full Year 2019 Operational Highlights:

Loan volume

The following table sets forth the volume of loans the Company facilitated and originated (including loans funded by institutional funding partners) for the periods indicated:


                                For the year ended



                                 December 31, 2018            December 31, 2019



                             RMB                                  % of total      RMB               % of total
                                                      loan volume                       loan volume



                             (in millions, except for
                                    percentages)


      Total loan volume                        78,786                      100.0 61,102                     100.0



     Including:


      Loans funded by
       institutional funding
       partners                                 3,231                        4.1  3,372                       5.5

Loan balance

Total loan balance was RMB13.7 billion (US$2.0 billion) as of December 31, 2019, compared to RMB19.9 billion as of December 31, 2018.

Full Year 2019 Financial Results

Net revenues decreased by 14.2% to RMB3,357.5 million (US$482.3 million) in 2019 from RMB3,913.5 million in 2018, primarily due to a decrease in loan service fee. The Company's take rate([2]) increased to 24.5% in 2019 from 19.7% in 2018.

    --  Loan service fee was RMB2,955.1 million (US$424.5 million) in 2019,
        compared to RMB3,497.8 million, which was the aggregate of (i) revenues
        from loan facilitation service fees and (ii) revenues from post
        facilitation service fees, in 2018. The decrease was primarily due to
        the change of accounting policy and decreases in the Company's loan
        volume and outstanding balance.
    --  Other revenues increased by 44.1% to RMB273.4 million (US$39.3 million)
        in 2019 from RMB189.7 million in 2018, primarily due to an increase in
        insurance income.
    --  Net financing income decreased by 41.3% to RMB144.8 million (US$20.8
        million) in 2019 from RMB246.6 million in 2018, primarily due to a
        decrease in loan balance of the Company's on-balance sheet loans.

                            [2] "Take rate" is
                             defined as dividing net
                             revenue of a certain
                             period by the period
                             end loan balance.

Provision for loans and advances was RMB1,240.0 million (US$178.1 million) in 2019, compared to RMB751.6 million in 2018. The increase was primarily due to (i) an increase in delinquency rates as a result of industry-wide turmoil, and macroeconomic headwinds that negatively impacted small and micro enterprises, and (ii) the significant deterioration of the general macroeconomic environment in China which resulted in the Company recording additional allowance for loans and advances after taking into consideration current economic factors. Provision for loans and advances as a percentage of net revenues increased to 36.9% in 2019 from 19.2% in 2018.

Operating costs and expenses decreased by 24.2% to RMB1,909.5 million (US$274.3 million) in 2019 from RMB2,519.5 million in 2018. Operating costs and expenses as a percentage of net revenues decreased from 64.4% in 2018 to 56.9% in 2019.

    --  Provision for financial guarantee liabilities was RMB19.2 million
        (US$2.8 million) in 2019.
    --  Origination and servicing expenses decreased by 21.0% to RMB1,388.6
        million (US$199.5 million) in 2019 from RMB1,757.9 million in 2018,
        primarily due to the Company's cost and personnel optimization efforts.
        Origination and servicing expenses as a percentage of net revenues
        decreased to 41.4% in 2019 from 44.9% in 2018.
    --  Sales and marketing expenses decreased by 37.6% to RMB138.1 million
        (US$19.8 million) in 2019 from RMB221.1 million in 2018. The decrease
        was primarily attributable to the Company's cost and personnel
        optimization efforts.
    --  General and administrative expenses decreased by 25.7% to RMB282.0
        million (US$40.5 million) in 2019 from RMB379.4 million in 2018. The
        decrease was primarily due to the Company's cost and personnel
        optimization efforts.
    --  Research and development expenses decreased by 41.4% to RMB81.7 million
        (US$11.7 million) in 2019 from RMB139.3 million in 2018, primarily due
        to the Company's cost and personnel optimization efforts.

Share-based compensation expenses were RMB64.8 million (US$9.3 million) in 2019, compared to RMB106.6 million in 2018.

Income tax expenses were RMB105.2 million (US$15.1 million) in 2019, compared to RMB159.6 million in 2018.

Net income was RMB263.2 million (US$37.8 million) in 2019, compared to RMB604.6 million in 2018.

Net income attributable to ordinary shareholders was RMB253.6 million (US$36.4 million) in 2019, compared to RMB721.6 million in 2018.

Adjusted net income was RMB328.0 million (US$47.1 million) in 2019, compared to RMB711.2 million in 2018.

Change of Business Operations

The Company ceased offering new loans for online investors' subscription since February 2020, including its Premier Investment Program and X Investment Program. Investors of Company's then existing Investment Programs now directly fund the underlying loans they used to invest in through the Company's Investment Programs and will receive repayment of principal when the respective underlying loans become due.

In an effort to reinforce investor confidence and accelerate their investment return, in April 2020, the Company entered into collaboration arrangements with certain companies providing asset management services, pursuant to which the Company's online investors have the option to transfer their rights to loans on the Company's platform to those companies and receive repayment of principals and interests in 18 months. The Company and Mr. Hong Yao provide guarantees for online investors who opt to participate in the arrangement. The Company has informed all online investors on its platform of these changes in its business.

The Company is dedicated to ensuring a smooth and safe transition process for all of its existing online investors. After this change, the Company plans to use institutional funding partners as its primary funding source and will also facilitate loans through its micro credit company.

Impact of COVID-19

The recent coronavirus (COVID-19) outbreak has brought uncertainties and interruptions to the marketplace lending industry and the overall economy. Delinquency rates have risen across the industry. As a result, the Company's loan origination volume and outstanding balance of loans in the first quarter of 2020 was negatively affected. In response, the Company has adopted a more prudent approach towards managing its loan portfolio and is adjusting its business strategies to minimize the pandemic's impact on its operations. Given the extent of the disruption and the duration of COVID-19's impact on the Company's operations remain uncertain, the Company will continue to closely monitor the evolving situation and maintains an optimistic outlook on its future growth potential over the long term.

Change of Accounting Policy

In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", which superseded the revenue recognition requirements in Topic 605. The core principle of Topic 606 is that an entity should recognize revenues 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. The Company adopted Topic 606 on January 1, 2019 using the modified retrospective transition method which applied to all contracts which were not completed as of January 1, 2019.

Due to the complexity of Topic 606, the Company continuously evaluated the impact of adopting Topic 606 on the Company's financial statements during the year of 2019. In preparing the consolidated financial statements for the year ended December 31, 2019, the Company finalized its evaluation, and noticed that certain adjustments should be made to the previously announced interim financial results for the three months ended March 31, 2019, June 30, 2019 and September 30, 2019 according to Topic 606, respectively. These adjustments resulted in a RMB8.6 million (US$1.2 million) decrease in total net revenue and a RMB6.5 million (US$0.9 million) decrease in total net income, for the first three quarters of 2019.

Resignation of Directors

Mr. Wei Ye and Ms. Yan Wang have resigned from the board of directors of the Company due to personal reasons. Mr. Ye's and Ms. Wang's resignation did not result from any disagreement with the Company.

Use of Non-GAAP Financial Measures

The Company uses adjusted net income, a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that adjusted net income helps identify underlying trends in its business by excluding the impact of share-based compensation expenses. The Company believes that adjusted net income provides useful information about its operating results, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by the Company's management in its financial and operational decision-making.

Adjusted net income is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as an analytical tool, and when assessing the Company's operating performance, cash flows or liquidity, investors should not consider it in isolation, or as a substitute for net income, cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

For more information on this non-GAAP financial measure, please see the table captioned "Reconciliations of GAAP and Non-GAAP results" set forth at the end of this press release.

About Weidai Ltd.

Weidai Ltd. is a pioneer and leading auto-backed financing solution provider in China supported by sophisticated and effective risk management system and technology. The Company transforms used automobiles, a type of "non-standard" collateral, into investable assets, to provide accessible credit for China's small and micro enterprises, and connects the borrowers with institutional funding partners through its platform.

For more information, please visit http://weidai.investorroom.com/.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.9618 to US$1.00, the noon buying rate on December 31, 2019 set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" and similar statements. Weidai may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Weidai's beliefs and expectations, are forward-looking statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited the following: Weidai's goal and strategies; Weidai's expansion plans; Weidai's future business development, financial condition and results of operations; Weidai's expectations regarding demand for, and market acceptance of, its solutions and services; Weidai's expectations regarding keeping and strengthening its relationships with borrowers, investors and financial institutions and other platform participants; general economic and business conditions; the duration of COVID-19 and its impact on our business and financial performance; Weidai's assumptions underlying or related to any of the foregoing regulations and governmental policies relating to the online consumer finance industry in China; and Weidai's ability to meet the standards necessary to maintain listing of its ADSs on the NYSE, including its ability to cure any non-compliance with the NYSE's continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Weidai does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

For investor and media inquiries, please contact:

In China:
Christensen
Mr. Christian Arnell
Tel: +86-10-5900-1548
E-mail: carnell@christensenir.com

In US:
Christensen
Ms. Linda Bergkamp
Tel: +1-480-614-3004
E-mail: lbergkamp@christensenir.com


                                                              
              
                WEIDAI LTD.


                                            
              
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                   
              
                (All amounts in thousands, except share data, or otherwise noted)




                                                                                     As of December 31,



                                                                                                   2018                           2019



                                                                    
              
                RMB           
              
               RMB     US$

                                                                                                                                         ---

                                                                                       (in thousands)





            
                ASSETS


            
                Current assets:


             Cash and cash equivalents                                                        1,741,911                      1,075,557 154,494



            Restricted cash                                                                  1,619,937                      1,140,819 163,868


             Loans and advances, net (net of
              allowance                                                                       1,482,368                      1,517,876 218,029
      of RMB764,323 and RMB1,257,824 (US$180,675)
       as of
      December 31, 2018 and 2019, respectively)


             Short-term investments                                                               4,100                                     -


             Prepaid expenses and other
              assets                                                                            560,165                        441,332  63,393


             Amounts due from related parties                                                    21,797                         24,052   3,455



                          Total current assets                                                5,430,278                      4,199,636 603,239






            
                Non-current assets:



            Restricted cash                                                                     19,368                                     -



            Long-term investments                                                               13,333                         13,574   1,950


             Loans and advances, net (net of
              allowance of RMB6,027                                                             421,564
      and RMB1,801 (US$259) as of December 31,
       2018
      and 2019, respectively)

                                                                                                 49,643                          7,131


             Prepaid expenses and other
              assets                                                                              7,606                         23,429   3,365


             Property, equipment and
              software, net                                                                      88,731                         59,783   8,587



            Goodwill                                                                             5,812                          5,812     835



            Deferred tax assets                                                                329,796                        675,089  96,970



                          Total non-current assets                                              886,210                        827,330 118,838



                          Total assets                                                        6,316,488                      5,026,966 722,077






            
                LIABILITIES AND SHAREHOLDERS' EQUITY


                          Current liabilities (including current liabilities of the
      consolidated variable interest entities and subsidiaries
                 without recourse to the primary beneficiary of
      RMB3,570,407 and RMB2,476,965 (US$355,794) as
      of December 31, 2018 and 2019, respectively):


             Payable to institutional funding
              partners and online                                                             1,005,236                        289,026  41,516
      investors


             Current account with online
              investors and borrowers                                                         2,005,605                      1,275,210 183,172



            Income tax payable                                                                  70,679                        237,102  34,058


             Accrued expenses and other
              liabilities                                                                       501,439                        397,406  57,083


             Amounts due to related parties                                                      28,728                         29,050   4,173



            Deferred revenue                                                                    11,962                                     -



            Contract liabilities                                                                     -                       271,741  39,033


                          Total current liabilities                                           3,623,649                      2,499,535 359,035





                          Non-current liabilities (including non-current liabilities
      of the consolidated variable interest entities and
      subsidiaries without recourse to the primary
      beneficiary of RMB475,613 and RMB249,726
      (US$35,870) as of December 31, 2018 and 2019,
      respectively):


             Payable to institutional funding
              partners and online                                                               450,160                         51,444   7,389
      investors



            Deferred revenue                                                                    11,343                                     -



            Contract liabilities                                                                     -                       198,282  28,481


             Other non-current liabilities                                                       14,110                                     -



                          Total non-current liabilities                                         475,613                        249,726  35,870



                          Total liabilities                                                   4,099,262                      2,749,261 394,905






            
                Shareholders' equity


             Class A ordinary shares (par
              value of US$0.000002 per                                                                -
      share; and 35,375,777 and 35,390,055 shares issued
      and outstanding as of December 31, 2018 and 2019,
      respectively)


             Class B ordinary shares (par
              value of US$0.000002 per                                                                1                                     -
      share; 35,071,400 and 35,071,400 shares
       issued and
      outstanding as of December 31, 2018 and
       2019,
      respectively)


                                                                                                      1


             Additional paid-in capital                                                       1,170,956                      1,235,752 177,505


             Accumulated other comprehensive
              loss                                                                              (2,700)                       (2,510)  (361)



            Retained earnings                                                                1,040,443                      1,038,323 149,146



                          Total Weidai Ltd. shareholders'
                           equity                                                             2,208,700                      2,271,566 326,290



             Noncontrolling interests                                                             8,526                          6,139     882



                          Total shareholders' equity                                          2,217,226                      2,277,705 327,172



                          TOTAL LIABILITIES AND
                           SHAREHOLDERS'                                                      6,316,488
      EQUITY
                                                                                              5,026,966                        722,077



                                                                
              
                Weidai Ltd.


                                           
              
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


                                            
              
         (All amounts in thousands, except share data, or otherwise noted)




                                                                                Year Ended December 31,



                                                                                                         2018                           2019



                                                                  
              
                RMB                     
              
             RMB   
     
          US$

                                                                                                                                                       ---

                                                                         (in thousands, except for share, per
                                                                                   share and per ADS
                                                                             data)





            
                Net revenues:


             Loan facilitation services
              (including related                                                                    3,155,721                                             -
      party amounts of RMB781 and nil for
       the
      years ended December 31, 2018 and
       2019,
      respectively)


             Post facilitation
              services.                                                                               342,052                                             -


             Loan service fee
              (including related party                                                                      -                     2,955,050         424,466
      amounts of nil and RMB306 (US$44) for the
      years ended December 31, 2018 and 2019,
      respectively)


             Other revenues (including
              related party                                                                           189,712                        273,433          39,276
      amounts of RMB13,362 and nil for the
       years
      ended December 31, 2018 and 2019,
      respectively)


             Financing income                                                                         402,750                        195,364          28,062


             Less: Funding costs                                                                    (156,138)                      (50,610)        (7,270)



             Net financing income                                                                     246,612                        144,754          20,792


             Business related taxes and
              surcharges                                                                             (20,623)                      (15,743)        (2,261)



                          Total net revenues                                                        3,913,474                      3,357,494         482,273



             Provision for loans and
              advances                                                                              (751,572)                   (1,239,962)      (178,109)


                          Net revenues after
                           provision for loans                                                      3,161,902                      2,117,532         304,164
      and advances





            
                Operating costs and expenses:


             Provision for financial
              guarantee liabilities                                                                  (21,712)                      (19,206)        (2,759)


             Origination and servicing
              expenses (including                                                                 (1,757,935)                   (1,388,640)      (199,466)
      related party amounts of RMB162,853
       and
      RMB73,008 (US$10,485) for the years
      ended December 31, 2018 and 2019,
      respectively)


             Sales and marketing
              expenses (including                                                                   (221,117)                     (138,068)       (19,832)
      related party amounts of RMB9,631 and
       nil
      for the years ended December 31, 2018
       and 2019,
      respectively)


             General and administrative
              expenses (including                                                                   (379,415)                     (281,956)       (40,500)
      related party amounts of RMB276 and
       nil for
      the years ended December 31, 2018 and
       2019,
      respectively)


             Research and development
              expenses                                                                              (139,318)                      (81,664)       (11,730)



                          Total operation costs and
                           expenses                                                               (2,519,497)                   (1,909,534)      (274,287)





                          Income from operations                                                      642,405                        207,998          29,877



             Interest income, net                                                                      66,791                         39,616           5,690


             Government subsidies                                                                      70,351                        106,873          15,351


             Other (expenses) income,
              net                                                                                    (15,288)                        13,998           2,011



                          Net income before income
                           taxe                                                                       764,259                        368,485          52,929



             Income tax expenses                                                                    (159,629)                     (105,243)       (15,117)


                          Net income                                                                  604,630                        263,242          37,812



             Net income attributable to
              noncontrolling                                                                          (3,011)                       (9,632)        (1,384)
      interests



                          Net income attributable to
                           Weidai Ltd.'s                                                              601,619                        253,610          36,428
      shareholders



             Reversal of accretion on
              Series C preferred                                                                      120,000                                             -
      shares



                          Net income attributable to
                           Weidai Ltd.'s                                                              721,619                        253,610          36,428
      ordinary shareholders




            
                Earnings per share:



            Basic                                                                                      10.93                           3.60            0.52



            Diluted                                                                                    10.93                           3.60            0.52


                          Shares used in earnings per share
      computation:



            Basic                                                                                 50,954,061                     70,449,524      70,449,524



            Diluted                                                                               50,954,061                     70,449,524      70,449,524




                          Other comprehensive (loss) income


             Foreign currency
              translation adjustment                                                                  (2,700)                           190              27



                          Comprehensive income                                                        601,930                        263,432          37,839


             Comprehensive income
              attributable to                                                                         (3,011)                       (9,632)        (1,384)
      noncontrolling interests



                          Comprehensive income
                           attributable to                                                            598,919                        253,800          36,455
      Weidai Ltd.'s shareholders


             Reversal of accretion on
              Series C preferred                                                                      120,000                                             -
      shares



                          Comprehensive income
                           attributable to                                                            718,919                        253,800          36,455
      ordinary shareholders


                             
              
                Weidai Ltd.


                          UNAUDITED Reconciliation of 
                GAAP And Non-GAAP Results


                          (All amounts in thousands, except share data, or otherwise noted)




                                        Year Ended December, 31



                                                           2018                           2019



                                                  RMB                                     RMB   US$

                                                                                                ---

                                             (in thousands)




      Net income                                        604,630                        263,242 37,812



     Add:


      Share-based
       compensation
       expenses                                         106,571                         64,796  9,307



      Adjusted net income                               711,201                        328,038 47,119

View original content:http://www.prnewswire.com/news-releases/weidai-ltd-announces-full-year-2019-financial-results-301065913.html

SOURCE Weidai Ltd.