PINTEC ANNOUNCES UNAUDITED FINANCIAL RESULTS FOR THE FIRST HALF OF 2023
- Net loss decreased by 99.43%
- Commitment to executing MSME ecosystem strategy
- Focus on sustainable development
- Total revenues decreased by 11.89%
- Gross profit decreased by 79.48%
- Increase in operating expenses
Insights
The financial results reported by Pintec Technology Holdings Limited show a mixed performance with a decrease in total revenues and gross profit, yet a significant reduction in net loss. The decrease in total revenues by 11.89% and gross profit by 79.48% year-over-year suggests a contraction in the company's core operations. However, the reduction in net loss from RMB123.60 million to RMB0.71 million, a 99.43% decrease, is noteworthy and could indicate improved cost management or one-time gains.
From a financial perspective, the company's gross margin contraction from 51.50% to 11.99% is concerning, as it suggests that the cost of revenues is increasing at a faster rate than income. The increase in cost of revenues by 59.90% could be due to a variety of factors, including higher funding costs and origination and servicing costs. The reported out-of-period adjustments, which relate to prior period errors, might raise questions about the company's financial control processes.
The disposal of SCHL Group and the associated gain could be seen as a strategic move to streamline operations and focus on core competencies. However, this also indicates a divestiture of non-core assets, which might have implications for the company's future revenue streams.
The going concern note suggests that there is substantial doubt about the company's ability to continue as a going concern without additional financing. This could be a red flag for investors, as it indicates potential liquidity issues and the need for capital infusion to sustain operations.
Pintec's financial performance reflects broader trends in the financial technology industry, where companies are grappling with market uncertainties and a challenging macroeconomic environment. The company's strategy to focus on providing loan services and digital solutions to micro, small and medium enterprises (MSMEs) is indicative of the sector's pivot towards digital transformation and innovation to drive growth.
The significant decrease in loan volume and outstanding balance may suggest a contraction in demand for Pintec's services or a strategic shift in its lending practices, potentially due to a more cautious approach to risk management. The increased delinquency rates reported could be a reflection of the economic pressures on MSMEs and could impact the company's asset quality and profitability in the long run.
Moreover, the reported increase in wealth management service fees indicates a potential area of growth for Pintec. This aligns with industry trends where fintech companies are diversifying their revenue streams to include wealth management and insurance brokerage services, which could offer more stable income compared to lending activities.
The financial results highlight several risk factors for Pintec Technology Holdings. The substantial increase in the reversal of credit losses and the recover on guarantee suggest improvements in the company's risk management practices. However, the increase in delinquency rates could be indicative of underlying credit risk within the loan portfolio, requiring ongoing monitoring and potentially more conservative provisioning in the future.
The company's efforts in strengthening risk management and optimizing cost structures are positive steps towards achieving a break-even point. Yet, the negative working capital position and accumulated deficit raise concerns about the company's financial sustainability. The reliance on a line of credit facility to alleviate capital pressure points to potential liquidity risk, which could be exacerbated by the unpredictable nature of the capital markets and the industry.
Investors may need to consider the company's long-term viability and the effectiveness of its strategies to mitigate these risks, especially in light of the current economic climate and the competitive landscape of the fintech sector.
First Half 2023 Financial Highlights
- Total revenues were
RMB35.09 million (US ) for the first half of 2023 compared to total revenues of$4.86 million RMB39.82 million for the same period of 2022. - Gross profit decreased by
79.48% toRMB4.21 million (US ) for the first half of 2023 from$0.58 million RMB20.51 million for the same period of 2022. Gross margin was11.99% for the first half of 2023 compared to51.50% for the same period of 2022. - Loss from operations decreased by
48.54% toRMB12.09 million (US ) for the first half of 2023 from$1.67 million RMB23.49 million for the same period of 2022. - Net loss decreased by
99.43% toRMB0.71 million (US ) for the first half of 2023 compared to net loss of$0.10 million RMB123.60 million for the same period of 2022.
First Half 2023 Operating Highlights
- Total loans facilitated decreased by
58.98% toRMB47.3 million (US ) for the first half of 2023 from$6.55 million RMB115.30 million for the same period of 2022. - Loan outstanding balance decreased by
35.08% toRMB 61.71 million (US ) as of June 30, 2023 from$ 8.54 million RMB95.06 million as of December 31, 2022. - The following table provides delinquency rates by balance for all loans facilitated by the Company as of the dates indicated:
Delinquent for | |||
16-30 days | 31-60 days | 61-90 days | |
December 31, 2020 | 0.77 % | 0.97 % | 0.95 % |
December 31, 2021 | 1.00 % | 1.30 % | 1.18 % |
December 31, 2022 | 0.23 % | 0.58 % | 0.18 % |
June 30, 2023 | 0.58 % | 1.06 % | 0.22 % |
Mr. Zexiong Huang, Chief Executive Officer and acting Chief Financial Officer of Pintec, commented, "Amidst the sluggish macroeconomic recovery, during the first half of 2023, we persistently focused on our core strategy. We continued to provide loan services and digital solutions to micro, small and medium enterprises ("MSME") ecosystem, as a direct lender, facilitator and enabler. Our business partners, financial partners, and end customers are able to enhance the efficiency and effectiveness of their financial services and their customers' navigating financial service processes driven by our digital technical services and our financial solutions. We are also continuously devoted to initiating innovative business models. At the same time, ongoing improvements in operation, strengthening risk management, optimizations to cost structures were implemented relentlessly to achieve the goal of break-even point. We are committed to cautious and sustainable growth, and prepare for the potential risks and uncertainty."
"Going forward, despite the market uncertainties, we are committed to prudently execute our MSME ecosystem strategy by solidifying our competencies in technology innovation, enhancing overall risk management, attracting customers and strengthening partnership, refining operations, expanding our business and implementing cost-effective initiatives to ensure successful execution of our future growth plans. We believe that sustainable quality-based development is valuable." Mr. Huang concluded.
First Half 2023 Financial Results
Revenues
Total revenues decreased by
- Revenues from technical service fees decreased by
17.90% toRMB19.83 million (US ) for the first half of 2023 from$2.75 million RMB24.16 million for the same period of 2022. The decrease in revenues from technical service fees was mainly due to we ceased the risk-sharing loan facilitation business. - Revenues from installment service fee decreased by
16.55% toRMB7.53 million (US ) for the first half of 2023 from$1.04 million RMB9.02 million for the same period of 2022. The decrease in revenues from installment service fee was mainly due to the decrease in volume of SMEs loans in the first half of 2023. - Revenues from wealth management service fees increased by
16.32% toRMB7.73 million (US ) for the first half of 2023 from$1.07 million RMB6.64 million for the same period of 2022. The increase in revenue of the wealth management was mainly due to increased revenue generated from our insurance brokerage service business.
Cost of Revenues
Cost of revenues increased by
- Funding cost. Funding cost mainly consists of interest expense the Company pays in relation to the funding debts to fund its financing receivables. Funding cost increased
RMB 9.28 million toRMB9.31 million (US ) compared to funding cost of$1.29 million RMB0.03 million in the same period of 2022. We recorded interest expenses ofRMB9.31 million during the first half of 2023, which was mainly represents an out-of-period adjustments amount toRMB9.30 million from prior years. In July 2018, Minheng, a subsidiary of our variable interest entity, entered into loan agreements with a shareholder of ours (the "Lender"), these loans have principal amount ofRMB190 million , and the annual interest rates are10.3% , which are similar to market interest rate. In August 2018, Minheng and the Lender entered into a supplementary agreement which changed the interest rates, retroactive to the first date of each loan, to0.6% . The differences of interest expenses between the market interest rate and the actual rates amount toRMB9.30 million was deemed as contribution by the shareholder to the Company, which was an out-of-period adjustments to correct prior period errors relating to recording the additional paid-in capital and funding cost. - Reversal of credit losses. Reversal of credit losses of
RMB0.38 million (US ) in first half of 2023 compared to provision for credit losses of$52 thousand RMB0.94 million in the same period of 2022, which was mainly due to collection of financial receivables exceeding the credit losses accrued during the first half of 2023. - Origination and servicing cost. Origination and servicing cost increased by
27.76% toRMB23.86 million (US ) compared to$3.30 million RMB18.67 million in the same period of 2022, which was mainly due to the increased cost of insurance brokerage services and credit assessment services. - Recover on guarantee. Recover on guarantee increased by
422.80% toRMB1.90 million (US ) compare to$0.26 million RMB0.36 million in the same period of 2022, as we purposely and gradually ceased providing credit enhancement for loans that we facilitated with any financial partners from 2020 in order to improve the overall quality of our off-balance-sheet loans, which lead to the increase of reimbursement for defaulted loans being outpaced by the recovery of reimbursement for defaulted loans in 2022 and 2023. - Service cost charged by the related party. We had service cost charge by the related party of
RMB0.03 million and nil for the first half of 2022 and 2023, respectively. The decrease was primarily attributable to the expiration of the loan facilitated under risk-sharing model with Jimu Group, a related party.
Gross Profit
Gross profit decreased to
Operating Expenses
Total operating expenses decreased by
- Sales and marketing expenses in the first half of 2023 decreased by
38.72% toRMB8.51 million (US ) from$1.18 million RMB13.89 million in the same period of 2022. This decrease was primarily driven by the decrease in payroll cost. - General and administrative expenses in the first half of 2023 decreased by
74.15% toRMB5.06 million (US ) from$0.70 million RMB19.57 million in the same period of 2022. This decrease was primarily driven by 1) the reversal of share-based compensation expense ofRMB6.87 million ; and 2) strict overall cost control for the reduction of various items including, among other things, professional services fees and payroll cost. The reversal of share-based compensation expense wasRMB6.9 million during the first half of 2023 based on the actual forfeiture rate, which was an out-of-period adjustments from prior years. - Research and development expenses in the first half of 2023 decreased by
74.13% toRMB2.73 million (US ) from$0.38 million RMB10.54 million in the same period of 2022, primarily due to personnel structure optimization as part of the business transformation of the Company.
Loss from operations
Loss from operations decreased by
Other income and expenses
Other expenses, net decreased by
Income tax (expense)/benefit
Income tax was recorded as income tax benefit of
Net loss
As a result of the foregoing, net loss was recorded
Net income attributable to ordinary shareholders was recorded
Adjusted net loss was
Net Loss Per Share
Basic and diluted net income per ordinary share in the first half of 2023 were both
Adjusted basic and diluted net loss per ordinary share in the first half of 2023 were both
Balance Sheet
The Company has combined cash and cash equivalents, short-term and long-term restricted cash of
Out-of-period adjustment
For the year ended December 31, 2022, the Company recorded an out-of-period adjustment to correct previous period errors relating to accounts receivable of
We recorded two out-of-period adjustments to correct previous period errors relating to: (1) Cost of revenues and additional paid-in capital of
Disposal of SCHL Group
On May 26, 2023, the Company entered into an equity transfer agreement with Otov Alfa Holdings Limited (Otov Alfa), under which the Company transferred
On May 26, 2023, as part of the Deconsolidation, the Company entered into a termination agreement with Otov Alfa ("Warrant Termination Agreement"), under which the Company and Otov Alfa agree that all terms and provisions in the warrant (which was accounted in the convertible loan together with consideration payable to Ningxia Fengyin) shall be terminated, and all rights and obligations of the relevant parties under the warrant shall be ceased and terminated with immediate effect upon the effectiveness of the Warrant Termination Agreement. The Company had pledged
Going Concern
The Company acknowledged that there were recurring losses from operation since year 2019. For the six months ended June 30, 2023, the Company reported a net loss of
Due to the unpredictable future of the capital markets and the industry in which we operate, there can be no assurance that the Company will be successful in achieving its budget goals, that the Company's future capital raising will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or with acceptable terms, if at all. If the Company is unable to raise sufficient financing or events or circumstances occur such that the Company does not meet its budget goals, it may have a material adverse effect on the Company's financial position, results of operations, cash flows, and ability to achieve its intended business objectives. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company's ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.
Use of Non-GAAP Financial Measures
In evaluating its business, the Company considers and uses adjusted net income/loss as a supplemental measure to review and assess its operating performance. The presentation of this non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with
The Company believes that this non-GAAP financial measure can help management evaluate the Company's operating performance and formulate business plans. Adjusted net income/loss enables management to assess operating results without considering the impact of share-based compensation expenses and income tax benefit recognized due to reversal of uncertain tax position. The Company also believes that this non-GAAP financial measure provides useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by management in their financial and operational decision-making.
This non-GAAP financial measure is not defined under
The Company compensates for these limitations by reconciling this non-GAAP financial measure to the most directly comparable
Exchange Rate
This announcement contains translations of certain RMB amounts into
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
About Pintec
Pintec is a Nasdaq-listed company providing technology enabled financial and digital services to micro, small and medium enterprises in
For further information, please contact:
Pintec Technology Holdings Ltd.
Phone: +86 (10) 6506-0227
E-mail: ir@pintec.com
Pintec Technology Holdings Ltd. | ||||||
Condensed Consolidated Balance Sheets | ||||||
(In thousands, except for share and per share data) | ||||||
As of December 31, | As of June 30, | |||||
2022 | 2023 | 2023 | ||||
RMB | RMB | US$ | ||||
(Unaudited) | (Unaudited) | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | 249,728 | 14,462 | 2,001 | |||
Restricted cash | 1,482 | - | - | |||
Short-term investment | 1,001 | - | - | |||
Short-term financing receivables, net | 87,087 | 59,563 | 8,243 | |||
Short-term financial guarantee assets, net | 6,480 | 97 | 13 | |||
Accounts receivable, net | 18,627 | 15,049 | 2,083 | |||
Prepayments and other current assets, net | 22,628 | 13,944 | 1,928 | |||
Amounts due from related parties, net | 2,161 | 1,104 | 153 | |||
Total current assets | 389,194 | 104,219 | 14,421 | |||
Non-current assets: | ||||||
Non-current restricted cash | 5,000 | 5,000 | 692 | |||
Long-term investments | 35,000 | 35,000 | 4,844 | |||
Property, equipment and software, net | 89,795 | - | - | |||
Intangible assets, net | 9,882 | 9,882 | 1,368 | |||
Total non-current assets | 139,677 | 49,882 | 6,904 | |||
TOTAL ASSETS | 528,871 | 154,101 | 21,325 | |||
LIABILITIES | ||||||
Current liabilities: | ||||||
Convertible loan, current | 113,000 | - | - | |||
Accounts payable | 22,684 | 16,247 | 2,248 | |||
Amounts due to related parties, current | 294,634 | 296,549 | 41,040 | |||
Tax payable | 36,476 | 20,683 | 2,862 | |||
Financial guarantee liabilities | 6,914 | 97 | 13 | |||
Accrued expenses and other liabilities | 52,277 | 30,201 | 4,179 | |||
Total current liabilities | 525,985 | 363,777 | 50,342 | |||
Non-current liabilities: | ||||||
Deferred tax liabilities | 2,470 | 2,470 | 342 | |||
Long-term loan | 236,755 | - | - | |||
Other non-current liabilities | 10,798 | 5,175 | 716 | |||
Total non-current liabilities | 250,023 | 7,645 | 1,058 | |||
TOTAL LIABILITIES | 776,008 | 371,422 | 51,400 | |||
DEFICIT | ||||||
Class A Ordinary Shares ( | 233 | 454 | 63 | |||
Class B Ordinary Shares ( | 42 | 42 | 6 | |||
Additional paid-in capital | 1,998,822 | 2,036,473 | 281,834 | |||
Statutory reserves | 31,995 | 9,320 | 1,290 | |||
Accumulated other comprehensive income | 15,685 | 16,171 | 2,238 | |||
Accumulated deficit | (2,448,823) | (2,433,246) | (336,744) | |||
Total shareholders' deficit | (402,046) | (370,786) | (51,313) | |||
Non-controlling interests | 154,909 | 153,465 | 21,238 | |||
TOTAL DEFICIT | (247,137) | (217,321) | (30,075) | |||
TOTAL LIABILITIES AND DEFICIT | 528,871 | 154,101 | 21,325 |
Pintec Technology Holdings Ltd. | ||||||
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss | ||||||
(In thousands, except for share and per share data) | ||||||
For the six months ended June 30, | ||||||
2022 | 2023 | 2023 | ||||
RMB | RMB | US$ | ||||
Revenues: | ||||||
Technical service fees | 24,158 | 19,834 | 2,745 | |||
Installment service fees | 9,020 | 7,527 | 1,042 | |||
Wealth management service fees and others | 6,643 | 7,727 | 1,069 | |||
Total revenues | 39,821 | 35,088 | 4,856 | |||
Cost of revenues: | ||||||
Funding cost | (33) | (9,305) | (1,288) | |||
(Provision of)/reversal of credit losses | (937) | 378 | 52 | |||
Origination and servicing cost | (18,673) | (23,856) | (3,301) | |||
Reversal of guarantee | 364 | 1,903 | 263 | |||
Service cost charged by the related party | (33) | - | - | |||
Cost of revenues | (19,312) | (30,880) | (4,274) | |||
Gross profit | 20,509 | 4,208 | 582 | |||
Operating expenses: | ||||||
Sales and marketing expenses | (13,886) | (8,509) | (1,178) | |||
General and administrative expenses | (19,569) | (5,059) | (700) | |||
Research and development expenses | (10,543) | (2,728) | (378) | |||
Total operating expenses | (43,998) | (16,296) | (2,256) | |||
Loss from operations | (23,489) | (12,088) | (1,674) | |||
Long-term investments impairment | (86,600) | - | - | |||
Share of loss from equity method investments | (934) | - | - | |||
Long-lived assets impairment | - | (3,737) | (517) | |||
(Loss)/Gain from disposal of subsidiaries | (2,176) | 6,711 | 929 | |||
Financial expenses, net | (11,295) | (4,273) | (591) | |||
Other income, net | 2,304 | 1,305 | 181 | |||
Loss before income tax (expense)/benefit | (122,190) | (12,082) | (1,672) | |||
Income tax (expense)/benefit | (1,412) | 11,377 | 1,574 | |||
Net loss | (123,602) | (705) | (98) | |||
Net loss attributable to non-controlling interest | (1,566) | (1,444) | (200) | |||
Net (loss)/income attributable to Pintec Technology | (122,036) | 739 | 102 | |||
Other comprehensive (loss)/income: | ||||||
Foreign currency translation adjustments, net of nil tax | (8,598) | 486 | 67 | |||
Total other comprehensive (loss)/income | (8,598) | 486 | 67 | |||
Total comprehensive loss | (132,200) | (219) | (31) | |||
Total comprehensive loss attributable to non-controlling | (1,566) | (1,444) | (200) | |||
Total comprehensive (loss)/income attributable to Pintec | (130,634) | 1,225 | 169 | |||
Net (loss)/income per ordinary share | ||||||
Basic | (0.41) | 0.00 | 0.00 | |||
Diluted | (0.41) | 0.00 | 0.00 | |||
Weighted average ordinary shares outstanding | ||||||
Basic | 300,059,264 | 433,743,535 | 433,743,535 | |||
Diluted | 300,059,264 | 434,294,424 | 434,294,424 |
Pintec Technology Holdings Ltd. | ||||||
Unaudited Reconciliations of GAAP and Non-GAAP Results | ||||||
(In thousands, except for share and per share data) | ||||||
Net loss | (123,602) | (705) | (98) | |||
Add: Share-based compensation expenses | 4,383 | (6,884) | (952) | |||
Less: Income tax benefit recognized due to reversal of | - | 12,319 | 1,705 | |||
Adjusted net loss | (119,219) | (19,908) | (2,755) | |||
Net loss attributable to non-controlling interest | (1,566) | (1,444) | (200) | |||
Adjusted net loss attributable to Pintec Technology | (117,653) | (18,464) | (2,555) | |||
Adjusted net loss per ordinary share | ||||||
Basic and diluted | (0.39) | (0.04) | (0.01) | |||
Weighted average number of ordinary shares | ||||||
Basic and diluted | 300,059,264 | 433,743,535 | 433,743,535 |
View original content:https://www.prnewswire.com/news-releases/pintec-announces-unaudited-financial-results-for-the-first-half-of-2023-302023327.html
SOURCE Pintec Technology Holdings Limited
FAQ
What is Pintec Technology Holdings Limited's ticker symbol?
What were the first half of 2023 financial highlights for Pintec?
What were the total revenues for Pintec in the first half of 2023?
What were the operating highlights for Pintec in the first half of 2023?
What were the financial results for Pintec in the first half of 2023?
What is Pintec's strategy going forward?