Business Context and Reporting Period
This Form 6-K filing by 9F Inc. reports unaudited financial results for the six months ended June 30, 2021. The company is undergoing a strategic transformation from a fintech service provider focused on personal credit to an internet securities service platform and technology company. This shift follows the termination of its online lending information intermediary services in Mainland China in late 2020 due to regulatory requirements.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2021 (RMB) | Six Months Ended June 30, 2021 (USD) | Six Months Ended June 30, 2020 (RMB) |
|---|---|---|---|
| Total Net Revenues | 393.0 million | 60.9 million | 848.4 million |
| Net Loss | (193.0) million | (29.9) million | (744.6) million |
| Adjusted Net Loss (Non-GAAP) | (69.8) million | (10.8) million | (454.3) million |
| Cash, Cash Equivalents, and Term Deposits | 1,979.6 million | 306.6 million | 2,860.5 million (as of Dec 31, 2020) |
| Total Assets | 5,169.0 million | 800.6 million | 5,386.5 million (as of Dec 31, 2020) |
Material Changes Versus Prior Period
- Revenue Decline: Total net revenues decreased 53.7% year-over-year. This was primarily driven by the cessation of loan facilitation services (revenue dropped to nil) and an 85.3% drop in post-origination services revenue.
- Revenue Growth Areas: Technical services revenue surged 1,534% to RMB164.5 million, and "Other revenues" increased 395.5% to RMB89.1 million, reflecting progress in fintech empowerment and new business lines.
- Expense Reduction: Operating expenses decreased significantly due to the exit from the lending business. Sales and marketing expenses fell 60.5%, origination and servicing expenses dropped 86.1%, and general and administrative expenses declined 49.3% following headcount reductions.
- Loss Improvement: Net loss improved by 74.1% compared to the prior year, and adjusted net loss improved by 84.6%.
- Unusual Items: The company recorded an unrealized loss of RMB114.2 million on investments in marketable securities, which is excluded from the adjusted net loss calculation.
Guidance, Outlook, and Risks
Strategic Outlook: Management is leveraging its licensed brokerage firm and over 100 million registered users to expand securities brokerage, wealth management, and investment banking services. The company aims to utilize big data and AI to enhance user experience and investment decision-making.
Liquidity: As of June 30, 2021, the company held RMB1,979.6 million in cash and term deposits. Management believes this position is sufficient to meet operational needs.
Risks and Contingencies: The filing includes a Safe Harbor statement highlighting risks related to the ongoing business transformation, the ability to attract and retain investors, regulatory compliance in China, and the ability to maintain Nasdaq listing standards. The company explicitly states it does not guarantee the outcome of its transformation or future profits.
Investor Verification Checklist
- Verify the sustainability of the 1,534% growth in technical services revenue as the company pivots away from lending.
- Confirm the status of the company's compliance with Nasdaq continued listing criteria, as noted in the risk factors.
- Review the reconciliation of GAAP to Non-GAAP results to understand the impact of the RMB114.2 million unrealized investment loss.
- Monitor the company's ability to convert its 113 million registered user base into revenue-generating securities and wealth management clients.
- Assess the impact of the RMB100 million term deposit from a related party on liquidity independence.