9F Inc. — FY2021 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a quarterly filing. 9F Inc. is a Cayman Islands holding company whose China operations are conducted through subsidiaries and contractual VIE arrangements. Its businesses include internet securities and wealth management services, fintech technology services, e-commerce, and legacy online-lending runoff.
Financial performance and position
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Net revenue | RMB761.5 million | RMB1,256.0 million | Down 39.4% |
| Consolidated net loss | RMB233.7 million | RMB2,251.2 million | Loss narrowed substantially |
| Net loss attributable to 9F Inc. | RMB234.9 million | RMB2,258.9 million | Basic and diluted loss per share: RMB1.10, versus RMB11.37 |
| Operating costs and expenses | RMB816.9 million | RMB2,538.2 million | 107.3% of revenue in 2021 |
| Cash used in operating activities | RMB229.7 million | RMB1,744.6 million | Cash outflow decreased |
| Cash and cash equivalents | RMB2,443.4 million | RMB2,726.7 million | Down 10.4% |
| Total assets / total liabilities | RMB5,049.6 million / RMB859.7 million | RMB5,386.5 million / RMB1,163.2 million | Year-end 2021 |
Revenue mix shifted as legacy lending wound down: technical services rose to RMB417.6 million from RMB38.3 million, and product sales to RMB203.0 million from RMB5.7 million. Post-origination lending revenue fell to RMB39.8 million from RMB859.1 million; loan-facilitation revenue was nil. Technical services and sales together represented most FY2021 revenue.
FY2021 included a RMB149.1 million unrealized loss on marketable securities, RMB27.4 million investment impairment loss, and RMB14.1 million loss on a held-to-maturity investment. The company reported no borrowings in the balance-sheet liabilities presented; lease obligations totaled RMB20.6 million, including imputed interest. Restricted cash of RMB295.9 million primarily related to client securities funds and should not be treated as freely available liquidity. Financing activities provided RMB199.6 million, mainly from private placements; investing activities used RMB321.5 million, mainly for marketable securities purchases.
Material changes versus FY2020
- Revenue declined as online lending facilitation ceased; the business mix moved toward technology services and e-commerce.
- Operating expenses fell sharply, including general and administrative expense to RMB522.8 million from RMB1,303.8 million, and doubtful-account and contract-asset provisions to RMB22.4 million from RMB347.8 million.
- The net loss narrowed, but revenue remained below operating costs and the company continued to use cash in operations.
- Employees decreased to 740 at year-end 2021 from 1,091 a year earlier. Management attributed cost reductions partly to staff restructuring following the lending-business exit.
Outlook, risks, contingencies, and unusual items
- Outlook: No quantified revenue or earnings guidance is provided. Management said existing cash, cash equivalents, and anticipated operating cash flows were expected to meet needs for at least 12 months from the report’s release. Planned 2022 capital expenditure was approximately RMB20 million, primarily for business expansion and licenses.
- Business transition: The company stopped publishing new fixed-income investment opportunities in 2020. Third parties are responsible for servicing transferred legacy loans and returning investors’ remaining investments; repayment is expected within 36 months under arrangements described in the filing. The transition’s costs and benefits remain uncertain.
- PICC litigation: 9F seeks approximately RMB2.3 billion for disputed service fees and late-payment losses. PICC countersued, disputing an amendment and seeking repayment of some fees plus interest. The cases remained preliminary, and outcomes could not be determined.
- Regulation and corporate structure: The company depends on VIE contracts rather than direct ownership of key China operating entities. Enforceability and future PRC regulatory treatment are uncertain. The filing also highlights uncertainty around overseas-listing filings, cybersecurity review, data protection, and whether China-based activities could require securities-related licenses.
- Other material risks: COVID-19 impacts, foreign-exchange and capital-transfer restrictions, potential U.S. trading restrictions under the HFCA Act, and possible U.S. PFIC tax treatment. The filing says 9F believed it was a PFIC for 2021 and likely for 2022.
- Controls and audit: Management concluded disclosure controls and internal control over financial reporting were ineffective at year-end, citing three material weaknesses involving U.S. GAAP/SEC reporting expertise, account analyses and reconciliations, and documentation of processes and controls. The auditor gave an unqualified opinion on the financial statements but did not audit internal controls. Remediation was underway and not yet complete.
- Capital and distributions: No dividends had been paid, and the company did not expect to pay cash dividends in the foreseeable future. A service-provider warrant could issue up to 44.8 million Class A shares if exercised; none had been exercised as of the report date.
Important facts investors should verify
- Reconcile the filing’s varying descriptions of FY2021 loss: audited consolidated net loss was RMB233.7 million, while net loss attributable to 9F Inc. was RMB234.9 million.
- Track operating cash burn, available unrestricted cash, and whether the company achieves profitability without relying on further financing.
- Assess recoverability and timing of the approximately RMB2.3 billion PICC claim, PICC’s counterclaim, and the accounting treatment of related receivables.
- Monitor performance and revenue quality in technical services, e-commerce, securities, and wealth management as legacy lending revenue runs off.
- Confirm completion and effectiveness of internal-control remediation, and monitor any restatements or reporting delays.
- Monitor PRC rules and enforcement concerning VIEs, overseas listings, cybersecurity/data, and securities licensing, as well as PCAOB inspection and U.S. listing developments.
- Evaluate potential dilution from warrants, share-based awards, and future equity financing; review the constraints on cash transfers from PRC entities to the Cayman Islands parent.