EX-99.1

EX-99.1 2 d698478dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

PPDAI Group Inc. Reports Fourth Quarter and Fiscal Year 2018

Unaudited Financial Results

SHANGHAI, March 14, 2019 /PRNewswire/ – PPDAI Group Inc. (“PPDAI,” “Paipaidai,” or the “Company”) (NYSE: PPDF), a leading online consumer finance marketplace in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2018.


	As of
	December 31, 2017		September 30, 2018		December 31, 2018
Cumulative registered users¹(’000)		65,409		83,949		88,930
Cumulative number of borrowers²(’000)		10,518		13,440		14,440
Cumulative number of individual investors³		559,760		644,376		667,738


	For Three Months Ended									For Twelve Months Ended
	December 31, 2017			December 31, 2018			YoY Change			December 31, 2017			December 31, 2018			YoY Change
Number of unique borrowers⁴(’000)		4,017			3,037			(24.4	%)		8,730			6,806			(22.0	%)
Loan origination volume⁵(RMB, million)		17,567			17,617			0.3	%		65,568			61,498			(6.2	%)
Repeat borrowing rate⁶(%)		72.8	%		73.4	%		0.8	%		68.9	%		73.6	%		6.8	%
Average loan size⁷ (RMB)		2,590			3,423			32.2	%		2,470			3,281			32.8	%

Fourth Quarter 2018 Financial and Operational Highlights

•

Net profit was RMB774.6 million (US$112.7 million) in the fourth quarter of 2018, compared to net loss of RMB507.1 million in the fourth quarter of 2017.

•

Operating revenues for the fourth quarter of 2018 increased by 33.7% to RMB1,219.2 million (US$177.3 million), from RMB912.1 million in the same period of 2017.

•

Loan facilitation service fees increased by 35.0% to RMB837.4 million (US$121.8 million) in the fourth quarter of 2018, from RMB620.2 million in the same period of 2017.

•

Post-facilitation service fees further increased by 10.0% to RMB249.9 million (US$36.3 million) in the fourth quarter of 2018, from RMB227.2 million in the same period of 2017.

•

Operating income was RMB486.6 million (US$70.8 million) for the fourth quarter of 2018, representing an increase of 328.4% from RMB113.6 million in the same period of 2017.

•

Non-GAAP adjusted operating income, which excludes share-based compensation expenses before tax and a write back of provision for expected discretionary payments to investors in investment programs protected by the Company’s investor reserve funds, was RMB472.1 million (US$68.7 million) for the fourth quarter of 2018, representing an increase of 44.2% from RMB327.4 million in the same period of 2017.

•

Cumulative registered users¹ reached 88.9 million as of December 31, 2018.

•

Cumulative number ofborrowers² reached 14.4 million as of December 31, 2018.

•

Cumulative number of individual investors³ reached 667,738 as of December 31, 2018.

•

Number of unique borrowers⁴ was 3.0 million for the fourth quarter of 2018, representing a decrease of 24.2% from the same period of 2017.

•

Loan origination volume⁵ was RMB17.6 billion for the fourth quarter of 2018, representing an increase of 0.3% from the same period of 2017.

•

Average loan tenure⁸ was 9.6 months for the fourth quarter of 2018.

Fiscal Year 2018 Financial and Operational Highlights:

•

Net profit increased by 128.0% to RMB2,469.5 million (US$359.2 million) in 2018 compared to RMB1,082.9 million in 2017.

•

Operating revenues in 2018 increased by 10.1% to RMB4,287.6 million (US$623.6 million), from RMB3,895.8 million in 2017.

•

Loan facilitation service fees increased by 2.7% to RMB2,919.2 million (US$424.6 million) in 2018, from RMB2,843.3 million in 2017.

•

Post-facilitation service fees increased by 38.0% to RMB922.8 million (US$134.2 million) in 2018, from RMB668.8 million in 2017.

•

Operating income was RMB1,846.6 million (US$268.6 million) in 2018, representing an increase of 20.8% from RMB1,529.2 million in 2017.

•

Non-GAAP adjusted operating income, which excludes share-based compensation expenses and a one-time provision for the expected discretionary payments to investors in investment programs protected by the Company’s investor reserve funds from profit/(loss) before tax, increased by 4.9% to RMB1,828.3 million (US$265.9 million).

•

Number of unique borrowers⁴ was 6.8 million in 2018, representing a decrease of 22% from 2017.

•

Loan origination volume⁵ was RMB61.5 billion in 2018, representing a decrease of 6.2% from 2017.

•

Average loan tenure⁸ was 9.4 months in 2018.

¹	On a cumulative basis, number of users registered on PPDAI platform as of December 31, 2018.

²	On a cumulative basis, number of borrowers whose loans were funded on or prior to December 31, 2018.

³	On a cumulative basis, number of individual investors who have made at least one investment in loans on or prior to December 31, 2018.

⁴	Represents the total number of borrowers whose loans on PPDAI platform were funded during the period presented.

⁵	Represents the loan origination volume generated during the period presented.

⁶	Represents percentage of loan volume generated by repeat borrowers who have successfully borrowed on PPDAI platform before.

⁷	Represents the average loan size on PPDAI platform during the period presented.

⁸	Represents the average loan tenure period on PPDAI platform during the period presented.

Mr. Jun Zhang, Chairman and Co-Chief Executive Officer of PPDAI, commented, “We delivered solid performance in the fourth quarter and fiscal year 2018 despite tightening regulations and a volatile market environment. Our outstanding operating results were highlighted by a robust 128.0% increase in net profit to RMB2,469.5 million in 2018 from RMB1,082.9 million in 2017. The progressive growth in net profit reflects our stable business operations, a culture of good compliance and our prudent track record of risk management. As of December 31, 2018, we had over 88.9 million cumulative registered users, with cumulative borrowers exceeding 14.4 million and our cumulative investors reaching 667,738. Our ‘technologies as a service’ has been making steady progress over the course of the year as our services have been deployed to a broadening range of financial institutions.

“The stricter enforcement of regulations in the consumer lending space has led to rapid industry consolidation. In light of these industry trends, we are benefiting from our increased market share position. Additionally, we continue to work closely with the regulatory authorities and we are confident of meeting future industry compliance requirements. We firmly believe that a strengthened regulatory framework around consumer lending is crucial to supporting a healthy and sustainable industry. As a leader in the space, with strong proprietary technologies and capabilities, and the longest operating history, PPDAI is well positioned to capture the tremendous long-term growth opportunities in China’s online consumer finance marketplace.”

Mr. Feng Zhang, Co-Chief Executive Officer of PPDAI, said, “Benefitting from the rapid growth in institutional funding, the Company’s total loan origination volume in the fourth quarter of 2018 increased by 19.2% to RMB17.6 billion from RMB14.8 billion in the third quarter of 2018. In the fourth quarter, we made solid progress in expanding our institutional funds and the proportion of loans facilitated with institutional funding partners to total loan origination volume increased to 20.4% from 14.3% in the third quarter of 2018. Looking forward, we are confident in our ability to achieve further diversification in funding sources through our institutional funding partners in 2019.”

Mr. Simon Ho, Chief Financial Officer of PPDAI, commented, “In spite of regulatory changes that impacted our industry, we are delighted to achieve strong operational results in the fourth quarter, as demonstrated by a 44.2% year-over-year increase in our non-GAAP operating income and a healthy non-GAAP operating margin of 40%. Our balance sheet remained solid with approximately RMB3.3 billion of cash and short-term liquidity. Notably, our quality assurance fund remains sufficiently funded with a total balance of RMB4.5 billion, equivalent to 23.2% of the total outstanding loans protected by the quality assurance fund. Our result highlights the strength and resilience of our operating model as we navigate through the evolving industry landscape.”

Mr. Jun Zhang concluded, “As a leader in the online consumer finance industry, we remain committed to enhancing shareholder value. We are also pleased to announce our first dividend of US$0.19 per ADS as a listed company. This reflects the confidence in our business, our capabilities and the long-term market potential. Going forward, we will maintain focus on expanding the breadth of our loan services, strengthening brand recognition, continuing to invest in and enhance proprietary technologies in addition to exploring opportunities for expansion both domestically and internationally.”

Fourth Quarter 2018 Financial Results

Operating revenues for the fourth quarter of 2018 increased by 33.7% to RMB1,219.2 million (US$177.3 million) from RMB912.1 million in the same period of 2017, primarily due to the old revenue recognition standard ASC 605 used in 2017 and a write-back of provision for expected discretionary payments to investors in investment programs protected by the investor reserve funds. As a result of the adoption of ASC 606 effective January 1, 2018, revenue is generally recognized earlier in the life of the contract as there is no contingency revenue cap under the new standard. For the three months ended December 31, 2018, the impact of applying the new revenue standard resulted in an increase of approximately RMB44.5 million (US$6.5 million) in revenues.

Loan facilitation service fees increased by 35.0% to RMB837.4 million (US$121.8 million) for the fourth quarter of 2018 from RMB620.2 million in the same period of 2017, primarily due to the old revenue recognition standard ASC 605 used in 2017. The average rate of transaction fees charged to borrowers was 7.38% in the period, compared to 7.07% in the third quarter of 2018 and 6.24% in the fourth quarter of 2017. Loan collection fees of RMB99.8 million (US$14.5 million) have been allocated from other revenue to loan facilitation service fees related to the adoption of ASC 606 effective January 1, 2018.

Post-facilitation service fees increased by 10.0% to RMB249.9 million (US$36.3 million) for the fourth quarter of 2018 from RMB227.2 million in the same period of 2017, due to the adoption of ASC 606 effective January 1, 2018. Loan collection fees of RMB38.3 million (US$5.6 million) have been allocated from other revenue to post facilitation service fees related to the adoption of ASC 606.

Other revenue decreased by 37.5% to RMB107.8 million (US$15.7million) for the fourth quarter of 2018 from RMB172.4 million in the same period of 2017, primarily due to the adoption of ASC 606 effective January 1, 2018, which reallocated loan collection fees to loan facilitation fees and post facilitation fees. This was offset by an increase in management fees from investment programs that invest in loans protected by the quality assurance fund.

Net interest income/(expenses) and loan provision losses for the fourth quarter of 2018 were an expense of RMB9.4 million (US$1.4 million), compared to an expense of RMB13.2 million in the same period of 2017, mainly due to provisions for loan losses related to consolidated investment trusts established during the period.

Origination and servicing expenses decreased by 6.3% to RMB277.6 million (US$40.4 million) for the fourth quarter of 2018 from RMB296.3 million in the same period of 2017, primarily due to the discontinuation of consumption loan products since late 2017.

Sales and marketing expenses decreased by 24.2% to RMB180.9 million (US$26.3million) for the fourth quarter of 2018 from RMB238.6 million in the same period of 2017, primarily due to the decline in online customer acquisition expenses.

General and administrative expenses decreased by 15.5% to RMB211.7 million (US$30.8 million) for the fourth quarter of 2018 from RMB250.4 million in the same period of 2017, primarily due to the decline in share-based compensation expenses. General and administrative expenses for the period included share-based compensation of RMB9.6 million (US$1.4 million). Share-based compensation recognized in the fourth quarter of 2017 included compensation related to employee options granted historically with a performance target contingent upon IPO.

Operating income increased by 328.4% to RMB486.6 million (US$70.8 million) for the fourth quarter of 2018 from RMB113.6 million in the same period of 2017.

Non-GAAP adjusted operating income, which excludes share-based compensation expenses before tax and a write-back of provision for expected discretionary payments to investors in investment programs protected by the investor reserve funds, was RMB472.1 million (US$68.7 million) for the fourth quarter of 2018, representing an increase of 44.2% from RMB327.4 million in the same period of 2017.

Other income was RMB94.4 million (US$13.7 million) for the fourth quarter of 2018, compared with a loss of RMB694.8 million in the same period of 2017. Other income primarily consisted of (1) a gain of RMB23.5million (US$3.4 million) from the quality assurance fund, (2) a gain of RMB10.8 million (US$1.6 million) from the fair value change of financial guarantee derivatives, and (3) a realized gain of RMB18.0 million (US$2.6 million) from financial guarantee derivatives due to the amount of investment programs maturing during the period. The Company re-evaluates the fair value of outstanding financial guarantee derivatives at each balance sheet date to reflect the views of market participants on the expected default rate based on the latest market changes. For the fourth quarter of 2018, RMB13.1 billion of loans facilitated on the Company’s platform were protected by the quality assurance fund.

Income tax credits were RMB193.6 million (US$28.2 million) for the fourth quarter of 2018, compared with income tax credits of RMB74.1 million in the same period of 2017, primarily due to the write-back of accrued income tax as the Company is able to enjoy a preferential tax treatment since it was recognized as a “software enterprise” by relevant PRC government agencies.

Net profit was RMB774.6 million (US$112.7 million) for the fourth quarter of 2018, compared with a net loss of RMB507.1 million in the same period of 2017.

Net profit attributable to ordinary shareholders of the Company was RMB774.2 million (US$112.6 million) for the fourth quarter of 2018, compared with a net loss attributable to ordinary shareholders of RMB1,303.9 million in the same period of 2017 due to accretion of the Company’s Series A, B and C preferred shares in the fourth quarter of 2017.

As of December 31, 2018, the Company had cash and cash equivalents of RMB1,616.2 million (US$235.1 million) and short-term investments mainly in wealth management products of RMB1,694.7 million (US$246.5 million).

The total balance of the quality assurance fund, which includes restricted cash of RMB2,414.4 million (US$351.2 million) and the quality assurance fund receivable of RMB2,064.4 million (US$300.3 million), was equivalent to 23.2% of the total outstanding loans protected by the quality assurance fund.

The following table provides the delinquency rates for all outstanding loans on the Company’s platform as of the respective dates indicated.


As of	15-29 days			30-59 days			60-89 days			90-119 days			120-149 days			150-179 days
March 31, 2015		0.79	%		1.75	%		1.10	%		1.01	%		0.87	%		0.67	%
June 30, 2015		0.88	%		1.06	%		0.67	%		0.54	%		0.89	%		0.67	%
September 30, 2015		0.67	%		0.89	%		0.61	%		0.54	%		0.44	%		0.35	%
December 31, 2015		0.80	%		0.93	%		0.51	%		0.49	%		0.39	%		0.32	%
March 31, 2016		0.62	%		0.93	%		0.72	%		0.61	%		0.48	%		0.32	%
June 30, 2016		0.82	%		1.01	%		0.63	%		0.43	%		0.47	%		0.44	%
September 30, 2016		0.83	%		1.11	%		0.80	%		0.63	%		0.49	%		0.39	%
December 31, 2016		0.63	%		0.91	%		0.75	%		0.79	%		0.69	%		0.57	%
March 31, 2017		0.57	%		0.95	%		0.79	%		0.59	%		0.54	%		0.51	%
June 30, 2017		0.86	%		1.11	%		0.79	%		0.51	%		0.55	%		0.52	%
September 30, 2017		0.89	%		1.40	%		1.15	%		1.02	%		0.79	%		0.60	%
December 31, 2017		2.27	%		2.21	%		1.72	%		1.63	%		1.36	%		1.20	%
March 31, 2018		0.87	%		2.11	%		2.43	%		3.83	%		2.29	%		1.89	%
June 30, 2018		0.83	%		1.21	%		1.05	%		0.98	%		1.60	%		2.03	%
September 30, 2018		1.03	%		1.77	%		1.49	%		1.29	%		1.06	%		1.02	%
December 31, 2018		0.92	%		1.63	%		1.41	%		1.45	%		1.44	%		1.34	%

The following chart and table display the historical cumulative 30-day plus past due delinquency rates by loan origination vintage for all continuing loan products facilitated through the Company’s online marketplace:

LOGO


	Month on Book
Vintage	2^nd			3^rd			4^th			5^th			6^th			7^th			8^th			9^th			10^th			11^th			12^th
2015Q1		1.95	%		2.75	%		3.46	%		3.98	%		4.36	%		4.58	%		4.67	%		4.69	%		4.73	%		4.76	%		4.74	%
2015Q2		1.74	%		2.66	%		3.38	%		3.75	%		4.02	%		4.15	%		4.30	%		4.38	%		4.45	%		4.46	%		4.46	%
2015Q3		1.46	%		2.13	%		2.70	%		3.15	%		3.47	%		3.68	%		3.77	%		3.85	%		3.93	%		4.01	%		4.02	%
2015Q4		1.54	%		2.27	%		2.88	%		3.17	%		3.53	%		3.77	%		3.97	%		4.12	%		4.26	%		4.32	%		4.33	%
2016Q1		1.00	%		1.57	%		2.21	%		2.82	%		3.33	%		3.77	%		4.09	%		4.33	%		4.45	%		4.57	%		4.59	%
2016Q2		1.75	%		2.49	%		3.21	%		3.77	%		4.17	%		4.39	%		4.59	%		4.76	%		4.88	%		4.94	%		4.96	%
2016Q3		1.67	%		2.45	%		2.96	%		3.47	%		3.87	%		4.11	%		4.27	%		4.44	%		4.59	%		4.70	%		4.77	%
2016Q4		1.29	%		2.07	%		2.66	%		3.15	%		3.59	%		3.97	%		4.32	%		4.62	%		4.88	%		5.07	%		5.18	%
2017Q1		1.20	%		2.01	%		2.68	%		3.32	%		3.87	%		4.33	%		4.68	%		4.98	%		5.33	%		5.61	%		5.80	%
2017Q2		1.72	%		2.89	%		3.81	%		4.55	%		5.14	%		5.78	%		6.32	%		6.79	%		7.05	%		7.19	%		7.24	%
2017Q3		1.82	%		2.93	%		4.08	%		5.16	%		6.13	%		6.64	%		6.88	%		7.04	%		7.16	%		7.22	%		7.26	%
2017Q4		2.51	%		4.12	%		5.16	%		5.68	%		5.97	%		6.18	%		6.29	%		6.39	%		6.47	%		6.50	%		6.50	%
2018Q1		1.35	%		2.18	%		2.97	%		3.65	%		4.30	%		4.85	%		5.22	%		5.50	%
2018Q2		1.75	%		3.08	%		4.35	%		5.43	%		6.31	%
2018Q3		1.42	%		2.48	%

Fiscal Year 2018 Financial Results

Operating revenues for the fiscal year 2018 increased by 10.1% to RMB4,287.6 million (US$623.6 million) from RMB3,895.8 million in 2017, primarily due to the old revenue recognition standard ASC 605 used in 2017 and the write-back of provision for expected discretionary payments to investors in investment programs protected by the investor reserve funds. For the fiscal year 2018, the impact of applying the new revenue standard ASC 606 resulted in an increase of approximately RMB511.1 million (US$74.3 million) in revenue.

Loan facilitation service fees increased by 2.7% to RMB2,919.2 million (US$424.6 million) for the fiscal year 2018 from RMB2,843.3 million in 2017, primarily due to the old revenue recognition standard ASC 605 used in 2017. The average rate of transaction fees charged to borrowers was 6.77%, compared with 6.5% in 2017. Loan collection fees of RMB342.7 million (US$49.8 million) have been allocated from other revenue to loan facilitation service fees related to the adoption of ASC 606 effective January 1, 2018.

Post-facilitation service fees increased by 38.0% to RMB922.8 million (US$134.2 million) for the fiscal year 2018 from RMB668.8 million in the prior year, primarily due to the rolling impact of deferred transaction fees and the adoption of ASC 606 effective January 1, 2018. Loan collection fees of RMB125.2 million (US$18.2 million) have been allocated from other revenue to post facilitation service fees related to the adoption of ASC 606.

Other revenue decreased by 23.3% to RMB376.9 million (US$54.8 million) for the fiscal year 2018 from RMB491.4 million in 2017, primarily due to the adoption of ASC 606 effective January 1, 2018, which reallocated loan collection fees to loan facilitation fees and post facilitation fees. This was offset by an increase in management fees from investment programs that invest in loans protected by the quality assurance fund.

Net interest income/(expense) and loan provision losses for the fiscal year 2018 was an income of RMB63.4 million (US$9.2 million), compared with an expense of RMB15.2 million in 2017, primarily due to income from the increased number of consolidated investment trusts.

Origination and servicing expenses increased by 1.1% to RMB985.6 million (US$143.3 million) for the fiscal year 2018 from RMB974.5 million in the prior year, primarily due to (i) a decrease in salaries and benefits as a result of a decrease in headcount particularly for consumption loan products, and (ii) a decrease in referral fees paid to third parties for successful loan originations, which was largely offset by an increase in fees paid to third parties for loan collection services.

Sales and marketing expenses decreased by 9.8% to RMB710.8 million (US$103.4 million) for the fiscal year 2018 from RMB788.3 million in 2017, primarily due to a decline in online customer acquisition expenses.

General and administrative expenses increased by 19.1% to RMB701.4 million (US$102.0 million) for the fiscal year 2018 from RMB588.7 million in 2017, primarily due to an increase in research and development costs. General and administrative expenses for the period included share-based compensation of RMB50.3 million (US$7.3 million).

Operating income increased by 20.8% to RMB1,846.6 million (US$268.6 million) for the fiscal year 2018 from RMB1,529.2 million in 2017.

Non-GAAP adjusted operating income, which excludes share-based compensation expenses and a one-time provision for expected discretionary payments to investors in investment programs protected by the Company’s investor protection funds from profit/(loss) before tax, increased by 4.9% to RMB1,828.3 million (US$265.9 million) for the fiscal year 2018 from RMB1,743.0 million in 2017.

Other income recorded a gain of RMB774.1 million (US$112.6 million) for the fiscal year 2018, compared to a loss of RMB171.5 million in 2017. Other income primarily consisted of (1) a gain of RMB510.9 million (US$74.3 million) from the quality assurance fund resulting from the growth in loans facilitated on the Company’s platform that are protected by the quality assurance fund, (2) a gain of RMB272.1 million (US$39.6 million) from fair value change of financial guarantee derivatives due to an improvement in the expected default rate for underlying loans investment programs protected by the investor reserve funds, and (3) a RMB157.2 million (US$22.9 million) realized loss from financial guarantee derivatives due to the amount of investment programs maturing during the period .

Income tax expenses were RMB151.2 million (US$22.0 million) for the fiscal year 2018, compared with RMB274.7 million in 2017. The decrease was primarily due to the write-back of accrued income tax as the Company is able to enjoy a preferential tax treatment since it was recognized as a “software enterprise” by relevant PRC government agencies.

Net profit was RMB2,469.5 million (US$359.2 million) for the fiscal year 2018, representing a 128.0% increase from RMB1,082.9 million in 2017.

Net profit attributable to ordinary shareholders of the Company was RMB2,469.1 million (US$359.1 million) for fiscal year 2018, compared with a net loss attributable to ordinary shareholders of RMB1,990.5 million in 2017 due to the accretion losses on the Company’s Series A, B and C preferred shares.

Conference Call

The Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern Time on March 14, 2019 (8:00 PM Beijing/Hong Kong time on March 14, 2019).

Dial-in details for the earnings conference call are as follows:


United States (toll free):		1-888-346-8982
International:		1-412-902-4272
Hong Kong (toll free):		800-905-945
Hong Kong:		852-3018-4992
China:		400-120-1203

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the call for “PPDAI Group.”

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.ppdai.com.

A replay of the conference call will be accessible approximately one hour after the conclusion of the live call until March 21, 2019, by dialing the following telephone numbers:


United States (toll free):		1-877-344-7529
International:		1-412-317-0088
Replay Access Code:		10129178

About PPDAI Group Inc.

PPDAI is a leading online consumer finance marketplace in China with strong brand recognition. Launched in 2007, the Company is the first online consumer finance marketplace in China connecting borrowers and investors. As a pioneer in China’s online consumer finance marketplace, the Company benefits from both its early-mover advantages and the invaluable data and experience accumulated throughout multiple complete loan lifecycles. The Company’s platform, empowered by its proprietary, cutting-edge technologies, features a highly automated loan transaction process, which enables a superior user experience, as evidenced by the rapid growth of the Company’s user base and loan origination volume. As of December 31, 2018, the Company had over 88.9 million cumulative registered users.

For more information, please visit http://ir.ppdai.com.

Use of Non-GAAP Financial Measures

We use Non-GAAP operating income, a Non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes. We believe that adjusted operating income help identify underlying trends in our business by excluding the impact of share-based compensation expenses and expected discretionary measures. We believe that adjusted operating income provide useful information about our operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.

Non-GAAP adjusted operating income is not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. This Non-GAAP financial measure has limitations as analytical tools, and when assessing our operating performance, cash flows or our liquidity, investors should not consider them in isolation, or as a substitute for net (loss)/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 our 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.

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 RMB6.8755 to US$1.00, the rate in effect as of December 31, 2018 as certified for customs purposes by the Federal Reserve Bank of New York.

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. 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 to, uncertainties as to the Company’s ability to attract and retain borrowers and investors on its marketplace, its ability to increase volume of loans facilitated through the Company’s marketplace, its ability to introduce new loan products and platform enhancements, its ability to compete effectively, laws, regulations and governmental policies relating to the online consumer finance industry in China, general economic conditions in China, and the Company’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 PPDAI 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:

PPDAI Group Inc.

Jimmy Tan / Sally Huo

Tel: +86 (21) 8030 3200-8601

E-mail: ir@ppdai.com

The Piacente Group, Inc.

Ross Warner

Tel: +86 (10) 5730-6200

E-mail: paipaidai@tpg-ir.com

In the United States:

The Piacente Group, Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: paipaidai@tpg-ir.com

PPDAI GROUP INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

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


	As of December 31,			As of December 31,
	2017			2018
	RMB			RMB			USD
Assets
Cash and cash equivalents		1,891,131			1,616,164			235,061
Restricted cash		2,392,573			3,677,557			534,878
Short-term investments		1,958,910			1,694,660			246,478
Investments		12,234			167,501			24,362
Guarantee and quality assurance fund receivable		1,152,769			2,064,366			300,250
Intangible assets		63,760			68,880			10,018
Property, equipment and software, net		108,248			144,002			20,944
Loans and receivables, net of provision for loan losses		681,794			2,331,108			339,046
Accounts receivable		17,773			812,042			118,107
Deferred tax assets		128,361			122,763			17,855
Financial guarantee derivative assets		—			56,287			8,187
Due from related party		—			2,830			412
Contract assets		—			112,103			16,305
Prepaid expenses and other assets		145,699			221,793			32,259
Goodwill		50,411			50,411			7,332

Total assets		8,603,663			13,142,467			1,911,494

Liabilities and Shareholders’ Equity
Payable to platform customers		1,113,966			905,034			131,632
Guarantee and quality assurance fund payable		2,062,844			3,819,379			555,506
Deferred revenue		265,094			—			—
Payroll and welfare payable		156,831			188,254			27,380
Taxes payable		257,143			225,101			32,740
Provision for payment to investor reserve fund investor		107,660			—			—
Short-term borrowings		—			25,000			3,636
Funds payable to investors of consolidated trusts		502,641			1,505,909			219,025
Contract liabilities		—			165,469			24,066
Due to related party		11,972			—			—
Deferred tax liabilities		15,940			100,064			14,554
Accrued expenses and other liabilities		211,614			222,519			32,364
Financial guarantee derivative liabilities		215,770			—			—

Total liabilities		4,921,475			7,156,729			1,040,903

Commitments and contingencies
PPDai Group Inc. Shareholder’s deficit
Class A ordinary shares		56			58			8
Class B ordinary shares		44			44			7
Additional paid-in capital		5,951,044			5,896,017			857,540
Treasury stock		—			(332,121	)		(48,305	)
Statutory reserves		55,090			256,006			37,235
Accumulated other comprehensive income		14,917			58,210			8,466
Accumulated deficit(retained earnings)		(2,398,984	)		45,668			6,643

Total PPDai Group Inc. shareholders’ equity		3,622,167			5,923,882			861,594

Non-controlling interest		60,021			61,856			8,997

Total shareholders’ equity		3,682,188			5,985,738			870,591

Total liabilities and shareholders’ equity		8,603,663			13,142,467			1,911,494

PPDAI GROUP INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

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


	For the Three Months Ended December 31,									For the Year Ended December 31,
	2017			2018						2017			2018
	RMB			RMB			USD			RMB			RMB			USD
Operating revenue:
Loan facilitation service fees		620,237			837,427			121,799			2,843,287			2,919,234			424,585
Post-facilitation service fees		227,150			249,887			36,345			668,819			922,797			134,215
Other Revenue		172,393			107,802			15,679			491,400			376,915			54,820
Changes in expected discretionary payment to IRF investors		(107,660	)		24,047			3,497			(107,660	)		68,619			9,980
Total operating revenues		912,120			1,219,163			177,320			3,895,846			4,287,565			623,600
Net interest income (expense) and loan provision losses		(13,243	)		(9,410	)		(1,369	)		(15,209	)		63,359			9,215

Net revenues		898,877			1,209,753			175,951			3,880,637			4,350,924			632,815

Operating expenses:
Origination and servicing expenses-related party		(28,834	)		(30,913	)		(4,496	)		(84,362	)		(109,666	)		(15,950	)
Origination and servicing expenses		(267,443	)		(246,682	)		(35,878	)		(890,160	)		(875,905	)		(127,395	)
Sales and marketing expenses		(238,600	)		(180,901	)		(26,311	)		(788,291	)		(710,754	)		(103,375	)
General and administrative expenses		(250,369	)		(211,667	)		(30,786	)		(588,664	)		(701,353	)		(102,008	)
Provision for doubtful accounts		—			(53,021	)		(7,712	)		—			(106,652	)		(15,512	)

Total operating expenses		(785,246	)		(723,184	)		(105,183	)		(2,351,477	)		(2,504,330	)		(364,240	)
Other income (expenses)
Gain from guarantee and quality assurance fund		(271,850	)		23,469			3,413			5,885			510,894			74,307
Realized gain (loss) from financial guarantee derivatives		27,105			17,971			2,614			169,103			(157,244	)		(22,870	)
Fair value change of financial guarantee derivatives		(460,428	)		10,780			1,568			(383,061	)		272,057			39,569
Gain from disposal of subsidiary		—			—			—			—			—			—
Other income (expense), net		10,337			42,185			6,136			36,531			148,356			21,578

Profit (loss) before income tax credit (expense)		(581,205	)		580,974			84,499			1,357,618			2,620,657			381,159
Income tax credit (expenses)		74,139			193,617			28,160			(274,711	)		(151,206	)		(21,992	)

Net profit (loss)		(507,066	)		774,591			112,659			1,082,907			2,469,451			359,167
Less: net profit (loss) attributable to non-controlling interest shareholders		(76	)		417			61			(76	)		377			55
Net profit (loss) attributable to PPDai Group Inc.		(506,990	)		774,174			112,598			1,082,983			2,469,074			359,112

Accretion on convertible redeemable preferred shares to redemption value		(796,874	)		—			—			(3,073,471	)		—			—
Net profit (loss) attributable to ordinary shareholders		(1,303,864	)		774,174			112,598			(1,990,488	)		2,469,074			359,112

Net profit (loss) attributable to PPDai Group Inc.		(506,990	)		774,174			112,598			1,082,983			2,469,074			359,112
Foreign currency translation adjustment, net of nil tax		(10,097	)		(3,787	)		(551	)		99,934			43,293			6,297

Total comprehensive income (loss) attributable to PPDAI Group Inc.		(517,087	)		770,387			112,047			1,182,917			2,512,367			365,409

PPDAI GROUP INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

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


	For the Three Months Ended December 31,							For the Year Ended December 31,
	2017			2018				2017			2018
	RMB			RMB		USD		RMB			RMB		USD
Weighted average number of ordinary shares used in computing net income (loss) per share
Basic		1,120,473,462			1,486,851,379		1,486,851,379		779,804,270			1,498,780,165		1,498,780,165
Diluted		1,120,473,462			1,563,655,040		1,563,655,040		779,804,270			1,599,592,231		1,599,592,231
Income (loss) per share - Basic		(1.1637	)		0.5207		0.0757		(2.5525	)		1.6474		0.2396
Income (loss) per ADS - Basic		(5.8184	)		2.6034		0.3786		(12.7627	)		8.2369		1.1980
Income (loss) per share - Diluted		(1.1637	)		0.4951		0.0720		(2.5525	)		1.5436		0.2245
Income (loss) per ADS - Diluted		(5.8184	)		2.4755		0.3600		(12.7627	)		7.7178		1.1225

PPDAI GROUP INC.

UNAUDITED Reconciliation of GAAP And Non-GAAP Results

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


	For the Three Months Ended December 31,									For the Year Ended December 31,
	2017			2018						2017			2018
	RMB			RMB			USD			RMB			RMB			USD
Net Revenues		898,877			1,209,753			175,951			3,880,637			4,350,924			632,815
Less: total operating expenses		(785,246	)		(723,184	)		(105,183	)		(2,351,477	)		(2,504,330	)		(364,240	)
Operating Income		113,631			486,569			70,768			1,529,160			1,846,594			268,575
Less: Change in expected discretionary payment to IRF investors		107,660			(24,047	)		(3,497	)		107,660			(68,619	)		(9,980	)
Add: share-based compensation expenses		106,152			9,555			1,390			106,152			50,319			7,319
Non-GAAP adjusted operating income		327,443			472,077			68,661			1,742,972			1,828,294			265,914

PPDAI GROUP INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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


	For the Three Months Ended December 31,									For the Year Ended December 31,
	2017			2018						2017			2018
	RMB			RMB			USD			RMB			RMB			USD
Net cash provided by (used in) operating activities		(28,173	)		518,273			75,380			3,409,451			1,884,956			274,153
Net cash used in investing activities		(876,176	)		(819,178	)		(119,145	)		(2,450,800	)		(1,447,013	)		(210,460	)
Net cash provided by financing activities		1,701,581			440,841			64,117			2,132,933			530,097			77,100
Effect of exchange rate changes on cash and cash equivalents		(14,888	)		(2,876	)		(418	)		(15,445	)		41,977			6,107
Net increase in cash, cash equivalent and restricted cash		782,344			137,060			19,934			3,076,139			1,010,017			146,900
Cash, cash equivalent and restricted cash at beginning of period		3,501,360			5,156,661			750,005			1,207,565			4,283,704			623,039
Cash, cash equivalent and restricted cash at end of period		4,283,704			5,293,721			769,939			4,283,704			5,293,721			769,939