GlobeNewswire Inc | Nov 24, 2020 03:56AM EST

November 24, 2020

SHENZHEN, China, Nov. 24, 2020 (GLOBE NEWSWIRE) -- LexinFintech Holdings Ltd. (Lexin or the Company) (NASDAQ: LX), a leading online consumption and consumer finance platform for new generation consumers in China, today announced its unaudited financial results for the quarter ended September 30, 2020.

ThirdQuarter 2020 Operational Highlights:

-- Total loan originations1 in the third quarter of 2020 reached RMB48.3 billion, an increase of 30.6% from RMB37.0 billion in the third quarter of 2019. -- Total outstanding principal balance of loans1 reached RMB67.4 billion as of September 30, 2020, representing an increase of 31.0% from RMB51.5 billion as of September 30, 2019. -- Number of active users2 who used our loan products in the third quarter of 2020 reached 7.4 million, representing an increase of 21.3% from 6.1 million in the third quarter of 2019. -- Number of new active users who used our loan products in the third quarter of 2020 was 1.7 million, representing a decrease of 32.9% from 2.5 million in the third quarter of 2019. -- Number of orders placed on our platform in the third quarter of 2020 was 84.4 million, representing an increase of 49.9% from 56.3 million in the third quarter of 2019. -- The GMV3 of our e-commerce channel amounted to RMB1.3 billion, representing a decrease of 37.1% from RMB2.1 billion in the third quarter of 2019. -- The weighted average tenor of loans originated on our platform in the third quarter of 2020 was approximately 11.4 months. The nominal APR4 was 15.0% for the third quarter of 2020. -- Total number of registered users reached 106 million as of September 30, 2020, representing an increase of 69.6% from 62.6 million as of September 30, 2019; and users with credit line reached 25.2 million as of September 30, 2020, up by 51.0% from 16.7 million as of September 30, 2019. -- 90 day+ delinquency ratio5 was 2.60% as of September 30, 2020.

1Originations of loans and outstanding principal balance represent the origination and outstanding principal balance of both on- and off-balance sheet loans.

2Active users refer to, for a specified period, users who made at least one transaction during that period through our platform or through our third-party partners platforms using credit line granted by us.

3GMV refers to the total value of transactions completed for products purchased on the e-commerce channel, net of returns.

4Nominal APR refers to all-in interest costs and fees to the borrower over the net proceeds received by the borrower as a percentage of the total loan originations of both on- and off-balance sheet loans.

590 day+ delinquency ratio refers to outstanding principal balance of on- and off-balance sheet loans that were 90 to 179 calendar days past due as a percentage of the total outstanding principal balance of on- and off-balance sheet loans on our platform as of a specific date. On-balance sheet loans that were over 179 calendar days past due and charged off are not included in the delinquency rate calculation. Off-balance sheet loans that were over 179 calendar days past due are assumed charged off and not included in the delinquency rate calculation. The Company does not distinguish on the basis of the on- or off-balance sheet treatment in monitoring the credit risks of borrowers and the delinquency status of loans.

ThirdQuarter 2020 Financial Highlights:

-- Total operating revenue reached RMB3.2 billion. Credit-oriented services income reached RMB2.0 billion, representing an increase of 5.8% from the third quarter of 2019. Platform-based services income reached RMB614 million, representing an increase of 159% from the third quarter of 2019. -- Gross profit reached RMB978 million, representing a decrease of 42.5% from the third quarter of 2019. -- Net income was RMB345 million, representing a decrease of 52.4% from the third quarter of 2019. -- Non-GAAP EBIT6 was RMB499 million, representing a decrease of 41.0% from the third quarter of 2019. -- Adjusted net income6 was RMB443 million, representing a decrease of 38.0% from the third quarter of 2019. Adjusted net income per ADS6 was RMB2.15 on a fully diluted basis.

6Non-GAAP EBIT, adjusted net income, adjusted net income per ordinary share and per ADS are non-GAAP financial measures. For more information on non-GAAP financial measures, please see the section of Use of Non-GAAP Financial Measures Statement and the tables captioned Unaudited Reconciliations of GAAP and Non-GAAP Results set forth at the end of this press release.

I am happy to announce a record quarter of loan originations, where we exceeded our guidance and continued our strong growth. Our RMB48.3 billion in loan originations exceeded our previous record of RMB42.8 billion, and represented a year-on-year growth rate of 30.6%, demonstrating our continued ability to serve our customers and connect them with financial institutions and retail merchants both online and offline, said Mr. Jay Wenjie Xiao, Lexin's chairman and chief executive officer. Our continued ability to grow our loan originations is also a demonstration of our funding partners' trust and confidence in our ability to generate high quality loan assets, and the continued increased adoption of the profit sharing model by our funding partners, which has now reached 39.4% of our loan originations, demonstrates our partners confidence in our risk control and the quality of the assets that we are generating.

As China's consumer market continues to recover, we have seen strong momentum in our consumption-focused strategy, which brought our registered user number and the number of orders placed on our platform in the quarter to a record high," Mr. Xiao added.

We performed strongly for the quarter and are very much on track to achieve our full year loan origination guidance of RMB170-180 billion, said Mr. Craig Yan Zeng, Lexins chief financial officer, Due to the change in accounting policies, we are not able to directly compare this years numbers with last years, but we can see that while the impact of the new profit sharing model will bring pressure on margins in the short term, the new model is far more competitive and will bring benefits to our long term development.

In spite of the challenges in the industry and to the economy, our credit performance and credit quality continues to be stable and within our expectations, said Mr. Ryan Huanian Liu, Lexins chief risk officer, Our vintage charge-off rates7 is within expectations at approximately 4.5%, and our 90 day+ delinquency rate was 2.60% as of September 30, 2020. We expect to continue to perform strongly and improve in the future.

7Vintage charge-off rate refers to, with respect to on- and off-balance sheet loans originated during a specified time period, which we refer to as a vintage, the total outstanding principal balance of the loans that are charged off during a specified period, divided by the total initial principal of the loans originated in such vintage. Please refer to vintage curve at the end of Third Quarter 2020 Financial Results of this press release.

Third Quarter 2020 Financial Results:

Operating revenue decreased from RMB3,188 million in the third quarter of 2019 to RMB3,154 million in the third quarter of 2020. This decrease in operating revenue was due to a decrease in online direct sales and services income, partially offset by the increase in credit-oriented services income and platform-based services income for the quarter, driven by continuing increases in the number of active users on our platform, and the change of the presentation of guarantee income along with the adoption of ASC 326. Before the adoption of ASC 326, gain or loss related to financial guarantee not accounted for as derivatives was recorded in one combined financial statement line item within (Loss)/gain on guarantee liabilities, net. After the adoption of ASC 326, the gain released from the guarantee liabilities accounted for under ASC 460 is recorded as Guarantee income as a separate financial statement line item within revenue and the relevant credit losses are recorded as Provision for credit losses of contingent liabilities of guarantee.

Online direct sales decreased by 53.3% from RMB989 million in the third quarter of 2019 to RMB462 million in the third quarter of 2020. This decrease was primarily due to the decrease in the number of e-commerce orders during the third quarter of 2020.

Credit-oriented services income increased by 5.8% from RMB1.9 billion in the third quarter of 2019 to RMB2.0 billion in the third quarter of 2020. The increase was primarily resulted from the increase of RMB598 million due to change of presentation of guarantee income as aforementioned, partially offset by the decrease in loan facilitation and servicing fees-credit oriented.

Loan facilitation and servicing fees-credit oriented decreased by 35.8% from RMB1,650 million in the third quarter of 2019 to RMB1,058 million in the third quarter of 2020. This decrease was primarily due to the Companys business strategy shift to increase the loan originations under platform-based model.

Guarantee income for the third quarter of 2020 was RMB598 million. The guarantee liabilities accounted for under ASC 460 are released from the underlying risk, i.e., as the underlying loan is repaid by the borrower or when the lender is compensated in the event of a borrowers default.

Interest and financial services income and other revenues increased by 39.5% from RMB264 million in the third quarter of 2019 to RMB369 million in the third quarter of 2020, which was consistent with the increase in the origination of on-balance sheet loans in the third quarter of 2020.

Platform-based services income increased by 159% from RMB237 million in the third quarter of 2019 to RMB614 million in the third quarter of 2020. This increase was primarily contributed by an increase in the loan facilitation and servicing fees-performance based, partially offset by the decrease in loan facilitation and servicing fees-volume based.

Loan facilitation and servicing fees-performance based increased by 222% from RMB180 million in the third quarter of 2019 to RMB580 million in the third quarter of 2020. This increase was primarily due to an increase in the origination of off-balance sheet loans under the performance-based model within platform-based services.

Cost of sales decreased by 51.4% from RMB979 million in the third quarter of 2019 to RMB476 million in the third quarter of 2020, which is consistent with the decrease of online direct sales revenue.

Funding cost increased by 21.3% from RMB118 million in the third quarter of 2019 to RMB143 million in the third quarter of 2020, which was consistent with the increase of the funding debts to fund the on-balance sheet loans.

Processing and servicing cost increased by 104% from RMB177 million in the third quarter of 2019 to RMB362 million in the third quarter of 2020. This increase was primarily due to an increase in fees to third-party insurance companies and guarantee companies, an increase in fees to third-party payment platforms, an increase in risk management expenses, an increase in credit assessment cost, and an increase in salaries and personnel related costs.

Provision for credit losses of financing receivables increased by 41.4% from RMB154 million in the third quarter of 2019 to RMB217 million in the third quarter of 2020. The increase was primarily due to earlier recognition of credit losses under ASC 326 as well as the negative impact of the ongoing COVID-19 pandemic since the beginning of this year.

Provision for credit losses of contract assets and receivables increased by 74.5% from RMB59.9 million in the third quarter of 2019 to RMB104 million in the third quarter of 2020. This increase was mainly due to the significant increase in off-balance sheet loans originated as a result of the continuing growth of our business, earlier recognition of credit losses under ASC 326 as well as negative impact of the ongoing COVID-19 pandemic started in 2020.

Provision for credit losses of contingent liabilities of guarantee was RMB874 million in the third quarter of 2020. After the adoption of ASC 326 on January 1, 2020, a separate contingent liability in full amount determined using current expected credit losses (CECL) lifetime methodology is accounted for in addition to and separately from the guarantee liabilities accounted for under ASC 460, and relevant credit losses are recorded as Provision for credit losses of contingent liabilities of guarantee. Before the adoption of ASC 326, gain or loss related to such financial guarantee was recorded in one combined financial statement line item within (Loss)/gain on guarantee liabilities, net.

Gross profit decreased by 42.5% from RMB1,701 million in the third quarter of 2019 to RMB978 million in the third quarter of 2020. The decrease in the gross profit is primarily due to the significant increase of processing and servicing cost, provision for credit losses of financing receivables, provision for credit losses of contract assets and receivables and provision for credit losses of contingent liabilities of guarantee.

Sales and marketing expenses decreased by 29.2% from RMB508 million in the third quarter of 2019 to RMB360 million in the third quarter of 2020. This decrease was primarily due to a decrease in online advertising cost.

Research and development expenses decreased by 2.3% from RMB121 million in the third quarter of 2019 to RMB118 million in the third quarter of 2020. This decrease was primarily due to a decrease in salaries and personnel related costs.

General and administrative expenses decreased by 7.7% from RMB111 million in the third quarter of 2019 to RMB103 million in the third quarter of 2020. This decrease was primarily due to a decrease in salaries and personnel related costs.

Change in fair value of financial guarantee derivatives was a loss of RMB21.8 million in the third quarter of 2020, as compared to a loss of RMB119 million in the third quarter of 2019. The loss was primarily due to the re-measurement of the expected loss rates of the underlying outstanding off-balance sheet loans at the balance sheet date.

Change in fair value of loans at fair value was a loss of RMB11.4 million in the third quarter of 2020. Starting from the second quarter of 2020, for the loans we acquired/purchased from the relevant funding partners during the period, we account for them using fair value option pursuant to ASC 825, Financial Instruments, and record them as Loans at fair value. Changes in fair value of these loans are reported net and recorded as Change in fair value of loans at fair value.

Income tax expense for the third quarter of 2020 was RMB44.7 million, as compared to income tax expense of RMB124 million in the third quarter of 2019. The decrease of the income tax expense was consistent with the decrease of the taxable income from the same period of 2019. In addition, RMB16.2 million income tax provision relating to 2019 was reversed as one subsidiary of the Group was certified to be qualified for using a preferential tax rate of 10% for 2019 annual tax clearance in this quarter.

Net income for the third quarter of 2020 was RMB345 million, representing a decrease of 52.4% from RMB724 million in the third quarter of 2019.

Adjusted net income for the third quarter of 2020 was RMB443 million, representing a decrease of 38.0% from RMB714 million in the third quarter of 2019.

Please click here to view our vintage curve:

http://ml.globenewswire.com/Resource/Download/28eefd47-dc92-4437-af0f-2c178e76f308

Management Share Purchase

Lexins senior management team including Chairman and CEO Jay Wenjie Xiao, president Jared Yi Wu, and other members of the senior management team have purchased in their personal capacity 1.85 million of the Companys ADS since the announcement of the management share purchase plan on September 14, 2020. The total shares purchased represent a total transaction value of $12.9 million, and the purchases were made during the open trading window period and in compliance with the Companys guidelines. These purchases represent part of the $20 million worth of the Companys ADS that the senior management intends to purchase.

Outlook

Based on Lexins preliminary assessment of the current market conditions, the Company reiterates total loan origination guidance for fiscal year 2020 to be between RMB170 billion and RMB180 billion. This is Lexins current and preliminary view, which is subject to changes and uncertainties.

Conference Call

The Companys management will host an earnings conference call at 6:00 AM U.S. Eastern time on November 24, 2020 (7:00 PM Beijing/Hong Kong time on November 24, 2020).

Participants who wish to join the conference call should register online at:

http://apac.directeventreg.com/registration/event/8098922

Please note the Conference ID number of 8098922.

Once registration is completed, participants will receive the dial-in information for the conference call, an event passcode, and a unique registrant ID number.

Participants joining the conference call should dial-in at least 10 minutes before the scheduled start time.

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

A replay of the conference call will be accessible approximately two hours after the conclusion of the live call until December 9, 2020, by dialing the following telephone numbers:

United States: 1 855 452 5696 or 1 646 254 3697 International: 61 2 8199 0299 Replay Access Code: 8098922

About LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd. is a leading online consumption and consumer finance platform for new generation consumers in China. The Company provides a range of services including financial technology services, membership benefits, and a point redemption system through its ecommerce platform Fenqile and membership platform Le Card. The Company works with financial institutions and brands both online and offline to provide a comprehensive consumption ecosystem catering to the needs of young professionals in China. Lexin utilizes advanced technologies such as big data, cloud computing and artificial intelligence throughout the Company's services and operations, which include risk management, loan facilitation, and the near-instantaneous matching of users funding requests with offers from the Company's many funding partners.

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

To follow us on Twitter, please go to: https://twitter.com/LexinFintech.

Use of Non-GAAP Financial Measures Statement

In evaluating our business, we consider and use adjusted net income, non-GAAP EBIT, adjusted net income per ordinary share and per ADS, four non-GAAP measures, as supplemental measures to review and assess our operating performance. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define adjusted net income as net income excluding share-based compensation expenses, interest expense associated with convertible notes, investment-related impairment and investment (income)/loss and we define non-GAAP EBIT as net income excluding income tax expense/(benefit), share-based compensation expenses, interest expense, net, investment-related impairment, and investment (income)/loss.

We present these non-GAAP financial measures because it is used by our management to evaluate our operating performance and formulate business plans. Adjusted net income enables our management to assess our operating results without considering the impact of share-based compensation expenses, interest expense associated with convertible notes, investment-related impairment and investment (income)/loss. Non-GAAP EBIT, on the other hand, enables our management to assess our operating results without considering the impact of income tax expense/(benefit), share-based compensation expenses, interest expense, net, investment-related impairment and investment (income)/loss. We also believe that the use of these non-GAAP financial measures facilitates investors assessment of our operating performance. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP.

These non-GAAP financial measures have limitations as an analytical tool. One of the key limitations of using adjusted net income and non-GAAP EBIT is that they do not reflect all items of income and expense that affect our operations. Share-based compensation expenses, interest expense associated with convertible notes, income tax expense/(benefit), interest expense, net and investment-related impairment and investment (income)/loss have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted net income and non-GAAP EBIT. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore their comparability may be limited.

We compensate for these limitations by reconciling the non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure, which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

Exchange Rate Information Statement

This announcement contains translations of certain RMB amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.7896 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2020. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Lexins beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, confident and similar statements. Among other things, the expectation of its collection efficiency and delinquency, business outlook and quotations from management in this announcement, contain forward-looking statements. Lexin may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (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. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Lexins goal and strategies; Lexins expansion plans; Lexins future business development, financial condition and results of operations; Lexins expectation regarding demand for, and market acceptance of, its credit and investment management products; Lexins expectations regarding keeping and strengthening its relationship with borrowers, institutional funding partners, merchandise suppliers and other parties it collaborates with; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Lexins filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Lexin does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

LexinFintech Holdings Ltd.

IR inquiries:Tony HungTel: +86 (755) 3637-8888 ext. 6258E-mail: IR@lexin.com

Media inquiries:Limin ChenTel: +86 (755) 3637-8888 ext. 8047E-mail: liminchen@lexin.com

SOURCE LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd.Unaudited Condensed Consolidated Balance Sheets

As of (In thousands) December31,2019 September30, 2020 RMB RMB US$ ASSETS Current assets Cash and cash equivalents 2,085,234 1,593,413 234,684 Restricted cash 1,813,855 2,281,501 336,029 Restricted time deposits 1,962,293 2,067,485 304,508 Short-termfinancingreceivables, net of allowancefor credit losses ofRMB318,262 and RMB772,813 as 3,752,690 4,914,926 723,890 of December31, 2019 andSeptember30, 2020,respectivelyLoans at fair value - 367,438 54,118 Accrued interest receivable,net of allowance for creditlosses of nil and RMB1,681 as 54,284 91,837 13,526 of December31, 2019 andSeptember30, 2020,respectivelyPrepaid expenses and other 1,324,924 1,275,570 187,871 current assetsAmounts due from related - 941 139 partiesDeposits to insurancecompanies and guarantee 1,251,003 1,170,314 172,369 companiesShort-term guaranteereceivables, net of allowancefor credit losses of RMB49,833and RMB17,544 as of 1,183,278 1,079,194 158,948 December31, 2019 andSeptember30, 2020,respectivelyShort-term contract assets andservice fees receivable, netof allowance for credit lossesof RMB94,894 and RMB61,428 as 2,971,976 3,545,337 522,172 of December31, 2019 andSeptember30, 2020,respectivelyInventories, net 106,781 59,238 8,725 Total current assets 16,506,318 18,447,194 2,716,979 Non?current assets Restricted cash 86,537 125,299 18,455 Restricted time deposits 4,350 9,415 1,387 Long?term financingreceivables, net of allowancefor credit losses of RMB55,283and RMB34,462 as of 658,798 257,967 37,994 December31, 2019 andSeptember30, 2020,respectivelyLong-term guaranteereceivables, net of allowancefor credit losses of RMB750 281,699 240,540 35,428 and RMB3,910 as of December31, 2019 and September 30,2020, respectivelyLong-term contract assets andservice fees receivable, netof allowance for credit lossesof RMB2,845 and RMB13,692 as 482,875 364,600 53,700 of December 31, 2019 andSeptember 30, 2020,respectivelyProperty, equipment and 92,553 103,702 15,274 software, netLand use rights, net - 1,009,067 148,620 Long?term investments 511,605 475,423 70,022 Deferred tax assets 157,138 599,720 88,329 Other assets 454,421 509,292 75,011 Total non?current assets 2,729,976 3,695,025 544,220 TOTAL ASSETS 19,236,294 22,142,219 3,261,199 LIABILITIES Current liabilities Accounts payable 201,837 65,692 9,675 Amounts due to related parties 40,804 57,184 8,422 Short?term borrowings 1,977,691 2,155,572 317,481 Short?term funding debts 3,755,528 4,654,269 685,500 Accrued interest payable 87,003 59,128 8,709 Guarantee liabilities^(1) 1,726,368 - - Deferred guarantee income^(1) - 970,221 142,898 Contingent guarantee - 2,622,095 386,193 liabilities^(1)Funds payable to individual 618,749 930,018 136,977 investorsAccrued expenses and other 1,394,639 2,453,386 361,345 current liabilitiesTotal current liabilities 9,802,619 13,967,565 2,057,200 Non?current liabilities Long?term funding debts 450,595 1,182,257 174,128 Deferred tax liabilities 309,646 39,870 5,872 Convertible notes 2,046,051 2,002,444 294,928 Other long-term liabilities 27,844 29,840 4,395 Total non?current liabilities 2,834,136 3,254,411 479,323 TOTAL LIABILITIES 12,636,755 17,221,976 2,536,523 SHAREHOLDERS? EQUITY: Class A Ordinary Shares 170 175 26 Class B Ordinary Shares 61 58 9 Additional paid?in capital 2,519,886 2,677,072 394,290 Statutory reserves 352,313 352,313 51,890 Accumulated other (7,288 ) (10,576 ) (1,556 )comprehensive lossRetained earnings 3,734,397 1,901,201 280,017 TOTAL SHAREHOLDERS? EQUITY 6,599,539 4,920,243 724,676 TOTAL LIABILITIES AND 19,236,294 22,142,219 3,261,199 SHAREHOLDERS? EQUITY

(1) We have adopted ASU No. 2016-13, Financial InstrumentsCredit Losses (Topic 326) effective January 1, 2020 using the modified retrospective method.

Before the adoption of ASC 326, the guarantee liabilities subsequent to initial recognition were measured at the greater of the amount determined based on ASC 460 and the amount determined under ASC 450. An excess liability was recorded when the aggregate contingent liabilities under ASC 450 exceeded the balance of guarantee liabilities determined under ASC 460.

After the adoption of ASC 326, a contingent liability in full amount determined using CECL lifetime methodology of the guarantee (i.e., the contingent aspect recorded as Contingent guarantee liabilities) shall be accounted for in addition to and separately from the guarantee liability (i.e., the noncontingent aspect recorded as Deferred guarantee income) accounted for under ASC 460.

LexinFintech Holdings Ltd.Unaudited Condensed Consolidated Statements of Operations

For the Three Months Ended September 30, For the Nine Months Ended September 30, (In thousands,except for share 2019 2020 2019 2020 and per sharedata) RMB RMB US$ RMB RMB US$ Operating revenue: Online direct 988,964 461,959 68,039 2,539,291 1,473,075 216,960 salesMembership 24,166 27,602 4,065 86,491 76,098 11,208 services^(1)Other services^(1) 23,277 26,048 3,835 59,841 63,408 9,339 Online directsales and services 1,036,407 515,609 75,939 2,685,623 1,612,581 237,507 income^(1)Loan facilitationand servicing 1,649,969 1,058,468 155,895 3,282,343 2,752,731 405,433 fees-creditoriented^(1)Interest andfinancial services 264,255 368,702 54,304 887,568 946,224 139,364 income and otherrevenuesGuarantee income^ - 597,542 88,008 - 1,981,113 291,786 (2)Credit-orientedservices income^ 1,914,224 2,024,712 298,207 4,169,911 5,680,068 836,583 (1)Loan facilitationand servicing 180,058 580,358 85,477 454,957 1,251,341 184,303 fees-performancebased^(1)Loan facilitationand servicing 57,307 33,375 4,916 144,955 68,104 10,031 fees-volume based^(1)Platform-basedservices income^ 237,365 613,733 90,393 599,912 1,319,445 194,334 (1)Total operating 3,187,996 3,154,054 464,539 7,455,446 8,612,094 1,268,424 revenueOperating cost: Cost of sales (979,179 ) (475,824 ) (70,081 ) (2,532,635 ) (1,475,704 ) (217,348 )Funding cost (117,586 ) (142,658 ) (21,011 ) (380,522 ) (449,102 ) (66,146 )Processing and (177,004 ) (361,839 ) (53,293 ) (432,002 ) (1,031,248 ) (151,886 )servicing costProvision forcredit losses of (153,601 ) (217,222 ) (31,993 ) (489,321 ) (628,384 ) (92,551 )financingreceivablesProvision forcredit losses of (59,867 ) (104,452 ) (15,384 ) (104,531 ) (254,578 ) (37,495 )contract assetsand receivablesProvision forcredit losses ofcontingent - (873,936 ) (128,717 ) - (2,660,101 ) (391,791 )liabilities ofguarantee^(2)Total operating (1,487,237 ) (2,175,931 ) (320,479 ) (3,939,011 ) (6,499,117 ) (957,217 )costGross profit 1,700,759 978,123 144,060 3,516,435 2,112,977 311,207 Operating expenses:Sales and (507,928 ) (359,828 ) (52,997 ) (1,018,689 ) (931,130 ) (137,141 )marketing expensesResearch anddevelopment (121,114 ) (118,325 ) (17,427 ) (314,653 ) (379,141 ) (55,841 )expensesGeneral andadministrative (111,102 ) (102,501 ) (15,097 ) (292,394 ) (325,820 ) (47,988 )expensesTotal operating (740,144 ) (580,654 ) (85,521 ) (1,625,736 ) (1,636,091 ) (240,970 )expensesChange in fairvalue of financial (119,202 ) (21,833 ) (3,216 ) 45,521 (381,594 ) (56,203 )guaranteederivatives, netChange in fairvalue of loans at - (11,356 ) (1,673 ) - (11,356 ) (1,673 )fair value(Loss)/gain onguarantee (45,833 ) - - 80,517 - - liabilities, net^(2)Interest expense, (8,590 ) (23,450 ) (3,454 ) (9,739 ) (59,468 ) (8,759 )netInvestment-related - (35,370 ) (5,209 ) - (35,370 ) (5,209 )impairmentInvestment income/ 55,197 (1,293 ) (190 ) 53,433 9,321 1,373 (loss)Others, net 6,095 85,241 12,555 32,077 83,295 12,268 Income before 848,282 389,408 57,352 2,092,508 81,714 12,034 income tax expenseIncome tax (123,916 ) (44,713 ) (6,586 ) (315,878 ) 3,590 529 (expense)/benefitNet income 724,366 344,695 50,766 1,776,630 85,304 12,563 Net income per ordinary shareBasic 2.03 0.94 0.14 5.01 0.23 0.03 Diluted 1.96 0.87 0.13 4.87 0.30 0.04 Net income per ADS Basic 4.05 1.89 0.28 10.02 0.47 0.07 Diluted 3.93 1.74 0.26 9.75 0.59 0.09 Weighted averageordinary shares outstandingBasic 357,428,690 364,991,825 364,991,825 354,720,615 364,328,223 364,328,223 Diluted 369,863,610 410,968,465 410,968,465 364,924,688 411,274,741 411,274,741

(1) Starting from the second quarter of 2020, we report revenue streams in three categoriesonline direct sales and services income, credit-oriented services income and platform-based services income, to provide more relevant information. We also revised the comparative period presentation to conform to current period classification.

In providing credit-oriented services, we originate on-balance sheet loans, or facilitate the loan origination of off-balance loans where we also provide guarantee services. Consequently, we take all credit risks of borrowers in respect of on-balance sheet loans, and off-balance sheet loans through the relevant guarantee arrangements. By nature, revenue earned from off-balance sheet loans where we also provide guarantee services is recorded as Loan facilitation and servicing fees-credit oriented and Guarantee income, and interest income and other fees from on-balance sheet loans is recorded as Interest and financial services income and other revenues.

In providing platform-based services, we do not provide guarantee services and take no credit risks of borrowers in respect of principal and interests due to the lenders for off-balance sheet loans we facilitate. We either charge the service fees for loan facilitation and servicing at predetermined rates based on the performance of the underlying off-balance sheet loans, which we refer to as performance-based model, or charge the service fees at predetermined rates of amount of loan originations upon successful matching of borrowing requests, which we refer to as volume-based model.

Revenue from Loan facilitation and servicing fees-credit oriented, Loan facilitation and servicing fees-performance based and Loan facilitation and servicing fees-volume based were previously reported as one combined financial statement line item as Loan facilitation and servicing fees before the change of presentation.

For online direct sales and services income, we report the premium membership fees for our membership packages as Membership services, and the commission fee earned from third-party sellers for the online marketplace services we rendered and other services revenue as Other services within Online direct sales and services income. The premium membership fees, commission fee earned from third-party sellers and other services revenue were previously reported as Services and others within Online direct sales and services income before the change of presentation.

(2) We have adopted ASU No. 2016-13, Financial InstrumentsCredit Losses (Topic 326) effective January 1, 2020 using the modified retrospective method.

Before the adoption of ASC 326, gain or loss related to guarantee liabilities accounted for under ASC 460 was recorded in one combined financial statement line item within (Loss)/gain on guarantee liabilities, net.

After the adoption of ASC 326, the gain released from the guarantee liabilities accounted for under ASC 460 is recorded as a separate financial statement line item within revenue as Guarantee income and the relevant credit losses of guarantee are recorded as Provision for credit losses of contingent liabilities of guarantee.

LexinFintech Holdings Ltd.Unaudited Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended September For the Nine Months Ended September 30, 30,(In 2019 2020 2019 2020 thousands) RMB RMB US$ RMB RMB US$ Net income 724,366 344,695 50,766 1,776,630 85,304 12,563 Othercomprehensive income/(loss)Foreigncurrencytranslation 12,661 (3,687 ) (543 ) 13,358 (3,288 ) (484 )adjustment,net of niltaxTotalcomprehensive 737,027 341,008 50,223 1,789,988 82,016 12,079 income

LexinFintech Holdings Ltd.Unaudited Reconciliations of GAAP and Non-GAAP Results

For the Three Months Ended September30, For the Nine Months Ended September30, (In thousands,except for share 2019 2020 2019 2020 and per sharedata) RMB RMB US$ RMB RMB US$ Reconciliation ofAdjusted Net Income to NetIncomeNet income 724,366 344,695 50,766 1,776,630 85,304 12,563 Add: Share-basedcompensation 43,345 49,193 7,246 123,767 152,192 22,416 expensesInterest expenseassociated with 1,868 12,127 1,786 1,868 36,246 5,338 convertible notesInvestment-related - 35,370 5,209 - 35,370 5,209 impairmentInvestment (55,197 ) 1,293 190 (53,433 ) (9,321 ) (1,373 )(income)/lossAdjusted net 714,382 442,678 65,197 1,848,832 299,791 44,153 income Adjusted netincome per ordinary shareBasic 2.00 1.21 0.18 5.21 0.82 0.12 Diluted 1.93 1.08 0.16 5.07 0.73 0.11 Adjusted net income per ADSBasic 4.00 2.43 0.36 10.42 1.65 0.24 Diluted 3.86 2.15 0.32 10.13 1.46 0.21 Weighted averagenumber of ordinary shares outstandingBasic 357,428,690 364,991,825 364,991,825 354,720,615 364,328,223 364,328,223 Diluted 369,863,610 410,968,465 410,968,465 364,924,688 411,274,741 411,274,741

LexinFintech Holdings Ltd.Unaudited Reconciliations of GAAP and Non-GAAP Results

For the Three Months Ended September30, For the Nine Months Ended September30, (In thousands) 2019 2020 2019 2020 RMB RMB US$ RMB RMB US$ Reconciliations ofNon-GAAP EBIT to Net IncomeNet income 724,366 344,695 50,766 1,776,630 85,304 12,563 Add: Income tax 123,916 44,713 6,586 315,878 (3,590 ) (529 )expense/(benefit)Share-basedcompensation 43,345 49,193 7,246 123,767 152,192 22,416 expensesInterest expense, 8,590 23,450 3,454 9,739 59,468 8,759 netInvestment-related - 35,370 5,209 - 35,370 5,209 impairmentInvestment (55,197 ) 1,293 190 (53,433 ) (9,321 ) (1,373 )(income)/lossNon-GAAP EBIT 845,020 498,714 73,451 2,172,581 319,423 47,045