GlobeNewswire Inc | Aug 18, 2020 03:14AM EDT

August 18, 2020

SHENZHEN, China, Aug. 18, 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 June 30, 2020.

Second Quarter 2020 Operational Highlights:

-- Total loan originations1 in the second quarter of 2020 reached RMB41.1 billion, an increase of 57.8% from RMB26.0 billion in the second quarter of 2019. -- Total outstanding principal balance of loans1 reached RMB61.9 billion as of June 30, 2020, representing an increase of 52.4% from RMB40.6 billion as of June 30, 2019. -- Number of active users2 who used our loan products in the second quarter of 2020 reached 6.8 million, representing an increase of 65.8% from 4.1 million in the second quarter of 2019. -- Number of new active users who used our loan products in the second quarter of 2020 was 1.4 million, representing an increase of 12.3% from 1.3 million in the second quarter of 2019. -- Number of orders placed on our platform in the second quarter of 2020 was 74.6 million, representing an increase of 168% from 27.8 million in the second quarter of 2019. -- The GMV3 of our e-commerce channel amounted to RMB1.4 billion, representing a decrease of 27.3% from RMB1.9 billion in the second quarter of 2019. -- The weighted average tenor of loans originated on our platform in the second quarter of 2020 was approximately 11.4 months. The weighted average APR4 was 26.5% for the second quarter of 2020. -- Total number of registered users reached 95.3 million as of June 30, 2020, representing an increase of 90.0% from 50.2 million as of June 30, 2019; and users with credit line reached 22.7 million as of June 30, 2020, up by 68.4% from 13.5 million as of June 30, 2019. -- 90 day+ delinquency ratio5 was 2.99% as of June 30, 2020.

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

2 Active 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.

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

4 APR is the annualized percentage rate of all-in interest costs and fees to the borrower over the net proceeds received by the borrower. Weighted average APR is weighted by loan origination amount for each loan originated in the period.

5 90 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.

Second Quarter 2020 Financial Highlights:

-- Total operating revenue reached RMB3.0 billion. Credit-oriented services income reached RMB2.0 billion, representing an increase of 48.8% from the second quarter of 2019. Platform-based services income reached RMB419 million, representing an increase of 109% from the second quarter of 2019. -- Gross profit reached RMB968 million, representing a decrease of 11.9% from the second quarter of 2019. -- Net income was RMB419 million, representing a decrease of 33.3% from the second quarter of 2019. -- Non-GAAP EBIT6 was RMB541 million, representing a decrease of 30.3% from the second quarter of 2019. -- Adjusted net income6 was RMB453 million, representing a decrease of 32.5% from the second quarter of 2019. Adjusted net income per ADS6 was RMB2.21 on a fully diluted basis.

6 Non-GAAP EBIT, adjusted net income/(loss), adjusted net income/(loss) 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 quarter of strong growth driven by our New Consumption Platform Strategy and a continuing recovery of Chinas consumer market. Our efforts to serve customers broader consumption needs have begun to pay off, with our platform-based services income in the quarter more than doubled from a year earlier, said Mr. Jay Wenjie Xiao, Lexin's chairman and chief executive officer.

We started as a consumer finance platform, and have now become a comprehensive consumption service provider, connecting our customers with financial institutions and retail merchants both online and offline. In this ecosystem, we offer not only credit services, but also membership-based privileges to our customers; we provide financial institutions with fintech services and retail merchants with consumer finance tools and customer management services. With that, we combine consumer finance, membership services, and fintech services in one ecosystem, marking a gradual evolution of our business model, Mr. Xiao added. As the China Banking and Insurance Regulatory Commission officially acknowledged the loan facilitation model of fintech platforms in July and domestic consumption continues to recover, we believe that Lexin is well positioned to benefit from market consolidation and further tap the potential of Chinese consumer market, Mr. Xiao said.

Our major key metrics for our businesses continue to improve, and we are seeing a continued recovery from the COVID-19 pandemic, said Mr. Craig Yan Zeng, Lexins chief financial officer, We performed strongly for the quarter and are very much on track to achieve our full year loan origination guidance. Our total loan originations for the quarter reached over RMB41.1 billion and we successfully returned to profitability with net income of RMB419 million. In addition, more funding partners have now accepted our loan-performance-based facilitation and servicing fee model, and we have made continued progress in lowering the borrowing rates required by our institutional funding partners.

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 2.99% as of June 30, 2020. We expect to continue to perform strongly within the current credit cycle, and we expect that our credit statistics should begin to improve in the third quarter and in the future as we exit the current credit cycle.

7 Vintage 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 Second Quarter 2020 Financial Results of this press release.

Second Quarter 2020 Financial Results:

Operating revenue increased from RMB2,493 million in the second quarter of 2019 to RMB2,958 million in the second quarter of 2020. This increase in operating revenue was due to an 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, partially offset by the decrease in online direct sales and services income. 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 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 43.6% from RMB925 million in the second quarter of 2019 to RMB522 million in the second quarter of 2020. This decrease was primarily due to the decrease in the average consumer spending per order as a result of the impact of the COVID-19 pandemic during the second quarter of 2020.

Credit-oriented services income increased by 48.8% from RMB1.3 billion in the second quarter of 2019 to RMB2.0 billion in the second quarter of 2020. The increase was primarily resulted from the increase of RMB706 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 7.7% from RMB1,009 million in the second quarter of 2019 to RMB931 million in the second 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 second quarter of 2020 was RMB706 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 5.5% from RMB314 million in the second quarter of 2019 to RMB332 million in the second quarter of 2020, which was consistent with the increase in the origination of on-balance sheet loans in the second quarter of 2020.

Platform-based services income increased by 109% from RMB200 million in the second quarter of 2019 to RMB419 million in the second 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 171% from RMB145 million in the second quarter of 2019 to RMB394 million in the second 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 43.8% from RMB925 million in the second quarter of 2019 to RMB520 million in the second quarter of 2020, which is consistent with the decrease of online direct sales revenue.

Funding cost increased by 35.4% from RMB121 million in the second quarter of 2019 to RMB163 million in the second 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 158% from RMB138 million in the second quarter of 2019 to RMB356 million in the second 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 decreased by 34.0% from RMB183 million in the second quarter of 2019 to RMB121 million in the second quarter of 2020. The decrease has reflected the most recent performance in relation to the Companys on-balance sheet loans as the Company has continued to implement prudent credit assessment and risk management policies and procedures since the beginning of this year.

Provision for credit losses of contract assets and receivables increased by 130% from RMB26.4 million in the second quarter of 2019 to RMB60.8 million in the second 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 RMB769 million in the second 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 Gain on guarantee liabilities, net.

Gross profit decreased by 11.9% from RMB1,099 million in the second quarter of 2019 to RMB968 million in the second 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 contract assets and receivables and provision for credit losses of contingent liabilities of guarantee.

Sales and marketing expenses increased by 3.8% from RMB316 million in the second quarter of 2019 to RMB327 million in the second quarter of 2020. This increase was primarily due to an increase in online promotional fees and advertising costs and an increase in amortization and depreciation expenses allocated to sales and marketing expense.

Research and development expenses increased by 35.0% from RMB99.7 million in the second quarter of 2019 to RMB135 million in the second quarter of 2020. This increase was primarily due to an increase in salaries and personnel related costs and an increase in amortization and depreciation expenses allocated to research and development expenses.

General and administrative expenses increased by 21.0% from RMB94.1 million in the second quarter of 2019 to RMB114 million in the second quarter of 2020. This increase was primarily due to an increase in salaries and personnel related costs and an increase in share-based compensation expenses.

Change in fair value of financial guarantee derivatives was a gain of RMB79.2 million in the second quarter of 2020, as compared to a gain of RMB114 million in the second quarter of 2019. The gain was primarily due to the realization of gains through our performance of the guarantee.

Income tax expense for the second quarter of 2020 was RMB76.6 million, as compared to income tax expense of RMB106 million in the second quarter of 2019. The decrease was consistent with the decrease of the taxable income from the same period of 2019.

Net income for the second quarter of 2020 was RMB419 million, representing a decrease of 33.3% from RMB628 million in the second quarter of 2019.

Adjusted net income for the second quarter of 2020 was RMB453 million, representing a decrease of 32.5% from RMB671 million in the second quarter of 2019.

Please click here to view our vintage curve:

http://ml.globenewswire.com/Resource/Download/bff8d4b0-45ab-4e24-bb2f-2802fc7c8d70

Outlook

Based on Lexins preliminary assessment of the current market conditions, the Company expects third quarter loan originations to be over RMB48 billion and 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 7:00 AM U.S. Eastern time on August 18, 2020 (7:00 PM Beijing/Hong Kong time on August 18, 2020).

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

http://apac.directeventreg.com/registration/event/6562599

Please note the Conference ID number of 6562599.

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 August 25, 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: 6562599

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/(loss), non-GAAP EBIT, adjusted net income/(loss) 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/(loss) as net income/(loss) excluding share-based compensation expenses, interest expense associated with convertible notes, and investment loss/(income) and we define non-GAAP EBIT as net income/(loss) excluding income tax expense/(benefit), share-based compensation expenses, interest (income)/expense, net, and investment loss/(income).

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/(loss) enables our management to assess our operating results without considering the impact of share-based compensation expenses, interest expense associated with convertible notes and investment loss/(income). 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 (income)/expense, net, and investment loss/(income). 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/(loss) 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 (income)/expense, net, and investment loss/(income) have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted net income/(loss) 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 RMB7.0651 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 30, 2020. The Company makes no representation that the RMB or US$ 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. 6993E-mail: liminchen@lexin.com

SOURCE LexinFintech Holdings Ltd.

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Balance Sheets As of(In thousands) December31, June 30, 2020 2019 RMB RMB US$ASSETS Current assets Cash and cash equivalents 2,085,234 1,164,805 164,867 Restricted cash 1,813,855 2,933,323 415,185 Restricted time deposits 1,962,293 2,305,679 326,348 Short?term financing receivables, netof allowance for credit losses ofRMB318,262 and RMB680,367 3,752,690 4,718,582 667,872 as of December 31, 2019 and June30, 2020, respectivelyLoans at fair value ? 349,627 49,486 Accrued interest receivable, net ofallowance for credit losses of niland RMB1,681as 54,284 94,359 13,356 of December 31, 2019 and June 30,2020, respectivelyPrepaid expenses and other current 1,324,924 1,140,670 161,451 assetsAmounts due from related parties ? 941 133 Deposits to insurance companies and 1,251,003 1,158,325 163,950 guarantee companiesShort-term guarantee receivables, netof allowance for credit losses ofRMB49,833 and RMB26,788 1,183,278 1,070,012 151,450 as of December 31, 2019 and June30, 2020, respectivelyShort-term contract assets andservice fees receivable, net ofallowance for credit losses of 2,971,976 3,160,563 447,349 RMB94,894 and RMB62,644 as of December 31,2019 and June 30, 2020, respectivelyInventories, net 106,781 55,652 7,877 Total current assets 16,506,318 18,152,538 2,569,324 Non?current assets Restricted cash 86,537 147,915 20,936 Restricted time deposits 4,350 10,594 1,499 Long?term financing receivables, netof allowance for credit losses ofRMB55,283 and RMB44,249 658,798 341,378 48,319 as of December 31, 2019 and June30, 2020, respectivelyLong-term guarantee receivables, netof allowance for credit losses ofRMB750 and RMB5,698 281,699 227,612 32,216 as of December 31, 2019 and June30, 2020, respectivelyLong-term contract assets and servicefees receivable, net of allowance forcredit losses of RMB2,845 482,875 362,578 51,320 and RMB13,326 as of December 31,2019 and June 30, 2020, respectivelyProperty, equipment and software, net 92,553 106,117 15,020 Land use rights, net ? 1,017,667 144,041 Long?term investments 511,605 510,444 72,249 Deferred tax assets 157,138 557,518 78,912 Other assets 454,421 483,073 68,375 Total non?current assets 2,729,976 3,764,896 532,887 TOTAL ASSETS 19,236,294 21,917,434 3,102,211 LIABILITIES Current liabilities Accounts payable 201,837 59,320 8,396 Amounts due to related parties 40,804 53,729 7,605 Short?term borrowings 1,977,691 2,442,215 345,673 Short?term funding debts 3,755,528 4,651,585 658,389 Accrued interest payable 87,003 92,071 13,032 Guarantee liabilities^(1) 1,726,368 ? ? Deferred guarantee income^(1) ? 1,053,553 149,121 Contingent guarantee liabilities^(1) ? 2,590,402 366,648 Funds payable to individual investors 618,749 1,292,863 182,993 Accrued expenses and other current 1,394,639 2,081,547 294,624 liabilitiesTotal current liabilities 9,802,619 14,317,285 2,026,481 Non?current liabilities Long?term funding debts 450,595 911,118 128,960 Deferred tax liabilities 309,646 64,909 9,187 Convertible notes 2,046,051 2,079,875 294,387 Other long-term liabilities 27,844 14,205 2,011 Total non?current liabilities 2,834,136 3,070,107 434,545 TOTAL LIABILITIES 12,636,755 17,387,392 2,461,026 SHAREHOLDERS? EQUITY ClassA Ordinary Shares 170 173 24 ClassB Ordinary Shares 61 59 8 Additional paid?in capital 2,519,886 2,627,880 371,952 Statutory reserves 352,313 352,313 49,867 Accumulated other comprehensive loss (7,288 ) (6,889 ) (975 )Retained earnings 3,734,397 1,556,506 220,309 TOTAL SHAREHOLDERS? EQUITY 6,599,539 4,530,042 641,185 TOTAL LIABILITIES AND SHAREHOLDERS? 19,236,294 21,917,434 3,102,211 EQUITY (1) We have adopted ASU No. 2016-13, Financial Instruments?Credit Losses (Topic326) effective January 1, 2020 using the modified retrospective method.

Before the adoption of ASC 326, the guarantee liabilities subsequent toinitial recognition were measured at the greater of the amount determined basedon ASC 460 and the amount determined under ASC 450. An excess liability wasrecorded when the aggregate contingent liabilities under ASC 450 exceeded thebalance of guarantee liabilities determined under ASC 460.

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

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Statements of Operations (In thousands, For the Three Months For the Six Monthsexcept for share Ended June 30, Ended June 30,and per sharedata) 2019 2020 2019 2020

RMB RMB US$ RMB RMB US$Operating revenue:Online direct 925,418 521,592 73,827 1,550,327 1,011,116 143,114 salesMembership 27,063 24,205 3,426 62,325 48,496 6,864 services^(1)Other services^ 17,127 24,154 3,418 36,564 37,360 5,288 (1)Online directsales and 969,608 569,951 80,671 1,649,216 1,096,972 155,266 services income^(1)Loanfacilitation andservicing 1,008,831 931,295 131,816 1,632,374 1,694,263 239,807 fees-creditoriented^(1)Interest andfinancialservices income 314,248 331,593 46,934 623,313 577,522 81,743 and otherrevenuesGuarantee income ? 706,271 99,966 ? 1,383,571 195,832 ^(2)Credit-orientedservices income^ 1,323,079 1,969,159 278,716 2,255,687 3,655,356 517,382 (1)Loanfacilitation andservicing 145,054 393,595 55,710 274,899 670,983 94,971 fees-performancebased^(1)Loanfacilitation andservicing 55,199 25,301 3,581 87,648 34,729 4,916 fees-volumebased^(1)Platform-basedservices income^ 200,253 418,896 59,291 362,547 705,712 99,887 (1)Total operating 2,492,940 2,958,006 418,678 4,267,450 5,458,040 772,535 revenue Operating cost: Cost of sales (925,454 ) (519,713 ) (73,561 ) (1,553,456 ) (999,880 ) (141,524 )Funding cost (120,664 ) (163,363 ) (23,123 ) (262,936 ) (306,444 ) (43,374 )Processing and (138,279 ) (356,439 ) (50,451 ) (254,998 ) (669,409 ) (94,749 )servicing costProvision forcredit losses of (183,203 ) (120,913 ) (17,114 ) (335,720 ) (411,162 ) (58,196 )financingreceivablesProvision forcredit losses of (26,423 ) (60,786 ) (8,604 ) (44,664 ) (150,126 ) (21,249 )contract assetsand receivablesProvision forcredit losses ofcontingent ? (768,922 ) (108,834 ) ? (1,786,165 ) (252,815 )liabilities ofguarantee^(2)Total operating (1,394,023 ) (1,990,136 ) (281,687 ) (2,451,774 ) (4,323,186 ) (611,907 )costGross profit 1,098,917 967,870 136,991 1,815,676 1,134,854 160,628 Operating expenses:Sales andmarketing (315,578 ) (327,430 ) (46,345 ) (510,761 ) (571,302 ) (80,863 )expensesResearch anddevelopment (99,691 ) (134,605 ) (19,052 ) (193,539 ) (260,816 ) (36,916 )expensesGeneral andadministrative (94,082 ) (113,793 ) (16,106 ) (181,292 ) (223,319 ) (31,609 )expensesTotal operating (509,351 ) (575,828 ) (81,503 ) (885,592 ) (1,055,437 ) (149,388 )expensesChange in fairvalue offinancial 114,227 79,223 11,213 164,723 (359,761 ) (50,921 )guaranteederivatives, netGain onguarantee 22,673 ? ? 126,350 ? ? liabilities, net^(2)Interest income/ 1,309 (23,713 ) (3,356 ) (1,149 ) (36,018 ) (5,098 )(expense), netInvestment (1,764 ) 26,880 3,805 (1,764 ) 10,614 1,502 (loss)/incomeOthers, net 8,372 21,248 3,007 25,982 (1,946 ) (275 )Income/(loss)before income 734,383 495,680 70,157 1,244,226 (307,694 ) (43,552 )tax expenseIncome tax(expense)/ (106,419 ) (76,644 ) (10,848 ) (191,962 ) 48,303 6,837 benefitNet income/ 627,964 419,036 59,309 1,052,264 (259,391 ) (36,715 )(loss) Net income/(loss) per ordinary shareBasic 1.77 1.15 0.16 2.98 (0.71 ) (0.10 )Diluted 1.73 1.05 0.15 2.90 (0.71 ) (0.10 ) Net income/ (loss) per ADSBasic 3.54 2.30 0.33 5.96 (1.43 ) (0.20 )Diluted 3.46 2.10 0.30 5.81 (1.43 ) (0.20 ) Weighted averagenumber of ordinary sharesoutstandingBasic 355,026,635 364,483,393 364,483,393 353,344,135 363,992,775 363,992,775 Diluted 363,122,834 410,340,418 410,340,418 362,394,391 363,992,775 363,992,775 _________________________________

^(1)Starting from the second quarter of 2020, we report revenue streams inthree categories?online direct sales and services income, credit-orientedservices income and platform-based services income, to provide more relevantinformation. We also revised the comparative period presentation to conform tocurrent period classification.

In providing credit-oriented services, we originate on-balance sheet loans, orfacilitate the loan origination of off-balance loans where we also provideguarantee services. Consequently, we take all credit risks of borrowers inrespect of on-balance sheet loans, and off-balance sheet loans through therelevant guarantee arrangements. By nature, revenue earned from off-balancesheet loans where we also provide guarantee services is recorded as ?Loanfacilitation and servicing fees-credit oriented? and ?Guarantee income,? andinterest 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 andtake no credit risks of borrowers in respect of principal and interests due tothe lenders for off-balance sheet loans we facilitate. We either charge theservice fees for loan facilitation and servicing at predetermined rates basedon the performance of the underlying off-balance sheet loans, which we refer toas performance-based model, or charge the service fees at predetermined ratesof 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,? ?Loanfacilitation and servicing fees-performance based? and ?Loan facilitation andservicing fees-volume based? were previously reported as one combined financialstatement line item as ?Loan facilitation and servicing fees? before the changeof presentation.

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

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

Before the adoption of ASC 326, gain or loss related to guarantee liabilitiesaccounted for under ASC 460 was recorded in one combined financial statementline item within ?Gain on guarantee liabilities, net.?

After the adoption of ASC 326, the gain released from the guarantee liabilitiesaccounted for under ASC 460 is recorded as a separate financial statement lineitem within revenue as ?Guarantee income? and the relevant credit losses ofguarantee are recorded as ?Provision for credit losses of contingentliabilities of guarantee.?

LexinFintech Holdings Ltd.

Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss) (In For the Three Months Ended June For the Six Months Ended June 30,thousands) 30, 2019 2020 2019 2020 RMB RMB US$ RMB RMB US$Net income/ 627,964 419,036 59,309 1,052,264 (259,391 ) (36,715 )(loss)Othercomprehensive income/(loss)Foreigncurrencytranslation 10,236 (908 ) (128 ) 697 399 56 adjustments,net of niltaxTotalcomprehensive 638,200 418,128 59,181 1,052,961 (258,992 ) (36,659 )income/(loss)

LexinFintech Holdings Ltd.

Unaudited Reconciliations of GAAP and Non-GAAP Results (In thousands, For the Three Months Ended June 30, For the Six Months Ended June 30,except forshare and per 2019 2020 2019 2020share data) RMB RMB US$ RMB RMB US$Reconciliationof AdjustedNet Income/ (Loss) to NetIncome/(Loss)Net income/ 627,964 419,036 59,309 1,052,264 (259,391 ) (36,715 )(loss)Add:Share-based 41,015 48,265 6,831 80,422 102,999 14,579 compensationexpensesInterestexpenseassociated ? 12,206 1,728 ? 24,119 3,414 withconvertiblenotesInvestment 1,764 (26,880 ) (3,805 ) 1,764 (10,614 ) (1,502 )loss/(income)Adjusted net 670,743 452,627 64,063 1,134,450 (142,887 ) (20,224 )income/(loss) Adjusted netincome/(loss) per ordinaryshareBasic 1.89 1.24 0.18 3.21 (0.39 ) (0.06 )Diluted 1.85 1.10 0.16 3.13 (0.39 ) (0.06 ) Adjusted netincome/(loss) per ADSBasic 3.78 2.48 0.35 6.42 (0.79 ) (0.11 )Diluted 3.69 2.21 0.31 6.26 (0.79 ) (0.11 ) Weightedaverage numberof ordinary sharesoutstandingBasic 355,026,635 364,483,393 364,483,393 353,344,135 363,992,775 363,992,775 Diluted 363,122,834 410,340,418 410,340,418 362,394,391 363,992,775 363,992,775

LexinFintech Holdings Ltd.

Unaudited Reconciliations of GAAP and Non-GAAP Results (In thousands) For the Three Months EndedJune 30, For the Six Months EndedJune 30, 2019 2020 2019 2020 RMB RMB US$ RMB RMB US$Reconciliationsof Non-GAAP EBIT to NetIncome/(Loss)Net income/ 627,964 419,036 59,309 1,052,264 (259,391 ) (36,715 )(loss)Add: Income taxexpense/ 106,419 76,644 10,848 191,962 (48,303 ) (6,837 )(benefit)Share-basedcompensation 41,015 48,265 6,831 80,422 102,999 14,579 expensesInterest(income)/ (1,309 ) 23,713 3,356 1,149 36,018 5,098 expense, netInvestment loss 1,764 (26,880 ) (3,805 ) 1,764 (10,614 ) (1,502 )/(income)Non-GAAP EBIT 775,853 540,778 76,539 1,327,561 (179,291 ) ) (25,377