The following discussion of our financial condition and results of operations is based upon, and should be read in conjunction with, our audited consolidated financial statements and the related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A. Operating Results Overview We are a leading online and offline consumption platform and a technology-driven service provider in China. Established in 2013, we leverage our profound understanding of consumers in China and the valuable experience of partnering with hundreds of financial institutions over the years, as well as our advanced technological capabilities, to connect fast-growing new generation consumers and SME owners with well-established national and regional funding partners. We have expanded the scale of our platform rapidly since our inception. From our inception in August 2013 through the end of 2025, we cumulatively originated RMB1,531 billion (US$219 billion) in loans. In 2023, 2024 and 2025, we originated RMB250 billion, RMB212 billion and RMB205 billion (US$29.4 billion) in loans, respectively. As of December 31, 2023, 2024 and 2025, our outstanding principal balance of loans was approximately RMB124 billion, RMB110 billion and RMB96.6 billion (US$13.8 billion), respectively. The weighted average tenor of loans originated on our platform in 2024 and 2025 was approximately 12.9 months and 12.9 months, respectively. Key Operating Metrics We regularly monitor a number of metrics in order to measure our current performance and project our future performance. These metrics aid us in developing and refining our growth strategies and making strategic decisions: As of or for the Year Ended December 31, 2023 2024 2025 RMB RMB RMB US$ Outstanding principal balance (in millions) 123,984 110,266 96,567 13,809 Outstanding principal balance by accounting treatment: Outstanding principal balance of on-balance sheet loans (in millions) 4,137 4,808 5,692 814 Outstanding principal balance of off-balance sheet loans (in millions) 119,847 105,458 90,875 12,995 Originations (in millions) 249,454 212,050 205,340 29,363 Number of active users (in thousands) 8,530 8,164 8,188 — 126 Outstanding principal balance. Outstanding principal balance represents the total amount of principal outstanding for loans originated through our platform or through our third-party partners' platforms at the end of the period. The accounting treatment with respect to outstanding principal balance of loans on our consolidated balance sheets varies, depending primarily on whether we are considered as the primary obligor in the lending relationship. See “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies-Presentation for on- and off-balance sheet loans.” Originations. Originations represent the total principal amount of the loans we originate through our platform or through our third-party partners' platforms during the period. Our users have the option to postpone or reschedule their monthly repayment. For originations, the principal amount postponed or rescheduled is calculated as a new loan principal amount. We treat off-balance sheet loans as part of our originations. Number of active users and new active users using our loan products. We define an active user as a user who made at least one transaction during the relevant period through our platform or through our third-party partners’ platforms using the credit line granted by us. A new active user during a period is an active user during the period who did not make any transaction prior to the beginning of this period. On- and Off-Balance Sheet Treatment of Loans We access an array of diversified funding sources to ensure that we have scalable and stable funding. The accounting treatment of assets, liabilities and revenues arising from the loans we originate varies, depending primarily on whether we are considered as the primary obligor in the lending relationship. We generate financing receivables from providing loans to users. The loans generated from our platform or mobile application are primarily funded by the following funding sources:(1) the Institutional Funding Partners; and (2) third-party investors of the consolidated Trusts and asset‑backed securitized debts. Depending on the arrangements among the Group, the Borrowers and the funding partners, the underlying loans are accounted for as “on-balance sheet loans” or “off-balance sheet loans,” where applicable. With respect to the loans funded by certain institutional funding partners, such as certain third-party commercial banks, we have determined that we are not the primary obligor in the lending relationship and thus do not record financing receivables from such loans. For certain off-balance sheet loans, we are obligated to compensate some institutional funding partners for the principal and interest repayment of loans in the event of a user default. These financial guarantee contracts are accounted for as guarantee liabilities under ASC 460, Guarantees, provided that the scope exception under ASC 815-10-15-58 is met. For the financial guarantee provided by us that does not meet the scope exception under ASC 815-10-15-58, we account for our contracts with these institutional funding partners as a derivative under ASC Topic 815, Derivatives and Hedging, which is recognized on our consolidated balance sheets as either assets or liabilities. Other institutional funding partners do not require us to provide any guarantee pursuant to the loans facilitated. See “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies-Presentation for on- and off-balance sheet loans.” General Factors Affecting Our Results of Operations Our results of operations are affected by general factors driving the online consumer finance industry in China. Regulatory environment in China 127 The online consumer finance industry in China is regulated. Since mid-2015, relevant regulatory authorities have issued various laws and regulations governing the online consumer finance industry. See “Item 4. Information on the Company—B. Business Overview—Regulations.” It is expected that the online consumer finance market may be subject to closer scrutiny from regulators with more detailed rules and regulations to be introduced. We modified our operations from time to time to comply with relevant PRC laws and regulations. For example, in response to certain requirements under the Circular 141, we have made an adjustment to our cooperation model with institutional funding partners and currently conduct a part of our cooperation with these institutional funding partners through our own financial guarantee companies qualified to provide financing guarantees for the users on our platform and to charge fees for the relevant guarantee services. Due to the restriction on the outstanding guarantee liabilities of our own financing guarantee companies, we also cooperate with other third-party financing guarantee companies or commercial insurance companies, which provide guarantee or insurance services for the users on our platform, provided that for some of such cooperation, the variable interest entities without the financing guarantee qualification, has been required to provide the third-party financing guarantee companies and/or the commercial insurance companies with risk safeguard measures or a deposit to compensate them in the event that such financing guarantee companies or commercial insurance companies performed their guarantee or insurance obligations upon the defaults of our users. In the future, we may be required to make further adjustment in our operations to comply with any relevant future PRC laws and regulations regarding the online consumer finance industry. These changes would have a material impact on our future financial results. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—If our current investor protection measures for institutional funding partners are deemed to violate the relevant laws and regulations, or if we are deemed to have operated financial guarantee business by the PRC regulatory authorities, our business, liquidity, financial condition and results of operations would be materially and adversely affected.” On the other hand, we have closely tracked the development and implementation of new rules and regulations that are likely to affect us. Tighter regulations may increase overall compliance costs of market players, promote more commercially reasonable and sensible credit products, enhance the competitive edge of established market players, and encourage consolidations within the industry. We believe these requirements have created entry barriers for many market players in China and further differentiated us from our competitors. We will continue to ensure timely compliance with existing and new laws and regulations applicable to our business. We believe that our ability to ensure timely and full compliance with these rules and regulations will improve our competitive position in the online consumer finance industry in China. Economic and market conditions While we believe we will continue to offer attractive value propositions to users and funding sources in changing economic environments, changes in the overall economic conditions may impact our business in several ways, including demand for our products, credit performance and funding costs. The demand from our users and funding sources for our loan products is dependent upon interest rates offered and the return earned relative to other comparable or substitute products. For example, a significant interest rate increase could cause potential users to defer seeking loans as they wait for rates to settle. Additionally, if weakness in the economy occurs and actual or expected default rates increase, investors and institutional funding partners may delay or reduce their funding of loans on our platform. Furthermore, although we have access to diversified funding sources, in the event of an insufficient amount of liquidity in the financial markets, it may be difficult for us to obtain sufficient funding from our institutional funding partners at a reasonable cost. In a strong economic climate, demand for our products and services may increase as consumer spending increases. In addition, additional potential users may qualify for a higher credit limit based on our credit assessment. Traditional lenders may also approve loans for a higher percentage of our potential users. Young professionals may receive higher and more stable salaries or other income, which may result in lower loan losses. In a weakening economic climate or recession, the opposite may occur. These effects may be partly mitigated by the fact each loan borrowed by our users is relatively small, which should be less affected by adverse economic conditions than if the principal amount of each loan were larger. 128 Key Specific Factors Affecting Our Results of Operations Major specific factors affecting our results of operations include the following: Ability to attract and retain users Our ability to grow depends on the addition of new users and increasing business from existing users. The number of active users was approximately 8.5 million in 2023, 8.2 million in 2024 and 8.2 million in 2025. Since 2021, we optimized our customer acquisition model by enhancing segmentation and providing differentiated credit lines, pricing and billing terms. We anticipate that our future development will continue to depend in part on attracting new users, including our ability to manage both online and offline acquisition channels, and to develop and improve our management of different customer cohorts. In addition, we believe the repeat transactions of our existing users will be important to our future development. We believe our ability to retain our users is primarily dependent on our ability to address the credit needs of our targeted user cohort, the superior user experience on our platform and the competitiveness of loan pricing. The extent to which we generate repeat business from our users will be an important factor in our continued revenue growth. Ability to satisfy our users’ growing financial needs Creating value by satisfying our users’ growing financial needs will be an important component of our future performance. We seek to grow with our users and capture their long-term growth potential by effectively managing the mix of our product and service offerings to cater to their evolving consumption needs. In addition, as young generation consumers build up their credit history with us and move up in the workforce, we offer them higher credit lines and the ability to borrow personal installment loans to obtain cash up to a higher limit, in anticipation of their expanding consumption requirements. Ability to access diversified and scalable funding The growth of our business is also dependent on our ability to ensure that we have access to diversified funding sources and secure scalable and stable funding to meet our users’ needs. With our access to multiple funding sources and the ability to adjust allocation of funding needs to different sources, we are not dependent on any particular type of funding source, and we are able to withstand seasonality and fluctuations in the supply and costs of funding. In 2024 and 2025, we cooperated with 15 and 11 new funding partners. As of December 31, 2025, we had cumulatively served over 180 funding partners, including commercial banks, consumer finance companies, and other licensed financial institutions, with many of which we developed long-term, stable business relationships. Since 2016, we have also offered 10 public asset-backed securitization programs. These diversification efforts have ensured adequate funding for our products and services so far, while the sustainable, reliable and scalable sources remain critical to our growth. Ability to effectively manage risk As one of the first companies in providing internet consumer finance services in China, we also have industry-leading experience and boast a wealth of consumer insights. We adopt an advanced and customized credit risk management approach driven by our proprietary risk control system and strong risk management culture. We put great emphasis in improving our fraud detection capabilities, the accuracy of our credit assessment model and the collection effectiveness through the combination of our big-data analytical capabilities and the increasing amount of data we accumulate through our operations. The effectiveness of our risk management system also depends on our ability to collect delinquent loans. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—If our ability to collect delinquent loans is impaired, or if the collection efforts of our in-house team or third-party service providers are impaired, our business and results of operations might be materially and adversely affected.” 129 Loan Performance Data We define 90 day+ delinquency ratio as outstanding principal balance of on-balance and off-balance sheet loans that was over 90 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. Loans that are delinquent for 180 days or more are charged off and are not included in the delinquency rate calculation. The 90 day+ delinquency ratio was 2.9%, 3.6% and 3.1% as of December 31, 2023, 2024 and 2025, respectively. We also define vintage charge-off rates as, with respect to on- and off-balance set loans originated during a specified time period, which we refer to as a “vintage,” the total outstanding principal balance of loans that are charged off during a specified period, divided by the total initial principal of the loans originated in such vintage. The following chart displays our historical vintage charge-off rates as of December 31, 2025 for each vintage of a three-month period from January 1, 2022 to June 30, 2025. 130 Key Components of Our Results of Operations Operating revenue Our operating revenue consist of credit facilitation service, tech-empowerment service and installment e-commerce platform service. Among the three types of services (i.e., credit facilitation service, tech-empowerment service and installment e-commerce platform service) we provide, the revenue from our credit facilitation service is recognized as credit facilitation service income, the revenue from our installment e-commerce platform service is primarily recognized as installment e-commerce platform service income, and the revenue from our tech-empowerment service is primarily recognized as tech-empowerment service income and, to a lesser extent, referral services and other services income. For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Credit facilitation service income 9,666,120 74.0 10,999,931 77.5 9,562,072 1,367,358 72.7 Loan facilitation and servicing fees-credit oriented 5,001,881 38.3 6,325,924 44.5 4,988,562 713,355 38.0 Guarantee income 2,519,284 19.3 2,663,824 18.8 2,423,570 346,566 18.4 Financing income 2,144,955 16.4 2,010,183 14.2 2,149,940 307,437 16.3 Tech-empowerment service income 1,640,453 12.6 1,881,376 13.2 2,081,335 297,627 15.8 Installment e-commerce platform service income 1,750,509 13.4 1,322,287 9.3 1,508,680 215,738 11.5 Total operating revenue 13,057,082 100.0 14,203,594 100.0 13,152,087 1,880,723 100.0 Installment e-commerce platform service. We generate Installment e-commerce platform service income from our e-commerce platform. We engage in the online direct sales along with our Installment e-commerce platform service, which is recorded on a gross basis, and we also earned commissions from third-party sellers made on our online marketplace through our e-commerce platform. Credit facilitation service •Loan facilitation and servicing fees-credit oriented. With respect to off-balance sheet loans where we provide guarantee services, we take all credit risks of borrowers in respect of off-balance sheet loans through the relevant guarantee arrangements, and generate loan facilitation and servicing fees-credit oriented under credit-oriented model for provision of intermediary services to both the users and the funding partners, including loan facilitation and matching, account maintenance, collection, and payment processing services and financing guarantee services, if any. •Guarantee income. 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 borrower’s default and recognized as guarantee income. •Financing income. We generate financing income from on-balance sheet loans, which are funded by establishment of the consolidated Trusts and issuance of asset‑backed securitized debts, as well as loans funded by our own microcredit company. Tech-empowerment service We generate tech-empowerment service income from profit sharing model, referral services as well as other services including technical services to financial institutions, subscription services and others. 131 Operating cost For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Cost of sales 1,635,635 19.1 1,319,526 14.4 1,206,033 172,460 13.9 Funding cost 513,869 6.0 326,451 3.6 228,958 32,741 2.6 Processing and servicing cost 1,935,016 22.7 2,291,904 25.0 2,442,557 349,281 28.1 Provision for financing and interest receivables 627,061 7.3 865,524 9.4 1,016,742 145,392 11.7 Provision for contract assets and receivables 629,308 7.4 718,413 7.8 614,364 87,853 7.1 Provision for contingent liabilities of guarantee 3,203,123 37.5 3,655,548 39.8 3,174,787 453,989 36.6 Total operating cost 8,544,012 100.0 9,177,366 100.0 8,683,441 1,241,716 100.0 Cost of sales. Our cost of sales consists of the purchase price of the products, shipping charges and handling costs, as well as inventory write-downs, which were not significant in 2023, 2024 and 2025. Funding cost. Our funding cost consists of interest expenses paid to institutional funding partners under on-balance sheet loan and amortization of deferred debt issuance cost incurred in connection with obtaining these debts, such as origination fees and legal fees. Processing and servicing cost. Our processing and servicing cost consist primarily of vendor costs related to credit assessment, user and system support, payment processing services and collection services associated with originating, facilitating and servicing loans, and related payroll cost and related share-based compensation expenses for personnel engaged in processing and servicing activities. Provision for financing receivables. We evaluate the creditworthiness and collectability of our on-balance sheet loan portfolio on a pooled basis. The provision for financing receivables represents an estimate of the losses inherent in our on-balance sheet loan portfolio. Provision for contract assets and receivables. We evaluate the collectability of our contract assets and receivables primarily related to loan facilitation and servicing fees. The provision for contract assets and receivables primarily represents an estimate of the credit losses inherent in our off-balance sheet loan portfolio. Provision for contingent guarantee liabilities. 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 contingent guarantee liabilities.” Operating expenses For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing expenses 1,733,301 65.8 1,787,299 65.2 1,918,894 274,398 66.7 Research and development expenses 513,284 19.5 578,243 21.1 595,316 85,129 20.7 General and administrative expenses 387,387 14.7 374,481 13.7 361,819 51,739 12.6 Total operating expenses 2,633,972 100.0 2,740,023 100.0 2,876,029 411,266 100.0 132 Sales and marketing. Sales and marketing expenses consist primarily of advertising costs and payroll and related share-based compensation expenses for personnel engaged in marketing and business development activities. Advertising costs consist primarily of costs of online advertising and offline promotional activities. Research and development. Research and development expenses consist primarily of payroll and related share-based compensation expenses for IT professionals involved in developing our technology platform and website, depreciation of server and other equipment, bandwidth and data center costs. General and administrative. General and administrative expenses consist of payroll and related share-based compensation expenses for employees engaged in general corporate functions, including finance, legal and human resources, costs associated with use of facilities and equipment, such as depreciation expenses, rental and other general corporate related expenses. Taxation Cayman Islands We are an exempted company incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciation. The Cayman Islands does not impose a withholding tax on payments of dividends to shareholders. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties, which may be applicable on instruments executed in, or after execution brought within, the jurisdiction of the Cayman Islands. The Cayman Islands is not a party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands. Hong Kong Our subsidiaries incorporated in Hong Kong are subject to Hong Kong profit tax at a rate of 16.5%. No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiaries during the periods presented. Hong Kong does not impose a withholding tax on dividends. Commencing from the year of assessment of 2018, the first HK$2 million of profits earned by the Company’s subsidiaries incorporated in Hong Kong will be taxed at half the current tax rate (i.e., 8.25%) while the remaining profits will continue to be taxed at the existing 16.5% tax rate. Mainland China Generally, our PRC subsidiaries, the variable interest entities and their subsidiaries, which are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%, if they are not eligible for any preferential tax treatment. However, an HNTE is instead subject to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. During this three-year period, an HNTE must conduct a qualification self-review each year to ensure it meets the HNTE criteria, and will be subject to the regular 25% income tax rate for any year in which it does not meet the criteria. In December 2022, one of our PRC subsidiaries obtained a qualification as HNTE for 2022, 2023 and 2024. In December 2025, the subsidiary renewed its qualification as HNTE for 2025, 2026 and 2027. In this regard, it was subject to 15% income tax rate in 2025. Pursuant to the Circular on Income Tax Policies for “Software Enterprises Encouraged by the State” announced on April 23, 2021, a “Software Enterprise Encouraged by the State” is entitled to an income tax exemption for two years beginning with its first profitable year and a 50% reduction to a rate of 12.5% for the subsequent three years. One of our PRC subsidiaries was qualified as “Software Enterprises Encouraged by the State” from 2021. As a result, it is entitled to an income tax exemption for the years of 2021 and 2022 and a preferential income tax rate of 12.5% from 2023 to 2025. The “Software Enterprise Encouraged by the State” is subject to review by the relevant authorities every year. 133 Benefiting from Notice of Promoting High-Level Opening and High-Quality Development of Guangxi Beibu Gulf Economic Zone In The New Era, and Announcement on The Continuation of The Western Development Enterprise Income Tax Policy, two of our PRC subsidiaries are entitled for a preferential income tax rate of 15% for China’s Western Development Strategy. Therefore, the two subsidiaries applied a preferential income tax rate of 15% from 2023 to 2030. In the meantime, the local tax bureau in Guangxi exempted 40% of the income based on the preferential income tax rate of 15%. One of our PRC subsidiaries is entitled to enjoy a preferential income tax rate of 9% from 2023 to 2027. Our online direct sales revenue from sales of electronic products, home appliance products and general merchandise products had been subject to a 17% value-added tax until May 1, 2018, when the rate was adjusted to 16%. The tax rate was further adjusted to 13% from April 1, 2019. Our financial services income from services to our customers in the PRC is subject to a 6% value-added tax. Dividends paid by our wholly foreign-owned subsidiary in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income with respect to Taxes on Income and Capital and receives approval from the relevant tax authority. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.” If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” In August 2023, our board of directors approved a semi-annual cash dividend policy. Under the policy, we will declare and distribute a recurring cash dividend semi-annually, starting from the second fiscal quarter of 2023, at an amount equivalent to approximately 15% to 30% of our net profit in the previous six-month period, or as otherwise authorized by the board. In November 2024, our board of directors approved a dividend payout ratio of 25% of total net profit for the entire year of 2025. In August 2025, our board of directors approved a further increased dividend payout ratio of 30% of total net income since the second half of 2025. We accrued related withholding tax liabilities based on a 10% tax rate for certain percentage of the annual profits to be distributed according to the dividend policy. We still intend to indefinitely reinvest the remaining earnings in our PRC subsidiaries. Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amount and as a percentage of our total operating revenue for the periods presented. The period-to-period comparisons of results of operations should not be relied upon as indicative of future performance. 134 For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for per share and per ADS data) Selected Consolidated Statements of Operations Data: Operating revenue: Credit facilitation service income 9,666,120 74.0 10,999,931 77.5 9,562,072 1,367,358 72.7 Loan facilitation and servicing fees-credit oriented-credit oriented 5,001,881 38.3 6,325,924 44.5 4,988,562 713,355 38.0 Guarantee income 2,519,284 19.3 2,663,824 18.8 2,423,570 346,566 18.4 Financing income 2,144,955 16.4 2,010,183 14.2 2,149,940 307,437 16.3 Tech-empowerment service income 1,640,453 12.6 1,881,376 13.2 2,081,335 297,627 15.8 Installment e-commerce platform service income 1,750,509 13.4 1,322,287 9.3 1,508,680 215,738 11.5 Total operating revenue 13,057,082 100.0 14,203,594 100.0 13,152,087 1,880,723 100.0 Operating cost: Cost of sales (1,635,635 ) -12.5 (1,319,526 ) -9.3 (1,206,033 ) (172,460 ) -9.2 Funding cost (513,869 ) -3.9 (326,451 ) -2.3 (228,958 ) (32,741 ) -1.7 Processing and servicing cost (1,935,016 ) -14.8 (2,291,904 ) -16.1 (2,442,557 ) (349,281 ) -18.6 Provision for financing receivables (627,061 ) -4.8 (865,524 ) -6.1 (1,016,742 ) (145,392 ) -7.7 Provision for contract assets and receivables (629,308 ) -4.8 (718,413 ) -5.1 (614,364 ) (87,853 ) -4.7 Provision for contingent guarantee liabilities (3,203,123 ) -24.5 (3,655,548 ) -25.7 (3,174,787 ) (453,989 ) -24.1 Total operating cost (8,544,012 ) -65.4 (9,177,366 ) -64.6 (8,683,441 ) (1,241,716 ) -66.0 Gross profit 4,513,070 34.6 5,026,228 35.4 4,468,646 639,007 34.0 Operating expenses: Sales and marketing expenses (1,733,301 ) -13.3 (1,787,299 ) -12.6 (1,918,894 ) (274,398 ) -14.6 Research and development expenses (513,284 ) -3.9 (578,243 ) -4.1 (595,316 ) (85,129 ) -4.5 General and administrative expenses (387,387 ) -3.0 (374,481 ) -2.6 (361,819 ) (51,739 ) -2.8 Total operating expenses (2,633,972 ) -20.2 (2,740,023 ) -19.3 (2,876,029 ) (411,266 ) -21.9 Change in fair value of financial guarantee derivatives and loans at fair value (206,368 ) -1.6 (979,234 ) -6.9 508,160 72,666 3.9 Interest expense, net (50,483 ) -0.4 (9,007 ) -0.1 (22,732 ) (3,251 ) -0.2 Investment loss (303,235 ) -2.3 (2,417 ) - (21,903 ) (3,132 ) -0.2 Others, net 7,774 0.1 58,188 0.4 19,461 2,783 0.1 Income before income tax expense 1,326,786 10.2 1,353,735 9.5 2,075,603 296,807 15.8 Income tax expense (260,841 ) -2.0 (253,275 ) -1.8 (398,526 ) (56,988 ) -3.0 Net income 1,065,945 8.2 1,100,460 7.7 1,677,077 239,819 12.8 Net income attributable to ordinary shareholders of the Company 1,065,945 8.2 1,100,460 7.7 1,677,077 239,819 12.8 (1)Share-based compensation expenses are allocated to processing and servicing cost and operating expense items as follows: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Processing and servicing cost 246 0.0 3,173 0.0 16,232 2,321 0.1 Sales and marketing expenses 17,454 0.1 13,756 0.1 19,354 2,768 0.1 Research and development expenses 23,547 0.2 10,715 0.1 13,353 1,909 0.1 General and administrative expenses 76,605 0.6 66,979 0.5 47,236 6,755 0.4 135 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Operating revenue Operating revenue decreased by 7.4% from RMB14,204 million in 2024 to RMB13,152 million (US$1,881 million) in 2025. This decrease in operating revenues was primarily attributable to a decrease in credit facilitation service income, partially offset by increases in tech-empowerment service income and installment e-commerce platform service income for the year. Credit facilitation service income. Credit facilitation service income decreased by 13.1% from RMB11,000 million in 2024 to RMB9,562 million (US$1,367 million) in 2025. The decrease was driven by the decreases in loan facilitation and servicing fees-credit oriented and guarantee income, partially offset by the increase in financing income. •Loan facilitation and servicing fees-credit oriented. Loan facilitation and servicing fees-credit oriented decreased by 21.1% from RMB6,326 million in 2024 to RMB4,989 million (US$713 million) in 2025. The decrease was primarily due to the decrease in the APR of off-balance sheet loans and the decrease in origination of off-balance sheet loans. •Guarantee income. Guarantee income decreased by 9.0% from RMB2,664 million in 2024 to RMB2,424 million (US$347 million) in 2025. The decrease was primarily due to the decrease of annual average outstanding balances in the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees. •Financing income. Financing income increased by 7.0% from RMB2,010 million in 2024 to RMB2,150 million (US$307 million) in 2025. The increase was primarily driven by the increase in the outstanding balances of on-balance sheet loans. Tech-empowerment service income. Tech-empowerment service income increased by 10.6% from RMB1,881 million in 2024 to RMB2,081 million (US$298 million) in 2025. The increase was primarily driven by the increase in referral services. Installment e-commerce platform service. Installment e-commerce platform service income increased by 14.1% from RMB1,322 million in 2024 to RMB1,509 million (US$216 million) in 2025. The increase was primarily driven by the increase in transaction volume with third-party sellers. Operating cost Operating cost decreased by 5.4% from RMB9,177 million in 2024 to RMB8,683 million (US$1,242 million) in 2025, primarily as a result of the decreases in provision for contingent guarantee liabilities, cost of sales, provision for contract assets and receivables and funding cost, partially offset by the increases in provision for financing receivables and processing and servicing cost. Cost of sales. Cost of sales decreased by 8.6% from RMB1,320 million in 2024 to RMB1,206 million (US$172 million) in 2025. The decrease was primarily driven by the decrease in transaction volume of online direct sales which is recorded on a gross basis. Funding cost. Funding cost decreased by 29.8% from RMB326 million in 2024 to RMB229 million (US$32.7 million) in 2025.The decrease was primarily driven by the decrease in funding rates and balance of funding debts to fund the on-balance sheet loans. Processing and servicing cost. Processing and servicing costs increased by 6.6% from RMB2,292 million in 2024 to RMB2,443 million (US$349 million) in 2025. The increase was primarily driven by the increase in risk management expenses. Provision for financing receivables. Provision for financing receivables was RMB1,017 million (US$145 million) for 2025, as compared to RMB866 million for 2024. The increase was primarily due to the increase of the outstanding loan balances of on-balance sheet loans. 136 Provision for contract assets and receivables. Provision for contract assets and receivables was RMB614 million (US$87.9 million) in 2025, as compared to RMB718 million in 2024. The decrease was primarily driven by the decrease of the outstanding loan balances of off-balance sheet loans. Provision for contingent guarantee liabilities. Provision for contingent guarantee liabilities was RMB3,175 million (US$454 million) in 2025, as compared to RMB3,656 million in 2024. The decrease was primarily due to the decrease of outstanding balances in the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees. Gross profit As a result of the foregoing, our gross profit decreased by 11.1% from RMB5,026 million in 2024 to RMB4,469 million (US$639 million) in 2025. Our gross margin decreased from 35.4% in 2024 to 34.0% in 2025. Operating expenses Operating expenses was RMB2,876 million (US$411 million) in 2025, as compared with RMB2,740 million in 2024. Sales and marketing. Sales and marketing expenses was RMB1,919 million (US$274 million) in 2025, as compared to RMB1,787 million in 2024. The increase was primarily driven by the increase in online advertising costs. Research and development. Research and development expenses was RMB595 million (US$85.1 million) in 2025, as compared to RMB578 million in 2024. The increase was primarily due to the increase in personnel-related costs. General and administrative expenses. General and administrative expenses was RMB362 million (US$51.7 million) in 2025, as compared to RMB374 million in 2024. Change in fair value of financial guarantee derivatives and loans at fair value Change in fair value of financial guarantee derivatives and loans at fair value was a gain of RMB508 million (US$72.7 million) in 2025, as compared to a loss of RMB979 million in 2024. The change was primarily driven by the fair value gains realized as a result of the release of guarantee obligation as loans are repaid, partially offset by the fair value loss from the re-measurement of the expected loss rates. Investment loss Investment loss was RMB 21.9 million (US$3.1 million) in 2025, as compared to RMB2.4 million in 2024. The increase was primarily due to the losses picked up in 2025. Income tax expense Income tax expense increased by 57.7% from RMB253 million in 2024 to RMB399 million (US$57.0 million) in 2025. The increase was primarily due to the increase in income before income tax expense. Net income As a result of the foregoing, our net income increased by 52.4% from RMB1,100 million in 2024 to RMB1,677 million (US$240 million) in 2025. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 For a detailed description of the comparison of our operating results for the year ended December 31, 2024 to the year ended December 31, 2023, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Results of Operations—Year Ended December 31, 2024 Compared to Year Ended December 31, 2023” of our annual report on Form 20-F filed with the Securities and Exchange Commission on April 18, 2025. 137 Changes in Financial Position The following table sets forth selected information from our consolidated balance sheets as of December 31, 2024 and 2025. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. As of December 31, 2024 2025 RMB RMB US$ (in thousands) Assets: Cash and cash equivalents 2,254,213 2,156,133 308,323 Restricted cash-current 1,638,479 1,717,773 245,638 Restricted term deposit and short-term investments 138,497 78,458 11,219 Short-term financing receivables, net 4,668,715 5,450,418 779,399 Short-term contract assets and receivables, net 5,448,057 3,763,096 538,116 Deposits to insurance companies and guarantee companies 2,355,343 2,187,609 312,824 Restricted cash-non-current 100,860 91,937 13,147 Long-term financing receivables, net 112,427 167,378 23,935 Long-term contract assets and receivables, net 317,402 317,496 45,401 Long‑term investments 284,197 243,971 34,887 Other assets 500,363 535,242 76,539 TOTAL ASSETS 22,240,779 23,162,963 3,312,259 Liabilities: Short-term borrowings and current portion of long-term borrowings 690,772 905,791 129,526 Short‑term funding debts 2,754,454 2,440,685 349,013 Deferred guarantee income 975,102 1,305,911 186,743 Contingent guarantee liabilities 1,079,000 544,191 77,818 Long-term borrowings 585,024 566,015 80,939 Long‑term funding debts 1,197,211 850,590 121,633 TOTAL LIABILITIES 11,500,773 11,210,332 1,603,051 Total shareholders’ equity 10,740,006 11,952,631 1,709,208 Cash and cash equivalents Our cash and cash equivalents decreased by 4.35% from RMB2,254 million as of December 31, 2024 to RMB2,156 million (US$308 million) as of December 31, 2025, primarily due to the net cash provided by operation activities of RMB3,614 million (US$517 million), the net cash used in investing activities of RMB2,612 million (US$373 million), and the net cash used in financing activities of RMB1,031 million (US$147 million). See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Cash Flows.” Restricted cash Restricted cash mainly represents (i) cash received from users but not yet repaid to funding parties or received from funding parties but not yet remitted to users, which is not available to fund our general liquidity needs; and (ii) security deposits set aside for our partnering commercial banks in case of users’ defaults; and (iii) cash received via consolidated trust and ABS that has not been distributed. Restricted cash increased by 4.84% from RMB1,739 million as of December 31, 2024 to RMB1,810 million (US$259 million) as of December 31, 2025, primarily due to an increase in the security deposits placed with and set aside for our partnering commercial banks in case of users' defaults. Financing receivables, net Financing receivables, net increased by 17.5% from RMB4,781 million as of December 31, 2024 to RMB5,618 million (US$803 million) as of December 31, 2025, primarily due to the increase associated with on-balance sheet loans originated on our platform in 2025. Deposits to insurance companies and guarantee companies 138 We engaged third-party licensed insurance companies and guarantee companies to provide assurance to some institutional funding partners, and are required to prepay certain amount of deposit as guarantee to these insurance companies and guarantee companies. Such prepayment in the bank accounts of these insurance companies and guarantee companies is recorded as deposits to insurance companies and guarantee companies. Deposits to insurance companies and guarantee companies decreased by 7.1% from RMB2,355 million as of December 31, 2024 to RMB2,188 million (US$313 million) as of December 31, 2025. This decrease is primarily due to the decrease in underlying loan balance. Short-term and long-term contract assets and receivables, net The contract assets and receivables decreased by 29.2% from RMB5,765 million as of December 31, 2024 to RMB4,081 million (US$584 million) as of December 31, 2025, primarily due to the decrease in off-balance sheet loans originated. Other assets Other assets increased by 7.0% from RMB500 million as of December 31, 2024 to RMB535 million (US$76.5 million) as of December 31, 2025, primarily due to the increase of long-term receivables from third parties. Borrowings Borrowings increased by 15.4% from RMB1,276 million as of December 31, 2024 to RMB1,472 million (US$210 million) as of December 31, 2025, primarily due to additional borrowings from banks. Funding debts Funding debts decreased by 16.7% from RMB3,952 million as of December 31, 2024 to RMB3,291 million (US$471 million) as of December 31, 2025, primarily due to the reduction of on-balance sheet funding scale. Deferred guarantee income Our deferred guarantee income increased by 33.9% from RMB975 million as of December 31, 2024 to RMB1,306 million (US$187 million) as of December 31, 2025, due to the increase of loan origination of the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees. Contingent guarantee liabilities Our contingent guarantee liabilities decreased by 49.6% from RMB1,079 million as of December 31, 2024 to RMB544 million (US$77.8 million) as of December 31, 2025, primarily due to the improvement of the loan portfolio in the off-balance sheet loans funded by certain institutional funding partners, which are accounted for under ASC 460, Guarantees. Accruals and other current liabilities Accruals and other current liabilities increased by 8.8% from RMB4,020 million as of December 31, 2024 to RMB4,371 million (US$625 million) as of December 31, 2025, primarily due to the increase in deferred service fees and amount due to third parties. B. Liquidity and Capital Resources 139 To date, we have financed our operations primarily through cash generated by operating activities, the funding provided by institutional funding partners, issuance of convertible notes and asset-backed securities. As of December 31, 2023, 2024 and 2025, we had RMB2,625 million, RMB2,254 million and RMB2,156 million (US$308 million), respectively, in cash and cash equivalents. Our cash and cash equivalents solely consist of demand deposits placed with banks or other financial institutions. We believe that our current cash and cash equivalents and our anticipated cash flows from operations and financing activities will be sufficient to meet our anticipated working capital requirements, capital expenditures and repayment need of debt becoming due for the next 12 months from the date of this annual report on Form 20-F. We may, however, need additional capital in the future to fund our continued operations. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity or convertible loans would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that might restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Although we consolidate the results of the variable interest entities, we only have access to cash balances or future earnings of the consolidated variable interest entities through our contractual arrangements with them. See “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with the Variable Interest Entities.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.” As a Cayman Islands exempted company and offshore holding company, we are permitted under the PRC laws and regulations to provide funding to our wholly foreign-owned subsidiaries in China only through loans or capital contributions, subject to the approval of government authorities and limits on the amount of capital contributions and loans. In addition, our wholly foreign-owned subsidiaries in China may provide Renminbi funding to their respective subsidiaries through capital contributions and loans, and to the consolidated variable interest entities only through loans. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We and the VIEs are subject to the PRC regulation of loans to and direct investment in the PRC entities by offshore holding companies and governmental regulations on currency conversion when making loans to our PRC subsidiaries and the consolidated variable interest entities or making additional capital contributions to our PRC subsidiaries, which could affect our liquidity and our ability to fund and expand our business” and “Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.” Funding debts Liabilities to institutional funding partners. As part of our arrangement with institutional funding partners, we typically agree on an aggregate amount of funds to be provided, the maximum credit limit given to an individual customer, the maximum borrowing term and an annualized interest rate. These liabilities mature between January 2024 and March 2027, and had weighted average interest rates of 9.1%, 7.4% and 5.5%, as of December 31, 2023, 2024 and 2025, respectively. As of December 31, 2024 and 2025, institutional funding partners funded an aggregate amount of RMB4,380 million and RMB3,307 million (US$471 million), in our outstanding financing receivables, respectively. As of December 31, 2024 and 2025, financing receivables amounting to RMB11.9 million and RMB1,197 million (US$170 million) were pledged as collateral, respectively. The increase in pledged collateral in 2025 was due to the increase in the amount of funds provided by certain institutional funding partners. The following table summarizes our outstanding funding debts on our consolidated balance sheets as of December 31, 2024 and 2025, respectively: As of or for the Year Ended December 31, 2024 2025 RMB RMB US$ Short-term: Liabilities to institutional funding partners 2,754,454 2,440,685 349,013 Total short-term funding debts 2,754,454 2,440,685 349,013 Long-term: Liabilities to institutional funding partners 1,197,211 850,590 121,633 Total long-term funding debts 1,197,211 850,590 121,633 140 The following table summarizes the remaining contractual maturity dates of our funding debts on our consolidated balance sheets as of December 31, 2025 and associated interest payments. 1-12 months 12-24 months Total (RMB in thousands) Liabilities to institutional funding partners 2,440,685 850,590 3,291,275 Total funding debts 2,440,685 850,590 3,291,275 Interest payments (1) 92,565 52,981 145,546 Total interest payments 92,565 52,981 145,546 (1)Interest payments for funding debts with variable interest rates are calculated using the interest rate as of December 31, 2025. Cash Flows The following table sets forth a summary of our cash flows for the years presented: For the Year Ended December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Net cash provided by operating activities 2,817,572 1,081,458 3,614,441 516,858 Net cash provided by/(used in) investing activities 2,334,452 (904,880 ) (2,611,670 ) (373,463 ) Net cash used in financing activities (3,882,952 ) (387,277 ) (1,030,961 ) (147,426 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 3,914 1,082 481 69 Net increase/(decrease) in cash, cash equivalents and restricted cash 1,272,986 (209,617 ) (27,709 ) (3,962 ) Cash, cash equivalents and restricted cash at beginning of the year 2,930,183 4,203,169 3,993,552 571,070 Cash, cash equivalents and restricted cash at end of the year 4,203,169 3,993,552 3,965,843 567,108 Operating Activities Net cash provided by operating activities was RMB3,614 million (US$517 million) in 2025. In 2025, the difference between net cash provided by operating activities and our net income of RMB1,677 million (US$240 million) mainly resulted from provision for contingent guarantee liabilities of RMB3,175 million (US$454 million), provision for financing and interest receivables of RMB1,017 million (US$145 million), provision for contract assets and receivables of RMB614 million (US$87.9 million) and net gain of change in fair value of financial guarantee derivatives and loans at fair value of RMB508 million (US$72.7 million). Changes in operating assets and liabilities mainly included a decrease in contingent guarantee liabilities of RMB3,710 million (US$530 million), a decrease in contract assets and receivables of RMB1,104 million (US$158 million), and a decrease in financing receivables related to online direct sales of RMB620 million (US$88.6 million), an increase in prepayments and other current assets of RMB1,118 million (US$160 million), an increase in deferred guarantee income of RMB331 million (US$47.3 million), and an increase in accruals and other current liabilities of RMB211 million (US$30.1 million). Net cash provided by operating activities was RMB1,081 million in 2024. In 2024, the difference between net cash provided by operating activities and our net income of RMB1,100 million mainly resulted from provision for contingent guarantee liabilities of RMB3,656 million, net loss of change in fair value of financial guarantee derivatives and loans at fair value of RMB979 million, provision for financing and interest receivables of RMB866 million, provision for contract assets and receivables of RMB718 million. Changes in operating assets and liabilities mainly included a decrease in contingent guarantee liabilities of RMB4,385 million, a decrease in accruals and other current liabilities of RMB1,712 million, a decrease in deferred guarantee income of RMB563 million, a decrease in other operating assets of RMB323 million, a decrease in deposits to insurance companies and guarantee companies of RMB258 million, and a decrease in contract assets and receivables of RMB267 million. 141 Net cash provided by operating activities was RMB2,818 million in 2023. In 2023, the difference between net cash provided by operating activities and our net income of RMB1,066 million mainly resulted from provision for contingent guarantee liabilities of RMB3,203 million, provision for contract assets and receivables of RMB629 million, provision for financing and interest receivables of RMB627 million, net loss of change in fair value of financial guarantee derivatives and loans at fair value of RMB206 million, share-based compensation expenses of RMB118 million, depreciation and amortization of RMB105 million. Changes in operating assets and liabilities mainly included an increase in deposits to insurance companies and guarantee companies of RMB364 million, an increase in contract assets and receivables of RMB2,841 million, a decrease in contingent guarantee liabilities of RMB2,277 million, an increase in accruals and other current liabilities of RMB1,151 million and an increase in deferred guarantee income of RMB644 million. Investing Activities Net cash used in investing activities was RMB2,612 million (US$373 million) in 2025, which was primarily attributable to financing receivables originated and purchased (excluding receivables related to online direct sales) of RMB22,238 million (US$3,180 million), and investments in loans at fair value of RMB2,542 million (US$364 million), partially offset by principal collection on financing receivables and recoveries (excluding receivables related to online direct sales) of RMB19,067 million (US$2,726 million), and collection of loans at fair value of RMB3,010 million (US$430 million). Net cash used in investing activities was RMB905 million in 2024, which was primarily attributable to financing receivables originated and purchased (excluding receivables related to online direct sales) of RMB16,162 million, and investments in loans at fair value of RMB4,593 million, partially offset by principal collection on financing receivables and recoveries (excluding receivables related to online direct sales) of RMB14,972 million, and collection of loans at fair value of RMB4,923 million. Net cash provided by investing activities was RMB2,334 million in 2023, which was primarily attributable to principal collection on financing receivables and recoveries (excluding receivables related to online direct sales) of RMB19,888 million, collection of principals of loans at fair value RMB5,120 million, and withdrawal of restricted term deposit and short-term investments of RMB2,130 million, partially offset by financing receivables originated and purchased (excluding receivables related to online direct sales) of RMB18,316 million, investments in loans at fair value of RMB5,155 million and placement of restricted term deposit and short-term investments of RMB1,103 million. Financing Activities Net cash used in financing activities was RMB1,031 million (US$147 million) in 2025, which was primarily attributable to principle payments on funding debts of RMB13,752 million (US$1,967 million), principle payments on borrowings of RMB942 million (US$135 million), partially offset by proceeds from funding debts of RMB13,092 million (US$1,872 million) and proceeds from borrowings of RMB1,139 million (US$163 million). Net cash used in financing activities was RMB387 million in 2024, which was primarily attributable to principle payments on funding debts of RMB12,684 million, principle payments on borrowings of RMB781 million, and repayments of convertible loans of RMB504 million, partially offset by proceeds from funding debts of RMB12,697 million and proceeds from borrowings of RMB1,030 million. Net cash used in financing activities was RMB3,883 million in 2023, which was primarily attributable to principle payments on funding debts of RMB19,719 million and principle payments on borrowings of RMB2,266 million, partially offset by proceeds from funding debts of RMB17,938 million and proceeds from borrowings of RMB1,958 million. 142 Material Cash Requirements Our material cash requirements as of December 31, 2025 and any subsequent interim period primarily include capital expenditures and contractual obligations, including funding debts, short-term borrowings, operating lease obligations, and commitment to purchase delinquent loans. Capital Expenditures We incurred capital expenditures of RMB222 million, RMB244 million and RMB362 million (US$51.6 million) in 2023, 2024 and 2025, respectively. In these periods, our capital expenditures were mainly used for purchases of property, equipment and software, and in construction of our new headquarters located in Shenzhen. Our capital expenditures for 2026 are expected to be approximately RMB104 million, including RMB61.6 million payment in construction of our new headquarters located in Shenzhen, and RMB42.3 million in expansion and enhancement of our information technology infrastructure. We will continue to incur capital expenditures to meet the expected growth of our business. Contractual Obligations The following table sets forth our contractual obligations, including interest payments, as of December 31, 2025: Payment Due by Period Total Less than 1 year 1— 2 years 2 — 3 years More than 3 years (RMB in thousands) Contractual Obligations: Debts obligations Funding debts 3,436,821 2,533,250 903,571 — — Borrowings 1,575,331 946,643 113,644 110,177 404,867 Operating lease obligations 44,856 32,970 8,858 3,028 — Commitment for construction 307,889 226,509 81,380 — — Commitment to purchase delinquent loans 81,890 81,890 — — — Total 5,446,787 3,821,262 1,107,453 113,205 404,867 Other than those shown above, we did not have any significant capital and other commitments as of December 31, 2025. We intend to fund our existing and future material cash requirements with our existing cash balance. We will continue to make cash commitments, including capital expenditures, to support the growth of our business. For guarantees provided by us, please refer to the section "Off- Balance Sheet Arrangements" below. Off-Balance Sheet Arrangements We provide services in connection with off-balance sheet loans, including account maintenance, collection and payment processing from user and distributions to certain institutional funding partners. According to relevant financial guarantee contracts with certain institutional funding partners, the guarantee provided by us is solely for the purpose of reimbursing them in the event that the borrowers fail to satisfy their required payment obligations. See “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies-Guarantee receivables and liabilities.” Other than the above, we have not entered into any other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. 143 Holding Company Structure LexinFintech Holdings Ltd. is a holding company with no material operations of its own. We conduct our operations primarily through (i) our PRC subsidiaries and (ii) the variable interest entities and their subsidiaries in China. As a result, LexinFintech Holdings Ltd.’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with the PRC accounting standards and regulations. Under the PRC laws, each of our subsidiaries, the variable interest entities and their subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, our wholly foreign-owned subsidiaries in China and the variable interest entity may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Technology” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D. Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period since January 1, 2026 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. E. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements. For a detailed discussion of our significant accounting policies and related judgments, see “Notes to Consolidated Financial Statements – Note 2 Significant Accounting Policies.” 144 Allowance for credit losses The allowance for credit losses represents our estimate of expected credit losses on the financial assets measured at amortized cost and financial guarantees not accounted for as derivatives for off-balance sheet loans. The expected credit losses on these financial assets and contingent guarantee liabilities are determined using a pooled basis within respective credit risk classification levels of the underlying customers, taking into consideration the historical credit loss experience, the current credit quality of the portfolio and application of macroeconomic forecasts. The allowance for credit losses is based on our significant judgment regarding: •Probability of default. The expected probability of payment and time to default, which include assumptions about macroeconomic factors and recent performance; and •Loss given default. The percentage of the expected balance due at default that is not recoverable. The loss given default takes into account the expected future recoveries. The macroeconomic factors used in estimation include variables that have historically been key drivers of increases and decreases in credit losses, such as CPI and Total retail sales of consumer goods. Total retail sales of consumer goods is formulated by the National Bureau of Statistics of China, it reflects the total domestic market volume of physical goods consumption and catering revenue. Changes in the probability of default and loss given default assumptions would affect the allowance for credit losses. The effect of the indicated increase/decrease in the assumptions for the consolidated statements of operations is as follows (in RMB thousands): Assumption Relative Change in Basis Point Increase/(Decrease) Probability of default (lifetime) +/- 100 bps 34,553 / (34,553) Loss given default +/- 100 bps 72,747 / (72,747) 145 Fair value measurement of financial guarantee derivatives Financial guarantee derivatives provided for off-balance sheet loans are recorded at fair value at the inception of the off-balance sheet loans and are subsequently remeasured at fair value on an ongoing basis. The estimated fair value of the financial guarantee derivatives is determined based on a discounted cash flow model, with reference to the estimates of expected loss rates and margins on cost of guarantee services. Our estimate of fair value is based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. The significant assumptions in the determination of the fair value of financial guarantee derivatives include the expected loss rates for off-balance sheet loans and estimated margins on cost of guarantee services. Changes in the assumptions may have a significant impact on the fair value of financial guarantee derivatives. The effect of the indicated increase/decrease in the assumption of the expected loss rates for off-balance sheet loans for the consolidated statements of operations is as follows (in RMB thousands): Assumption Relative Change in Basis Point (Decrease)/Increase Weighted average cumulative loss rate (i) +/- 100 bps (31,910)/ 31,910 (i) Expressed as a percentage of the original principal balance of the loans. Revenue recognition for loan facilitation and servicing fees- credit oriented and performance based We provide intermediary services to the borrowers and funding partners as the lenders. The intermediary services provided include (i) loan facilitation and matching services, (ii) post-origination services (i.e. account maintenance, collection, and payment processing), and (iii) a financial guarantee, if any. We identify loan facilitation and matching services and post-origination services as distinct and separate performance obligations. A financial guarantee is recorded at fair value at inception of each loan. The total transaction price is first allocated to the financial guarantee based on the estimated fair value of the guarantee liability at the loan inception, the remaining consideration is allocated to each of the performance obligations based on relative standalone selling price, and include variable consideration in the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur when the uncertainty associated with variable consideration is subsequently resolved. Revenues from loan facilitation and matching services are recognized at point-in-time upon the successful matching of the loans, and revenues from post-origination services are recognized ratably over the terms of the loans. Revenue from loan facilitation and servicing fees-performance based is recognized at predetermined revenue sharing rates based on the repayment collected from the borrowers by funding partners. Such revenue sharing rates are determined based on the performance of the underlying off-balance sheet loans. 146 Significant judgment is applied in allocation of transaction prices for each distinct performance obligation and in determination of variable considerations. We primarily use the expected cost plus a margin approach to determine the standalone selling price. A number of key factors were considered for the estimation of standalone selling price, including the estimated cost of providing the services and the estimated margins. The variable consideration of loan facilitation and servicing fees-performance based is estimated using the expected value method, i.e, based on revenue sharing rates and estimated repayment amount collectible from the borrowers by funding partners, taking into consideration of the expected loss rates of the underlying off-balance sheet loans. The increase in the expected loss rates of the underlying off-balance sheet loans will result in the decrease in revenue recognized. We update our estimate on a quarterly basis, and any adjustments to the estimate are recognized as adjustments to revenue using the cumulative catch-up method. The revenue recognition is sensitive to our estimates in these factors. Changes in our estimates of these factors may have a significant impact on the revenue recognized.