Executive Summary / Key Takeaways

• Strategic Pivot to Profitability: 9F Inc. has successfully transitioned from its legacy online lending business, achieving a significant net income of RMB50.2 million (US$6.9 million) in 2024, a notable turnaround from prior losses, driven by its focus on digital technology and wealth management services.
• Technology as a Core Differentiator: The company's advanced AI algorithms and proprietary platform are central to its strategy, empowering institutional partners with enhanced user acquisition, risk management, and operational efficiency, thereby creating a competitive moat.
• Wealth Management Fuels Growth: The Wealth Management Services segment demonstrated robust growth, with a 95.6% revenue increase in 2024, primarily from life insurance offerings, indicating strong potential in offshore securities and diversified investment products.
• Operational Efficiency and Investment Strategy: Proactive expense management, including staff optimization and reduced office lease expenses, coupled with a strategic shift towards marketable securities in its investment portfolio, contributed to improved financial health.
• Complex Regulatory and Legal Environment: Significant risks remain, including uncertainties surrounding China's evolving regulatory framework for fintech, ongoing legacy business litigations with substantial frozen assets, and material weaknesses in internal controls, which demand close investor attention.

Digital Transformation: A New Chapter for 9F Inc.

9F Inc. (NASDAQ:JFU) is undergoing a profound transformation, repositioning itself as a digital technology and wealth management service provider. The company's overarching strategy centers on empowering institutional partners with advanced financial technologies while attracting individual investors with global asset allocation opportunities and access to quality e-commerce products. This strategic pivot, initiated in 2020 with the cessation of its online lending information intermediary services, marks a critical juncture in its journey, aiming to capitalize on the vast potential of China's new consumer economy and the appreciation of global assets.

The company's history, tracing back to Jiufu Shuke Technology Group Co., Ltd. in 2006, laid the groundwork for its current operations. Following its Nasdaq listing in 2019, 9F Inc. embarked on a strategic redirection, moving away from its legacy peer-to-peer lending model. This evolution is set against a backdrop of dynamic industry trends, including the increasing demand for AI and data center infrastructure, which indirectly supports digital financial services, alongside the complexities of China's macroeconomic environment and heightened geopolitical tensions that influence global financial markets.

Technological Edge and Innovation: The Core of 9F's Strategy

At the heart of 9F Inc.'s strategic transformation lies its commitment to technological differentiation. The company leverages a suite of advanced financial technologies, particularly sophisticated artificial intelligence (AI) algorithms. These include machine learning, community discovery, natural language processing (NLP) for voice recognition, and enhanced machine learning automation models for training. This proprietary technology is not merely a supporting function but a core offering, enabling 9F to provide technology empowerment services to its institutional partners.

The tangible benefits of this technology are evident in several areas. For institutional partners, these AI-driven solutions translate into improved user acquisition, more precise user filtering, optimized user operation management, and robust risk management capabilities. This directly contributes to reduced user acquisition costs, higher user conversion rates, and enhanced profitability for partners. For instance, the company's well-developed risk management and data analysis technology places it in a superior position to assist financial institutions in identifying potential borrowers that align with their client profiles. This deep insight, cultivated as a long-standing provider of digital finance solutions, allows 9F to offer high-quality consultation and integrated technology solutions across various sectors, including banking, automobile, securities investment, and insurance. The company's independently built data service system provides what-you-see-is-what-you-get interface editing environments, allowing for rapid deployment and editing of new user-interfacing functions. Its front-end development infrastructure is compatible with major operating systems like iOS and Android, ensuring broad accessibility and responsiveness to market trends. Furthermore, 9F has developed data centers for storage and a big-data monitoring system with centralized log management, visualization, and intelligent warning systems for risk management. The intelligent operating system provides optimized risk management and customized information pushing services to millions of users. The company actively pursues research and development in big data and AI, both in-house and through investments in emerging technology companies, signaling a continuous drive for innovation. This technological prowess forms a critical competitive moat, driving operational efficiency and enabling the company to offer differentiated value propositions in a crowded market.

Strategic Business Segments and Performance Analysis

9F Inc. operates through three primary segments: Technology Empowerment Services, E-commerce Services, and Wealth Management Services, alongside the phasing out of its legacy Post-origination Services.

The Technology Empowerment Services segment, while still a significant revenue contributor, experienced a decline in recent years. Revenues decreased by 24.3% from RMB327.2 million in 2022 to RMB247.8 million in 2023, and further by 42.0% to RMB143.6 million (US$19.7 million) in 2024. This reduction was primarily attributed to decreased demand from institutional customers, reflecting a broader economic slump and a relative decline in their business operations. Despite the revenue contraction, the segment maintained positive operating income, demonstrating its underlying profitability.

The E-commerce Services segment also faced headwinds, with sales income decreasing by 7.9% to RMB142.6 million in 2023 from RMB154.9 million in 2022, and a further 12.4% decline to RMB125.0 million (US$17.1 million) in 2024. Management noted that this was due to proactive adjustments in product offerings to enhance efficiency and margins, a decrease in customer numbers, and a general decline in China's retail industry. Despite the revenue decline, the segment's gross profit impressively increased by 17.6% from RMB81.0 million in 2023 to RMB95.2 million (US$13.0 million) in 2024. This improvement was a direct result of the company's strategy to shift towards selling products with higher profit margins and a reduction in the cost of goods sold.

The Wealth Management Services segment emerged as a key growth driver, showcasing a remarkable turnaround. After a 57.8% decrease in revenue to RMB18.4 million in 2023 from RMB43.7 million in 2022, this segment saw a substantial 95.6% increase to RMB36.0 million (US$4.9 million) in 2024. This growth was primarily fueled by an increase of RMB27.0 million (US$3.7 million) from life insurance offerings. The segment also transitioned from an operating loss in previous years to a positive operating income of RMB32.3 million in 2024, highlighting the success of its expansion into offshore securities investment and diversified wealth management products.

The Post-origination Services segment, representing the legacy online lending business, continued its wind-down. Revenues from this segment declined by 89.8% to RMB3.6 million in 2023 from RMB35.8 million in 2022. In 2024, the company recognized all remaining revenues of RMB5.3 million (US$0.7 million) from this legacy business, as outstanding loans were transferred to third parties. This indicates the near completion of the transition away from this historical business line.

Financial Health and Liquidity: A Return to Profitability

9F Inc.'s financial performance in 2024 marked a significant turning point, with the company reporting a net income of RMB50.2 million (US$6.9 million), a substantial improvement from net losses of RMB140.3 million in 2023 and RMB594.9 million in 2022. This return to profitability underscores the effectiveness of its strategic pivot and operational adjustments.

The company's liquidity profile saw notable changes. Cash and cash equivalents decreased by 77.5% to RMB379.4 million (US$52.0 million) as of December 31, 2024, from RMB1,686.3 million in 2023. This was primarily due to a shift in cash management and investment strategy, involving substantial investments in marketable securities. Consequently, investment in marketable securities surged by 357.1% to RMB1,956 million (US$268.0 million) in 2024, yielding an unrealized gain of RMB5.2 million (US$0.7 million) due to strong market performance. Operating cash flow remained positive at RMB46.5 million (US$6.4 million) in 2024. Management anticipates that current cash, cash equivalents, and projected cash flow from operations will be sufficient to meet its needs for at least the next 12 months. Furthermore, capital expenditures for the fiscal year ended December 31, 2025, are expected to be nil.

Competitive Landscape and Strategic Positioning

The industries in which 9F Inc. operates—digital technology and wealth management—are intensely competitive and rapidly evolving. The company holds a mid-tier position, striving to differentiate itself through an integrated service model.

Compared to Qifu Technology, Inc. (QFIN), a leader in online consumer finance, JFU's offerings in online lending and wealth management are less narrowly focused. QFIN benefits from a streamlined credit services model, often demonstrating stronger profitability margins and robust cash flow. While JFU's integrated ecosystem, combining lending with e-commerce and payment facilitation, offers greater convenience for users, it faces challenges in matching QFIN's innovation speed and market share in core credit processing.

Against Lufax Holding Ltd (LU), a major player in wealth management and consumer finance, JFU's platform integrates more payment and e-commerce features, aiming for a comprehensive user experience. However, LU's extensive partnerships with traditional banks and strong distribution network give it a larger network effect and more stable profitability. JFU's emphasis on user-centric tools and faster integration of new services in certain areas provides an edge, but LU generally exhibits superior scalability and financial health.

When contrasted with Futu Holdings Ltd (FUTU), a prominent online brokerage with a global focus, JFU's business is more domestically oriented towards integrated financial services for Chinese consumers. FUTU excels in advanced trading algorithms and international reach, leading to rapid revenue growth and strong profitability. JFU's localized approach and potentially lower cost structure for basic services differentiate it, but it lags in R&D investment and overall market share capture in advanced wealth management.

JFU's competitive advantages, or "moats," primarily stem from its integrated digital platform and proprietary technology. The integrated platform fosters customer loyalty through bundled services, potentially leading to stronger recurring revenue and improved margins. Its proprietary AI and big data technologies offer enhanced efficiency in processing, helping to counter competitors' distribution strengths and potentially improving capital efficiency and gross margins. However, key vulnerabilities include its dependence on the Chinese regulatory environment, which can impose significant operational costs and limit expansion, and potential technological gaps that could expose it to rivals with more advanced tools. Barriers to entry in fintech, such as stringent regulations, high capital requirements, and the need for advanced technology, generally favor established players like 9F, but also benefit larger, well-resourced competitors.

Risks and Challenges Ahead

Despite the positive shift in profitability, 9F Inc. faces a complex array of risks. The company's Variable Interest Entity (VIE) structure in China remains a significant concern, as PRC laws restrict foreign ownership in value-added telecommunication services. Any adverse changes in these laws or their interpretation could force the company to relinquish its interests in its VIEs, potentially leading to deconsolidation and a material adverse effect on its financial condition. "If the PRC government finds that the contractual arrangements which establish the structure of our business operations do not comply with PRC laws or regulations, or if these laws or regulations or their interpretations change in the future, we could be forced to relinquish our interests in those operations, which may result in our VIEs being deconsolidated."

The evolving regulatory landscape in China, particularly concerning cybersecurity, data privacy, and overseas listings, poses ongoing challenges. The company acknowledges that "the PRC governments oversight and control over offerings conducted overseas in relation to securities of, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability and the ability of any holder of our ADSs or other securities of our company to offer or continue to offer such securities to investors, or cause such securities to significantly decline in value or become worthless." Furthermore, the potential for delisting from U.S. exchanges under the Holding Foreign Companies Accountable Act (HFCAA) if the PCAOB is unable to inspect its auditor for two consecutive years, presents a material risk to its U.S. listing. The company also explicitly states, "We do not hold any licenses or permits for providing securities brokerage services in China," and has removed its MetaStock app from app stores in the PRC region to address compliance concerns. PRC governmental controls on currency conversion and cross-border remittances could also directly impact trading volumes on its platform, affecting revenue from brokerage commissions.

Legal proceedings continue to be a drain on resources. The consolidated court proceeding with PICC Property and Casualty Company Limited Guangdong Branch, where 9F is seeking approximately RMB2.3 billion in payments, is pending a ruling. An unfavorable outcome could materially affect its financial condition. Additionally, certain assets, amounting to approximately RMB430.9 million, were subject to judicial freezing orders as of August 8, 2025, related to legacy business litigations. Internally, the company identified three material weaknesses in its internal control over financial reporting as of December 31, 2024, leading management to conclude that its internal controls were ineffective. While remediation efforts are underway, including hiring additional personnel and engaging financial consulting firms, the full impact and timeline for resolution remain uncertain. Lastly, the company's likely status as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes in 2024 and 2025 could result in adverse tax consequences for U.S. holders of its ADSs or ordinary shares.

Conclusion

9F Inc. stands at a pivotal moment, having successfully pivoted from its legacy online lending business to a more diversified model centered on digital technology empowerment and wealth management services. The return to net profitability in 2024, driven by robust growth in wealth management and strategic cost management, underscores the potential of its transformed business. The company's core technological capabilities, particularly in AI and big data, are foundational to its competitive strategy, enabling enhanced operational efficiency and differentiated service offerings for both institutional partners and individual investors.

However, the investment thesis for 9F Inc. is tempered by significant regulatory and legal complexities inherent in its operating environment. The uncertainties surrounding China's evolving fintech regulations, the ongoing legal battles, and the need to fully remediate internal control weaknesses present material risks that warrant careful consideration. While the company's strategic focus on technology and international expansion, particularly in offshore wealth management, offers avenues for future growth, its ability to effectively navigate these external and internal challenges will be paramount to sustaining its recent profitability and realizing its long-term value proposition for investors.