1. Principal activities and reorganization (a) Principal activities PPDAI Group Inc. (the Company) is an investment holding company and with its consolidated subsidiaries and variable interest entities (VIEs) (collectively referred to as the Group) operates an online consumer finance marketplace through its platform (www.ppdai.com) registered in the Peoples Republic of China (the PRC or China). As of December 31, 2018, the Companys principal subsidiaries and consolidated VIEs are as follows: Name Percentage of direct or indirect ownership Date of incorporation Place of incorporation Subsidiaries PPDAI (HK) LIMITED. (PPDAI HK) 100 % June 12, 2012 Hong Kong, China Beijing Prosper Investment Consulting Co., Ltd. (Beijing Prosper) 100 % August 21, 2012 Beijing, China Shanghai Guangjian Information Technology Co., Ltd. (Shanghai Guangjian) 100 % June 5, 2017 Shanghai, China Shanghai Shanghu Information Technology Co., Ltd. (Shanghai Shanghu) Shanghai Manyin Information Technology Co., Ltd. (Shanghai Manyin) 100 % June 15, 2017 Shanghai, China Consolidated VIEs Beijing Paipairongxin Investment Consulting Co., Ltd. (Beijing Paipairongxin) 100 %* June 15, 2012 Beijing, China Shanghai Zihe Information Technology Co., Ltd. (Shanghai Zihe) 100 %* March 21, 2018 Shanghai, China Shanghai Nianqiao Technology Co., Ltd. (Shanghai Nianqiao) 100 %* November 29, 2018 Shanghai, China Consolidated VIEs principal subsidiaries Shanghai PPDai Financial Information Services Co.,Ltd. (Shanghai PPDai) 100 %* January 18, 2011 Shanghai, China Shanghai Erxu Information Technology Co., Ltd. (Shanghai Erxu) 100 %* April 28, 2018 Shanghai, China * Controlled via contractual relationships (b) Reorganization Prior to 2012, the operation of the online consumer finance marketplace was carried out by Shanghai PPDAI and Beijing Paipairongxin, both of which were owned by the original shareholders (the Founders) and an angel investor. To facilitate offshore financing, an offshore corporate structure was formed in 2012 (the Reorganization), which was carried out as follows: 1) PPDAI Group Inc was incorporated in the Cayman Islands on June 6, 2012 by the Founders and angel investor. 2) On June 12, 2012, PPDAI HK was incorporated in Hong Kong as a wholly owned subsidiary of the Company. 3) On June 15, 2012, Beijing Prosper was incorporated in the PRC as a wholly owned subsidiary of PPDAI HK. 4) On August 21, 2012, Beijing Paipairongxin was incorporated in the PRC by the founders of Shanghai PPDAI. By entering into a series of commercial agreements in 2012 to 2014 (the VIE Agreements) that included the founders. Beijing Prosper, Beijing Paipairongxin and Shanghai PPai, (i) Shanghai PPDAI became a wholly owned subsidiary of Beijing Paipairongxin and (ii) Beijing Pairongxin became a VIE whose primary beneficiary is Beijing Prosper. Upon entering into the agreements, the shareholders of Beijing Paipairongxin became the Nominee Shareholders of Beijing Paipairongxin. The Company further carried out the following reorganization activities in 2017: 1) On June 5, 2017, Shanghai Guangjian was incorporated in the PRC as a wholly owned subsidiary of PPDAI HK. 2) On June 15, 2017, Shanghai Shanghu was incorporated in PRC as a wholly owned subsidiary of Shanghai Guangjian. In June, 2017, Shanghai Guangjian, Shanghai Shanghu, Beijing Prosper, Beijing Paipairongxin, Shanghai PPDAI and the shareholders of Beijing Paipairongxin entered into a new set of contractual arrangements, including an equity pledge agreement, a business operation agreement, a power of attorney, an option agreement and an exclusive technology consulting and service agreement, replacing the previous contractual agreements among Beijing Prosper, Beijing Paipairongxin, Shanghai PPDai and the shareholders of Beijing Paipairongxin. The term of the new set of agreements do not change from the previous ones. As a result, the Company continues to have control over Beijing Paipairongxin. Shanghai Guangjian and Shanghai Manyin are collectively referred to as the WOFEs. Beijing Paipairongxin, Shanghai Zihe and Shanghai Nianqiao are collectively referred to as the VIEs. (c) Share split On October 20, 2017, the Company effected a share split. Each of ordinary share and preferred share of the Company was subdivided into 100 shares at a par value of US$0.00001. All shares and per share amounts presented in these consolidated financial statements and notes have been revised on a retroactive basis to reflect the effect of the share split. The par value per ordinary share has been retroactively revised as if it had been adjusted in proportion to the share split.