Earnings call transcript: Yirendai Ltd reports strong Q1 2025 revenue growth

Yirendai Ltd’s Q1 2025 earnings call revealed a robust increase in total revenue by 13% year-over-year, reaching RMB1.6 billion. Despite this growth, net income saw a significant drop of 49% to RMB248 million. The company’s stock showed a minor decline in premarket trading, reflecting a 0.51% decrease to $5.89. Yirendai’s financial performance was driven by its financial services segment, which saw a substantial revenue increase of 59%. According to InvestingPro analysis, the stock appears undervalued, trading at a P/E ratio of just 2.88x and maintaining an impressive gross profit margin of 85.38%.

Key Takeaways

• Total revenue increased by 13% year-over-year.
• Financial services segment revenue surged by 59%.
• Net income decreased by 49% compared to the previous year.
• Stock price experienced a slight premarket decline of 0.51%.

Company Performance

Yirendai Ltd demonstrated a strong revenue performance in Q1 2025, mainly driven by its financial services segment. However, the decline in net income highlights some underlying challenges. The company continues to focus on technological innovation and global expansion, positioning itself as a dominant platform in the industry.

Financial Highlights

• Total Revenue: RMB1.6 billion, up 13% year-over-year
• Net Income: RMB248 million, down 49% year-over-year
• Cash and Cash Equivalents: RMB4 billion
• Financial Services Revenue: Up 59% year-over-year
• Insurance Segment Revenue: Down 43% year-over-year

Outlook & Guidance

Yirendai Ltd expects Q2 revenue to range between RMB1.6 billion and RMB1.7 billion, indicating a potential year-over-year increase of 7% to 14%. The company anticipates double-digit growth in loan volume and is focusing on international expansion in the Philippines and Indonesia, with potential market exploration in the Middle East and Europe. InvestingPro’s comprehensive analysis shows the company maintains a "GREAT" financial health score of 3.28, suggesting strong fundamentals to support its expansion plans. For detailed insights into Yirendai’s growth potential and market position, investors can access the exclusive Pro Research Report, available to subscribers.

Executive Commentary

CEO Ning Tang emphasized the company’s commitment to "global high-quality development" and highlighted the centrality of AI in their strategy. CFO Yuning Feng discussed the balance between increasing shareholder returns and reinvesting in high-potential opportunities.

Risks and Challenges

• Regulatory Changes: New loan facilitation regulations could impact operations.
• Insurance Market Contraction: Regulatory tightening presents challenges.
• Net Income Decline: A significant decrease in net income may concern investors.
• International Expansion Risks: Entering new markets involves uncertainties.
• Technological Investments: Increased R&D expenses may affect short-term profitability.

Yirendai Ltd’s Q1 2025 earnings call revealed a company navigating growth and challenges with a focus on technology and international markets. The strategic emphasis on innovation and expansion suggests potential for future growth, albeit with notable risks. The company’s strong financial position is evidenced by its Altman Z-Score of 14.16, indicating minimal bankruptcy risk, while its low debt-to-equity ratio of 0.01 provides financial flexibility for future growth initiatives.

Full transcript - Yirendai Ltd (YRD) Q1 2025:

Conference Operator: Good day, and welcome to the First Quarter twenty twenty five Year End Digital Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Keow He. Please go ahead.

Keow He, Investor Relations, CreditEase: Thank you, operator. Good morning and good evening, everyone. Today’s call features the presentation by the Founder, Chairman and CEO of CreditEase, our CEO, Mr. Ning Tang and our CFO, Mr. Yuning Feng.

Our incoming CFO, Mr. William Hui, will join us for the Q and A session after the prepared remarks. Before beginning, we would like to remind you that discussions during this call contain forward looking statements made under the Safe Harbor provisions of U. S. Private Securities Litigation Reform Act of 1995.

Such statements affect the risks, uncertainties and factors that can cause actual results to differ materially from those contained in any such statements. Further information regarding future risks, uncertainties or factors is included in our filings with the U. S. Securities and Exchange Commission. We do not undertake any obligation to update any forward looking statements as required under the relevant laws.

During the call, we will be referring to certain non GAAP financial measures and supplemental measures to review and assess our operating performance. These non GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with The U. S. GAAP. For information about those non GAAP measures and reconciliations to GAAP measures, please refer to our earnings press release.

I will now pass it to Ning for opening remarks.

Ning Tang, Founder, Chairman and CEO, CreditEase: Thank you all for joining our earnings conference call today. We are pleased to report another solid and healthy quarter, reflecting the strength of our technology transformation strategy, which focuses on sustainable growth, operational efficiency, technology innovation and international expansion. Our core business benefits from domestic economic stimulus policies that boost consumption and expand credit access, creating sector wide opportunities. Through our strategic focus on attracting and serving high quality borrowers, combined with ongoing integration of advanced technology across our platform, We are well positioned to capitalize on these favorable conditions and confident in maintaining our growth momentum through 2025. Before discussing our operations in detail, I would like to share our interpretation of the new rules on loan facilitation business issued by China’s National Financial Regulatory Administration in early April this year.

Under the new rules, commercial banks are required to adopt a formal white list of mechanism for FinTech partnerships and comply with standardized financing cost structures. Under the new regulatory framework, we anticipate accelerated consolidation in China’s online lending industry due to stricter compliance requirements. While smaller platforms may face pressure in maintaining partnership with funding sources, major platforms like ours are gaining dominance through compliance advantages and technological strength. Looking ahead, risk management capabilities, regulatory compliance and differentiated product pricing capabilities will become critical competitive differentiators and those are precisely the areas where we are strategically building our operational edge. Now, let me go through our business highlights for this quarter.

on our financial services business. In the first quarter of twenty twenty five, loan volume facilitated reached RMB15.2 billion, representing a slight decline of less than 1% quarter over quarter, but a strong 28% increase year over year, demonstrating resilience amid seasonal headwinds. We project the double digit growth in loan volume for the second quarter of this year, attributable to three key growth drivers. The one is our growing repeat borrowing rate, which increased significantly to 74% in the first quarter of twenty twenty five compared to 65% in the fourth quarter of twenty twenty four. Having successfully upgraded our customer base with higher quality borrowers, We are now focusing on increasing repeat borrowing within this premium segment.

This strategic optimization allows us to grow our loan volume while improving customer acquisition cost efficiency, driving superior unit economics across our platform portfolio. Secondly, we have also broadened our traffic channel mix by adding three new partnerships this quarter, including collaborations with travel and lifestyle platforms. These partnerships are already contributing to our borrower acquisition and engagement. Thirdly, we continue to see exceptional results from our AI driven initiative, which are a cornerstone of our operations. In April, our proprietary large language model Zhiyue received filing approval for commercial use, marking a key milestone in applying our AI technology to enhance marketing and engagement.

During the first quarter of this year, Zhiyue generated over five fifty advertising pieces in China and 20 video sets, 200 advertising texts and 200 images in The Philippines, streamlining campaigns and the boost impact. Moreover, our AI marketing system continues to demonstrate strong performance. Currently, our AI customer service system handles over 30,000,000 costs per month, boosting acquisition efficiency and cutting labor costs. Specifically, for existing customer operations, in the first quarter of this year, our system served over 20,000,000 existing borrowers with advancements in semantic recognition and intent detection, enabling more meaningful and efficient interactions. On average, customer interactions achieved 7.1 ROM per session in the first quarter, up from 6.6 ROM in the prior quarter, which further improved sales conversion.

Furthermore, customer service efficiency has also seen concrete improvement. The 20 call pickup rate has increased to 96% in the first quarter this year from 85% in the prior quarter, delivering a faster, more seamless customer experience and reinforcing our commitment to high quality service standard. Additionally, we have launched an AI powered marketing prediction system, which enables personalized and precise customer targeting. Meanwhile, our proprietary AI driven internal customer service training platform is well received among our employees. It provides a variety of training services such as role stimulation, AI powered business freezing suggestions, real time AI evaluation feedbacks and AI generated training reports, which has enhanced the agent communication quality and ensured compliance with operational standards.

Now let’s turn to the funding aspect. In the first quarter of twenty twenty five, we added four new institutional funding partners, bringing our total number of funding sources to nearly 60. Meanwhile, our funding costs continue to decline by nine basis points in March compared to December 2024 paving the way for our long term high quality growth. Regarding our asset quality, risk indicators remain stable at historical low in the

William Hui, Incoming CFO, CreditEase: first quarter of twenty twenty five. As of March 31, delinquency rates for loans past due for one to thirty days, thirty one to sixty days and sixty one to ninety days were 1.6%, 1.21.2% showing negligible fluctuation

Ning Tang, Founder, Chairman and CEO, CreditEase: from the previous quarter. This stability reflects our commitment to maintaining high asset quality through rigorous risk management practices. It’s worth mentioning that AI has played a pivotal role in enhancing our asset management efficiency. Take loan collection work for instance. In the first quarter of twenty twenty five, eighty three percent of day one delinquent cases, twenty nine percent of day two cases and 28% day three cases in the domestic market were handled by AI collection robots, saving approximately RMB1.9 million monthly in labor cost.

In The Philippines, AI collection strategies have reduced the complaints by 14% quarter over quarter, further improving our operational efficiency and the service quality. Now let’s look at our overseas business, which continues to demonstrate strong momentum. In the first quarter of twenty twenty five, our loan volume in The Philippines reached RMB123.7 million, representing a 74% growth compared to the fourth quarter of twenty twenty four, with new borrowers’ loan facilitation up 108% quarter over quarter, paving the way for our continued growth in the net space as we will drive up our repeat borrowing later this year. Looking ahead, we anticipate a double digit growth in loan volume in The Philippines for the second quarter this year. Meanwhile, preparations for our expansion into Indonesia are progressing well with operations expected to launch in the second half of twenty twenty five.

We are also leveraging AI to optimize marketing, enhance intent recognition and reduce costs further supporting our international growth. With that said, AI remains central to our strategy. In addition to using AI in our operations, we are expanding our AI ecosystem through investments in AI technologies and exploring potential acquisition opportunities globally. These efforts support collaboration while speeding up innovation and time to market. Now, go on to our insurance business.

Our insurance brokerage market continues to face headwinds due to regulatory tightening and the market contraction, particularly in the life insurance segment. In the first quarter of twenty twenty five, our total premiums reached RMB801.8 million with revenue of 71.5 million reflecting a sharp decline of 1243% year over year in line with broader industry trends. To navigate these challenges, we are adopting a dual pronged strategy. For life insurance, we are leveraging new media customer acquisition and digital channels to drive momentum. For property insurance, we are capitalizing on emerging opportunities by expanding embedded insurance in sectors such as AI robots and the low altitude economy.

By focusing on providing tailored high value products, we are aligning with new growth areas in the economy, driving innovation and strengthening our partnership. Based on current assessment, we anticipate a remarkable recovery in our insurance brokerage business next quarter. Moreover, we’re also seeing growing synergies between our lending and insurance businesses with premiums from cross selling up 67% quarter over quarter, demonstrating the effectiveness of our integrated business model. Now for the consumption and lifestyle business segment. Following a strategic review, we determined that the segment has reached an optimal scale with high penetration.

It will require a substantial investment to grow the business to the next level. As a result, we are realigning resources to focus more on financial services and AI driven innovation, where we see greater opportunities for sustainable growth. As we look ahead to 2025, we see significant opportunities for both our core business and the new areas emerging as we transform into a more international and technology driven organization. We will continue to emphasize AI driven innovation and application as one of our core pillars of growth. By pursuing a path of global high quality development, we are confident in our ability to achieve sustainable progress and we will remain focused on creating long term value for our customers, partners and shareholders.

Finally, we have a management change to announce. Mr. Yun Lin Feng, our current CFO will step down from his position on 07/30/2025 due to personal reasons. We sincerely thank Yuning for her dedication and contributions to Yiren Digital and wish him all the best in his future endeavors. We are delighted to welcome Mr.

William Hui as our new CFO. With nearly two decades of experience in investment banking and capital markets, William has a strong track record in global investment operation. Since joining our parent company CreditEase in 2017, he has played a key role in driving investment and capital market strategy. His extensive leadership background and expertise are invaluable as we continue to grow and strengthen our organization. With that, I will pass it to Yuning, who will go through the financial performance for this quarter.

Yuning Feng, Current CFO, CreditEase: Thank you, Mr. Yang, and thank you for all your kind wishes. So hello, everyone. On this call, I will be focused on our key financial highlights. Please refer to our earnings release and IR deck for further details, both available on our website.

Firstly, we are pleased to report a steady growth in the fourth quarter of twenty twenty five. Our total revenue increased 13% year over year to RMB1.6

William Hui, Incoming CFO, CreditEase: billion.

Yuning Feng, Current CFO, CreditEase: In the Financial Services segment, total loan facilitation reached RMB15.2 billion in the first quarter, up 28% year over year. The growth was primarily driven by robust demand for our small revolving loan products, coupled with a steady increase in demand from repeat higher quality borrowers. The platform’s ability to attract, retain and nurture high quality borrowers has been a key driver of the sustained growth in loan volume. As a result, revenue from these segments surged by 59% year over year to billion in the fourth quarter, further highlighting the platform success in meeting growing customer demand. In the fourth quarter, the revenue from guarantee service reached RMB380 million compared to RMB17 million in the same period last year, reflecting the growing loan volume facilitated under the risk taking model.

As loan balance under risk taking model continue to grow, we expect higher revenue contribution from the guarantee services. In the insurance sector, our gross written premium totaled million in the fourth quarter of twenty twenty five, making a 12% year over year decline. The decline was mainly driven by industry wide new sales contraction amid regulatory changes. Consequently, revenue from our insurance segment declined 43 year over year to million. In the consumption and lifestyle segment, as we strategically scaled back product offering since the second half twenty twenty four.

The total revenue dropped 40% year over year to million. Following our strategic review, just as Mr. Tang mentioned, we have decided to focus more on our financial service and AI driven innovation to optimize our ROI as we see greater business opportunity there. On the expense side, sales and marketing spend in the first quarter edged down 0.1% year over year to RMB277 million, which remains stable. This reflects better cost efficiency from development of our AI technology.

Research and development expenses increased 112% year over year to RMB86 million as we increased our investment in AI technologies, strategic recruitment of specialized talent. Origination, servicing and other operating costs was RMB225 million in the down 4% year on year, which remained stable. G and A expenses for the for the quarter increased by 15% year over year to RMB96 million. The increase reflects our enhanced incentive bonuses and increased employee benefit expenses. The allowance for contract assets and receivables for the quarter was RMB153 million, up 49% year over year.

This is mainly driven by the continued growth of loan volume facilitated on our platform as well as our cautious approach to risk management. Provision for contingent liability this quarter increased five eleven year over year to million. This reflects a higher loan volume growth facilitated under our risk taking model, which in accordance with our current accounting standard require substantial upfront provision, while the corresponding revenue will be recognized on a monthly basis throughout our loan’s lifetime. So on the bottom line, net income of this quarter was RMB248 million, decreased 49% year over year. The decline in net income can be attributed to four key factors.

substantial upfront provision were allocated due to growing in loan volume under our risk taking business model our product model. research and development expense increased as we continue to enhance our in house AI capabilities. Thirdly, there was a reduction in overall profitability in within the insurance business as well as lifestyle and consumption business segment. Regarding our cash flow, we generated approximately million net cash from our operations in the fourth quarter. On our balance sheet, our cash and cash equivalents remained strong at RMB4 billion, underscoring our financial flexibility and positioning us to capitalize our strategic opportunities.

Lastly, on our business outlook, based on our assessment of current business and marketing condition, we expect our revenue for the second quarter of twenty twenty five to stand between RMB1.6 billion to RMB1.7 billion, representing a 7% to 14% year on year increase with a healthy net profit margin. This represents our current and preliminary assessment, which may be subject to changes and uncertainties. So here we have concluded our remarks.

Keow He, Investor Relations, CreditEase: Operator, we’re now ready for Q and A. Thanks.

Conference Operator: Thank you. We will now begin the question and answer session. Our question comes from Chris Wu from Loop Capital. Please go ahead.

Yuning Feng, Current CFO, CreditEase: Thank you. Perhaps my question is what kind of impact or changes do you expect from the new loan facilitation rules? Thank you.

William Hui, Incoming CFO, CreditEase: Okay. Thank you for the question. The recent loan facilitation regulation in China, we believe, is a significant step toward formalizing and stabilizing the industry within the country’s financial framework. So these rules promote greater transparency and regulatory clarity, which align with the government’s supportive goals of supporting financially robust lenders and fostering healthy industry growth. So for Yiren Digital, we are benefited from it is beneficial for big platform like us as the industry will see we likely see an acceleration in the industry consolidation.

So as we are already on the right list of our funding partners, so we believe this is good news for us.

Keow He, Investor Relations, CreditEase: Thanks. I hope that answers your question, And next question. Yes, do you have any other questions?

Yuning Feng, Current CFO, CreditEase: Yes. Can you provide some details on the international expansion? Thank you.

Keow He, Investor Relations, CreditEase: Thanks. And Tang Zong, will you answer this question? Yes, sure. And then previously

Ning Tang, Founder, Chairman and CEO, CreditEase: reported international business is very strategic and for us and will, yes, grow into a significant part of our revenue and the value in the future. I hope, yes, not too far away. And we are making very solid progress in The Philippines as I earlier reported. Yes, and the second quarter will likely see also double digit growth. And also, are already profitable there.

And so AI is playing a very key role in The Philippines and I expect also in other markets, international markets. And yes, we are working closely with our partner in Indonesia for the launch. Yes, soon, sooner rather than later, I hope. Yes, in the beginning of the half of the year and because our partner has very rich resources in Indonesia And we contribute our great technology capability and also fintech experience in Mainland China and also in The Philippines. So there is strong synergy between the partners.

And I very much hope that, yes, results in Indonesia will also be very positive. William, you have more color to add?

William Hui, Incoming CFO, CreditEase: Yes. I’ll just add some financial context into it. So in Q1, our international transaction volume has reached billion. That’s up 75% quarter over quarter with a loan facilitation for new borrower growing by 108%. So we expect a continued double digit growth in loan volume in the second quarter.

So in Indonesia, as Ning just mentioned, are preparing for the launch and we expect it will launch in the second half of this year. And meanwhile, The Philippines and Indonesia, we will continue to explore the possibilities of the other market such as The Middle East or even the Europe.

Keow He, Investor Relations, CreditEase: Thank you, Willem. And I hope that answers your question, Chris.

Ning Tang, Founder, Chairman and CEO, CreditEase: Thank you.

Conference Operator: Thank you. Our next question comes from the line of Dale Tungsten, a shareholder. Please go ahead.

Dale Tungsten, Shareholder: Hi, thank you for taking my question. I just wanted to ask about the crypto asset that appeared on the balance sheet this quarter and then also the fair value adjustment. So any context there would be great.

Ning Tang, Founder, Chairman and CEO, CreditEase: Koyal, this is about what asset?

Dale Tungsten, Shareholder: Crypto asset. And then also, I think there was a fair value adjustment that took place in the quarter and in the cash flow statement, it looked like it might be related to the crypto asset.

Ning Tang, Founder, Chairman and CEO, CreditEase: Yes. This is a part of our yes, effort to yes, invest our cash and yes, so crypto is becoming more mainstream and part of the yes, financial system. So it’s a minority piece of our, yes, investment effort. And in the first quarter, it experienced some value drop. But as we see, its value has gone up.

Yes. So we expect some fluctuation, yes, in this emerging asset class. But yes, we are hopeful that we are making through the investments and things will work out. William, you have more color to add?

Yuning Feng, Current CFO, CreditEase: Yes, this is Yunnan. So yes, in the first quarter, we have allocated a small amount of our cash into the curricular assets as we explore new ways to manage our especially overseas cash and cash equivalent in our balance sheet. As Mr. Tang mentioned, yes, in the first quarter, there are some market valuation and we have managed our positioning during the fourth quarter and the second quarter. We are happy to see that actually the foundation we see has been already asset value has been growing back in the second quarter.

And but in the fourth quarter, the fair value changes on this investment item has been approximately $70,000,000 I hope that answers the question.

Dale Tungsten, Shareholder: Yes, that answers

Keow He, Investor Relations, CreditEase: It’s that adjustment for fair value or we can see that the adjusted EBITDA in the first quarter was RMB325 million, which is quite stable compared to the last quarter. So, we expect the best value adjustment will be lifted in the second quarter this year.

Dale Tungsten, Shareholder: Okay. And then on the guarantee business Just to track

Yuning Feng, Current CFO, CreditEase: the fair value changes in this asset class was RMB70 million.

Keow He, Investor Relations, CreditEase: Yes.

Dale Tungsten, Shareholder: Great. And then when do you expect the Guaranty business to sort of stabilize? Just in terms of it looks like you’re still ramping it. Just when do you expect it to stabilize and potentially show profitability?

William Hui, Incoming CFO, CreditEase: Yes. Currently, the guarantee business is at around 40% level, and we believe the 50 less than 50% is our optimal target. So we expect it will continue to grow slightly in the next couple of quarters and then after that it will start to come down as our non guaranteed business start to outgrow the self guarantee business.

Dale Tungsten, Shareholder: Okay. I don’t have any other questions. Thank you.

Conference Operator: Thank you.

Ning Tang, Founder, Chairman and CEO, CreditEase: Our

Conference Operator: next question comes from the line of Bruce Orrin from Black Lab. Please go ahead.

Bruce Orrin, Analyst, Black Lab: Yes. Thank you. I’d like to say I’m delighted that Euron Digital expects to benefit from consolidation in the new regulatory environment. I have two questions. concerning the six fold increase provision for contingent liabilities, which has now grown to the largest operating cost and expense.

Why would a higher volume of loans decrease profitability, especially since delinquency rates have remained stable? And my question is, can you offer any insight into Yiren’s dividend commitment for later this year? Thank you.

William Hui, Incoming CFO, CreditEase: Okay. I think to answer your question about six times the provision, it’s because of we are taking bigger position into in the self guarantee business. With that, according to the accounting standards, we need to make the relevant provisions immediately, even though the revenue will come on a month by month basis. So with that, we that’s why we see a hit on

Yuning Feng, Current CFO, CreditEase: our margins

William Hui, Incoming CFO, CreditEase: as the loan volume grows in the self guarantee assets. So I think that answered the kind of discrepancy between why the delinquency is low but the provision is high because it’s more it’s like an accounting treatment for us. So for your question about the dividend, I think it’s we are committed to our semi annual dividend policies to ensuring the consistent value is returned to our investors. So according to our semi annual dividend policies, current dividend payout ratio stands at around 10% based on the earnings of the prior six months period. So while our payout ratio reached around 20% when we last paid our dividends in May.

So moving forward, we are carefully assessing the balance between increasing shareholder return and reinvesting in the high potential opportunities and innovation to drive a more sustainable long term growth. So this strategic evaluation will guide us our decision to maximize the value for all stakeholders.

Keow He, Investor Relations, CreditEase: Yes. And then we will do cash dividends next quarter. We will make the announcement next quarter because it is semi annual.

William Hui, Incoming CFO, CreditEase: But at the same time, we are also noticing and comparing dividend policies of our peers and then we will make a decision that will maximize the balance for our shareholders.

Keow He, Investor Relations, CreditEase: Hope that answers your question.

Bruce Orrin, Analyst, Black Lab: Yes. I have a small follow-up. I failed to completely understand with the higher provision for contingent liabilities, is that a one off for this quarter? Or can we expect levels of that level for continuing quarters? Thank you.

William Hui, Incoming CFO, CreditEase: I think every time that we increase the loan balance in this self guarantee loans, then we need to increase our provision proportionally. So I think as we as that the loan volume in that category continue to rise as we expect it will peak at around Q2 or Q3. Then after Q3, we will see that the provision will start to tail off. But at the same time, the loan that we made earlier in Q1, will start getting more interest revenue from it. So that will more or less offset the impact of the contingency liability.

I think the way it works is when that loan balance reach a steady state, the provision will the change in provision will stop.

Keow He, Investor Relations, CreditEase: Hope that answers your questions. And back to you, operator.

Conference Operator: Thank you. This concludes our question and answer session for today. If you have any further questions, you can please connect the IR team of Yiren Digital. The conference has now concluded.

William Hui, Incoming CFO, CreditEase: Thank you. Thank

Conference Operator: you for attending today’s presentation. You may now disconnect.

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