Yiren Digital Ltd. Q4 FY2024 earnings call

• Reshaped and upgraded customer segments for Financial Services, improving asset quality and laying foundation for long-term growth.
• Integrated AI throughout operations, with 2024 R&D expenses totaling RMB412 million (a 177% year-over-year increase), with significant allocation to AI development. AI models applied in collections, customer service, etc., improving efficiency.
• International Business upgraded customer mix in Philippines, achieving profitability (high single digits) and aiming to replicate success in other regions.
• Insurance Brokerage actively digitizing, leveraging social media for client acquisition, with property insurance strategy including strong channel partnerships and over 1,100 products.
• Announced cash dividend of US$0.22 per ADS for the second half of 2024, to be paid around May 15, 2025.

Segment Performance

• Financial Services: Fourth quarter loan volumes reached RMB15.4 billion, a 32% year-over-year increase. Full year 2024 loan volumes were RMB53.6 billion, a 49% increase from the previous year. Fourth quarter revenue from this segment grew 34% year-over-year to RMB1.048 billion, and full year revenue was RMB3.5 billion, a 38% annual increase. The Yixianghual ending platform had 4.5 million monthly active users in the fourth quarter, a 27% year-over-year increase. Funding costs in the fourth quarter saw a 23 basis points sequential decline, with a total decline of 210 basis points compared to the same period in 2023.
• International Business: Upgraded customer mix in the Philippines led to improved profitability (high single digits). Monthly loan volumes are in the RMB30 million to RMB40 million range, with total loan volume in 2025 expected to double compared to 2024.
• Insurance Brokerage: Fourth quarter premiums were RMB1.1 billion, a 9% year-over-year decline. Revenue from the insurance segment in the fourth quarter increased 8% year-over-year to RMB106 million. Full year 2024 premiums were RMB4.4 billion, a 10% year-over-year decline, and revenue was RMB408 million, a 58% year-over-year decline. Property insurance total premiums in 2024 were over RMB2.0 billion, with over 120 institutional partners and more than 1,100 property insurance products.
• Consumption and Lifestyle: Fourth quarter revenue was RMB298 million, a 25% year-over-year decline. Full year revenue for this segment was over RMB1.9 billion, a 36% year-over-year increase.

• Full year 2025 revenue expected to be between RMB5.5 billion to RMB6.5 billion.
• International business loan volume in 2025 expected to double compared to 2024.
• Dividend of US$0.22 per ADS for the second half of 2024, to be paid on or around May 15, 2025.

• Forward-looking statements subject to risks and uncertainties as outlined in SEC filings.
• Regulatory changes impacting the Insurance Brokerage segment.
• Market conditions affecting allowance for contract assets and receivables, with provision for contingent liability increasing due to loan volume growth under risk-taking model.

Q: As the Chinese government now relaxed regulations, what change will the company make, especially when your competitors may act more positively?

A: Will continue to drive up repeat borrowing rate (targeting 70% this year), use AI-driven analytics for smarter customer acquisition via platforms like Douyin, explore non-finance acquisition channels, upgrade customer mix to increase average ticket size, and improve customer experience through streamlined processes and UI upgrades.

Q: Can you share some long-term goals for the overseas business? Like, what scale will the business achieve, and how much will you invest in the overseas business? Do you think that overseas business could be bigger than the domestic business one day?

A: Overseas business could be as big as domestic in the long run. Aim to make international business a meaningful revenue contributor in the next couple of years. Leverage AI in overseas markets, replicate Philippines success in other regions, and is optimistic about global growth as a strategic objective.