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Yiren Digital Reports Third Quarter 2021 Financial Results

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BEIJING, Nov. 24, 2021 /PRNewswire/ -- Yiren Digital Ltd. (NYSE: YRD) ("Yiren Digital" or the "Company"), a leading digital personal financial management platform in China, today announced its unaudited financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Operational Highlights

Wealth Management

  • Cumulative number of investors served reached 2,612,279 as of September 30, 2021, representing an increase of 2.9% from 2,538,656 as of June 30, 2021 and compared to 2,283,828 as of September 30, 2020.

  • Number of active investors[1] was 427,873 as of September 30, 2021, representing an increase of 11.0% from 385,536 as of June 30, 2021, and compared to 170, 907 as of September 30, 2020.

  • Total client assets[2] was RMB17,415.3 million (US$2,702.8 million) as of September 30, 2021, representing an increase of 18.8% from RMB14,660.4 million as of June 30, 2021, and compared to RMB4,994.6 million as of September 30, 2020.

  • Sales volume of investment products amounted to RMB5,030.2 million (US$780.7 million) in the third quarter of 2021, representing a decrease of 5.9% from RMB5,343.6 million in the second quarter of 2021 and compared to RMB4,593.3 million in the same period of 2020.

Consumer Credit

  • Total loans facilitated under loan facilitation model in the third quarter of 2021 reached RMB6.8 billion (US$1.1 billion), representing an increase of 30.3% from RMB5.3 billion in the second quarter of 2021 and compared to RMB3.1 billion in the third quarter of 2020.

  • Cumulative number of borrowers served reached 5,840,424 as of September 30, 2021, representing an increase of 5.1% from 5,558,085 as of June 30, 2021 and compared to 5,060,824 as of September 30, 2020.

  • Number of borrowers served in the third quarter of 2021 was 548,495 representing an increase of 26.3% from 434,153 in the second quarter of 2021 and compared to 143,238 in the third quarter of 2020.

  • Outstanding balance of performing loans facilitated under loan facilitation model reached RMB13,793.9 million (US$2,140.8 million) as of September 30, 2021, representing an increase of 10.0% from RMB12,543.7 million as of June 30, 2021 and compared to RMB6,250.3 million as of September 30, 2020.

"We are delighted to announce a solid quarter with visible increase in profitability and a healthy growth in business scale amid a muted macro environment," said Mr. Ning Tang, Chairman and Chief Executive Officer of Yiren Digital. "And as our business structures continue to integrate and expand, we are seeing growing interactions and synergies between each business line, reinforcing our strategic positioning as a user-centric leading digital personal financial management platform."

"For wealth management, we are pleased to see continued growth in both new investor base and average client asset per investor. As of September 30, 2021, our total client assets exceeded RMB17.4 billion, representing a 19% growth from last quarter and approximately 250% increase from the prior year. On Yiren Wealth's platform, the number of new investors grew 93% quarter-over-quarter and excluding insurance products, the number of investors with client asset over RMB500,000 grew almost three times compared with the prior year, a vivid reflection of our enhanced capabilities to serve a higher segment of our investor spectrum. Moreover, Hexiang insurance contributed RMB735 million in total premium this quarter, up 29% compared with last quarter."

"For our credit business, the total loan facilitation volume maintained a strong growth trajectory reaching RMB6.8 billion for the quarter, representing an increase of 30% quarter over quarter. Driven by our enhanced digital operating capabilities and improved servicing standards, our Yi Xiang Hua APP, the credit-tech platform offering unsecured revolving loans, saw its MAU jumping 82% quarter over quarter to 1.1million users. Meanwhile, our SME loans, which we started to focus on in the second half of this year, increased by 431% from the last quarter and accounted 25% of our total loan volume in the third quarter."

"In the third quarter, we are pleased to see strong growth across revenue, profit and transaction volume. Total revenue in the third quarter stood at RMB1.2 billion, increasing 20% year over year, with wealth management business becoming an increasingly important growth driver and contributing close to 30% of total revenue. Meanwhile, net income grew three times year on year to over RMB0.3 billion, reflecting a net income margin of 26%, driven by our continued efforts in cost control and increasing operating efficiencies, "said Ms. Na Mei, Chief Financial Officer of Yiren Digital. "Turning to our balance sheet, we ended the quarter with RMB2.3 billion in cash and cash equivalents, representing 6% increase from the prior quarter, leaving us with sufficient resilience to seize any new opportunities."

Third Quarter 2021 Financial Results

Total net revenue in the third quarter of 2021 was RMB1,232.0 million (US$191.2 million), compared to RMB1,022.8 million in the same period last year. Revenue from wealth management business reached RMB337.6 million (US$52.4 million), representing an increase of 20.1% from RMB281.1 million in the third quarter of 2020, as we continue to drive up our wealth management business. Revenue from credit business reached RMB894.4 million (US$138.8 million), representing an increase of 20.6% from RMB741.7 million in the third quarter of 2020, primarily driven by an increase in loan volume.

Sales and marketing expenses in the third quarter of 2021 were RMB407.2 million (US$63.2 million), compared to RMB485.1 million in the same period last year. The decrease was primarily due to internal restructuring to optimize operating efficiencies.

Origination, servicing and other operating costs in the third quarter of 2021 were RMB186.9 million (US$29.0 million), compared to RMB239.7 million in the same period last year. The decrease was due to the improved collection efficiency.

General and administrative expenses in the third quarter of 2021 were RMB139.3 million (US$21.6 million), compared to RMB159.7 million in the same period last year. The decrease was due to enhancement of operational efficiency.

Allowance for contract assets, receivables and others in the third quarter of 2021 was RMB83.6 million (US$13.0 million), compared to RMB25.0million in the same period last year. The increase was primarily driven by the one-time write back to credit impairment in the same period last year due to the better-than-expected credit performance post the pandemic. Excluding the one-time write back impact, allowance for contract assets remained stable compared to the same period last year.

Income tax expense in the third quarter of 2021 was RMB75.9million (US$11.8 million).

Net income in the third quarter of 2021 was RMB320.9 million (US$49.8million), compared to net income of RMB79.8 million in the same period last year.

Adjusted EBITDA[3] (non-GAAP) in the third quarter of 2021 was RMB438.6 million (US$68.1 million), compared to RMB117.5 million in the same period last year.

Basic income per ADS in the third quarter of 2021 was RMB3.8 (US$0.6), compared to a basic income per ADS of RMB0.9 in the same period last year.

Diluted income per ADS in the third quarter of 2021 was RMB3.7 (US$0.6), compared to a diluted income per ADS of RMB0.9 in the same period last year.

Net cash generated from operating activities in the third quarter of 2021 was RMB323.8 million (US$50.3 million), compared to RMB3.1 million in the same period last year.

Net cash used in investing activities in the third quarter of 2021 was RMB233.8 million (US$36.3 million), compared to RMB99.5 million in the same period last year.

As of September 30, 2021, cash and cash equivalents was RMB2,328.4 million (US$361.4 million), compared to RMB2,192.5 million as of June 30, 2021. As of September 30, 2021, the balance of held-to-maturity investments was RMB2.2 million (US$0.3 million), compared to RMB2.2 million as of June 30, 2021. As of September 30, 2021, the balance of available-for-sale investments was RMB277.9 million (US$43.1 million), compared to RMB224.3 million as of June 30, 2021.

Delinquency rates. As of September 30, 2021, the delinquency rates for loans facilitated that are past due for 15-29 days, 30-59 days and 60-89 days were 0.7%, 0.9% and 0.8% respectively, compared to 0.5%, 0.8% and 0.7% respectively as of June 30, 2021.

Cumulative M3+ net charge-off rates. As of September 30, 2021, the cumulative M3+ net charge-off rate for loans facilitated in 2018, 2019 and 2020 was 9.9%, 11.0% and 4.8% respectively, as compared to 9.9%, 10.5% and 3.7% respectively as of June 30, 2021.

[1] Active investors refer to those who have made at least one investment through our wealth management platform or have had client assets with us above zero in the past twelve months.

[2] Client assets refer to the outstanding balance of client assets generated through our platforms, where an asset is counted towards the outstanding balance for so long as it continues to be held by the investor who acquired it through our platform.

[3] "Adjusted EBITDA" is a non-GAAP financial measure. For more information on this non-GAAP financial measure, please see the section of "Operating Highlights and Reconciliations of GAAP to Non-GAAP Measures" and the table captioned "Reconciliations of Adjusted EBITDA" set forth at the end of this press release.

Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses several non-GAAP financial measures, such as adjusted EBITDA and adjusted EBITDA margin as supplemental measures to review and assess operating performance. We believe these non-GAAP measures provide useful information about our core operating results, enhance the overall understanding of our past performance and prospects and allow for greater visibility with respect to key metrics used by our management in our financial and operational decision-making. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The non-GAAP financial measures have limitations as analytical tools. Other companies, including peer companies in the industry, may calculate these non-GAAP measures differently, which may reduce their usefulness as a comparative measure. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. See "Operating Highlights and Reconciliation of GAAP to Non-GAAP measures" at the end of this press release.

Board Composition Change

Mr. Dennis Cong has resigned from the board of directors of the Company, having fulfilled his term as a board member since November 2020, effective from November 24, 2021.

Currency Conversion

This announcement contains currency conversions of certain RMB amounts into US$ at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB6.4434 to US$1.00, the effective noon buying rate on September 30, 2021, as set forth in the H.10 statistical release of the Federal Reserve Board.

Conference Call

Yiren Digital's management will host an earnings conference call at 7:00 a.m. U.S. Eastern Time on November 24, 2021 (or 8:00 p.m. Beijing/Hong Kong Time on November 24, 2021).

Participants who wish to join the call should register online in advance of the conference at:

http://apac.directeventreg.com/registration/event/8382762

Please note the Conference ID number of 8382762.

Once registration is completed, participants will receive the dial-in information for the conference call, an event passcode, and a unique registrant ID number.

Participants joining the conference call should dial-in at least 10 minutes before the scheduled start time.

A replay of the conference call may be accessed by phone at the following numbers until December 2, 2021:

International

+61 2-8199-0299

U.S.

+1 646-254-3697

Replay Access Code:

8382762

Additionally, a live and archived webcast of the conference call will be available at ir.yirendai.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Yiren Digital's control. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited to, uncertainties as to Yiren Digital's ability to attract and retain borrowers and investors on its marketplace, its ability to introduce new loan products and platform enhancements, its ability to compete effectively, PRC regulations and policies relating to the peer-to-peer lending service industry in China, general economic conditions in China, and Yiren Digital's ability to meet the standards necessary to maintain listing of its ADSs on the NYSE or other stock exchange, including its ability to cure any non-compliance with the NYSE's continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in Yiren Digital's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Yiren Digital does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

About Yiren Digital

Yiren Digital Ltd. is a leading digital personal financial management platform in China. The Company provides customized asset allocation services and wealth management solutions to China's mass affluent population as well as utilizes online and offline channels to provide retail credit facilitation services to individual borrowers and small business owners.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except for share, per share and per ADS data, and percentages)



For the Three Months Ended



For the Nine Months Ended


September 30,
2020


June 30,
2021


September 30,
2021


September 30,
2021



September 30,
2020


September 30,
2021


September 30,
2021


RMB


RMB


RMB


USD



RMB


RMB


USD

Net revenue:















Loan facilitation services

406,413


551,373


601,283


93,318



936,038


1,694,788


263,027

Post-origination services

195,570


40,584


39,024


6,056



468,567


124,394


19,306

Account management services

157,327


-


-


-



871,213


-


-

Insurance brokerage services

102,495


151,801


199,406


30,947



122,040


510,911


79,292

Financing services

3,075


125,267


144,614


22,444



5,310


384,813


59,722

Others

157,882


256,010


247,664


38,437



397,943


742,083


115,169

Total net revenue

1,022,762


1,125,035


1,231,991


191,202



2,801,111


3,456,989


536,516

Operating costs and expenses:















Sales and marketing

485,055


436,882


407,172


63,192



1,609,962


1,249,230


193,877

Origination,servicing and other
operating costs

239,655


182,667


186,915


29,009



507,756


544,107


84,444

General and administrative

159,670


127,690


139,321


21,622



481,279


386,876


60,042

Allowance for contract assets,
receivables and others

25,016


93,433


83,578


12,971



337,109


318,243


49,391

Total operating costs and expenses

909,396


840,672


816,986


126,794



2,936,106


2,498,456


387,754

Other income/(expenses):















Interest income/(expense), net

11,003


(22,782)


(21,565)


(3,347)



53,069


(55,327)


(8,587)

Fair value adjustments related to
Consolidated ABFE

(30,905)


(20,916)


(526)


(82)



(89,882)


(49,162)


(7,630)

Others, net

2,726


14,674


3,934


611



11,400


23,730


3,683

Total other expenses

(17,176)


(29,024)


(18,157)


(2,818)



(25,413)


(80,759)


(12,534)

Income/(loss) before provision for income
taxes

96,190


255,339


396,848


61,590



(160,408)


877,774


136,228

Income tax expense/(benefit)

16,353


55,259


75,923


11,783



(27,269)


175,555


27,245

Net income/(loss)

79,837


200,080


320,925


49,807



(133,139)


702,219


108,983
















Weighted average number of ordinary
shares outstanding, basic

182,144,192


167,974,463


170,193,542


170,193,542



184,444,536


168,719,693


168,719,693

Basic income/(loss) per share

0.4383


1.1911


1.8856


0.2926



(0.7218)


4.1620


0.6459

Basic income/(loss) per ADS

0.8766


2.3822


3.7712


0.5852



(1.4436)


8.3240


1.2918
















Weighted average number of ordinary
shares outstanding, diluted

182,730,892


169,173,603


171,571,392


171,571,392



184,444,536


169,972,343


169,972,343

Diluted income/(loss) per share

0.4369


1.1827


1.8705


0.2903



(0.7218)


4.1314


0.6412

Diluted income/(loss) per ADS

0.8738


2.3654


3.7410


0.5806



(1.4436)


8.2628


1.2824
















Unaudited Condensed Consolidated Cash
Flow Data















Net cash generated/(used in) from
operating activities

3,098


(212,993)


323,819


50,259



501,097


(31,185)


(4,840)

Net cash used in investing activities

(99,460)


(208,539)


(233,782)


(36,283)



(815,567)


(728,377)


(113,042)

Net cash provided by financing activities

81,693


144,107


49,770


7,723



55,961


473,277


73,451

Effect of foreign exchange rate changes

(3,389)


(278)


(257)


(41)



(2,269)


(653)


(101)

Net (decrease)/increase in cash, cash
equivalents and restricted cash

(18,058)


(277,703)


139,550


21,658



(260,778)


(286,938)


(44,532)

Cash, cash equivalents and restricted
cash, beginning of period

3,026,422


2,558,363


2,280,660


353,953



3,269,142


2,707,148


420,143

Cash, cash equivalents and restricted
cash, end of period

3,008,364


2,280,660


2,420,210


375,611



3,008,364


2,420,210


375,611

Unaudited Condensed Consolidated Balance Sheets

(in thousands)



As of


December 31,
2020


June 30,
2021


September 30,
2021


September 30,
2021


RMB


RMB


RMB


USD









Cash and cash equivalents

2,469,909


2,192,500


2,328,380


361,359

Restricted cash

237,239


88,160


91,830


14,252

Accounts receivable

122,742


228,554


258,729


40,154

Contract assets, net

750,174


1,063,470


1,191,497


184,917

Contract cost

65,529


44,684


34,707


5,386

Prepaid expenses and other assets

278,591


213,942


358,052


55,569

Loans at fair value

192,156


112,931


82,474


12,800

Financing receivables

1,253,494


1,738,742


1,969,456


305,656

Amounts due from related parties

884,006


1,064,703


768,646


119,292

Held-to-maturity investments

3,286


2,233


2,200


341

Available-for-sale investments

175,515


224,336


277,934


43,135

Property, equipment and software, net

147,193


123,491


115,326


17,898

Deferred tax assets

16,745


8,629


6,285


975

Right-of-use assets

105,674


93,783


70,897


11,003

Total assets

6,702,253


7,200,158


7,556,413


1,172,737

Accounts payable

9,903


64,469


36,799


5,711

Amounts due to related parties

970,309


498,053


474,925


73,707

Deferred revenue

50,899


21,137


11,862


1,841

Payable to investors at fair value

52,623


51,289


50,814


7,886

Accrued expenses and other liabilities

1,208,915


1,238,591


1,245,263


193,262

Secured borrowings

500,500


968,600


1,038,600


161,188

Refund liability

10,845


6,412


5,927


920

Deferred tax liabilities

38,741


118,654


147,575


22,903

Lease liabilities

81,854


70,114


53,194


8,256

Total liabilities

2,924,589


3,037,319


3,064,959


475,674

Ordinary shares

121


122


123


19

Additional paid-in capital

5,058,176


5,065,177


5,096,994


791,041

Treasury stock

(40,147)


(40,147)


(42,502)


(6,596)

Accumulated other comprehensive
income

17,108


16,139


14,442


2,241

Accumulated deficit

(1,257,594)


(878,452)


(577,603)


(89,642)

Total equity

3,777,664


4,162,839


4,491,454


697,063

Total liabilities and equity

6,702,253


7,200,158


7,556,413


1,172,737

Operating Highlights and Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except for number of borrowers, number of investors and percentages)



For the Three Months Ended



For the Nine Months Ended


September 30,
2020


June 30,
2021


September 30,
2021


September 30,
2021



September 30,
2020


September 30,
2021


September 30,
2021


RMB


RMB


RMB


USD



RMB


RMB


...

USD

Operating Highlights















Amount of investment in current investment
products

4,593,256


5,343,601


5,030,228


780,679

...