Yiren Digital Reports First Quarter 2021 Financial Results

BEIJING,June 10,2021 -- 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 first quarter ended March 31,2021.

First Quarter 2021 Operational Highlights

Wealth Management

Cumulative number of investors served reached 2,462,195 as of March 31,2021,representing an increase of 2.8% from 2,395,034 as of December 31,2020 and compared to 2,218,181 as of March 31,2020.

Number of active investors[1] was 307,107 as of March 31,representing an increase of 32.1% from 232,458 as of December 31,2020,and compared to 92,060 as of March 31,2020.

Total client assets[2] was RMB10,678.9 million (US$1,629.9 million) as of March 31,representing an increase of 24.9% from RMB8,550.7 million as of December 31,and compared to RMB1,731.0 million as of March 31,2020.

Sales volume of investment products amounted to RMB5,823.1 million (US$888.8 million) in the first quarter of 2021,representing a decrease of 14.8% from RMB6,836.9 million in the fourth quarter of 2020 and compared to RMB2,163.3 million in the same period of 2020.

Consumer Credit

Total loans facilitated under loan facilitation model in the first quarter of 2021 reached RMB4.9 billion (US$0.8 billion),representing an increase of 17.3% from RMB4.2 billion in the fourth quarter of 2020 and compared to RMB0.7 billion in the first quarter of 2020.

Cumulative number of borrowers served reached 5,309,727 as of March 31,representing an increase of 1.1% from 5,249,936 as of December 31,2020 and compared to 4,810,184 as of March 31,2020.

Number of borrowers served in the first quarter of 2021 was 345,939 representing an increase of 82.9% from 189,117 in the fourth quarter of 2020 and compared to 115,420 in the first quarter of 2020.

Outstanding balance of performing loans facilitated under loan facilitation model reached RMB11,159.2 million (US$1,703.2 million) as of March 31,representing an increase of 25.9% from RMB8,863.5 million as of December 31,2020 and compared to RMB3,582.7 million as of March 31,2020.

"We have completed our transition to a leading user-centric digital personal financial management platform and we are pleased to start the year of 2021 with a strong quarter,resuming high quality growth and returning to our normal profitability margin level," said Mr. Ning Tang,Chairman and Chief Executive Officer of Yiren Digital. "As we continue to focus on our strategic direction and drive growth,we are aiming to fully address our customers' financial needs in every stage of their lives serving them through both online and offline channels,with products and services ranging from credit to investment and insurance,to help them better spend,better invest and be better protected. This is how we are differentiated and we believe we are on the right track to continue to expand our business map and become the leading digital personal financial management platform in China."

Our wealth management business continues to see stable growth. Client assets for investment products reached RMB10.7 billion as of March 31,representing an increase of 25% quarter over quarter. Total number of active investors stood at 307,representing an increase of 32% from last quarter."

"We continue to see solid growth for our credit business in the first quarter of 2021,which has helped us to kick off the year strong. At the end of the first quarter,Yiren Credit's registered users reached 95.8 million,representing an 8% year-on-year increase. Total number of borrowers served in the first quarter reached close to 346 thousands,representing an 83% quarter-over-quarter increase. In the first quarter,Yiren Credit's platform facilitated RMB4.9 billion in loans,representing a 17% quarter-over-quarter increase."

"In the first quarter,our total revenue increased by 7% year-on-year to RMB1.1 billion,of which 24% came from our wealth management business." said Ms. Na Mei,Chief Financial Officer of Yiren Digital. "On the balance sheet side,our cash position remains strong with RMB2.6 billion of cash and short-term investments as of March 31,2021. Our strong balance sheet positions us well in the current operating environment and allows us to continue to explore new initiatives and tap into new opportunities."

First Quarter 2021 Financial Results

Total net revenue in the first quarter of 2021 was RMB1,100.0 million (US$167.9 million),compared to RMB1,023.7 million in the same period last year. Revenue from wealth management business reached RMB263.7 million (US$40.3 million),representing a decrease of 36.6% from RMB415.9 million in the first quarter of 2020,primarily driven by the spin-off of our legacy business. Revenue from credit business reached RMB836.2 million (US$127.6 million),representing an increase of 37.6% from RMB607.8 million in the first quarter of 2020,primarily driven by an increase in loan volume.

Sales and marketing expensesin the first quarter of 2021 were RMB405.2 million (US$61.8 million),compared to RMB616.4 million in the same period last year. The decrease was primarily due to internal restructuring to optimize operating efficiencies.

Origination,servicing and other operating costsin the first quarter of 2021 were RMB174.5 million (US$26.6 million),compared to RMB102.9 million in the same period last year. The increase was primarily due to increased sales commission expenses driven by expanded insurance volume.

General and administrative expensesin the first quarter of 2021 were RMB119.9 million (US$18.3 million),compared to RMB149.0million in the same period last year.

Allowance for contract assets,receivables and others in the first quarter of 2021 was RMB141.2 million (US$21.6 million),compared to RMB143.4 million in the same period last year.

Income tax expense in the first quarter of 2021 was RMB44.4 million (US$6.8 million).

Net incomein the first quarter of 2021 was RMB181.2 million (US$27.7 million),as compared to RMB19.2 million in the same period last year.

Adjusted EBITDA[3](non-GAAP) in the first quarter of 2021 was RMB251.5 million (US$38.4 million),compared to RMB29.8 million in the same period last year.

Basic income per ADSin the first quarter of 2021 was RMB2.2 (US$0.3),compared to a basic income per ADS of RMB0.2 in the same period last year.

Diluted income per ADSin the first quarter of 2021 was RMB2.1 (US$0.3),compared to a diluted income per ADS of RMB0.2 in the same period last year.

Net cash used in operating activities in the first quarter of 2021 was RMB142.0 million (US$21.7 million),compared to net cash generated from operating activities of RMB562.7 million in the same period last year.

Net cash used in investing activitiesin the first quarter of 2021 was RMB286.1 million (US$43.7 million),compared to RMB529.4 million in the same period last year.

As of March 31,cash and cash equivalents was RMB2,362.3 million (US$360.6 million),compared to RMB2,469.9 million as of December 31,2020. As of March 31,the balance of held-to-maturity investments was RMB3.1 million (US$0.5 million),compared to RMB3.3 million as of December 31,the balance of available-for-sale investments was RMB234.6 million (US$35.8 million),compared to RMB175.5 million as of December 31,2020.

Delinquency rates. As of March 31,the delinquency rates for loans facilitated that are past due for 15-29 days,30-59 days and 60-89 days were 0.5%,0.8% and 0.6% respectively,compared to 0.5%,0.7% and 0.6% respectively as of December 31,2020.

Cumulative M3+ net charge-off rates. As of March 31,the cumulative M3+ net charge-off rate for loans facilitated in 2018,2019 and 2020 was 10.0%,9.7% and 2.2% respectively,as compared to 10.2%,8.5% and 0.8% respectively as of December 31,2020.

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.

[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.

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 RMB 6.5518 to US$1.00,the effective noon buying rate on March 31,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 8:00 p.m. U.S. Eastern Time on June 9,2021 (or 8:00 a.m. Beijing/Hong Kong Time on June 10,2021).

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

http://apac.directeventreg.com/registration/event/6891837

Please note the Conference ID number of 6891837.

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 untilJune 17,2021:

International

+61 2-8199-0299

U.S.

+1 646-254-3697

Replay Access Code:

6891837

Additionally,a live and archived webcast of the conference call will be available atir.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.

For investor and media inquiries,please contact:

Yiren Digital

Investor Relations

Email: ir@Yirendai.com

Unaudited Condensed Consolidated Statements of Operations

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

For the Three Months Ended

March 31,

2020

March 31,

2021

March 31,

2021

RMB

RMB

USD

Net revenue:

Loan facilitation services

358,541

542,132

82,746

Post-origination services

146,520

44,786

6,836

Account management services

413,166

-

-

Insurance brokerage services

-

159,704

24,376

Financing services

650

114,932

17,542

Others

104,783

238,409

36,388

Total net revenue

1,023,660

1,099,963

167,888

Operating costs and expenses:

Sales and marketing

616,441

405,176

61,842

Origination,servicing and other operating costs

102,918

174,525

26,638

General and administrative

149,041

119,865

18,295

Allowance for contract assets,receivables and others

143,385

141,232

21,556

Total operating costs and expenses

1,011,785

840,798

128,331

Other income/(expenses):

Interest income/(expense),net

25,116

(10,980)

(1,676)

Fair value adjustments related to Consolidated ABFE

(26,020)

(27,720)

(4,231)

Others,net

12,184

5,122

782

Total other income/(expenses)

11,280

(33,578)

(5,125)

Income before provision for income taxes

23,155

225,587

34,432

Income tax expense

3,936

44,373

6,773

Net income

19,219

181,214

27,659

Weighted average number of ordinary shares outstanding,

basic

185,600,961

167,966,603

167,603

Basic income per share

0.1036

1.0789

0.1647

Basic income per ADS

0.2072

2.1578

0.3294

Weighted average number of ordinary shares outstanding,

diluted

186,166,429

169,147,563

169,563

Diluted income per share

0.1032

1.0713

0.1635

Diluted income per ADS

0.2064

2.1426

0.3270

Unaudited Condensed Consolidated Cash Flow Data

Net cash generated from/(used in) operating activities

562,720

(142,011)

(21,674)

Net cash used in investing activities

(529,437)

(286,056)

(43,661)

Net cash (used in)/provided by financing activities

(65,637)

279,400

42,645

Effect of foreign exchange rate changes

1,206

(118)

(18)

Net decrease in cash,cash equivalents and restricted cash

(31,148)

(148,785)

(22,708)

Cash,cash equivalents and restricted cash,beginning of

period

3,269,142

2,707,148

413,191

Cash,end of period

3,237,994

2,558,363

390,483

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

As of

December 31,

2021

RMB

RMB

USD

Cash and cash equivalents

2,469,909

2,362,310

360,559

Restricted cash

237,239

196,053

29,924

Accounts receivable

122,742

148,114

22,607

Contract assets,net

750,174

917,995

140,113

Contract cost

65,529

62,061

9,472

Prepaid expenses and other assets

278,591

215,099

32,830

Loans at fair value

192,156

175,664

26,812

Financing receivables

1,253,494

1,471,509

224,595

Amounts due from related parties

884,006

911,972

139,194

Held-to-maturity investments

3,286

3,137

479

Available-for-sale investments

175,515

234,587

35,805

Property,equipment and software,net

147,193

134,351

20,506

Deferred tax assets

16,745

13,906

2,123

Right-of-use assets

105,674

98,467

15,029

Total assets

6,702,253

6,945,225

1,060,048

Accounts payable

9,903

12,923

1,972

Amounts due to related parties

970,309

769,744

117,486

Deferred revenue

50,899

44,408

6,778

Payable to investors at fair value

52,623

52,082

7,949

Accrued expenses and other liabilities

1,208,915

1,148,549

175,303

Secured borrowings

500,500

799,200

121,982

Refund liability

10,845

7,404

1,130

Deferred tax liabilities

38,741

76,003

11,600

Lease liabilities

81,854

76,735

11,712

Total liabilities

2,924,589

2,987,048

455,912

Ordinary shares

121

121

19

Additional paid-in capital

5,058,176

5,884

772,137

Treasury stock

(40,147)

(40,147)

(6,128)

Accumulated other comprehensive

income

17,108

16,648

2,541

Accumulated deficit

(1,257,594)

(1,077,329)

(164,433)

Total equity

3,777,664

3,958,177

604,136

Total liabilities and equity

6,048

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

March 31,

2021

RMB

RMB

USD

Operating Highlights

Amount of investment in current investment

products

2,163,313

5,823,057

888,772

Number of investors in current investment products

18,809

110,072

110,072

Amount of loans facilitated under loan facilitation

model

741,268

4,930,287

752,509

Amount of loans facilitated

1,839,454

4,509

Number of borrowers

115,420

345,939

345,939

Remaining principal of performing loans facilitated

under loan facilitation model

3,582,742

11,159,179

1,703,223

Segment Information

Wealth management:

Revenue

415,876

263,743

40,255

Sales and marketing expenses

67,326

38,987

5,951

Origination,servicing and other operating costs

30,845

132,510

20,225

Consumer credit:

Revenue

607,784

836,220

127,633

Sales and marketing expenses

549,115

366,189

55,891

Origination,servicing and other operating costs

72,073

42,015

6,413

Reconciliation of Adjusted EBITDA

Net income

19,659

Interest (income)/expense,net

(25,116)

10,980

1,676

Income tax expense

3,773

Depreciation and amortization

27,171

15,151

2,313

Share-based compensation

4,541

(240)

(37)

Adjusted EBITDA

29,751

251,478

38,384

Adjusted EBITDA margin

2.9%

22.9%

22.9%

Delinquency Rates (Loan Facilitation Model)

15-29 days

30-59 days

60-89 days

All Loans

December 31,2015

1.3%

1.9%

1.5%

December 31,2016

0.6%

0.8%

0.7%

December 31,2017

0.5%

0.8%

0.6%

December 31,2018

1.0%

1.8%

1.7%

December 31,2019

0.8%

1.3%

1.0%

December 31,2020

0.5%

0.7%

0.6%

March 31,2021

0.5%

0.8%

0.6%

Online Channels

December 31,2015

0.4%

0.7%

0.5%

December 31,2016

0.8%

1.1%

1.7%

December 31,2017

0.3%

0.2%

0.0%

December 31,2018

0.9%

1.7%

1.5%

December 31,2019

1.0%

2.1%

1.6%

December 31,2020

0.6%

1.0%

1.1%

March 31,2021

0.5%

0.9%

0.6%

Offline Channels

December 31,2015

1.3%

2.0%

1.6%

December 31,2017

0.5%

0.9%

0.7%

December 31,2018

1.1%

1.9%

1.8%

December 31,2019

0.7%

0.9%

0.7%

December 31,2020

0.4%

0.6%

0.4%

March 31,2021

0.4%

0.7%

0.6%

Net Charge-Off Rate (Loan Facilitation Model)

Loan

Issued

Period

Amount of Loans

Facilitated

During the Period

Accumulated M3+ Net

Charge-Off

as of March 31,2021

Total Net Charge-Off

Rate

as of March 31,2021

(in RMB thousands)

(in RMB thousands)

2015

4,530,824

252,253

5.6%

2016

3,749,815

320,527

8.5%

2017

5,043,494

530,172

10.5%

2018

4,211,573

422,699

10.0%

2019

3,431,443

331,813

9.7%

2020

9,614,819

215,838

2.2%

M3+ Net Charge-Off Rate (Loan Facilitation Model)

Loan

Issued

Period

Month on Book

4

7

10

13

16

19

22

25

28

31

34

2015Q1

1.0%

1.9%

2.8%

3.7%

4.3%

4.8%

5.1%

5.3%

5.3%

5.3%

5.2%

2015Q2

1.1%

2.8%

4.2%

5.3%

6.2%

6.7%

7.0%

7.0%

6.9%

6.8%

6.8%

2015Q3

0.6%

2.2%

3.8%

5.0%

5.9%

6.5%

6.7%

6.8%

6.7%

6.7%

6.7%

2015Q4

1.0%

1.5%

2.2%

2.8%

3.1%

3.4%

3.7%

4.0%

4.2%

4.4%

4.4%

2016Q1

0.6%

0.9%

1.3%

1.7%

2.0%

2.2%

2.4%

2.7%

2.9%

3.0%

3.2%

2016Q2

0.6%

1.4%

2.3%

3.0%

3.6%

4.2%

4.8%

5.4%

5.8%

6.0%

6.2%

2016Q3

0.4%

1.7%

2.7%

4.1%

5.3%

6.5%

7.7%

8.6%

9.3%

9.3%

9.5%

2016Q4

0.3%

2.1%

3.8%

5.4%

7.2%

9.2%

10.4%

11.5%

12.4%

12.9%

13.3%

2017Q1

0.3%

1.6%

3.4%

5.3%

7.5%

8.9%

10.0%

10.9%

11.6%

12.1%

12.3%

2017Q2

4.1%

5.8%

7.9%

9.6%

11.3%

12.5%

13.2%

13.9%

14.6%

14.9%

15.1%

2017Q3

0.3%

1.6%

3.5%

4.9%

6.5%

7.6%

8.4%

8.9%

9.4%

9.9%

10.1%

2017Q4

0.2%

2.3%

5.1%

6.5%

7.9%

9.0%

9.7%

10.2%

10.7%

11.2%

10.6%

2018Q1

0.2%

2.9%

5.1%

6.8%

7.2%

7.9%

8.4%

8.7%

9.0%

8.6%

8.1%

2018Q2

0.7%

4.1%

7.1%

9.4%

11.2%

12.4%

13.4%

14.1%

14.3%

14.1%

2018Q3

0.2%

2.8%

3.6%

4.5%

5.2%

6.4%

7.0%

7.0%

6.9%

2018Q4

0.6%

2.2%

3.4%

5.2%

6.9%

9.0%

9.7%

9.9%

2019Q1

0.0%

0.8%

2.0%

3.4%

5.3%

5.9%

6.3%

2019Q2

0.1%

1.5%

4.5%

7.5%

8.8%

9.2%

2019Q3

0.2%

2.9%

6.8%

9.0%

10.4%

2019Q4

0.4%

3.1%

4.9%

6.3%

2020Q1

0.6%

2.3%

4.1%

2020Q2

0.5%

2.5%

2020Q3

1.1%

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