UPDATE: Yiren Digital Ltd. (YRD) Misses Q1 EPS by 20c, Revenues Miss

(Updated - June 23, 2020 5:03 PM EDT)

Yiren Digital Ltd. (NYSE: YRD) reported Q1 EPS of $0.03, $0.20 worse than the analyst estimate of $0.23. Revenue for the quarter came in at $144.6 million versus the consensus estimate of $209.46 million.

First Quarter 2020 Financial Results

• Total amount of loans facilitated in the first quarter of 2020 was RMB 1,839.5 million (US$259.8 million), compared to RMB 10,934.9 million in the same period last year. As of March 31, 2020, the total outstanding principal amount of the performing loans was RMB 42.1 billion (US$5.9 billion), decreased by 17.8% from RMB 51.2 billion as of December 31 2019.
• Total net revenue in the first quarter of 2020 was RMB 1,023.7 million (US$144.6 million), compared to RMB 1,980.4 million in the same period last year. Revenue from Yiren Credit reached RMB 607.8 million (US$ 85.8 million), representing a decrease of 58.3% from RMB 1,459.0 million in the first quarter of 2019. Revenue from Yiren Wealth reached RMB 415.9 million (US$58.7 million), representing a decrease of 20.2% from RMB 521.4 million in the first quarter of 2019.
• Sales and marketing expenses in the first quarter of 2020 were RMB 616.4 million (US$87.1 million), compared to RMB 1,127.9 million in the same period last year. Sales and marketing expenses in the first quarter of 2020 accounted for 33.5% of the total amount of loans facilitated, as compared to 10.3% in the same period last year mainly due to the decline of loan volume.
• Origination and servicing costs in the first quarter of 2020 were RMB 102.9 million (US$14.5 million), compared to RMB 172.1 million in the same period last year. Origination and servicing costs in the first quarter of 2020 accounted for 5.6% of the total amount of loans facilitated, compared to 1.6% in the same period last year due to the decline of loan volume.
• General and administrative expenses in the first quarter of 2020 were RMB 149.0 million (US$21.0 million), compared to RMB 257.7 million in the same period last year. General and administrative expenses in the first quarter of 2020 accounted for 14.6% of the total net revenue, compared to 13.0% in the same period last year.
• Allowance for contract assets and receivables in the first quarter of 2020 were RMB 143.4 million (US$20.3 million), compared to RMB 191.1 million in the same period last year.
• Income tax expense in the first quarter of 2020 was RMB 3.9 million (US$0.6 million).
• Net income in the first quarter of 2020 was RMB 19.2 million (US$2.7 million), compared to RMB 369.1 million in the same period last year.
• Adjusted EBITDA (non-GAAP) in the first quarter of 2020 was RMB 29.8 million (US$4.2 million), compared to an adjusted EBITDA of RMB 469.0 million in the same period last year. Adjusted EBITDA margin[1] (non-GAAP) in the first quarter of 2020 was 2.9%, compared to 23.7% in the same period last year.
• Basic income per ADS in the first quarter of 2020 was RMB 0.21 (US$0.03), compared to a basic income per ADS of RMB 3.99 in the same period last year.
• Diluted income per ADS in the first quarter of 2020 was RMB 0.21 (US$0.03), compared to a diluted income per ADS of RMB 3.96 in the same period last year.
• Net cash generated from operating activities in the first quarter of 2020 was RMB 557.8 million (US$78.8 million), compared to net cash used in operating activities of RMB 658.4 million in the same period last year.
• Net cash used in investing activities in the first quarter of 2020 was RMB 524.5 million (US$74.1 million), compared to RMB 249.9 million in the same period last year.

"During this unprecedented time, our core businesses remained stable while we made substantial progress to diversify and enrich our business lines as we continue our business transformation into China's leading digital financial service platforms for consumers." said Mr. Ning Tang, Chairman and Chief Executive Officer of Yiren Digital. "We are making good progress in expanding our creditech business with new products and services and through rapidly ramping up institutional funding. Meanwhile, our wealth management has seen strong growth despite the pandemic situation, especially for non-P2P wealth management products and services.

"For credit business, we have rolled out a series of new products to provide a full spectrum of credit services and meet broader needs for mainstream consumers' daily financing, including small-ticket-shorter-tenor loans, auto loans and SME loans. For the micro and small loans, we launched our products and services partnering with online consumption platforms. To fully leverage our nationwide service network coverage, we have rolled out auto loans targeted at second-handed cars, and the business has shown encouraging early growth momentum."

"On the wealth management front, non-P2P products are increasingly popular among investors and have seen strong growth. As of March 31, 2020, the total AUA for non-P2P products on Yiren Wealth grew to RMB 1,713.1 million, representing a 66.8% quarter-over-quarter growth and 303.2% year-over-year growth. Particularly we see strong demand of our fund products during the first quarter, with a 56.8% quarter-over-quarter growth of AUA driven by our new product offerings and also customers' strong demand, we expect this growth trends to continue through the year."

"Under the challenging operating environment amid the pandemic in the first quarter of 2020, we maintained strong liquidity and profitability," said Mr. Zhong Bi, Chief Financial Officer of Yiren Digital. "Despite significant business volume drop during the quarter, our strong cost control and operation efficiency efforts have kept our business at a profit and good cash position. Our cash and cash equivalents remained stable at RMB 3.2 billion. Our usable cash maintained at a healthy level at RMB 3.6 billion and we believe we are on solid footing in the dynamic environment."

"For credit performance and the risk management, overall, early delinquencies increased in the first quarter and reached its peak at the end of March due to the pandemic situation before it quickly declined in April and returned to near pre-pandemic level in May." said Mr. Michael Ji, Chief Risk Officer of Yiren Digital. "Visible progress has been made in prioritizing our business toward higher-quality customers, which was reflected in risk performance and we are glad to see essential improvement trend in 2019 and we expect a more substantially improved trend in 2020."

For earnings history and earnings-related data on Yirendai (YRD) click here.

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