Yiren Digital Ltd.

Good day and welcome to the first quarter 2025 year-end digital conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kiao He. Please go ahead.

Thank you, operator. Good morning, good evening, everyone. This call features the presentation by the founder, chairman, and CEO of Credit East, our CEO, Mr. Ning Chang, and our CFO, Mr. Yu Ning Feng. Our incoming CFO, Mr. William Hui, will join us for the Q&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 provision of U.S. Private Securities Litigation Reform Act of 1995. Such statements are accepted risks, uncertainties, and factors that can cause actual results to differ materially from those contained in any such statement. But the information regarding future risks, uncertainties, or factors is included in our filing for 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 recommendations to GAAP measures, please refer to our ending press release I will now pass it to Ning for opening remarks.

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 the confidence 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 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 partnerships with funding sources, major platforms like ours are gaining dominance through compliance advantages and technological strengths. 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. First, our financial services business. In the first quarter of 2025, loan volume facilitated reached RMB 15.2 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 first one is our growing repeat borrowing rate, which increased significantly to 74% in the first quarter of 2025, compared to 65% in the fourth quarter of 2024. 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 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 initiatives, which are a cornerstone of our operations. In April, our proprietary large language model, Zhiyu, 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, Zhiyu generated over 550 advertising pieces in China and 20 video sets, 200 advertising texts, and 200 images in the Philippines, streamlining campaigns and boost impact. Moreover, our AI marketing system continues to demonstrate strong performance. Currently, our AI customer service system handles over 30 million calls per month, boosting acquisition efficiency and cutting labor costs. Specifically, for existing customer operations, in the first quarter of this year, Our system serves over 20 million existing borrowers with advancements in semantic recognition and intent detection, enabling more meaningful and efficient interactions. On average, customer interactions achieved 7.1 rounds per session in the first quarter, up from 6.6 rounds in the prior quarter. which further improves sales conversion. Furthermore, customer service efficiency has also seen concrete improvement. The 22nd call pick-up 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 standards. 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 simulations, AI-powered business phrasing suggestions, real-time AI evaluation feedback, and AI-generated training reports, which has enhanced agent communication quality and ensured compliance with operational standards. Now, let's turn to the funding aspect. In the first quarter of 2025, 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 first quarter of 2025. As of March 31st, delinquency rates for loans passed due for 1 to 30 days, 31 to 60 days, and 61 to 90 days, were 1.6%, 1.2%, and 1.2%, showing negligible fluctuation 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 2025, 83% of day one delinquent cases, 29% of day two cases, and 28% day three cases in the domestic market were handled by AI collection robots. saving approximately RMB 1.9 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 2025, our loan volume in the Philippines reached RMB 123.7 million, representing a 74% growth compared to the fourth quarter of 2024, with new borrowers' loan facilitation up 108% quarter over quarter, paving the way for our continued growth in the next phase, 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 2025. 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 2025, Our total premiums reached RMB 801.8 million, with revenue of RMB 71.5 million, reflecting a sharp decline of 12% and 43% 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 partnerships. Based on current assessments, we anticipate a remarkable recovery in our insurance brokerage business next quarter. Moreover, we are also seeing growing synergies between our lending and insurance businesses with premiums from cross-settings 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. Yuning Feng, our current CFO, will step down from his position on July 30, 2025 due to personal reasons. We sincerely thank Yuning for her dedication and contributions to Elon 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 operations. Since joining our parent company, Credit East, 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.