Yiren Digital Ltd.

Good day, ladies and gentlemen, and welcome to the year-end digital second quarter 2035 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal and operate by pressing star and then zero. After today's presentation, there will be an opportunity for questions. To ask a question, you may press star and then one on your touch-tone phone. To withdraw your question, please press star and then two. Please note that this event is being recorded. I will now turn the conference over to Keo, IR officer of YRD. Please go ahead, ma'am.

Thank you, operator. Good morning and good evening, everyone. Today's call features the presentation of our founder, chairman, and CEO of Credit East, our CEO, Mr. Lin Chang, and our CFO, Mr. William Wei. There will be a Q&A session after the prepared remarks. Before beginning, we'd like to remind you that discussions during this call contain forward-looking statements made under the state-covered provision of U.S. Private Securities Litigation Reform Act of 1995. Such statements affected risks, uncertainties, and factors that can cause actual results to differ materially from those contained in any such statement. For the information regarding future risks, uncertainties, or factors included in our findings for the UI Security and Exchange Commission. We do not undertake any obligation to update any forward-looking statements as required in the relevant rules. 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 now intended to be considered in the next session or as a substitute for the financial information prepared and presented in accordance with the U.S. GAAP. For information about this non-GAAP standard of measures and recommendations of GAAP measures, please refer to any specialist. I will now pass it to me for opening remarks.

Thank you all for joining our earnings conference call today. We are pleased to report another strong quarter driven by the continued success of our AI-powered strategy. Our advanced AI capabilities have delivered quantifiable results, more personalized customer engagement, enhanced risk management with predictable analytics and fraud detection, and improving service efficiency with compliant, tailored solutions. This robust AI foundation enables us to innovate faster, exceed customer expectations, and optimize operational performance. Our growth is further fueled by three strategic priorities. By three strategic priorities, AI innovation, geographic expansion, and operational excellence. These initiatives are accelerating momentum across our core business while unlocking new opportunities through our proprietary AI platform. By executing on this strategy, we are well positioned to sustain long-term success Here are some of our successes. Our AI sales agent executes over 1,700 personalized marketing tasks daily, which results in a higher customer response rate. The AI capital manager completes the capital deployment optimization process in 10 minutes. versus one week by six employees in the past. The AI risk manager detects and blocks over 30,000 high-risk identity documents daily, resulting in the prevention of over RMB 180 million of loss from fraud annually. Most of our AI agents are monitored 24 by seven by our supervisor AI model for quality checks and the system integrity. Before we get into details of our operating results, I would like to address the recent loan facilitation regulation announcement. While the full impact on industry take rates and business operations is yet to be seen until the regulations take effect on October 1st. We have noticed that credit risk and capital costs have increased slightly. We believe the more regulated environment and the market conditions will trigger industry consolidation as smaller platforms exit the market and heighten the entry barrier. This will benefit established platforms like us. We are exploring different risk sharing models with our partners to mitigate potentially higher risk. Now, let me go through our business highlights for this quarter. First, our financial services business, which accounts for over 90% of our revenue in the second quarter of 2025. Loan volume facilitated reached RMB 20.3 billion in Q2, representing a 34% increase quarter over quarter and a 57% growth year over year. The robust growth is mainly driven by increasing repeat borrowing, which rose to 77% in the second quarter of this year, up three percentage points from the prior quarter and 21 percentage points from the same period last year. As we reiterated previously, driving up repeat borrowing rate and improving the long-term trust and the stickiness among our higher quality borrowers are our key focus as we have notably upgraded our customer base by attracting those with stronger repayment capabilities and better credit performance. AI innovation and application have played a pivotal role in driving our key objectives of boosting repeat borrowing rates and elevating service quality. In Q2 2025, we launched AI Marketing System 2.0 extensively personalizing marketing content using generated AI. By the end of June, this system was conducting personalized marketing for over 600,000 users daily using AI-generated outreach strategies, 30 times the output of the 1.0 version in the prior quarter. This expansion facilitated more meaningful and efficient interactions with the average number of customer engagement rounds rising from 7.1 in Q1 to 8.3 in Q2, further enhancing sales conversion rates. Additionally, intention recognition accuracy surpassed 80%, enabling more precise and effective engagements. On the quality assurance front, our AI-powered inspection system underwent critical algorithm upgrades, now covering the entire telemarketing segment. It performs real-time quality checks on over 2 million sales records daily, with accuracy jumping from 75% to 92%. This advancement has increased labor productivity by 50% while ensuring consistently high service standards. Now, let's turn to the funding aspect. In Q2 2025, our funding costs declined by 80 basis points year over year, though with a slight quarter over quarter increase. While new regulations in the loan facilitation business have introduced a sector-wide fluctuation in funding supply. We anticipate manageable capital costs for the remainder of the year, supported by our strong liquidity management. Regarding our asset quality, our overall risk performance remained stable quarter over quarter, though we did see some early delinquency increase in June but the delinquency improved in July as we tightened our credit measures. As of June 30th, our one to 30 day delinquency rate was 1.7%, up 10 basis points from the previous quarter. Meanwhile, our 31 to 60 day and the 61 to 90 day delinquency rates actually improved coming in at 1.1% and 1.0% respectively. That's 10 and 20 basis points lower than where we were at the end of first quarter. We have made substantial progress in strengthening our risk management framework, recognizing industry-wide trends in the first half of this year. We overhauled our risk rating system implementing a more granular eight-level classification model with more strict assessment criteria. Under this enhanced system, we selectively switched the system to decline lowest-tier borrowing applications. This upgrade has effectively contained the delinquency increase in May and June and reversed the trend in July. we will continue to monitor the market conditions to maintain our loan portfolio performance. Speaking of our asset quality management, AI has also played a pivotal role, particularly in loan collection. In the second quarter of 2025, our AI collection robots handled 81% of D1 delinquency cases and started to cover D31 to 60 cases in the domestic market. This automation realized average labor cost savings of RMB 2.7 million per month, a 42% increase from first quarter's monthly average of RMB 1.9 million savings. Besides cost savings, our customer experience improved substantially, with borrower complaint rate decreasing by a further 80% quarter over quarter. Now, let's look at our overseas business, which continues to demonstrate strong momentum. In the second quarter of 2025, our loan volume in the Philippines reached nearly RMB 200 million, representing a 54% growth compared to the first quarter of 2025. Our Indonesia pilot operation has begun and is expected to accelerate growth in Q4 this year and in 2026, following continued refinement to its data models. AI remains central to our strategy. Beyond our current applications, we are exploring the development of a fully autonomous AI agent platform that will integrate and automate the entire operational process, planning marketing, customer service, risk control, compliance, and quality assurance. Once implemented, this platform is expected to significantly enhance operational efficiency and reduce costs. We look forward to sharing more exciting developments in the near future. Moreover, our insurance brokerage business showed gradual recovery, with total premiums reaching approximately RMB 850 million in the quarter. a 6% increase quarter over quarter. Meanwhile, our digital insurance business has leveraged our existing customer acquisition channels to sell digital insurance products. It achieved 103% quarter over quarter growth in gross premiums, reaching RMB 8.3 million in Q2 this year. This demonstrates the adaptability of our customer acquisition algorithm and infrastructure for monetization from a new category regarding our consumption and lifestyle service as communicated into one we decided to wind down this segment to concentrate on our core financial services to better reflect this strategic priority and ensure more clear financial reporting we have refined our segment revenue categorization in this quarter's financials. William will provide further details on these adjustments during his remarks. Additionally, we are pleased to announce another round of cash dividends. Under our current semi-annual dividend policy, the company will distribute a cash dividend for the first half of 2025 amounting to U.S. dollar 0.22 per American depository share, which is expected to be paid on or about October 15, 2025, to holders of the company's ordinary shares and ADS of record as of the close of business on September 30, 2025, based on Hong Kong time and the New York time, respectively. In closing, our financial services customer acquisition platform has matured into a powerful monetization engine, as demonstrated by the strong performance of our digital insurance business, which we foresee sustaining its high growth for the next few quarters. By harnessing advanced AI, we've gained deeper insights into customer behavior boosting conversion rates, extending customer lifetime value, and unlocking monetization opportunities from previously untapped traffic. Despite the regulatory headwind and changing market environment, our business has shown greater resilience. With that, I'll pass it to William, who will go through the financial performance for this quarter.