Earnings call · Jun 2026 (Q2 FY26)

Yiren Digital Q2 FY26 earnings call YRD

Sep 30, 2026 Source

Executive summary

Yiren Digital Q2 FY26 — Strategic Shift Towards AI and Asset-Light Model Amidst Credit Recovery

Yiren Digital is undergoing a significant transformation, shifting towards an asset-light, technology-driven model, leveraging AI across its lending and insurance businesses. Despite a demanding quarter with reduced loan facilitation volumes and lower overall revenue, the company saw improvements in credit quality and growth in its insurance client base. The focus is on building an AI ecosystem through strategic investments and internal development, aiming for diversified, less capital-intensive revenue streams. This call featured prepared remarks only, with no Q&A session.

Highlights

31- to 60-day delinquency rate declined to 2.0% from 2.7%.
61- to 90-day delinquency rate declined to 2.4% from 3.2%.
Repeat borrowers accounted for a record 82% of total loan facilitation volume.
Insurance clients increased 281% year-over-year to approximately 453,000.
Technology service revenues increased by 5.9% compared to the second quarter of 2025.

Concerns

Loan facilitation volume was down 29% quarter-over-quarter to RMB 6.3 billion.
Total net revenue was RMB 890 million, down 46% year-over-year.
Net loss narrowed by 9% sequentially to RMB 449.6 million, compared with net income of RMB 357.5 million in the same period last year.
Allowance for contract assets receivable and others increased to RMB 502.8 million from RMB 176.4 million in Q1.
Net cash used in operating activities was RMB 1.03 billion, up from RMB 655.6 million in Q1.

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Credit Solutions The business is transitioning towards an asset-light and referral model, leveraging AI capabilities for customer acquisition and precision marketing. Delinquency rates improved due to broader credit recovery and focus on higher-quality borrowers. Loan facilitation volume: RMB 6.3 billionLoan facilitation volume growth QoQ: -29%Outstanding balance of performing loans: RMB 15.1 billionOutstanding balance of performing loans growth QoQ: -30%Repeat borrowers as % of total loan facilitation volume: 82%31- to 60-day delinquency rate: 2.0%31- to 60-day delinquency rate change: from 2.7%61- to 90-day delinquency rate: 2.4%61- to 90-day delinquency rate change: from 3.2%1- to 30-day delinquency rate: 2.5%	—	—	—	—
Insurance Brokerage Expansion of internet insurance distribution and steady growth in traditional operations supported YoY revenue growth. Sequential revenue was affected by lower-than-estimated renewal rates, offset by stronger new policy production. Number of insurance clients: 453,000Number of insurance clients growth QoQ: 14%Number of insurance clients growth YoY: 281%New policies issued: 918,000New policies issued growth YoY: 177%Gross written premiums: RMB 838.9 millionGross written premiums growth QoQ: 2%	RMB 67.3 million	16%	-23%	—

Deals & partnerships

4 high potential AI-native companies Warrant agreements providing option to acquire controlling stake at pre-agreed exercise prices, subject to specified terms and milestones. Companies are primarily focused on education and entertainment use cases.

Began working with these companies in 2024, providing early-stage support beyond capital, including assistance with strategy, team development, technology, product definition, distribution, and risk management.

One AI-native company (interactive entertainment platform) Exercise of warrant to acquire a controlling stake in an AI-powered user-generated role playing content and digital character experiences platform.

Platform has approximately 3.8 million users, including more than 120,000 paying users. Established strong presence in several Southeast Asian markets and expanding user acquisition internationally. Developing a proprietary vertical large language model.

Risks & headwinds

Lower loan facilitation volume Q2 FY26

Down 29% QoQ to RMB 6.3 billion

Mitigation:Transitioning to asset-light, technology-led model; focusing on repeat borrowers and higher-quality credit.

Lower renewal rates for Internet insurance products Q2 FY26

Affected sequential revenue, contributing to 23% QoQ decline in insurance brokerage revenue

Mitigation:Offset by stronger new policy production; focus on improving product matching, digital customer acquisition, engagement, and service efficiency in H2.

Increased allowance for contract assets receivable and related party loan receivables Q2 FY26

RMB 502.8 million, up from RMB 176.4 million in Q1

Mitigation:Strengthening collection efforts, closely monitoring counterparties, and updating assumptions as additional information becomes available.

Fair value loss in Ethereum holdings Q2 FY26

RMB 97.8 million

Mitigation:Expect to recognize substantial fair value gains in Q3 as Ethereum prices have recovered since August.

Increased net cash used in operating activities Q2 FY26

RMB 1.03 billion, up from RMB 655.6 million in Q1

Mitigation:Maintaining sufficient liquidity to meet customer obligations, manage credit volatilities, and support normal operations; funding internal AI developments and evaluating M&A opportunities.

What to watch in Q3 FY26

Ethereum fair value gains

Q3 FY26

Current RMB 97.8 million loss in Q2

Target Substantial fair value gains in Q3

Why it matters

Could significantly offset Q2 losses and impact overall profitability, given the recovery in Ethereum prices.

Assuming the price remains at or above at this level through the end of the third quarter, we would expect to recognize a substantial fair value gains in the third quarter.

3 min read 7 chapters

Detailed narrative

Business Model Transformation

Yiren Digital is transitioning to a technology-driven, asset-light revenue model, increasingly relying on AI and digital distribution. This aims to diversify revenue and reduce reliance on capital and the credit cycle, building an AI ecosystem beyond financial services. The company is focused on improving existing businesses and building a foundation for broader technology and AI applications across new industries.

Credit Solutions Performance & Strategy

Loan facilitation volume decreased 29% QoQ to RMB 6.3 billion, with the outstanding balance of performing loans down 30% to RMB 15.1 billion. The company is moderating activity, focusing on repeat borrowers, which accounted for a record 82% of total loan facilitation volume. Delinquency rates improved, with the 31-60 day rate declining to 2.0% from 2.7% and the 61-90 day rate declining to 2.4% from 3.2%, reflecting broader credit recovery and a focus on higher-quality borrowers.

Insurance Brokerage Growth

The insurance platform expanded its client base by 14% QoQ and 281% YoY to 453,000, issuing over 918,000 new policies (up 177% YoY). Gross written premiums increased 2% sequentially to RMB 839 million, and brokerage revenue grew 16% YoY. However, sequential revenue was affected by lower-than-estimated renewal rates, which was partially offset by stronger new policy production across both traditional and digital channels.

AI Integration & Impact

AI is integral to Yiren Digital's operations, producing measurable improvements across multiple areas. Automation in asset recovery reduced the human handling rate from 45% to 24.9%, and tech-based agents achieved an 80% autonomous resolution rate in customer operations (up from 60%). The HawkEye fraud detection system avoided RMB 165 million in potential losses in 2025, demonstrating the practical value of AI in strengthening risk identification and operational control.

AI Ecosystem Expansion & Strategic Investments

Yiren Digital entered warrant agreements with four high-potential AI-native companies in education and entertainment, providing early-stage support beyond capital. The company recently exercised a warrant to acquire a controlling stake in an AI-powered interactive entertainment platform with approximately 3.8 million users (120,000 paying users). This move aims to expand Yiren Digital's AI ecosystem into consumer entertainment and is expected to become a meaningful revenue contributor over time.

Financial Performance Overview

Total net revenue was RMB 890 million, down 3% QoQ and 46% YoY. Net loss narrowed 9% QoQ to RMB 449.6 million, but represented a significant shift from RMB 357.5 million net income YoY. Excluding allowances for long-aged receivables, adjusted operating income was approximately breakeven. The increase in allowance for contract assets receivable and others to RMB 502.8 million primarily reflected higher provisions for credit loss on aging balances.

Capital Allocation & Liquidity

Net cash used in operating activities increased to RMB 1.03 billion, up from RMB 655.6 million in Q1. Cash and cash equivalents stood at RMB 1.7 billion as of June 30, 2026. The board authorized a $20 million share repurchase program in July, allowing repurchases of up to 10% of total issued shares over 12 months. This reflects a disciplined approach to capital allocation, balancing liquidity needs with strategic investments and shareholder returns.

AI-generated summary of the company's earnings call. Not investment advice.