Yirendai NYSE: YRD, which operates as Yiren Digital, reported a narrower sequential net loss in the second quarter of 2026 as lower provisions for contingent liabilities reflected improving credit conditions. Management said the company is accelerating a shift away from capital-intensive lending and toward an asset-light model centered on technology, borrower referrals, digital insurance distribution and artificial intelligence services.
Net loss narrowed 9% from the first quarter to RMB449.6 million, according to CFO William Hui. The result included RMB502.8 million in allowances for contract assets, receivables and other items, largely tied to aging receivables and certain related-party loan receivables following a reassessment of recoverability. Excluding those allowances, Hui said adjusted operating income was approximately breakeven.
Credit Business Shifts Toward Asset-Light Model
Total net revenue was RMB890 million, down 3% sequentially and 46% from a year earlier. The company facilitated RMB6.3 billion in loans during the quarter, down 29% from the first quarter, while the outstanding balance of performing loans fell 30% to RMB15.1 billion.
Founder, Chairman and CEO Ning Tang said Yiren Digital does not intend to return to the previous scale of its risk-taking lending business despite an improvement in the credit environment. Instead, the company is emphasizing an asset-light referral model that uses AI-powered customer acquisition and precision marketing to match qualified borrowers with lending partners.
“This shift allows us to focus more on our technology and customer acquisition capabilities while reducing our reliance on capital and the credit cycle,” Tang said.
The company reported improved delinquency measures. Its 31- to 60-day delinquency rate declined to 2.0% from 2.7% in the first quarter, while the 61- to 90-day rate fell to 2.4% from 3.2%. The 1- to 30-day delinquency rate was stable at 2.5%. Repeat borrowers accounted for 82% of loan facilitation volume, compared with 78% in the prior quarter and 77% a year earlier.
Provisions for contingent liabilities declined 63% sequentially and 40% year over year to RMB233.3 million. Hui attributed the reduction to lower-than-expected net charge-off rates on newly originated loans and lower volumes of loans originated under guarantee arrangements.
Insurance Client Growth Continues, Though Renewals Weighed on Revenue
Yiren Digital’s insurance brokerage business expanded its customer base during the quarter. Insurance clients increased 14% sequentially and 281% year over year to approximately 453,000. The company issued more than 918,000 new policies, an increase of 177% from a year earlier, while gross written premiums rose 2% sequentially to approximately RMB839 million.
Insurance brokerage revenue totaled RMB67.3 million, up 16% from a year earlier but down 23% from the first quarter. Management said the sequential decline reflected lower-than-expected renewal rates for certain internet insurance products and adjustments to commission revenue from existing portfolios. The company said stronger new policy production across traditional and digital channels partially offset the renewal pressure.
Tang said the next phase of the insurance strategy will focus on improving retention, renewals, product matching, digital customer acquisition and service efficiency. The company is also beginning to generate technology and consulting revenue from services provided to insurance partners, supplementing traditional commission-based income.
AI Investments Target Operations and External Revenue
Research and development expense increased 4% from the first quarter and 5% from a year earlier to RMB113.1 million, reflecting investment in AI personnel and engineering capabilities. Tang said the company has deployed proprietary AI models and its Magic Cube multi-agent platform across customer acquisition, customer service, risk management, asset recovery and internal operations.
The company said automation in asset recovery reached a record level, with the human handling rate declining to 24.9% from 45.0%. The autonomous resolution rate for text-based customer-service agents increased from about 60% to nearly 80%, while automated quality inspection covered more than 2 million service records per day.
Yiren Digital also cited its 2025 ESG report, published in July 2026, which stated that its HawkEye fraud detection system and Beijing multi-model verification engine helped avoid about RMB165 million in potential borrower-fraud losses during 2025. Tang characterized that figure as an operational risk indicator rather than a financial metric.
Technology service revenue rose 5.9% from the second quarter of 2025, though it declined 2.3% sequentially. Revenue from other businesses increased 40% from the prior quarter to RMB45 million, driven by higher consulting, network and marketing services revenue. That category was down 57% from a year earlier, primarily because the company terminated its e-commerce business in 2025.
AI Ecosystem Strategy Includes Warrant Agreements
Management said it identified four AI-native companies between May and July and entered warrant agreements with their founders. The agreements provide options, subject to specified terms and milestones, to acquire controlling stakes at pre-agreed exercise prices. The companies are primarily focused on education and entertainment applications.
Earlier in the week, Yiren Digital delivered notice to exercise a warrant to acquire a controlling stake in one previously backed AI entertainment company, subject to definitive agreements. Tang described the target as an interactive entertainment platform for AI-powered user-generated role-playing content and digital-character experiences.
According to Tang, the platform had approximately 3.8 million users, including more than 120,000 paying users, and operated profitably. It has expanded user-acquisition efforts across Southeast Asia and other international markets. Management said it expects the business could become a meaningful revenue contributor over time if the transaction is completed.
Hui said the company will evaluate warrant exercises and other acquisition opportunities based on financial, strategic and governance standards while maintaining liquidity for customer obligations, credit volatility and normal operations.
Liquidity and Capital Allocation
Net cash used in operating activities was RMB1.03 billion, compared with RMB655.6 million in the first quarter. The company attributed the increase to lower service-fee collections from reduced business volumes, increased prepayments for collection, system-support and marketing services, and continued indemnity payments related to legacy risk-taking loans.
Cash and cash equivalents totaled RMB1.7 billion as of June 30, down from RMB2.45 billion at March 31. Financial investments declined to RMB252 million from RMB507.5 million over the same period.
In July, the board authorized a share repurchase program of up to $20 million over 12 months, covering up to 10% of the company’s total issued and outstanding ordinary shares and American depositary shares. Management said repurchases will be evaluated alongside liquidity needs, internal AI investment and selected strategic opportunities.
The company held no question-and-answer session following its prepared remarks.
About Yirendai (NYSE:YRD)
Yirendai Limited, now known as Yiren Digital Ltd. NYSE: YRD, is a China-based financial technology company that provides technology-enabled financial services. The company originally operated as an online consumer lending marketplace, using digital platforms and data-driven tools to connect borrowers with funding sources.
Over time, Yiren Digital expanded its offerings beyond loan facilitation to include wealth management, insurance brokerage and related financial services. Its platforms are designed to serve individual consumers, investors and small-business customers in China, with services intended to support borrowing, investing and broader financial planning needs.
Yirendai was established in 2012 as part of CreditEase, a Chinese financial services group, and completed its initial public offering on the New York Stock Exchange in 2015.
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