Yirendai Reports Third Quarter 2018 Financial Results

BEIJING, Nov. 13, 2018 /PRNewswire/ -- Yirendai Ltd. (NYSE: YRD) ("Yirendai" or the "Company"), a leading fintech company in China, today announced its unaudited financial results for the quarter ended September 30, 2018.

In the third quarter of 2018, Yirendai facilitated RMB 6,546.2 million (US$953.1 million) of loans to 96,402 qualified individual borrowers through its online marketplace; 32.2% of loan volume were generated by repeat borrowers who have successfully borrowed on Yirendai's platform before; 74.8% of the borrowers were acquired from online channels; 100% of the loan volume originated from online channels was facilitated through mobile.

In the third quarter of 2018, Yirendai facilitated 164,218 investors with total investment amount of RMB 11,412.6 million (US$1,661.7 million), 100% of which was facilitated through its online platform and 96% of which was facilitated through its mobile application.

In the third quarter of 2018, total net revenue was RMB 1,121.2 million (US$163.2 million), a decrease of 26% from prior year; net income was RMB 151.6 million (US$22.1 million), a decrease of 50% from prior year and adjusted net income in the third quarter of 2018 was RMB 367.5 million (US$53.5 million), an increase of 21% from prior year.

"Despite a challenging industry environment during the quarter, we achieved solid performance," commented Ms. Yihan Fang, Chief Executive Officer of Yirendai. "We have seen continuously strong demand from investors on our platform, with our PICC insured loan products being sold out every day, reinforcing our leadership position. We remain confident about Yirendai's long-term prospects amid an uncertain industry environment."

"As the industry goes through the regulatory evaluation process, we maintain a prudent risk and growth policy," commented Mr. Dennis Cong, Chief Financial Officer of Yirendai. "We are currently awaiting regulators to begin on-site inspections at Yirendai and we are exceedingly confident of our ability to meet registration requirements. This quarter, one of our top priorities was cash and liquidity management, and with efforts made in product and funding diversification, we believe that we are in a solid cash and liquidity position, making us well-positioned to resume our growth and capture market opportunities as the industry consolidates."

Third Quarter 2018 Financial Results

Total amount of loans facilitated in the third quarter of 2018, was RMB 6,546.2 million (US$953.1 million), decreased by 46% from RMB 12,185.4 million in the same period last year as we proactively controlled our business growth. As of September 30, 2018, Yirendai had facilitated approximately RMB 104.2 billion (US$15.2 billion) in loan principal since its inception.

Total net revenue in the third quarter of 2018 was RMB 1,121.2 million (US$163.2 million), decreased by 26% from RMB 1,513.9 million in the same period last year. The decrease of total net revenue was mainly attributable to a decline in loan origination volume.

Sales and marketing expenses in the third quarter of 2018 were RMB 451.0 million (US$65.7 million), compared to RMB 844.2 million in the same period last year. Sales and marketing expenses in the third quarter of 2018 accounted for 6.9% of amount of loans facilitated, remaining stable from 6.9% in the same period last year.

Origination and servicing costs in the third quarter of 2018 were RMB 155.0 million (US$22.6 million), compared to RMB 119.0 million in the same period last year. Origination and servicing costs in the third quarter of 2018 accounted for 2.4% of amount of loans facilitated, increased from 1.0% in the same period last year mainly due to increased collection efforts this quarter.

General and administrative expenses in the third quarter of 2018 were RMB 167.3 million (US$24.4 million), compared to RMB 172.6 million in the same period last year. General and administrative expenses in the third quarter of 2018 accounted for 14.9% of total net revenue, compared to 11.4% in the same period last year.

Provision expenses in the third quarter of 2018 were RMB 214.7 million (US$31.3 million),  compared to RMB 163.0 million in the second quarter of 2018. The increase in provision expenses was mainly attributable to more conservative changes in future collectability estimates.

Income tax expense in the third quarter of 2018 was RMB 34.2 million (US$5.0 million). Since the first quarter of 2017, Yi Ren Heng Ye Technology Development (Beijing) Co., Ltd., a subsidiary of the Company, enjoyed a favorable enterprise income tax rate of 12.5% as a software enterprise which qualification was confirmed by local tax bureau in the third quarter of 2016. This makes it eligible for an exemption of enterprise income tax for 2015 and 2016 and a favorable enterprise income tax rate of 12.5% for 2017, 2018 and 2019.

Net income in the third quarter of 2018 was RMB 151.6 million (US$22.1 million), decreased by 50% from RMB 303.0 million in the same period last year.

Adjusted net income (non-GAAP) in the third quarter of 2018 was RMB 367.5 million (US$53.5 million), increased by 21% from RMB 303.0 million in the same period last year. For the third quarter of 2018, net income would be positively impacted by RMB 215.9 million if ASC 606 was not adopted, generated from loans facilitated prior to 2018.

Adjusted EBITDA (non-GAAP) in the third quarter of 2018 was RMB 509.3 million (US$74.2 million), increased by 21% from RMB 422.4 million in the same period last year. Adjusted EBITDA margin^[1] (non-GAAP) in the third quarter of 2018 was 45.4%, compared to 27.9% in the same period last year. For the third quarter of 2018, adjusted EBITDA includes RMB 287.9 million adjustment on pre-tax income earned from loans facilitated prior to 2018, if ASC 606 was not adopted.

Basic income per ADS in the third quarter of 2018 was RMB 2.46 (US$0.36), decreased from RMB 5.00 in the same period last year.

Adjusted basic income per ADS in the third quarter of 2018 was RMB 5.97 (US$0.87). Adjusted basic income per ADS includes RMB 215.9 million adjustment on income earned from loans facilitated prior to 2018, if ASC 606 was not adopted.

Diluted income per ADS in the third quarter of 2018 was RMB 2.43 (US$0.35), decreased from RMB 4.91 in the same period last year.

Adjusted diluted income per ADS in the third quarter of 2018 was RMB 5.89 (US$0.86). Adjusted diluted income per ADS includes RMB 215.9 million adjustment on income earned from loans facilitated prior to 2018, if ASC 606 was not adopted.

Net cash used in operating activities in the third quarter of 2018 was RMB 138.2 million (US$20.1 million), compared to RMB 1,370.1 million in the second quarter of 2018.

As of September 30, 2018, cash and cash equivalents was RMB 806.9 million (US$117.5 million), compared to RMB 567.5 million as of June 30, 2018. As of September 30, 2018, balance of held-to-maturity investments was RMB 319.6 million (US$46.5 million), compared to RMB 312.1 million as of June 30, 2018. As of September 30, 2018, balance of available-for-sale investments was RMB 833.8 million (US$121.4 million), compared to RMB 530.1 million as of June 30, 2018.

Delinquency rates. As of September 30, 2018, the delinquency rates for loans that are past due for 15-29 days, 30-59 days and 60-89 days were 1.1%, 1.8% and 1.5%, compared to 0.8%, 1.2% and 1.3%, as of June 30, 2018. The increase in delinquency rates was partially due to the slower loan volume growth as well as continuous movements in the Company's asset credit performance.

Cumulative M3+ net charge-off rates. As of September 30, 2018, the cumulative M3+ net charge-off rate for loans originated in 2015 was 10.3%, compared to 10.1% as of June 30, 2018. As of September 30, 2018, the cumulative M3+ net charge-off rate for loans originated in 2016 was 9.6%, compared to 8.7% as of June 30, 2018. As of September 30, 2018, the cumulative M3+ net charge-off rate for loans originated in 2017 was 8.5%, compared to 6.0% as of June 30, 2018.

Other Operating Metrics and Business Results

• As of September 30, 2018, remaining principal of performing loans totaled RMB 42.6 billion (US$6.2 billion), decreased by 7% from RMB 45.8 billion as of June 30, 2018 and increased by 24% from RMB 34.2 billion as of September 30, 2017.
• In the third quarter of 2018, Grade I, II, III, IV and V loans represented 11.5%, 32.7%, 31.3%, 17.8% and 6.7% of the Company's product portfolio, respectively.

Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses several non-GAAP financial measures, such as adjusted net income, adjusted EBITDA, adjusted EBITDA margin, adjusted basic income per ADS and adjusted diluted income per ADS as supplemental measures to review and assess operating performance. We believe these non-GAAP measures provide useful information about our core operating results, enhance the overall understanding of our past performance and prospects and allow for greater visibility with respect to key metrics used by our management in our financial and operational decision-making. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The non-GAAP financial measures have limitations as analytical tools. Other companies, including peer companies in the industry, may calculate these non-GAAP measures differently, which may reduce their usefulness as a comparative measure. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. See "Operating Highlights and Reconciliation of GAAP to Non-GAAP measures" at the end of this press release.

Currency Conversion

This announcement contains currency conversions of certain RMB amounts into US$ at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to US$ are made at a rate of RMB 6.8680 to US$1.00, the effective noon buying rate on September 28, 2018 as set forth in the H.10 statistical release of the Federal Reserve Board.

Conference Call

Yirendai's management will host an earnings conference call at 8:00 p.m. Eastern Time on November 12, 2018, (or 9:00 a.m. Beijing/Hong Kong Time on November 13, 2018).

Dial-in details for the earnings conference call are as follows:

A replay of the conference call may be accessed by phone at the following numbers until November 19, 2018:

Additionally, a live and archived webcast of the conference call will be available at ir.yirendai.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Yirendai's control. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. Potential risks and uncertainties include, but are not limited to, uncertainties as to Yirendai's ability to attract and retain borrowers and investors on its marketplace, its ability to introduce new loan products and platform enhancements, its ability to compete effectively, PRC regulations and policies relating to the peer-to-peer lending service industry in China, general economic conditions in China, and Yirendai's ability to meet the standards necessary to maintain listing of its ADSs on the NYSE or other stock exchange, including its ability to cure any non-compliance with the NYSE's continued listing criteria. Further information regarding these and other risks, uncertainties or factors is included in Yirendai's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Yirendai does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

About Yirendai

Yirendai Ltd. (NYSE: YRD) is a leading fintech company in China connecting investors and individual borrowers. The Company provides an effective solution to address largely underserved investor and individual borrower demand in China through an online platform that automates key aspects of its operations to efficiently match borrowers with investors and execute loan transactions. Yirendai deploys a proprietary risk management system, which enables the Company to effectively assess the creditworthiness of borrowers, appropriately price the risks associated with borrowers, and offer quality loan investment opportunities to investors. Yirendai's online marketplace provides borrowers with quick and convenient access to consumer credit at competitive prices and investors with easy and quick access to an alternative asset class with attractive returns. For more information, please visit ir.yirendai.com.

For investor and media inquiries, please contact:

Yirendai
Hui (Matthew) Li
Director of Investor Relations
Email: ir@yirendai.com

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