United States securities and exchange commission logo
September 24, 2020
Zhong Bi
Chief Financial Officer
Yiren Digital Ltd.
10/F, Building 9, 91 Jianguo Road
Chaoyang District, Beijing 100022
The People s Republic of China
Re: Yiren Digital Ltd.
Form 20-F for the
Fiscal Year Ended December 31, 2019
Filed May 15, 2020
File No. 001-37657
Dear Zhong Bi:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2019
Item 4. Information on the Company
Business Overview, page 63
1. We note your disclosure
that your recent strategic business realignment with CreditEase
enables you to operate
your business in a more diverse and scalable mix of service
platforms Yiren
Credit and Yiren Wealth. Your disclosures further indicate that the loan
products on your Yiren
credit-tech platform are funded by both retail and institutional
investors while your
Yiren wealth management platform specifically targets mass affluent
investors and provides
them with one-stop asset allocation-based wealth management
solutions. In order to
provide more clarity around the impact of your realignment on your
business and the
significance of these changes to your revenue generating activities,
please tell us and
revise future filings to:
Zhong Bi
FirstName LastNameZhong Bi
Yiren Digital Ltd.
Comapany 24,
September NameYiren
2020 Digital Ltd.
September
Page 2 24, 2020 Page 2
FirstName LastName
Compare and contrast your business and related platforms (i.e.
Yiren Credit and
Yiren Wealth) before and after the business realignment,
highlighting any interaction
or relationship between the platforms and the specific synergy
opportunities
presented or created by this realignment. In addition, discuss
whether, and if so how,
this realignment has resulted in any new revenue generating
activities. Your
discussion should support your disclosure that your business is a
more diverse and
scalable mix of service platforms as a result of the business
realignment.
Quantify the approximate percentage of investors that only fund
loans versus those
that invest in products other than loans.
Describe the relationship between the loan products offered on
the Yiren credit-tech
platform and the products or services offered on the Yiren wealth
management
platform.
2. We note your disclosure on pages 63 and 101 that your wealth
management business
primarily distributes fixed income products, mutual fund investment
products, insurance
products and other wealth management products offered by banks. We
further note your
disclosure on pages 63, 101 and 103 that as of December 31, 2019, the
total AUA (Assets
under Administration) on your Yiren wealth platform were RMB 35,291.7
million
(US$5,069.3 million). In order for a reader to better understand the
significance of each of
these products to your overall business, please revise future filings
to provide a roll
forward for each period presented of AUA by product. Also, disclose
the amount of
revenue associated with each product.
3. We note your disclosure on pages 64, 69 and 101 that the Yiren Wealth
platform
generates revenue primarily from financial products and services
offered to clients in three
ways: (i) one-time commissions paid by clients or product providers
when clients
purchase financial products; (ii) recurring service fees paid by
product providers and
clients; and (iii) one-time service fees paid by investors for each
loan transferred over the
secondary loan market. Please tell us and revise future filings to
quantify the amount of
revenue associated with each of these three revenue streams. In
addition, please revise
future filings to provide a more transparent description of each
significant product or
service performed that generates revenue with prominence given to
those products or
services relative to their contribution to your business.
4. We note the diagram on page 65 detailing the underlying assets of the
wealth management
solution (i.e., Yiren Wealth platform). Please revise future filings
to quantify the amount
of assets associated with each investment option (i.e., MMF,
Structured Deposits, Bank
WM Products, Consumer Loans, FICC Portfolios, Selected Funds,
Intelligent Portfolios
and Insurance Planning) accompanied by a quantification of revenue
generated by each of
these products or services.
Zhong Bi
FirstName LastNameZhong Bi
Yiren Digital Ltd.
Comapany 24,
September NameYiren
2020 Digital Ltd.
September
Page 3 24, 2020 Page 3
FirstName LastName
Yiren Wealth Platform - Automated Investing Tool, page 68
5. You disclose that your automated investing tool automatically
reinvests investors funds
as soon as a loan is repaid. Please tell us and revise future filings
to discuss what happens
to an investors funds if or when no borrower loans are available to
reinvest the funds in
due to the lack of supply during the investment period. Specifically
discuss how often this
occurs and how you manage this risk.
Item 5. Operating and Financial Review and Prospects
Operating Results
Segment Information, page 113
6. Please revise future filings to provide a breakdown of net revenue for
each segment, both
in absolute amount and as a percentage of total net revenue, in a
format similar to that
provided on pages 108 and F-21 on a consolidated basis. In addition,
please revise future
filings to provide a more granular discussion of period-to-period
fluctuations in each
component of net revenue by segment, including any notable trends that
are likely to
impact segment operating performance.
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Revenue from account management services, page F-21
7. Please tell us and revise future filings to clarify how you determine
the amount of excess
of actual return over the expected return that you recognize as
revenue. For example,
clarify whether you are entitled to the entire excess or just a
percentage. If a percentage,
please disclose the percentage.
8. Please tell us and revise future filings to identify your performance
obligations related to
account management services and disclose when you typically satisfy
the performance
obligations. Refer to ASC 606-10-50-12 for guidance.
9. Please tell us and revise future filings to clarify whether the
transaction price related to
account management services includes variable consideration, whether
the estimate of
variable consideration is constrained in accordance with paragraphs
ASC 606-10-32-11
through 32-13, and how you assess whether the estimate of variable
consideration is
constrained. Refer to ASC 606-10-50-12 and 50-20 for guidance.
10. Please tell us in greater detail how you initially estimate the excess
of the actual return
over the expected return. If you use the expected value method, please
provide us your
calculation as of December 31, 2019. Please provide us an analysis of
the actual return
and the expected return for each quarter during 2018, 2019 and 2020.
11. Please tell us how loan defaults impact the actual return for an
investor if the loans are not
covered by a third party credit guarantee.
Zhong Bi
Yiren Digital Ltd.
September 24, 2020
Page 4
12. Please tell us and revise future filings to clarify the percentage of
loans facilitated by you
that are covered by a third party credit guarantee.
13. Please tell us how you considered the guidance in ASC 606-10-32-12 in
concluding that it
is probable that a significant reversal in the amount of cumulative
revenue will not occur
and when and how often this determination is made. Noting that charge
off rates have
ranged from 8% to 18% for different loan vintages, specifically tell
us how you
considered the volatility in credit risk and the impact on the actual
return in assessing the
probability.
14. Please revise future filings to disclose the weighted average
investment period at each
period end presented.
Contract Assets, page F-22
15. Please tell us why you do not reclassify amounts from contract assets
to accounts
receivable for the facilitation service monthly fees that are past the
payment due date but
have not been paid. If you believe these amounts should be
reclassified to accounts
receivable , please revise your future filings as appropriate and
disclose the information
required by ASC 310-10-50.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Ben Phippen, Staff Accountant, at 202-551-3697 or
Michael Volley,
Staff Accountant, at 202-551-3437 with any questions.
FirstName LastNameZhong Bi Sincerely,
Comapany NameYiren Digital Ltd.
Division of
Corporation Finance
September 24, 2020 Page 4 Office of
Finance
FirstName LastName