The following discussion of our financial condition and results of operations is based upon, and should be read in conjunction with, our audited consolidated financial statements and the related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A. Operating Results Overview We are a leading AI-powered Fintech platform specializing in digital consumer lending, insurance and financial technology innovation across China and global markets. We leverage advanced artificial intelligence and emerging technologies to enhance customer experience, optimize capital efficiency, and expand financial inclusion. We are primarily engaged in the operation of our credit solution services business, insurance brokerage business and others businesses mainly in China. In 2025, the majority of our revenues were generated from our credit solution services business, which included (i) loan facilitation service fees paid by institutional partners for our technology-enabled borrower acquisition services; (ii) post origination service fees paid by institutional partners for our post-origination loan management and collection services; (iii) financing service fees paid by borrowers for loans funded by our subsidiaries and consolidated ABFE; (iv) guarantee service fees arising from guarantees and related counter-guarantees for loans facilitated under the risk-taking model provided by our subsidiaries; (v) network and marketing services derived from intelligent marketing and referral arrangements with third-party partner institutions in relation to borrowers on our platform; (vi) technology services fees earned from the provision of our existing technological capabilities related to credit solution services to third-party companies; and (vii) revenue from other financial services, such as penalty fees for loan prepayment and late payment. Our insurance brokerage business generates revenues primarily from insurance commission fees paid by insurance companies when clients purchase insurance products through Hexiang Insurance Brokers. Our other revenues primarily from sales of non-financial products and services on e-commerce platforms, as well as network and marketing services and technology services provided to corporate clients outside our credit solutions business. Basis of Management’s Discussion of Operating Results On December 31, 2020, we consummated another business restructuring with CreditEase to streamline our service lines and reposition us as a comprehensive digital personal financial management platform in China. In connection with the business restructuring, we disposed of the online consumer lending platform targeting individual investors as the funding source (the “Disposed Business”). The Disposed Business was operated by Hengcheng, and CreditEase, through its subsidiaries and affiliates, paid the designated subsidiaries of our company an aggregate amount of RMB67.0 million in cash. 119 Major Factors Affecting Our Results of Operations Major factors affecting our results of operations include the following: Economic Conditions in China The demand for online consumer finance from borrowers is dependent upon overall economic conditions in China. General economic factors, including the interest rate environment and unemployment rates, may affect borrowers’ willingness to seek loans. For example, significant increases in interest rates could cause potential borrowers to defer obtaining loans as they wait for interest rates to become stable or decrease. Additionally, a slowdown in the economy, such as from a rise in the unemployment rate and a decrease in real income, may affect individuals’ level of disposable income. This may negatively affect borrowers’ repayment capability, which in turn may decrease their willingness to seek loans and potentially cause an increase in default rates. Ability to Acquire Borrowers and Clients Effectively Our ability to increase the loan volume facilitated through our marketplace largely depends on our ability to serve our existing borrowers and to attract potential new borrowers through sales and marketing efforts. Our sales and marketing efforts include those related to borrower acquisition and retention and general marketing. We intend to continue to dedicate significant resources to our sales and marketing efforts and constantly seek to improve the effectiveness of these efforts, in particular with regard to borrower acquisition. For our credit solution services business, our company and the VIEs attract borrowers through online channels, such as social media platforms, search engine marketing, search engine optimization, mobile application downloads through major application stores, as well as various marketing campaigns and membership services. For our insurance brokerage business, we acquire clients through a variety of sources, such as online direct marketing, CreditEase ecosystem, member referral, channel partnership and social media platforms. For our others business, we primarily serve our existing customers from other business lines. Effectiveness of Risk Management Our ability to effectively segment borrowers into appropriate risk profiles affects our ability to offer attractive pricing to borrowers as well as our ability to refer qualified borrowers to our institutional funding partners, both of which directly relate to the level of user confidence in our marketplace. Our proprietary risk management system is built upon data accumulated through our operations, and is further supported by an extensive database accumulated by CreditEase over the past ten years. Our risk management model utilizes big data capabilities to automatically evaluate a borrower’s credit characteristics. At the same time, we use automated verification and fraud detection tools to ensure the quality of the loans facilitated on our marketplace, and supplement these technology-driven tools with manual processes when necessary. Furthermore, our ability to effectively evaluate a borrower’s risk profile and likelihood of default may directly affect our results of operations. We have provided guarantee services in connection with some of the loans facilitated on our marketplace by institutional funding partners, through two of our wholly owned subsidiaries, Fujian Jiaying and Chongqing Jintong. We also provide back-to-back guarantee services to Chongqing Jintong and third party guarantee companies for some loans facilitated under our risk-taking model. Product Mix and Pricing Our ability to maintain profitability largely depends on our ability to continually optimize our product mix and to accurately price the loans facilitated through our platform. The expected net charge-off rate and actual observed results for each of these customer groups divide potential borrowers into distinctively different credit segments. See “Item 4. Information on the Company—B. Business Overview—Risk Management—Proprietary Credit Scoring Model and Loan Qualification System.” In response to market competition or further developments, we may spend more effort promoting certain loan products, managing the growth in volume of other loan products, introducing new products with new risk grades or adjusting the pricing of our existing products. Any material change in the product mix could have a significant impact on our profitability and net income margin. 120 Ability to Innovate Our success to date has depended on, and our future success will depend in part on, successfully meeting borrower demand with new and innovative loan products. Our company and the VIEs have made and intend to continue to make efforts to develop loan products for borrowers. We constantly evaluate the popularity of our existing product offerings and develop new products and services that cater to the ever evolving needs of our borrowers. From a credit solution services perspective, as we continue to optimize our product offerings, we are developing a more diversified range of credit products tailored to meet the specific needs of our target borrowers and institutional funding partners, all at competitive prices in line with updated regulatory guidelines. As our marketplace grows, we have enhanced our ability to offer risk-based loan pricing. For instance, we have introduced lower-priced loan products and regularly adjust our pricing strategy as we shift towards serving a higher-quality customer segment in response to regulatory directives. Moving forward, we will continue to diversify our product offerings and strengthen synergies across our various business lines. In the insurance brokerage business, we remain committed to driving innovation and customization in our product offerings as we expand our client base and strengthen partnerships with external stakeholders. We closely monitor both domestic and international markets, continually introducing new insurance products that target low-penetration segments with high growth potential. For example, since the second half of 2022, we have been offering overseas engineering liability insurance services to address the growing security needs of engineering projects in Belt and Road countries. Additionally, since 2022, we have introduced “New Citizen” insurance services, designed to meet the protection needs of flexible workforce members and part-time workers who are not covered by traditional social security systems. In 2024, we expanded our reach by launching online channels, including social media platforms, to offer more flexible insurance products, such as healthcare and retirement plans. In the others business, we continue to enhance our product and service offerings to better meet the diverse needs of our customers across various life scenarios. As we refine our customer segmentation and optimize our customer mix, we are strategically scaling back the offering of historical and existing products. This shift allows us to focus on studying and analyzing the profiles and needs of our newly upgraded customer group, enabling us to develop tailored products that more effectively address their requirements. Failure to continue to successfully develop and offer innovative products and for such products to gain broad customer acceptance could adversely affect our operating results and we may not recoup the costs of launching and marketing new products. Ability to Compete Effectively Our business and results of operations depend on our ability to compete effectively in the markets in which we operate. For our credit solution services business, we compete with other consumer finance marketplaces and loan facilitation platforms in China. The industry was intensely competitive before the year 2018. However, as the domestic regulations on the industry evolve and entry barriers continue to increase in recent years, fewer national-level players like us remain in the market while smaller platforms cease their operations, leaving more market share opportunities for us. Meanwhile, as we expand our credit solution service businesses overseas, such as in the Philippines, we are facing competition from regional peers. For our insurance brokerage business, we compete with other insurance brokerage companies in China. Given the overall low penetration rate of insurance services in China compared with the US and the Europe, we believe that our strategic deployment in insurance business has navigated us towards a large market with high growth potential. In light of a tightening regulatory landscape domestically, our ability to customize and innovate products, coupled with robust channel partnerships, will play a vital role in maintaining our competitiveness. 121 For our others business, we fully embrace AI to offer selected high-quality products and services that align with our customers’ preferences. Our primary goal in this segment is to enhance user experience and engagement, thereby increasing the long-term value of our existing customers through enriched products and upgraded services. We are currently scaling back product offerings in our other business and conducting a strategic review on how to better serve customers following the upgrade of our borrower segment and optimization of borrower profiles. If we are unable to compete effectively, the demand for our marketplace could stagnate or substantially decline, we could experience reduced revenues or our marketplace could fail to maintain or achieve more widespread market acceptance, any of which could harm our business and results of operations. Regulatory Environment in China The regulatory environment for the online consumer finance industry in China is developing and evolving, creating both challenges and opportunities that could affect our financial performance. The Chinese government has been putting the pieces in place for a more mature regulatory framework covering all aspects of our business. New regulations may result in both opportunities and challenges for us by weeding out weaker players, triggering consolidation within the industry and increasing compliance risk. We will continue to make efforts to ensure that we are compliant with the existing laws, regulations and governmental policies relating to our industry and to comply with new laws and regulations or changes under existing PRC laws and regulations that may arise in the future. While new laws and regulations or changes to existing laws and regulations could make products more difficult to be accepted by clients on terms favorable to us, or at all, these events could also provide new product and market opportunities. We will continue to diversify funding sources, expand our loan product mix and enhance our risk management to support our business growth. Loan Performance Data Delinquency Rates As of December 31, 2025, the delinquency rates for loans under our loan facilitation model, except loans originating outside mainland China, that are past due for 1-30 days, 31-60 days and 61-90 days are set forth below: Delinquent for 1-30 days 31-60 days 61-90 days All Loans December 31, 2023 2.0 % 1.4 % 1.2 % December 31, 2024 1.6 % 1.2 % 1.1 % December 31, 2025 3.4 % 3.0 % 2.8 % M3+ Net Charge-off Rates We currently define M3+ Net Charge-off Rate, with respect to loans facilitated during a specified time period, which we refer to as a vintage, as the difference between (i) the total balance of outstanding principal of loans that become over three months delinquent during a specified period and (ii) the total principal of recovered past due payments in the same period with respect to all loans in the same vintage that have ever become over three months delinquent, divided by (iii) the total initial principal of the loans facilitated in such vintage. 122 The following chart displays the historical lifetime cumulative M3+ Net Charge-off Rates by vintage as of December 31, 2025, for loans facilitated under our loan facilitation model, except loans originating outside mainland China, for each of the months shown: Cumulative M3+ Net Charge Off Rates The expected M3+ Net Charge-off Rates and actual observed results for each of these customer groups divide potential borrowers into distinctively different credit segments. See “Item 4. Information on the Company—B. Business Overview—Risk Management—Proprietary Credit Scoring Model and Loan Qualification System.” Our business and financial performance depend on our ability to manage and forecast net charge-off rates. However, given our limited operating history, we have limited information on historical charge-off rates, and as a result, we may not be able to conduct an accurate charge-off forecast for our target borrower group. In addition, due to the uncertainty of industry regulations, we expect borrower credit performance may be volatile in the foreseeable future, which may lead to higher default rates and adverse impacts on our reputation, business, results of operations and financial position. See “Item 4. Information on the Company—B. Business Overview—Risk Management.” Selected Statements of Operations Items Net revenue Our net revenue consists of revenue from loan facilitation services, post-origination services and guarantee services in connection with loans funded by third-party institutions, financing services in connection with loans funded by our subsidiaries and consolidated ABFE, insurance brokerage services, electronic commerce services, network and marketing services, technology services, and others. The following table sets forth the breakdown of our net revenue, both in an absolute amount and as a percentage of our total net revenue, for the periods presented: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenue: Loan facilitation services 2,240,852 45.8 2,721,389 46.9 2,234,571 319,539 39.1 Post-origination services 17,203 0.4 5,957 0.1 7,255 1,038 0.1 Guarantee services 50,865 1.0 429,299 7.4 1,705,985 243,953 29.8 Financing services 55,974 1.1 93,239 1.6 243,099 34,763 4.3 Insurance brokerage services 963,822 19.7 408,369 7.0 297,593 42,555 5.2 Electronic commerce services 1,267,104 25.9 1,865,621 32.1 324,996 46,474 5.7 Network and marketing services 253,019 5.2 241,114 4.2 636,277 90,986 11.1 Technology services 30,102 0.6 33,570 0.6 256,323 36,654 4.5 Others 16,692 0.3 7,343 0.1 13,121 1,876 0.2 Total net revenue 4,895,633 100.0 5,805,901 100.0 5,719,220 817,838 100.0 123 Loan facilitation, post-origination and guarantee service fees We provide loan facilitation services to third-party institutional funding partners and borrowers. The loans funded by these third parties are primarily unsecured small revolving loans and small business loans. For more details of these loan products, please see “Item 4. Information on the Company—B. Business Overview—Credit Solution Services Business—Our Loan Products.” For these loans, we receive service fees from the third-party funding partners, guarantee companies, and borrowers if any, which include (i) the loan facilitation service fees for our technology-enabled borrower acquisition services, (ii) the post-origination service fees for our loan management and collection services after origination, including payment reminder services, payment collection services, overdue payment monitoring services, and lawsuit filing services under certain circumstances, among others, and (iii) the guarantee service fees arising from guarantees and related counter-guarantees provided by our subsidiaries for loans facilitated under the risk-taking model. We determine the transaction price for these three types of services (loan facilitation, post-origination, and guarantee services) as the total service fees received from the aforementioned parties. In accordance with ASC 606, for loans not under the risk-taking model, we allocate the transaction price between loan facilitation services and post-origination services based on their relative standalone selling prices. For loans under the risk-taking model, we first allocate the transaction price to the guarantee services, and the remaining transaction price is then allocated between loan facilitation services and post-origination services, also based on their relative standalone selling prices. The guarantee service is accounted for at fair value in accordance with ASC Topic 460, Guarantees, with a stand-ready guarantee liability recognized at the inception of each loan. All of the loan products facilitated by us feature fixed monthly payments. After our third-party funding partners, and guarantee companies if any, receive the principals, interests and guarantee service fees from the borrowers in monthly installments, they will in turn pay us the corresponding transaction fees according to the agreed settlement period. We recognize revenue when (or as) we satisfy the service performance obligation by transferring a promised service to a customer. Revenues from loan facilitation services are recognized at the time a loan is originated between the investor and the borrower and the loan principal is transferred to the borrower, at which time the loan facilitation service is considered completed. Revenues from post-origination services are recognized on a straight-line basis over the term of the underlying loans as the services are provided. Revenue from guarantee services is recognized on a straight-line basis over the term of the guarantee liability. As these services are provided in respect of loans funded by third parties, we only recognize such service fees as revenue, and do not record the principal and interest amounts of loans provided by such third-party funding partners on our consolidated balance sheet. The respective rate of loan facilitation service fees and post-origination service fees that we charge varies mainly depending on the different risk grade of the loans facilitated. For loans within the same risk grade, the fee rate also varies depending on the different terms of the loans and different repayment schedules. In 2023, 2024 and 2025, our weighted average service fee rate for our loan facilitation services and post-origination services was 7.5%, 7.9% and 7.7%, respectively. The increase in the weighted average fee rate from 2023 to 2024 was primarily due to a longer average maturity term. The decrease in the weighted average fee rate from 2024 to 2025 was primarily due to the limit of comprehensive fee rate required by the regulators. We have implemented and will continue to implement a tighter risk policy to proactively control our business growth in order to improve the asset quality of new loans facilitated through our marketplace. Financing service fees We also offer loans funded by our subsidiaries and consolidated ABFE and charge financing service fees that consist of interest income charged from borrowers. In 2022, subsidiaries of the consolidated variable interest entities, such as microloan companies and financial leasing companies, also provided loans to borrowers using their own capital. The loans funded by these entities were primarily auto-secured loans and property-secured loans. We recognize the financing services revenue over the lifetime of the loans using the effective interest method. The principal and interests of such loans are recorded on our consolidated balance sheet. Insurance brokerage commissions We provide insurance brokerage services and sell various health and life insurance products and property and casualty insurance products on behalf of insurance companies. The terms of health and life insurance products vary and are typically one to five years. We earn brokerage commissions on health and life insurance products from both the first-year initial premium and the renewal premiums for each subsequent year throughout the policy term, as calculated based on pre-agreed percentages of the premiums paid by the policy holder. 124 The term of property and casualty insurance products is typically one year, and we receive a pre-agreed percentage of the premiums paid by the policy holder for such year as the commission. The range of commission rates of these insurance products varies significantly depending on the different types of insurance products. For example, commissions from certain property and casualty insurance products may be less than 1%, while a five-year term health and life insurance products may yield commissions of over 50% for the first year, 5% for the second year, and 1.5% for the third year. Since 2024, in addition to traditional brokerage services, Hexiang Insurance Brokers began to operate an internet-based insurance distribution business model. Internet insurance products generally carry monthly premiums payable over a one-year period. We earn brokerage commissions from insurance companies based on a pre-agreed rate applied to the actual premium amounts paid by policyholders. We perform our duty to sell insurance policies on behalf of the insurance companies as the performance obligation in our contracts rests on the insurance companies. Our performance obligation to the insurance companies is satisfied and commission revenue, including renewal commission revenue, is recognized at the point in time when an insurance policy becomes effective. The renewal commission revenue is recognized based on the projected renewal rate. Electronic commerce services fees. We generate revenue from sales of products and services provided on our comprehensive life service platform. Network and marketing services fees We charge network and marketing service fees from intelligent marketing and referral arrangements with third-party partner institutions. Specifically, we refer our platform customers to third-party platforms that may provide loan disbursement or a broader range of financial and non-financial services, and earn a fixed rate of referral fees upon specified actions by such customers on these platforms, including but not limited to clicking, registration, consumption, or acceptance by other funding or service providers. Revenue is recognized when the referral is completed and confirmed by the third-party partner institutions. Technology services fees We charge technology service fees from the provision of our existing technological capabilities to third-party companies, including capabilities related to our credit solution services and other corporate client services. These services include licensing the use of our proprietary software systems, as well as system installation and maintenance services. Fees are charged at a fixed rate based on business volume, in accordance with pre-agreed terms with the counterparties. Revenue is recognized on a monthly basis when the counterparties actually use the services and confirm the business volume. Others. We also charge other service fees, such as penalty fees for loan prepayment and late payment. Penalty fees are calculated as a certain percentage of past due amounts in the case of late payment, or a certain percentage of the contract amounts in case of prepayment, and we recognize the relevant revenue when the fees are received. Operating Costs and Expenses Our operating costs and expenses consist of sales and marketing expenses, origination, servicing and other operating costs, research and development expenses, general and administrative expenses, provision for contingent liabilities and allowance for contract assets, receivables and others. 125 The following table sets forth our operating costs and expenses, both in an absolute amount and as a percentage of our total operating costs and expenses, for the periods indicated: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating costs and expenses: Sales and marketing 656,603 28.5 1,196,429 28.8 1,159,934 165,868 19.5 Origination, servicing and other operating costs 976,172 42.5 882,957 21.2 786,386 112,452 13.2 Research and development 148,754 6.5 411,876 9.9 406,567 58,138 6.8 General and administrative 231,135 10.0 274,673 6.6 322,091 46,059 5.4 Provision for contingent liabilities 27,035 1.2 869,280 20.9 2,366,344 338,383 40.0 Allowance for contract assets, receivables and others 261,152 11.3 523,622 12.6 899,656 128,649 15.1 Total operating costs and expenses 2,300,851 100.0 4,158,837 100.0 5,940,978 849,549 100.0 Sales and marketing expenses. Sales and marketing expenses consist primarily of variable marketing expenses, including those related to borrower and client acquisition and retention and general brand and awareness building. The following table presents the sales and marketing expenses allocated to each business segment, both in an absolute amount and as a percentage of total sales and marketing expenses, during the periods indicated: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Sales and marketing expenses: Credit solution business 498,055 75.8 1,102,737 92.2 1,071,892 153,279 92.4 Insurance brokerage business 12,887 2.0 13,706 1.1 9,242 1,321 0.8 Others 145,661 22.2 79,986 6.7 78,800 11,268 6.8 Total operating costs and expenses 656,603 100.0 1,196,429 100.0 1,159,934 165,868 100.0 Origination, servicing and other operating costs. Origination, servicing and other operating costs consist primarily of variable expenses and vendor costs, including costs related to credit assessment, customer and system support, payment processing services and collection associated with facilitating and servicing loans. It also consists of costs in connection with the distribution of insurance products, including payroll and related expenses for insurance agents and transaction fees charged by third-party payment platforms. Research and development expenses. Research and development expenses consist primarily of salaries and benefits related to technology and technological innovations. General and administrative expenses. General and administrative expenses consist primarily of salaries and benefits related to accounting and finance, business development, legal, human resources and other personnel. Provision for contingent liabilities. Provision for contingent liabilities is the expected future net-payout for loans facilitated under our risk-taking model where we reimburse the loan principal and interest to the financial institution partners upon borrower’s default. Allowance for contract assets, receivables and others. Allowance for contract assets, receivables and others is the credit loss of contact assets, receivables and other assets. 126 Taxation Cayman Islands We are incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution, brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on payments of dividends to shareholders. Hong Kong Our subsidiaries incorporated in Hong Kong are subject to 16.5% Hong Kong profit tax on their taxable income generated from operations in Hong Kong for the years of assessment 2015/2016, 2016/2017 and 2017/2018. Commencing from the year of assessment 2018/2019, the first HK$2 million of profits earned by our subsidiaries incorporated in Hong Kong will be taxed at half the current tax rate (i.e., 8.25%) while the remaining profits will continue to be taxed at the existing 16.5% tax rate. Under the Hong Kong tax laws, we are exempted from the Hong Kong income tax on our foreign-derived income. In addition, payments of dividends from our subsidiaries incorporated in Hong Kong to us are not subject to any Hong Kong withholding tax. China Generally, our subsidiaries and the consolidated variable interest entities in China are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. YouRace Hengchuang, one of our PRC subsidiaries, was qualified as a “high and new technology enterprise” in November 2018 and the status was reaffirmed in 2024. Accordingly, it has been eligible for a preferential income tax rate of 15%. However, YouRace Hengchuang’s qualification as a “high and new technology enterprise” is subject to evaluation by the relevant authorities in China every three years. If YouRace Hengchuang fails to maintain its “high and new technology enterprise” qualification, its applicable corporate income tax rate would increase to 25%, which could have adverse effects on our financial condition and results of operations. Chongqing Hengfengyi Technology Co., Ltd, or Hengfengyi, one of our PRC subsidiaries, was also qualified as a “software enterprise” in April 2025, and accordingly has been eligible for an exemption of enterprise income tax for 2024 and 2025 and a reduced enterprise income tax at the rate of 12.5% from 2026 through 2028. However, Hengfengyi’s qualifications as “software enterprises” are subject to annual evaluation by the relevant authorities in China. If Hengfengyi fails to maintain its “software enterprise” qualification, its applicable corporate income tax rate would increase to 25%, which could have adverse effects on our financial condition and results of operations. In addition, Hengyuda, one of our PRC subsidiaries, has been eligible for a reduced enterprise income tax rate of 15% since 2017 pursuant to the Catalogue of Encouraged Industries in Western Regions, the Catalogue of Industries for Guiding Foreign Investment, Announcement on Renewing the Enterprise Income Tax Policy for Great Western Development, and the related rules granting favorable tax treatment to companies in specified industries in western China under the PRC government’s policy initiative to promote the development of the western region of China. However, the favorable tax treatments for Hengyuda are subject to an annual filing requirement. Besides, Beihai Youce Yike Technology Co., Ltd., Beihai Hengze Innovation Technology Co., Ltd., and Beihai Youjia Innovation Technology Co., Ltd. are also eligible for a reduced enterprise income tax rate of 15% pursuant to the same set of policies and regulations applicable to Hengyuda. Beihai Youce Yike Technology Co., Ltd., Beihai Hengze Innovation Technology Co., Ltd., and Beihai Youjia Innovation Technology Co., Ltd. are also eligible for an exemption of local portion of enterprise income tax for five years since the tax year they generate their first sum of main business revenue according to the Notice on Several Policies to Promote High-Level Opening-Up and High-Quality Development of the Beibu Gulf Economic Zone in the New Era. In addition, Xinjiang Hengyu Innovation Technology Development Co., Ltd., Hesi Shengju Technology Development (Xinjiang) Co., Ltd., and Hesi Shengrui Technology Development (Xinjiang) Co., Ltd., as newly setup PRC subsidiaries are eligible for an exemption of enterprise tax for five years since the tax year they generate their first sum of production and business revenue according to the Notice on Corporate Income Tax Incentives for Newly Established Enterprises in Xinjiang’s Difficult Areas and the Kashgar and Khorgos Special Economic Development Zones. However, the relevant rules and policy initiative may change, and the favorable tax treatment under these rules is available only to companies meeting certain qualifications. We are subject to VAT at a rate of 6% on the services we provide to borrowers and clients, less any deductible VAT we have already paid or borne. We are also subject to surcharges on VAT payments in accordance with PRC law. Dividends paid by our wholly foreign-owned subsidiaries in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the relevant tax authority. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5% by filing necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.” 127 If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in an absolute amount and as a percentage of our net revenue. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenue (including revenue from related parties of RMB141,595, RMB32,192 and RMB7,897 for the years ended December 31, 2023, 2024 and 2025, respectively)(1) 4,895,633 100.0 5,805,901 100.0 5,719,220 817,838 100.0 Operating costs and expenses: Sales and marketing (including expenses from related parties of RMB24, nil and RMB9,005 for the years ended December 31, 2023, 2024 and 2025, respectively) (656,603 ) (13.4 ) (1,196,429 ) (20.6 ) (1,159,934 ) (165,868 ) (20.3 ) Origination, servicing and other operating costs (including costs from related parties of RMB324,854, RMB283,907 and RMB208,313 for the years ended December 31, 2023, 2024 and 2025, respectively) (976,172 ) (19.9 ) (882,957 ) (15.2 ) (786,386 ) (112,452 ) (13.7 ) Research and development (including expenses from related parties of RMB52,468, RMB252,802 and RMB208,227 for the years ended December 31, 2023, 2024 and 2025, respectively) (148,754 ) (3.0 ) (411,876 ) (7.1 ) (406,567 ) (58,138 ) (7.1 ) General and administrative (including expenses from related parties of RMB19,567, RMB27,339 and RMB 25,325 for the years ended December 31, 2023, 2024 and 2025, respectively) (231,135 ) (4.7 ) (274,673 ) (4.7 ) (322,091 ) (46,059 ) (5.6 ) Provision for contingent liabilities (27,035 ) (0.6 ) (869,280 ) (15.0 ) (2,366,344 ) (338,383 ) (41.4 ) Allowance for contract assets, receivables and others (261,152 ) (5.4 ) (523,622 ) (9.0 ) (899,656 ) (128,649 ) (15.7 ) Total operating costs and expenses (2,300,851 ) (47.0 ) (4,158,837 ) (71.6 ) (5,940,978 ) (849,549 ) (103.8 ) Investment income 18,862 0.3 26,341 0.4 7,819 1,118 0.1 Interest income, net (including income from related parties of RMB6,937, RMB17,383 and 39,907 for the years ended December 31, 2023, 2024 and 2025, respectively) 61,887 1.3 79,136 1.4 78,722 11,257 1.4 Fair value adjustments (loss)/gain (50,171 ) (1.0 ) 107,532 1.9 68,977 9,864 1.2 Other income, net (including expenses from related parties of nil, RMB1,003 and nil for the years ended December 31, 2023, 2024 and 2025, respectively) 20,000 0.4 1,848 — 28,223 4,036 0.5 Total other income, net 50,578 1.0 214,857 3.7 183,741 26,275 3.2 Income before provision for income taxes 2,645,360 54.0 1,861,921 32.1 (38,017 ) (5,436 ) (0.6 ) Income tax (expenses)/benefit (565,163 ) (11.5 ) (279,182 ) (4.8 ) 97,107 13,886 1.7 Share of results of equity investees — — (440 ) — (4,560 ) (652 ) (0.1 ) Net income 2,080,197 42.5 1,582,299 27.3 54,530 7,798 1.0 128 Notes: (1) Net revenue is broken down as follows: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Net revenue: Loan facilitation services 2,240,852 45.8 2,721,389 46.9 2,234,571 319,539 39.1 Post-origination services 17,203 0.4 5,957 0.1 7,255 1,038 0.1 Guarantee services 50,865 1.0 429,299 7.4 1,705,985 243,953 29.8 Financing services 55,974 1.1 93,239 1.6 243,099 34,763 4.3 Insurance brokerage services 963,822 19.7 408,369 7.0 297,593 42,555 5.2 Electronic commerce services 1,267,104 25.9 1,865,621 32.1 324,996 46,474 5.7 Network and marketing services 253,019 5.2 241,114 4.2 636,277 90,986 11.1 Technology services 30,102 0.6 33,570 0.6 256,323 36,654 4.5 Others 16,692 0.3 7,343 0.1 13,121 1,876 0.2 Total net revenue 4,895,633 100.0 5,805,901 100.0 5,719,220 817,838 100.0 Segment Information In 2025, we adjusted the name of our business segments to reflect the nature of each business segment’s operations and our business strategies more accurately. Following this adjustment, our business is organized into three segments: the credit solution business, the insurance brokerage business, and the others. ● The credit solution business, formerly known as the “financial services business”, continues to offer loan facilitation services and self-funded financing services with no significant changes in product and service offerings. ● The name and the product offering of the insurance brokerage business segment remains unchanged. ● The others consolidate non-financial product and service offerings from Yixianghua and Yiren Select, and wealth products and services provided through Yiren Select. We believe this adjustment allows for a clearer understanding and representation of our diverse operations and strategic focus. For details on each business segment, see “Item 4. Information on the Company—B. Business Overview.” The table below provides a summary of our operating segment results for the years ended December 31, 2023, 2024 and 2025: For the Year Ended December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Credit solution business 2,515,119 3,473,109 5,040,026 720,714 Insurance brokerage business 963,822 408,369 297,593 42,555 Others 1,416,692 1,924,423 381,601 54,569 Total net revenue 4,895,633 5,805,901 5,719,220 817,838 Operating costs and expenses: Credit solution business (1,108,663 ) (3,384,367 ) (5,357,807 ) (766,158 ) Insurance brokerage business (724,652 ) (436,636 ) (282,259 ) (40,362 ) Others (283,948 ) (154,489 ) (121,421 ) (17,363 ) Income from operations: Credit solution business 1,406,456 88,742 (317,781 ) (45,443 ) Insurance brokerage business 239,170 (28,267 ) 15,334 2,193 Others 1,132,744 1,769,934 260,180 37,205 Total segment income from operations 2,778,370 1,830,409 (42,267 ) (6,045 ) Unallocated expenses (183,588 ) (183,345 ) (179,491 ) (25,666 ) Other income 50,578 214,857 183,741 26,275 Income before provision for income taxes 2,645,360 1,861,921 (38,017 ) (5,436 ) 129 Set forth below is a breakdown of net revenue for each segment, both in an absolute amount and as a percentage of total net revenue: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Credit solution business: Loan facilitation services 2,240,852 45.8 2,721,389 47.0 2,234,571 319,539 39.1 Post-origination services 17,203 0.4 5,957 0.1 7,255 1,038 0.1 Guarantee services 50,865 1.0 429,299 7.4 1,705,985 243,953 29.8 Financing services 55,974 1.1 93,239 1.6 243,099 34,763 4.3 Network and marketing services 120,216 2.5 205,187 3.5 600,836 85,918 10.5 Technology services 18,682 0.4 15,142 0.3 246,867 35,301 4.3 Others 11,327 0.2 2,896 - 1,413 202 - Subtotal 2,515,119 51.4 3,473,109 59.9 5,040,026 720,714 88.1 Insurance brokerage business: Insurance brokerage services 963,822 19.7 408,369 7.0 297,593 42,555 5.2 Subtotal 963,822 19.7 408,369 7.0 297,593 42,555 5.2 Others: Electronic commerce services 1,267,104 25.9 1,865,621 32.1 324,996 46,474 5.7 Network and marketing services 132,803 2.7 35,927 0.6 35,441 5,068 0.6 Technology services 11,420 0.2 18,428 0.3 9,456 1,353 0.2 Others 5,365 0.1 4,447 0.1 11,708 1,674 0.2 Subtotal 1,416,692 28.9 1,924,423 33.1 381,601 54,569 6.7 Total net revenue 4,895,633 100.0 5,805,901 100.0 5,719,220 817,838 100.0 Credit Solution Business (formerly known as financial services business) The revenue from our credit solution business increased by 45.1% from RMB3,473.1 million in 2024 to RMB5,040.0 million (US$720.7 million) in 2025, primarily due to the growing demand for our small revolving loan products. In particular, the revenue from our guarantee services increased by 297.4% from RMB429.3 million in 2024 to RMB1,706.0 million (US$244.0 million) in 2025, and the revenue from our loan facilitation services decreased by 17.9% from RMB2,721.4 million in 2024 to RMB2,234.6 million (US$319.5 million) in 2025, primarily due to the rising proportion of loan volume originated under the risk-taking model in 2025. The revenue from our post origination services increased by 21.8% from RMB6.0 million in 2024 to RMB7.3 million (US$1.0 million) in 2025, primarily due to the increased demand from institutional funding partners for such services for loans originated under the risk-taking model. The revenue from our financing services increased by 160.7% from RMB93.2 million in 2024 to RMB243.1 million (US$34.8 million) in 2025, primarily due to an increase in self-funded loans. The revenue from our network and marketing services increased by 192.8% from RMB205.2 million in 2024 to RMB600.8 million (US$85.9 million) in 2025, which was primarily attributable to growing referral demand for loan-related services and an expansion of our partner base, which has further diversified the range of services available for referral to borrowers. The revenue from our technology services significantly increased by 1,530.3% from RMB15.1 million in 2024 to RMB246.9 million (US$35.3 million) in 2025, primarily driven by the expanded provision of our technological capabilities through intellectual property licensing, system installation and maintenance services. Conversely, the revenue from our others decreased by 51.2% from RMB2.9 million in 2024 to RMB1.4 million (US$0.2 million) in 2025, primarily due to the decreased penalty fees. The revenue from our credit solution business increased by 38.1% from RMB2,515.1 million in 2023 to RMB3,473.1 million in 2024, primarily due to the growing demand for our small revolving loan products. In particular, the revenue from our loan facilitation services increased by 21.4% from RMB2,240.9 million in 2023 to RMB2,721.4 million in 2024, primarily due to the growing loan volume. The revenue from our guarantee services increased by 744.0% from RMB50.9 million in 2023 to RMB429.3 million in 2024, primarily due to the increasing loan volume guaranteed by our subsidiaries. The revenue from our financing services increased by 66.6% from RMB56.0 million to in 2023 RMB93.2 million in 2024, primarily due to an increase in self-funded loans. The increases were partially offset by a decrease in the revenue from our post-origination services of 65.4% from RMB17.2 million in 2023 to RMB6.0 million in 2024, primarily due to the reduced demand from institutional funding partners for such services. The revenue from network and marketing services increased by 70.7% from RMB120.2 million in 2023 to RMB205.2 million in 2024, which was primarily due to the growing number of borrowers referred by our technology platform. The revenue from technology services decreased by 18.9% from RMB18.7 million in 2023 to RMB15.1 million in 2024, as a result of a decrease in intellectual property franchising revenue. The revenue from others decreased by 74.4% from RMB11.3 million in 2023 to RMB2.9 million in 2024, primarily due to the penalty fees of the discontinued secured loan facilitation in 2022. 130 Insurance Brokerage Business The revenue from our insurance brokerage business decreased by 27.1% from RMB408.4 million in 2024 to RMB297.6 million (US$42.6 million) in 2025, primarily due to tightened market conditions under enhanced regulatory oversight. The revenue from our insurance brokerage business decreased by 57.6% from RMB963.8 million in 2023 to RMB408.4 million in 2024, primarily due to the ongoing impacts from regulatory changes. Others (formerly known as consumption and lifestyle business and Others) The revenue from our other business decreased by 80.2% from RMB1,924.4 million in 2024 to RMB381.6 million (US$54.6 million) in 2025, primarily due to a continued decline in sales from the e-commerce business. The revenue from our other business increased by 35.8% from RMB1,416.7 million in 2023 to RMB1,924.4 million in 2024, primarily due to the continuous growth of this segment in the first half of the year, followed by a strategic scale-back in the second half. Our revenue was predominately generated from the PRC and all of our long-lived assets were located in the PRC. Depreciation and amortization expenses of credit solution business in 2023, 2024 and 2025 were RMB1.0 million, RMB1.9 million and RMB3.4 million (US$0.5 million), respectively. Depreciation and amortization expenses of insurance brokerage business in 2023, 2024 and 2025 were RMB0.1 million, RMB0.4 million and RMB0.4 million (US$60 thousand), respectively. Depreciation and amortization expenses of others segment in 2023, 2024 and 2025 were RMB1.5 million, RMB1.0 million and RMB0.6 million (US$83 thousand), respectively. Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Net revenue. Our net revenue decreased by 1.5% from RMB5,805.9 million in 2024 to RMB5,719.2 million (US$817.8 million) in 2025, primarily due to (i) a decrease of 82.6% in the revenue from our electronic commerce services from RMB1,865.6 million in 2024 to RMB325.0 million (US$46.5 million) in 2025, primarily due to a continued decline in sales from the e-commerce business, (ii) a decrease of 27.1% in the revenue from our insurance brokerage business from RMB408.4 million in 2024 to RMB297.6 million (US$42.6 million) in 2025, primarily due to tightened market conditions under enhanced regulatory oversight, and (iii) an increase of 294.7% in the revenue from our guarantee services from RMB429.3 million in 2024 to RMB1,706.0 million (US$244.0 million) in 2025, mainly due to the rising proportion of loan volume originated under the risk-taking model. Operating costs and expenses. Our total operating costs and expenses increased by 42.9% from RMB4,158.8 million in 2024 to RMB5,941.0 million (US$849.5 million) in 2025, primarily attributable to increases in provision for contingent liabilities. Sales and marketing expenses. Our sales and marketing expenses decreased by 3.1% from RMB1,196.4 million in 2024 to RMB1,159.9 million (US$165.9 million) in 2025, mainly due to a decrease of 2.8% in sales and marketing expenses for the credit solution business from RMB1,102.7 million in 2024 to RMB1,071.9 million (US$153.3 million) in 2025, mainly attributable to a higher contribution from repeat borrowers through the Yixianghua platform, which increased to 76.5% in 2025, compared with 59.5% in 2024. Our sales and marketing expenses as a percentage of our total revenues decreased from 20.6% to 20.3% during the same period. Origination, servicing and other operating costs. Our origination, servicing and other operating costs decreased by 10.9% from RMB883.0 million in 2024 to RMB786.4 million (US$112.5 million) in 2025, mainly driven by cost savings from decreased insurance brokerage business along with the broader use of AI agents to automate customer service, and enhanced cost discipline in overall operations. Our origination, servicing and other operating costs as a percentage of total revenue decreased from 15.2% to 13.7% during the same period. Research and development expenses. Our research and development expenses decreased by 1.3% from RMB411.9 million in 2024 to RMB406.6 million (US$58.1 million) in 2025, as the AI credit system completed a major upgrade at the end of 2024, which created cost savings, offset by an increase in AI talent for future AI initiatives. Our research and development expenses as a percentage of our total revenue remained stable at 7.1% during the same periods. 131 General and administrative expenses. Our general and administrative expenses increased by 17.3% from RMB274.7 million in 2024 to RMB322.1 million (US$46.1 million) in 2025, primarily driven by the continuous investment in professionals and specialized talent to support business diversification and strengthen risk management, alongside organizational restructuring initiatives. Our general and administrative expenses as a percentage of our total revenue increased from 4.7% to 5.6% during the same period. Provision for contingent liabilities. Our provision for contingent liabilities increased by 172.2% from RMB869.3 million in 2024 to RMB2,366.3 million (US$338.4 million) in 2025, which was mainly driven by the overall growth in loan volume originated under the risk-taking model in 2025, coupled with a higher-risk asset profile. Allowance for contract assets, receivables and others. Our allowance for contract assets, receivables and others increased by 71.8% from RMB523.6 million in 2024 to RMB899.7 million (US$128.6 million) in 2025, which was primarily attributed to increased loan facilitation volume in 2025 compared to the prior year, which resulted in receivables and a corresponding increase in the allowance. Investment income. Our investment income decreased by 70.3% from RMB26.3 million in 2024 to RMB7.8 million (US$1.1 million) in 2025, primarily due to the increase in the unrealized gain or loss of investments held by us. Interest income, net. Our net interest income decreased by 0.5% from RMB79.1 million in 2024 to RMB78.7 million (US$11.3 million) in 2025, primarily due to our decrease in overall interest rate from our treasury management. Fair value adjustments gain. Our fair value gain decreased by 35.9% from RMB107.5 million in 2024 to RMB69.0 million (US$9.9 million) in 2025, mainly attributable to fair value changes in digital assets, reflecting weaker digital asset prices in the fourth quarter of 2025. Other income, net. Our net other income increased by 1427.2% from RMB1.8 million in 2024 to RMB28.2 million (US$4.0 million) in 2025, primarily due to government grants and incentives. Income tax (expense)/ benefit. Our income tax benefit was RMB97.1 million (US$13.9 million) in 2025, compared to an income tax expense of RMB279.2 million in 2024, as Hengfengyi was qualified as a Software Enterprise in 2025 and thereby entitled to full exemption from EIT for year 2024, which resulted in the income tax expense of RMB151.1 million accrued in 2024 being reversed in 2025. Net income. As a result of the foregoing, our net income decreased by 96.6% from RMB1,582.3 million in 2024 to RMB54.5 million (US$7.8 million) in 2025. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net revenue. Our net revenue increased by 18.6% from RMB4,895.6 million in 2023 to RMB5,805.9 million in 2024, primarily due to (i) an increase of 21.4% in the revenue from our loan facilitation services from RMB2,240.9 million in 2023 to RMB2,721.4 million in 2024, mainly due to the growing demand for our small revolving loan products, and (ii) an increase of 744.0% in the revenue from our guarantee services from RMB50.9 million in 2023 to RMB429.3 million, primarily due to the increasing loan volume guaranteed by our subsidiaries. The revenue from our insurance brokerage business decreased by 57.6% from RMB963.8 million in 2023 to RMB408.4 million in 2024, mainly due to the ongoing impacts from regulatory changes. The revenue from our others segment increased by 35.8% from RMB1,416.7 million in 2023 to RMB1,924.4 million in 2024, mainly due to the continuous growth of this segment in the first half of the year, followed by a strategic scale-back in the second half. Operating costs and expenses. Our total operating costs and expenses increased by 80.8% from RMB2,300.9 million in 2023 to RMB4,158.8 million in 2024, primarily attributable to increases in sales and marketing expenses and provision for contingent liabilities. Sales and marketing expenses. Our sales and marketing expenses increased by 82.2% from RMB656.6 million in 2023 to RMB1,196.4 million in 2024, mainly due to an increase of 121.4% in sales and marketing expenses for the credit solution business from RMB498.1 million in 2023 to RMB1,102.7 million in 2024, mainly attributable to our efforts to attract new, higher-quality borrowers and the growth of our credit solution business volume. The increase was partially offset by a decrease of 45.1% in sales and marketing expenses for our others segment from RMB145.7 million in 2023 to RMB80.0 million in 2024, mainly due to our strategic scaling back of holistic wealth business. Our sales and marketing expenses as a percentage of our total revenues increased from 13.4% to 20.6% during the same period. 132 Origination, servicing and other operating costs. Our origination, servicing and other operating costs decreased 9.5% from RMB976.2 million in 2023 to RMB883.0 million in 2024, mainly due to the AI-driven improvement of operational efficiency as well as the decline of our insurance product sales. Our origination, servicing and other operating costs as a percentage of our total revenue decreased from 19.9% to 15.2% during the same period. Research and development expenses. Our research and development expenses increased from RMB148.8 million in 2023 to RMB411.9 million in 2024, mainly due to our ongoing investment in AI development and the expansion of our technical team. Our research and development expenses as a percentage of our total revenue increased from 3.0% to 7.1% during the same period. General and administrative expenses. Our general and administrative expenses in 2024 were RMB274.7 million, which remained relatively stable compared to RMB231.1 million in 2023. Our general and administrative expenses as a percentage of our total revenue remained stable at 4.7% in 2023 and 2024. Provision for contingent liabilities. Our provision for contingent liabilities increased significantly from RMB27.0 million in 2023 to RMB869.3 million in 2024, which was mainly attributed to the growing loan volume facilitated under our risk-taking model with the upfront provision recognized at the loan’s inception. Allowance for contract assets, receivables and others. Our allowance for contract assets, receivables and others increased by 100.5% from RMB261.2 million in 2023 to RMB523.6 million in 2024, which was primarily attributed to a higher allowance for accounts receivable and financing receivables, reflecting our prudent approach to the heightened uncertainties in future market conditions. Investment income. Our investment income increased by 39.7% from RMB18.9 million in 2023 to RMB26.3 million in 2024, primarily due to our diversified investment strategy. Interest income, net. Our net interest income increased from RMB61.9 million in 2023 to RMB79.1 million in 2024, primarily due to our improvement of fund management capabilities. Fair value adjustments gain/(loss). We recorded a fair value gain of RMB107.5 million, as compared to a fair value loss of RMB50.2 million in 2023, as gains generated from loans issued by trusts increased in 2024, driven by a growing average outstanding loan balance of trusts. Other income, net. Our net other income decreased by 90.8% from RMB20.0 million in 2023 to RMB1.8 million in 2024, primarily due to reduced preferential tax treatments. Income tax expense. Our income tax expenses decreased by 50.6% from RMB565.2 million in 2023 to RMB279.2 million in 2024, primarily due to a decrease in taxable income combined with preferential income tax rate enjoyed by our subsidiaries. Net income. As a result of the foregoing, our net income decreased from RMB2,080.2 million to RMB1,582.3 million in 2024. Discussion of Certain Balance Sheet Items The following selected consolidated balance sheet as of December 31, 2024 and 2025 has been derived from our audited consolidated financial statements included in this annual report beginning on page F-1. The following selected consolidated balance sheet as of December 31, 2023 has been derived from our audited consolidated financial statements not included in this annual report: As of December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Assets: Cash and cash equivalents 5,791,333 3,841,284 3,348,126 478,776 Restricted cash 267,271 260,273 522,708 74,746 Contract assets, net (net of allowance of RMB164,141, RMB117,716 and RMB163,384 as of December 31, 2023, 2024 and 2025, respectively) 978,051 1,008,920 619,291 88,557 Prepaid expenses and other assets 423,621 2,361,585 1,776,019 253,967 Loans at fair value 677,835 421,922 342,895 49,033 Financing receivables (net of allowance of RMB51,858, RMB119,185 and RMB363,322 as of December 31, 2023, 2024 and 2025, respectively) 116,164 17,515 909,182 130,011 Financial investments 524,557 437,203 483,700 69,168 Total assets 10,276,916 12,982,696 13,454,955 1,924,033 Liabilities: Guarantee liabilities-stand ready 8,802 606,886 989,701 141,525 Guarantee liabilities-contingent 28,351 578,797 1,300,097 185,911 Payable to investors of consolidated ABFE 445,762 368,022 1,294,792 185,153 Accrued expenses and other liabilities 1,463,369 1,622,050 404,680 57,869 Total liabilities 2,191,367 3,440,266 4,182,918 598,149 Total equity 8,085,549 9,542,430 9,272,037 1,325,884 Total liabilities and equity 10,276,916 12,982,696 13,454,955 1,924,033 133 Cash and Cash Equivalents Our cash and cash equivalents decreased by 12.8% from RMB3,841.3 million as of December 31, 2024 to RMB3,348.1 million (US$478.8 million) as of December 31, 2025, primarily due to (i) decrease in cash inflow as a result of strategic tightening of the credit policy, and (ii) increase in payout for loans facilitated under our risk-taking model upon borrower’s default. Our cash and cash equivalents decreased by 33.7% from RMB5,791.3 million as of December 31, 2023 to RMB3,841.3 million as of December 31, 2024, primarily due to increases in equity investments and deposits for business cooperation. Restricted Cash Our restricted cash represents cash held by the Consolidated ABFE through segregated bank accounts which is not available to fund our general liquidity needs, guarantee deposits in a restricted bank account, collateral deposit, and frozen funds. The following table sets forth a breakdown of our restricted cash as of December 31, 2023, 2024 and 2025: As of December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Restricted cash: Consolidated ABFE 267,271 108,142 430,085 61,501 Guarantee deposit — 127,068 73,770 10,549 Collateral deposit — — 11,000 1,573 Frozen funds — 25,063 7,853 1,123 Total restricted cash 267,271 260,273 522,708 74,746 Our restricted cash increased by 100.8% from RMB260.3 million as of December 31, 2024 to RMB522.7 million (US$74.7 million) as of December 31, 2025, primarily due to new investments in Consolidated ABFE. Our restricted cash decreased by 2.6% from RMB267.3 million as of December 31, 2023 to RMB260.3 million as of December 31, 2024, primarily due to the deployment of restricted cash as loans in the Consolidated ABFE, partially offset by an increase in guarantee deposit. Contract Assets, Net Our contract assets represent our rights to payments for services rendered to customers before the payments become due. Our contract assets decreased by 38.6% from RMB1,008.9 million, net of allowance of RMB117.7 million as of December 31, 2024 to RMB619.3 million (US$88.6 million), net of allowance of RMB163.4 million (US$23.4 million), as of December 31, 2025, primarily due to the decrease in loans volume under which we only provide loan facilitation services. Our contract assets increased by 3.2% from RMB978.1 million, net of allowance of RMB164.1 million as of December 31, 2023 to RMB1,008.9 million, net of allowance of RMB117.7 million as of December 31, 2024, primarily due to an increase in loans facilitated under our loan facilitation services. 134 Prepaid Expenses and Other Assets Our prepaid expenses and other assets primarily include funds receivable from external payment networks, funds receivable for disposal of financing receivables and deposits. The following table sets forth a breakdown of our prepaid expenses and other assets as of December 31, 2023, 2024 and 2025: As of December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Prepaid Expenses and Other Assets: Funds receivable from external payment network providers 41,354 38,953 35,375 5,059 Funds receivable for disposal of financing receivables 1,989 1,274 368 53 Prepayment of investment — 938,516 67,239 9,615 Prepaid expenses 17,247 57,102 141,132 20,182 Deposits 327,987 1,295,010 1,495,610 213,869 Interest receivable 14,905 10,065 2,337 334 Loans to third parties — 13,777 15,363 2,197 Others 20,139 6,888 18,595 2,658 Total prepaid expenses and other assets 423,621 2,361,585 1,776,019 253,967 Our prepaid expenses and other assets decreased by 24.8% from RMB2,361.6 million as of December 31, 2024 to RMB1,776.0 million (US$254.0 million) as of December 31, 2025, primarily due to a decrease in prepayment of investment. Our prepaid expenses and other assets increased by 457.5% from RMB423.6 million as of December 31, 2023 to RMB2,361.6 million as of December 31, 2024, primarily due to an increase in prepayment of investment and deposits for business cooperation. Loans at Fair Value Loans at fair value represented the fair value of loans invested by the Consolidated ABFE. Our loans at fair value decreased by 18.7% from RMB421.9 million as of December 31, 2024 to RMB342.9 million (US$49.0 million) as of December 31, 2025, as we do not adopt fair value options for loans invested by newly established trust plans. Loans at fair value decreased by 37.8% from RMB677.8 million as of December 31, 2023 to RMB421.9 million as of December 31, 2024, primarily due to a decrease in the balance of loans invested by the Consolidated ABFE. Financing Receivables Financing receivables mainly represent loans issued by our overseas subsidiary and Consolidated ABFE and lease receivables arising from direct financing leases issued by Yichuang Financial Leasing. Financing receivables increased by 5,090.9% from RMB17.5 million, net of allowance of RMB119.2 million as of December 31, 2024 to RMB909.2 million (US$130.0 million), net of allowance of RMB363.3 million (US$52.0 million), as of December 31, 2025, primarily due to an increase in self-funded loans. Financing receivables decreased by 84.9% from RMB116.2 million, net of allowance of RMB51.9 million as of December 31, 2023 to RMB17.5 million, net of allowance of RMB119.2 million, as of December 31, 2024, primarily due to an increase in allowance of self-funded loans. Financial Investments (formerly known as trading securities, held-to-maturity investments, and other financial investments) Financial investments primarily include trading securities, debt securities, bank wealth management products and private funds. Financial investments increased by 10.6% from RMB437.2 million as of December 31, 2024 to RMB483.7 million (US$69.2 million) as of December 31, 2025, primarily due to our diversified investment strategy. Financial investments decreased by 16.7% from RMB524.6 million as of December 31, 2023 to RMB437.2 million as of December 31, 2024, primarily due to the improved diversification of our investments. 135 Guarantee liabilities-stand ready Guarantee liabilities-stand ready represents the transaction fees allocated to guarantee services which will be released to “revenue from guarantee services” over the guarantee term. Guarantee liabilities-stand ready increased by 63.1% from RMB606.9 million as of December 31, 2024 to RMB989.7 million (US$141.5 million) as of December 31, 2025, primarily due to the growing loan volume facilitated under our risk-taking model. Guarantee liabilities-stand ready increased by 6794.9% from RMB8.8 million as of December 31, 2023 to RMB606.9 million as of December 31, 2024, primarily due to the growing loan volume facilitated under our risk-taking model. Guarantee liabilities-contingent Guarantee liabilities-contingent represents the expected future net-payout for loans facilitated under our risk-taking model upon borrower’s default. Guarantee liabilities-contingent increasedby124.6% from RMB578.8 million as of December 31, 2024 to RMB1,300.1 million (US$185.9 million) as of December 31, 2025, primarily due to the growing loan volume facilitated under our risk-taking model. Guarantee liabilities-contingent increased by 1941.5% from RMB28.4 million as of December 31, 2023 to RMB578.8 million as of December 31, 2024, primarily due to the growing loan volume facilitated under our risk-taking model. Payable to investors of consolidated ABFE Payable to investors of consolidated ABFE represents the amount payable by the Consolidated ABFE to its investors. Payable to investors of consolidated ABFE increased by 251.8% from RMB368.0 million as of December 31, 2024 to RMB1,294.8 million (US$185.2 million) as of December 31, 2025, primarily due to the external contribution to our Consolidated ABFE. Payable to investors of consolidated ABFE decreased by 17.4% from RMB445.8 million as of December 31, 2023 to RMB368.0 million as of December 31, 2024, primarily due to an increase in principals paid to investors of the Consolidated ABFE. Accrued Expenses and Other Liabilities Our accrued expenses and other liabilities include primarily accrued payroll and welfare, tax payable, payable to investors and accrued advertisement expenses. The following table sets forth a breakdown of our accrued expenses and other liabilities as of December 31, 2023, 2024 and 2025: As of December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Accrued Expenses and Other Liabilities: Accrued payroll and welfare 153,554 206,225 60,718 8,683 Tax payable 931,191 1,152,314 188,472 26,951 Funds collected on behalf of third parties 54,025 32,119 21,263 3,041 Accrued customer incentives 3,263 1,354 25 4 Accrued advertisement expenses 134,601 168,378 72,333 10,343 Payable to investors 145,655 9,828 — — Borrowings — — 9,091 1,300 Advance payments — 505 12,910 1,846 Funds pending withdrawal 3,731 7,013 10,072 1,440 Accrued professional fees 4,601 8,131 7,411 1,060 Others 32,748 36,183 22,385 3,201 Total accrued expenses and other liabilities 1,463,369 1,622,050 404,680 57,869 136 Accrued expenses and other liabilities decreased by 75.1% from RMB1,622.1 million as of December 31, 2024 to RMB404.7 million (US$57.9 million) as of December 31, 2025, primarily due to the decrease in tax payable of Creditease Puhui, which was divested in 2025. Accrued expenses and other liabilities increased by 10.8% from RMB1,463.4 million as of December 31, 2023 to RMB1,622.1 million as of December 31, 2024, primarily due to an increase in tax payable as a result of the growing difference between accrued taxes with paid taxes. Off-Balance Sheet Arrangements We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. Recent Accounting Pronouncements The recent accounting pronouncements that are relevant to us are included in note 2 to our audited consolidated financial statements, which are included in this Annual Report. Inflation Since our inception, inflation in China has not materially affected our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index were a decrease of 0.3% for December 2023, an increase of 0.1% for December 2024, and an increase of 0.8% for December 2025. Although we have not been materially affected by inflation in the past, we may be affected if China experiences higher rates of inflation in the future. B. Liquidity and Capital Resources Cash Flows and Working Capital Our principal sources of liquidity have been cash generated from operating activities, proceeds from the issuance and sale of our shares, and proceeds from loans borrowed from third parties. In December 2015, we completed our initial public offering in which we issued and sold an aggregate of 7,500,000 ADSs, representing 15,000,000 ordinary shares, resulting in net proceeds to us of approximately US$64.9 million. Concurrently with our initial public offering, we sold 2,000,000 ordinary shares to Baidu Hong Kong in a private placement, resulting in net proceeds to us of approximately US$9.0 million. As of December 31, 2025, we had cash and cash equivalents of RMB3,348.1 million (US$478.8 million) as compared to cash and cash equivalents of approximately RMB3,841.3 million as of December 31, 2024. As of December 31, 2025, we had restricted cash of RMB522.7 million (US$74.7 million) as compared to restricted cash of approximately RMB260.3 million as of December 31, 2024. The increase in restricted cash was mainly due to new investments in Consolidated ABFE. As of December 31, 2025, the restricted cash represents cash held by the Consolidated ABFE through segregated bank accounts which is not available to fund our general liquidity needs, guarantee deposits in a restricted bank account, collateral deposit, and frozen funds. Our material unused sources of liquidity include cash balances, unencumbered assets and our ability to sell encumbered assets to raise cash. Unlike financial institutions, we are not subject to any capital adequacy requirement that is applicable to financial institutions in China. We believe that our cash on hand and anticipated cash flows from operating activities will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We may need additional capital, and financing may not be available on terms acceptable to us, or at all.” 137 Our ability to manage our working capital, including accounts receivable, prepaid expenses and other assets and accrued expenses and other liabilities, may materially affect our financial position and results of operations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—Failure to manage our liquidity and cash flows may materially and adversely affect our financial position and results of operations.” Our accounts receivable primarily include the commission receivable from insurance brokerage services and loan facilitation service fees receivable from industry partners. As of December 31, 2023, 2024 and 2025, we had accounts receivable of RMB499.0 million, RMB566.5 million and RMB826.1 million (US$118.1 million), respectively. Our accounts receivable increased from 2023 to 2025 was primarily due to the increase in service fees receivable from industry partners driven by the growth in our credit solution services business volume. As of December 31, 2025, we had RMB546.3 million (US$78.1 million) in loan facilitation service fees receivable from industry partners and RMB16.4 million (US$2.3 million) in commission receivable from insurance brokerage services. Our prepaid expenses and other assets primarily include funds receivable from external payment networks, prepayment of investment, prepaid expenses and deposits, and our accrued expenses and other liabilities include primarily accrued payroll and welfare, tax payable, funds collected on behalf of third parties, accrued advertisement expenses, accrued professional fees, advance payments, funds pending withdrawal and borrowings. Although we consolidated the results of operations of Yiren Financial Information, the consolidated variable interest entity, we only have access to the cash balances and the future earnings of Yiren Financial Information through our contractual arrangement with it. See “Item 4. Information on the Company—A. History and Development of Our Company.” In addition, although we consolidate the cash flow of the Consolidated ABFE into our cash flow, the cash balance of the Consolidated ABFE is not available to fund our general liquidity needs. For more information about the Consolidated ABFE, please see “Note 2—Summary of Significant Accounting Policies—Basis of Consolidation” appearing in Item 18 of this annual report. For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure” below. In utilizing the cash that we hold offshore, we may (i) make additional capital contributions to our PRC subsidiaries, (ii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, (iii) make loans to our PRC subsidiaries, or (iv) acquire offshore entities with business operations in China in offshore transactions. However, most of these uses are subject to PRC regulations and approvals. For example: ● capital contributions to our PRC subsidiaries, whether existing or newly established ones, must be reported to MOFCOM or its local counterparts; and ● loans by us to our PRC subsidiaries, which are foreign-invested enterprises, to finance their activities cannot exceed statutory limits, must be registered with SAFE or its local branches and must be registered with the NDRC if the term of such loan is more than one year. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of any offering outside China to make loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” Substantially all of our future revenues are likely to continue to be in the form of RMB. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated after-tax profits, if any, determined in accordance with Chinese accounting standards and regulations. Our PRC subsidiaries, when distributing its after-tax profits to shareholders, are required to set aside at least 10% of its after-tax profits after making up previous years’ accumulated losses each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. Such reserve is not distributable as cash dividends. Furthermore, capital account transactions, which include foreign direct investment and loans, must be approved by and/or registered with SAFE and its local branches. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Governmental control of currency conversion may limit our ability to utilize our net revenue effectively and affect the value of your investment.” 138 The following table sets forth a summary of our cash flows for the periods indicated: As of December 31, 2023 2024 2025 RMB RMB RMB US$ (in thousands) Summary Consolidated Cash Flow Data: Net cash generated from operating activities 2,171,013 1,424,082 703,623 100,617 Net cash provided by/(used in) investing activities 100,045 (3,113,115 ) (1,576,167 ) (225,389 ) Net cash (used in)/provided by financing activities (569,278 ) (277,226 ) 662,603 94,751 Effect of foreign exchange rate changes (3,871 ) 9,212 (20,782 ) (2,972 ) Net increase/(decrease) in cash, cash equivalents and restricted cash 1,697,909 (1,957,047 ) (230,723 ) (32,993 ) Cash, cash equivalents and restricted cash, beginning of year 4,360,695 6,058,604 4,101,557 586,515 Cash, cash equivalents and restricted cash, end of year 6,058,604 4,101,557 3,870,834 553,522 Operating Activities Net cash generated from operating activities was RMB703.6 million (US$100.6 million) in 2025. The difference between our net income and our net cash provided by operating activities was primarily attributable to certain non-cash items, including provision for contingent liabilities of RMB2,366.3 million (US$338.4 million), allowance for contract assets, receivables and others of RMB899.7 million (US$128.6 million), and certain working capital items, including an decrease in contract assets of RMB142.6 million (US$20.4 million), partially offset by an increase in accounts receivable of RMB394.8 million (US$56.5 million), an increase in guarantee receivable of RMB611.4 million (US$87.4 million), an increase in prepaid expenses and other assets of RMB202.2 million (US$28.9 million), an increase in deferred tax assets of RMB256.7 million (US$36.7 million), an decrease in accrued expenses and other liabilities of RMB152.1 million (US$21.8 million), and a decrease in guarantee liabilities of RMB1,262.2 million (US$180.5 million). Net cash generated from operating activities was RMB1,424.1 million in 2024. The difference between our net income and our net cash provided by operating activities was primarily attributable to certain non-cash items, including provision for contingent liabilities of RMB869.3 million, allowance for contract assets, receivables and others of RMB523.6 million, partially offset by fair value adjustments gain of RMB107.5 million, and certain working capital items, including an increase in guarantee liabilities of RMB279.3 million and an increase in accrued expenses and other liabilities of RMB159.9 million, partially offset by an increase in accounts receivable of RMB175.7 million, an increase in contract assets of RMB265.0 million, an increase in guarantee receivable of RMB537.0 million, and an increase in prepaid expenses and other assets of RMB991.8 million. Net cash generated from operating activities was RMB2,171.0 million in 2023. The difference between our net income and our net cash provided by operating activities was primarily attributable to certain non-cash items, including allowance for contract assets, receivables and others of RMB261.2 million, and certain working capital items, including a decrease in amounts due from related parties of RMB431.6 million and an increase in accrued expenses and other liabilities of RMB200.0 million, partially offset by an increase in accounts receivable of RMB306.5 million, an increase in contract assets of RMB547.7 million and an increase in prepaid expenses and other assets of RMB168.7 million. Investing Activities Net cash used in investing activities was RMB1,576.2 million (US$225.4 million) in 2025, which was primarily attributable to origination of financing receivables of RMB2,242.3 million (US$320.6 million), and purchases of digital assets of RMB381.1 million (US$54.5 million), partially offset by repayments of financing receivables of RMB1,077.8 million (US$154.1 million). Net cash used in investing activities was RMB3,113.1 million in 2024, which was primarily attributable to prepayment of investment of RMB2,399.2 million and loan to related parties of RMB1,100.0 million. 139 Net cash provided by investing activities was RMB100.0 million in 2023, which was primarily attributable to collection of principals of loans at fair value of RMB772.4 million and repayments of financing receivables of RMB359.0 million, partially offset by investment in loans at fair value of RMB1,494.1 million. Financing Activities Net cash provided by financing activities was RMB662.6 million (US$94.8 million) in 2025, which was mainly attributable to contribution from investors of the consolidated ABFE of RMB1,284.7 million (US$183.7 million). Net cash used in financing activities was RMB277.2 million in 2024, which was mainly attributable to dividends paid to shareholders of RMB122.3 million. Net cash used in financing activities was RMB569.3 million in 2023, which was mainly attributable to principal payments of loans from third parties of RMB767.9 million. Capital Expenditures We made capital expenditures of RMB4.4 million, RMB9.2 million and RMB25.7 million (US$3.7 million) in 2023, 2024 and 2025, respectively. In these periods, our capital expenditures were mainly used for purchases of property, equipment and software. We will continue to make capital expenditures to meet the requirements of our business operations. Holding Company Structure Yiren Digital Ltd. is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries and the consolidated variable interest entities in China. If our existing PRC subsidiaries or any newly formed ones incur debts on their own behalf in the future, the instruments governing their debts may restrict their ability to pay dividends to us. In addition, each of our wholly foreign-owned subsidiaries in China is permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital and may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. In 2025, YouRace Hengchuang and Hengyuda distributed cash dividends of RMB400.0 million and RMB84.0 million to YouRace HK, and YouRace HK distributed cash dividends of USD25.0 million to our holding company. Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2025: As of December 31, 2025 RMB (in thousands) 2026 20,319 2027 16,037 2028 and thereafter 4,907 Total lease liabilities 41,263 Our operating lease obligations relate to our leases of office premises. We lease our principal office premises under an operating lease with an expiration date in April 2028. Rental expenses under operating leases for 2023, 2024 and 2025 were RMB19.4 million, RMB19.3 million and RMB18.5million (US$2.6 million), respectively. 140 Payables to investors related to the Consolidated ABFE have been excluded from the table above. We will make such payments to the investors related to the Consolidated ABFE if and when we receive the related loan payments from borrowers. We do not have any contractual obligations to make such payments out of our own liquidity resources. Other than those shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2025. C. Product Development We had a dedicated product development team consisting of 36 full-time employees as of December 31, 2025. This team is responsible for developing and implementing new consumer finance products to introduce on to our marketplace. Our company and the VIEs constantly evaluate the popularity of our existing product offerings and develop new products and services that can cater to the ever-evolving needs of our clients. From a credit solution services perspective, as we continue to optimize our product offerings, we are developing a more diversified range of credit products tailored to meet the specific needs of our target borrowers and institutional funding partners, all at competitive prices in line with updated regulatory guidelines. As our marketplace grows, we have enhanced our ability to offer risk-based loan pricing. For instance, we have introduced lower-priced loan products and regularly adjust our pricing strategy as we shift towards serving a higher-quality customer segment in response to regulatory directives. Moving forward, we will continue to diversify our product offerings and strengthen synergies across our various business lines. In the insurance brokerage business, we remain committed to driving innovation and customization in our product offerings as we expand our client base and strengthen partnerships with external stakeholders. We closely monitor both domestic and international markets, continually introducing new insurance products that target low-penetration segments with high growth potential. For example, since the second half of 2022, we have been offering overseas engineering liability insurance services to address the growing security needs of engineering projects in Belt and Road countries. Additionally, since 2022, we have introduced “New Citizen” insurance services, designed to meet the protection needs of flexible workforce members and part-time workers who are not covered by traditional social security systems. In 2024, we expanded our reach by launching online channels, including social media platforms, to offer more flexible insurance products, such as healthcare and retirement plans. D. Trend Information Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2025 that are reasonably likely to have a material and adverse effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. E. Critical Accounting Policies, Judgments and Estimates An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates. 141 While our significant accounting policies are described in more detail in “Note 2—Summary of Significant Accounting Policies” to our consolidated financial statements appearing in Item 18 of this annual report, we believe the following critical accounting estimates used in the preparation of our consolidated financial statements require the most difficult, subjective and complex judgments and estimates and have had, or are reasonably likely to have a material impact on our financial condition or results of operations. Revenue from loan facilitation, post-origination and guarantee services We provide loan facilitation services, post-origination services and guarantee services under loan facilitation model. Revenues from loan facilitation are recognized at the time a loan is originated. Revenues from post-origination services are recognized on a straight-line basis over the term of the underlying loans as the services are provided. Revenues from guarantee services, if any, are recognized amortized during the guarantee term. Significant management judgment is applied to the determination and allocation of the transaction price, including: (i) estimation of variable consideration, and (ii) determination of standalone selling price of each performance obligation. We first allocate the transaction price to the guarantee liabilities, if any, in accordance with ASC 460, Guarantees, which requires the guarantee to be measured initially at fair value based on the stand ready obligation. The remaining considerations are then allocated to the loan facilitation services and post-origination services using their relative standalone selling prices consistent with the guidance in ASC 606. We do not have observable standalone selling price information for the loan facilitation services or post-origination services because it does not provide loan facilitation services or post-origination services on a standalone basis. There is no direct observable standalone selling price for similar services in the market that is reasonably available. As a result, the estimation of standalone selling price involves significant judgments. We use expected cost-plus margin approach to estimate the standalone selling prices of loan facilitation services as the basis of revenue allocation. In estimating its standalone selling price for the loan facilitation services, we consider the cost incurred to deliver such services, profit margin for similar arrangements, customer demand, effect of competitors on our services, and other market factors. However, for post-origination services, given the main services are about loan collecting and cash processing, we can refer to other companies performing the same services, therefore a direct observable standalone selling price for similar services in the market is available. We estimate the standalone selling prices of loan facilitation services and post-facilitation services based on historical cost data adjusted by current service patterns such as tenure, which could change with the evolvement of our product mix. There has been no material change to the allocation ratio between the two performance obligations during the year ended December 31, 2025. The transaction price includes variable consideration in the form of prepayment risk of the borrowers, and we estimate variable consideration for these contracts using the expected value approach on the basis of historical information and current trends of the prepayment percentage of the borrowers. A decrease in the amount of loans to be repaid in advance or an increase in tenure of early repayment would result in a greater amount of total transaction price than initially expected and vice versa. If the estimate of the prepayment rates suffers 0.5 percentage point increase/decrease, it would result in a decrease of RMB16.5 million (US$2.4 million) and an increase of RMB16.5 million (US$2.4 million) for revenue recognized for the year ended December 31, 2025. Revenue recognized for the year ended December 31, 2025 from performance obligations satisfied (or partially satisfied) in prior periods pertaining to adjustments to variable consideration due to the change of estimated prepayment rate and service fee allocation rate was immaterial. Allowance for guarantee receivable and contract assets Guarantee receivable and contract assets are stated at the historical carrying amount net of write offs and allowance for uncollectible accounts. Allowance for guarantee receivable and contract assets is based on net cumulative expected loss rates, taking the historical default rate of loans originated in the same vintage, as well as national or local economic conditions that correlate with defaults on loans into consideration. We regularly review the methodology and assumptions used for estimating the net cumulative expected loss rates. As of December 31, 2025, allowance for guarantee receivable and contract assets is RMB252.3 million (US$36.1 million) and RMB163.4 million (US$23.4 million), respectively. If the estimate of the net cumulative expected loss rates suffers 0.5 percentage point increase/decrease, it would result in an increase of RMB23.8 million (US$3.4 million) and a decrease of RMB23.8 million (US$3.4 million) for allowance for guarantee receivable and contract assets. 142 Provision for contingent liabilities We provide guarantee services in connection with some of the loans facilitated, and we recognize a separate contingent guarantee liability with an allowance for credit losses, which is an estimate of future net payouts upon borrowers’ default. We estimate expected net payouts according to the product mix, default rates and loan terms, which are revalued at each period end to reflect updated estimation for future net payouts. As of December 31, 2025, balance for contingent liabilities was RMB1,300.1 million (US$185.9 million). If the estimate of the net-payout rates suffers 0.5 percentage point increase/decrease, it would result in an increase of RMB119.2 million (US$17.0 million) and a decrease of RMB119.2 million (US$17.0 million) for provision for contingent liabilities.