Yiren Digital Ltd
NYSE:YRD
Earnings Call Analysis
Q4-2023 Analysis
Yiren Digital Ltd
In the recent quarter, the company faced a significant challenge with its life insurance products, as the market showed a lukewarm response to newly priced products. This led to a 51% year-over-year decrease in revenue from insurance brokerage services, ending up at RMB 98.2 million for the fourth quarter. The sharper decline in revenue compared to premiums is attributable to the higher commission rates for first-year premiums than renewals. The company foresees a gradual recovery anticipated to begin in the second or third quarter of 2024.
Despite setbacks in certain areas, the company is ramping up its investments in AI, escalating research and development expenses by 44% year-over-year to RMB 47.6 million. The company is in the final stages of securing strategic investments and partnerships in AI. The newly developed AI capabilities are being deployed across its fintech business lines, enhancing services such as risk management and insurance policy analysis. Furthermore, the company is progressing towards the launch of an AI Ops platform for training large language models, signaling a diversification into AI-driven business solutions.
The company's property insurance segment thrived with a 26% increase in fourth-quarter premiums year-over-year. Simultaneously, consumption and lifestyle services saw a 23% increase in GMV compared to the previous quarter. These positive outcomes are a result of the company leveraging an expanding customer base, derived from a multitude of business segments.
International markets are a cornerstone of the company's growth strategy. Significant strides have been made in Southeast Asia, beginning with the Philippines, and Latin America, with Mexico as the starting point. The company is also considering entry into African markets. For 2024, the company's international business is projected to double, underpinned by a growing localized team and sophisticated AI capabilities that support their overseas operations.
Looking ahead into 2024, the company targets a 30% growth rate for its loan facilitation business. This ambition is coupled with an emphasis on refining customer acquisition strategies, improving credit scoring models, and bolstering AI efficiencies. While confident in their prospective performance, management maintains a cautious approach towards preserving asset quality and overall business health.
Despite an 18% increase in quarterly profit and a robust balance sheet with RMB 5.8 billion in cash and equivalents, net cash from operations saw a 12% decrease from the previous year. Nonetheless, this financial cushion supports the company's ventures in institutional operations, international expansion, and AI strategy implementation. The company also repurchased shares for USD 1.9 million in the quarter, summing up to USD 7.4 million in buybacks to date. The upcoming year's full-year revenue is estimated to land between RMB 5.8 billion and RMB 6.8 billion, with expectations for a healthy net profit margin, although this forecast is recognized as preliminary and subject to changes.
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Thank you for standing by, and welcome to the Yiren Digital Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. [Operator Instructions]
I would now like to hand the conference over to Ms. Keyao He, IR Officer. Please go ahead.
Thank you, operator. Good morning, and good evening, everyone. Today's call features the presentation by the Founder, Chairman and CEO of CreditEase, our CEO, Mr. Ning Tang. Our SVP, Ms. Mei Zhao, will join us in the Q&A session after the prepared remarks. Before beginning, we would like to remind you that discussions during this call contain forward-looking statements made under the safe harbor provision of U.S. Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and factors that can cause actual results to differ materially from those contained in any such statements. For the information regarding future risk, uncertainties or factors is included in our filings with the U.S. Securities and Exchange Commission. We do not undertake any obligation to update any forward-looking statements as required under the relevant laws. During the call, we will be referring to certain non-GAAP financial measures and supplemental measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute to the financial information prepared or presented in accordance with U.S. GAAP. For information about these non-GAAP measures and reconciliations to GAAP measures, please refer to our earnings press release. I will now pass it to Ning for opening remarks.
Thank you for all joining our earnings conference call today. In the year of global economic uncertainties, we wrapped up 2023 stronger than ever, showcasing the strength and the resilience of our business. The year also marks a pivotal moment for us as we currently established ourselves as a pioneering AI-driven financial and lifestyle services platform. Through the strategic recategorization of our business line, we streamlined our operations, focusing on the most significant growth drivers. Our proactive integration of AI into our daily operations catalyzed a significant shift propelling our business forward amid a dynamic economic landscape. This strategic embrace of technology not only optimize our efficiency, minimize labor costs and enhance our customer service, but also underscore our dedication to innovation and strategic advancement. Our achievements in developing and deploying AI highlight our ability to adapt and excel, setting new benchmarks for operational excellence and resilience. First, on our Financial Services business segment. The fourth quarter witnessed continued robust growth with total loan volume reaching RMB 11.6 billion, a 72% increase year-over-year, marking the fourth consecutive quarter of double-digit growth. The number of borrowers served rose to 1.4 million, a 59% increase year-over-year, highlighting our eighth consecutive quarter of growth. The MAU of our Yi Xiang Hua APP increased from 2.9 million last quarter to more than 3.5 million this quarter, presenting an impressive annual growth rate of 77%, demonstrating the app's growing popularity and user engagement. This growth is underpinned by our advanced and continuously evolving AI system. For instance, in the fourth quarter, our AI telemarketing robot assisted over 10 million borrowers, facilitating more than RMB 1 billion in loans. Regarding our International Financial Services business, we achieved a 49% increase in loan volume facilitated in the Philippines in the fourth quarter compared to the third quarter of 2023. With the automation of information review processes driven by our AI LLM, we expect accelerated growth and expansion into additional overseas markets in 2024. Another operational highlight that I would like to address is our strategic shift to the RTA or real-time analysis, customer acquisition model. This approach integrates risk screening at the customer acquisition stage, attracting higher-quality customers and improving our customer mix. As a result, the proportion of new high-quality borrowers served this quarter increased by 4 percentage points compared to the previous quarter. Turning to asset quality. The fourth quarter saw a slight increase in 15 to 89 days delinquency rates to 3.5% due to industry-wide credit quality fluctuations. However, with the ongoing optimization to our customer mix and fine-tuned risk-controlled standards empowered by AI analysis, we've observed a 15 basis point decline in our [ FPD ] 30-plus delinquency rate in the fourth quarter from prior quarter along with a further downward trend going into the first quarter 2024. On the funding front, we are glad to see a continued decline in our funding cost by another 20 basis points compared to the prior quarter. As our institutional funding partnerships continue to expand nationwide, we expect a further 60 basis point decrease in the funding cost in 2024 compared to 2023. Now shifting to our insurance brokerage business. The year of 2023 saw continued strong growth in our business volume with total premiums reaching nearly RMB 4.9 billion, representing a 24% annual increase, significantly outperforming the industry average of 9.1%. The full year insurance commission revenue reached nearly RMB 1 billion, a 32% year-over-year increase. However, in the fourth quarter alone, due to new pricing regulations catching product returns at 3%. Life insurance premiums saw a 24% decline year-over-year, mirroring the broader industry trends. This was particularly -- this was partially offset by a 26% annual growth in our property insurance premiums for the fourth quarter of 2023. As we've previously discussed, our strategic focus remains on agent development, product innovation and digitization. For life insurance products, we will continue to enhance our capabilities in serving high net worth groups via our growing the team. In 2023, there was a notable 45% rise in the number of large ticket life insurance policies with premiums of RMB 3 million per policy, as well as a 70% increase in policies exceeding RMB 10 million. Currently, we are expanding our elite agent team and getting ourselves fully prepared for the rebound in the life insurance market, which is expected to occur in the second or third quarter of this year as the industry fully adjust to the new regulations and the product changes. On property insurance, we will continue to focus on higher-margin business through product innovation and channel partnerships in health and medical care, engineering and construction, and travel and transportation. For example, the 2023 full year premiums of our overseas construction insurance products increased by 13% year-over-year. Moreover, we have also strengthened our cooperation with high-quality social platforms, such as Little Red Book. Since the start of the fourth quarter of 2023, we closed nearly 100 high-end medical insurance policies on that platform, marking an efficient new acquisition approach. On consumption and lifestyle services, the growth momentum continued as the fourth quarter saw another 23% quarterly increase in our total GMV to RMB 693 million. The number of transactions reached 3.4 million, up 13% from the previous quarter. The robust growth reflects our continued effort to address our customers' nonfinancial needs and our commitment to enhancing their overall quality of life, which, in turn, improves user engagement and stickiness, creating a reinforcing cycle within our ecosystem. Looking forward, there will be more attractive lifestyle and entertainment products and services driven by AI and high tech coming on to our shelf. Last but not least, I would like to emphasize our AI strategy, a top our long-term strategic directions through our AI Lab initiative, we have been training and fine-tuning our large language models and developing our own large language model operations or the so-called [indiscernible] platform. This endeavor will firstly deepen AI integration across our operational spectrum, boosting efficiency and enhancing customer experience. Secondly, we aim to expand our AI expertise beyond the fintech verticals to more select sectors, empowering both B2B and B2C clients and partners with advanced technological capabilities. Moreover, we have recently encountered high-quality AI companies and plan to expand our AI ecosystem through strategic partnerships and investments. The horizon is bringing with exciting prospects. Originally, our CFO was scheduled to participate in this meeting. Due to unexpected travel commitment, she is currently on the road and unable to join us online. In her absence, I will be taking the lead to share the prepared remarks with everyone. For this part, I will only focus on the key financial highlights. Please refer to our earnings release and IR deck for further details. First of all, we are glad to report a solid full year of 2023, with both our top line and bottom line, realizing double-digit annual growth, beating our previous guidance. Specifically, in the fourth quarter of 2023, our total revenue reached RMB 1.3 billion, representing a 17% increase year-over-year. For the year of 2023, total volume reached RMB 4.9 billion, up 43% year-over-year. Now on Financial Services, we saw a continued healthy growth with total loans facilitated this quarter, reaching RMB 11.6 billion, representing a 72% growth over prior year. Revenue from this segment reached RMB 781.3 million for the fourth quarter, representing an increase of 22% year-over-year. On Insurance, gross written premiums reached RMB 1.2 billion, representing a 9% decrease year-over-year and a 15% decrease from the prior quarter. This decrease was mainly due to the new regulations tapping life insurance return at 3%, down from previous 3.5%, with sales peaking for legacy products in the second and third quarters of 2023, the market responded to the newly priced products with low interest. Consequently, we saw a substantial decline in the first year premiums of life insurance products. Therefore, revenue from insurance brokerage services in the fourth quarter decreased by 51% year-over-year to RMB 98.2 million. Given that first year premiums overall have a higher commission rate as compared to renewal premiums, the decline in revenue was greater than that of the premiums. As mentioned earlier, we expect a gradual recovery in the second or third quarter of 2024. Meanwhile, our property insurance remained solid with the fourth quarter premiums increasing by 26% year-over-year. On consumption and lifestyle services, total GMV for the quarter reached RMB 692.7 million, increasing 23% from prior quarter. The customers for this segment come from our existing users across all business lines. The growth rate of GMV is aligned with the increase in the number of our combined customers across diverse business segments. On the expense side, sales and marketing expense increased 99% year-over-year to RMB 205.7 million, mainly due to the intensified promotional activities as we see a continued growth in our financial services business volume. Research and development expenses increased 44% year-over-year to RMB 47.6 million as we persist in ramping up our investments in AI and technological innovation throughout the company. Origination and servicing costs decreased 13% year-over-year to RMB 184.7 million, mainly driven by a decrease in origination and servicing costs related to our insurance brokerage sector amid the current regulatory headwind. G&A remained stable year-over-year at RMB 50.5 million. Allowance for contract assets and receivables was RMB 98.7 million for the quarter, translating into 0.8% of loans facilitated, 10 basis points lower than prior quarter. On to our bottom line, we continue to deliver a strong profit of RMB 571.3 million this quarter, increasing 18% from prior year. We generated approximately RMB 417.2 million net cash from operations in the fourth quarter, a decrease of 12% from prior year. On the balance sheet side, our balance sheet remains strong with total cash and cash equivalents of RMB 5.8 billion by the end of this quarter, providing a sufficient buffer for us to respond to any business opportunities in institutional operations, international expansion and strategic AI deployment. This quarter, we deployed USD 1.9 million to buy back shares in the public market. As of fourth quarter end, the company has cumulatively deployed close to USD 7.4 million for its share repurchase program. We remain optimistic about the core strength and future growth opportunities of our company. Given our evaluation of the current state of our business and market trends, we expect our 2024 full year revenue to stand between RMB 5.8 billion to RMB 6.8 billion with a healthy net profit margin. This reflects our current and preliminary view, which is subject to change and uncertainty. With that, we conclude our remarks. Operator, we are now open for questions. Thank you.
[Operator Instructions] Your first question comes from [indiscernible] Zhang with Water Tower Research.
Congrats on your strong Q4 and 2023 results. My first question is your AI strategy. So what are your specific AI strategies for each business line? And regarding the development of an AI ecosystem as mentioned in your remarks earlier, could you elaborate on the latest progress? And are there any specific investments or collaboration with other technology companies that you can disclose?
Thank you, and first of all, we are utilizing AI in our fintech businesses, including like credit tax yes and insurance tax and lifestyle consumption services. For example, in our risk management, we use AI to do like collection. And we use AI for our international like businesses, quality control, like in the Philippines and in Mexico, like we can monitor from remote, how teams in those markets conduct businesses, according to local regulations through AI, like translation and intelligence. And for our insurance tax business, for example, like we are helping clients analyzing their insurance policies from us and from other like insurance companies and agents. And for example, we are developing like AI content for our lifestyle and consumption services. To be exact, we are developing models for each of our fintech business lines through open source-based large language model plus each business lines, our proprietary data and business know-how. Through this process, we've developed strong capabilities in our view to try and fine-tune model. And this capability is very in high demand in the market. So we are now working closely with a strategic partner on building a product for this model, large language model, training capability. So these LLM Ops platform will go live soon. And so on that platform, we can continue to join our models while others can come train theirs. So we welcome like the customers from all sectors to come train their models. We will offer open source functions to them. But for those who are interested in further developing their models, and if they need our help, we can provide additional help on a paid basis. So this will be our new business in AI, part of our new AI business. At the same time, we are leveraging this AI capability to try and work with industry leaders in legal, in psychology, social companion like sectors who have great data and great business know-how for their respective verticals, but don't have great AI capability. So we will try and work with them strategically, bringing AI capability to their businesses. And so we are in the process of closing a number of strategic investments and partnerships in AI. And -- one, the time is right, when we close each of those initiatives, we will make additional announcements.
Got it. That's good to hear. My second question is a little bit broader regarding your international business. So what are your expansion plans for 2024 regarding your international business? And what is the expected growth rate for loan facilitations overseas?
Let me first offer my -- more strategic -- more macro view and then colleagues -- Mei and colleagues, please add to it. And so our international expansion strategy is key to our future growth. And we've made very solid progress so far, but long way to go because the base is still quite small. And so any new business on top of that, we will represent -- will likely represent very high growth rate, but we will continue to grow our international business. We are doing work in Southeast Asia, first in the Philippines, but more countries to go in Southeast Asia. We've got started in Latin America, with Mexico to be the first. So we are very hopeful about that market. And subsequently, I hope, and we do have a plan to explore like Africa. But -- step by step. Can Mei, please provide more.
Yes. Yes. Just like Ning mentioned, our overseas geology is very key. Just in the last year, our objective is to understand the overseas market and to build up our team, and I think we are successfully met the targets in the last year. And for the 2024, I think we're going to target our international business as a double -- I mean, the double in the 2024, I think we are very confident on this year because we have a very solid foundation on the international business, just like a mean that we leverage from AI capabilities, and we already built up our international team and very localized. So I think we have very confidence on this year on our international business. Thank you.
Okay. So my third question is regarding your loan facilitation business, not just overseas, but also domestic. So in the total, so for 2024, what's your expected growth drivers for this business in 2024? And can you offer any guidance on the growth rate for new loan volumes for the year of 2024?
Mei, please take that question?
Yes, yes. Okay. For the 2024, I think as for the overall economic landscape, I think although we have very optimism, but it's partially for this year. So we have to balance our business expansion and our asset quality. So our target for this year is the growth is about 30%. I think about for the 2024 year's is our target growth rate, and meanwhile, I think we have to keep optimize our risk capabilities and which is to refine our customer acquisition strategy and also our credit score, modeling, so on and so forth and also enhance our AI capabilities as well. So although I think we have some very confidence on this year, but we still are very cautious on our assets and the business healthy and the asset quality. Thank you.
Got it. Yes. Congrats again on your strong results. Operator, I don't have any more questions.
Your next question comes from [ Bruce Aron with Black Lab Fund ].
Yes. Congratulations on another successful year especially the increase in overseas loans and their great future potential. I have 2 questions. First is concerning the Life Insurance segment, can you further address the 17.1% drop and how you plan to adjust to the new regulations? And secondly, just you further plan to have share repurchases.
Regarding the first question, yes, because the first half of the year or first part of the year saw like quite a great business volume due to the fact that people were expecting the regulation change. So put it in other way, most of the work of the year was done actually in the first part of it. So the second part, including fourth quarter wasn't great. But we expect that around mid of this year, things will stabilize and show new promise. And the market sentiment will be back, but, Mei can please provide more details regarding insurance.
Yes, yes, yes. Just like the fourth quarter, I think the whole market is under pressure on the regulatory -- the impact. But I think that although this impact the players in the market have some sort of the past, but I think we are very confident because the need is there, the market just needs some time to consume this impact. So I think for -- just like Ning mentioned, for the new year, we can expect some new products and also, I think our customer [indiscernible] the whole market, the customers still have this kind of insurance demand. So I'm pretty much confident we have rebound and we're going to have some growth as well, just like life insurance as a majority of our business, but still we can see a lot of demand from the property insurance as well, such as employer duty insurance so on and so forth, we can see the booming demand.
So I think for the 2024, our insurance products, we're going to have more property insurance as well. So I think that's going to help us to more balance our insurance brokers business as well.
And as for the [indiscernible] program this quarter, we have deployed USD 1.9 million to buy back our shares in the public market. And that for the fourth quarter. The end of the fourth quarter, the company has cumulatively deployed close to USD 7.4 million for our repurchase program, and we will still do sign back, and we are very confident on our core strength and future growth. And I hope that answers your question.
Yes, we'll do more share repurchase.
Your next question comes from Matthew Larson with Fincadia Capital.
Congratulations on another really great year. I've been following your company since you went public through Morgan Stanley back in 2015 or I was participated on your IPO. So it's nice to see the recovery in your business and the expansion, the valuation is just really astounding. I mean, your company's cash position is almost twice what your market capitalization is and your earnings establish yourselves at trading at just 1.5x earnings roughly. So if one just put a 5 multiple on that, you're looking at a stock that could be $16 or $18. Some of your competitors do trade at that multiple. They also paid dividends and that's usually received well by investors here in the United States. In fact, one competitor, Lufax, just announced today a $2.42 special dividend and the stock is up dramatically. With all your cash, you've been buying back some shares, not a lot of them know. The volumes picked up in the first quarter, which would allow you from volume restrictions to probably buy some more, and you're trading well below book value. So I would recommend you perhaps institute a dividend, but accelerate your buyback because it's totally accretive to you all. And in addition, I like your guidance. It's looking to be 20% to 40% greater for 2024 from 2023. And I think you should highlight that. So you're in a very strong growth pattern. Now AI has been discussed a number of times on this call and on your news release. And I'm not sure the market really understands that you are a pioneering artificial intelligence investment opportunity, because you don't put out many news releases and in fact, today's just announced the earnings.
In my judgment, so that the investment buy side would understand your story better and give your company a higher valuation would be to put out earning -- put out news releases that highlight your artificial intelligence capabilities. If, for example, you had put out that earnings were $3.29 helped by our artificial intelligence capabilities that would highlight that you are an AI firm. And investors certainly here in the United States, are hungry for exposure to the AI sector.
So if that is a possibility, I would recommend it, because your company is not widely known because no analysts follow you and you don't do road shows and what have you, it's a smaller price stock, but now that you're above $5, it puts you in a different arena where investors that might have a minimum stock price to be able to employ their capital into your firm can do so. So I look forward to another great year. Thank you for the last one. And -- just if you could take some of my advice and consider it, I think it could be very helpful.
Thank you very much. Yes, let me share my thoughts and then Mei can add to it. And first of all, thank you very much for your long time trust. And, so, as we previously mentioned, we will continue to do share buyback. But regarding dividend, it has been discussed. And we put some serious thoughts into it. As a matter of fact, we've done that before, so it's not new to us. The concept and the practice, and we've also started best practices around the world and in our peer group. So the idea is that we believe we have like great growth opportunities where we can deploy capital rather than issuing a dividend. For example, like our AI work has been done on a very low cost basis because we want to be prudent. We want to be like very careful. But as we develop our capability further, we may be able to deploy a larger amount of capital. So that's our strategic thinking. And so please give us a bit more time. We will show that, our strategy regarding paying or not paying a dividend is better. And regarding AI strategy, definitely, we will communicate with the market more this time, basically, we just gave our strategic thinking, work in progress because it's like -- so in my view, there are 2 types of like AI work. One is like the so-called like plus AI, meaning like existing business like plus AI. So this is great. This is something we must do, right, as a fintech leader, pioneer like we need to utilize the most cutting-edge technology, which is AI right now. So AI has been going into our fintech businesses and our company management, like big time. But at the same time, we are thinking about really doing AI native kind of work meaning developing this model training platform, starting to serve customers from other sectors, open sourcing much of the platform, so on and also strategically building like a vertical models for psychology, social companion and so on. So this is more kind of AI native, AI first opportunities. So as they come along, we will definitely communicate with the public more and more. And frankly, it's my vision that, 3, 5 years down the road, we are not just a fintech player, we are a fintech player and an AI kind of leader and fintech business utilizing AI big time. It is that's our showcase, right? We can use -- utilize AI grade, but our AI capability is also open to all. So not just our own fintech business. So that's the strategic thinking it's very -- in my view, a great, great moment for us to do that. And I hope to make that happen. And that's our thinking behind.
Okay. Great. Thanks for illuminating that, and I look forward to, again, hopefully seeing some more communication with the investment community here in the United States about your AI initiatives, your pioneering embrace of AI and frankly you've been employing AI or algorithms to a certain degree for years to make your credit decision. So this is nothing new for you. And if investors understood that, there's no question in my mind that your company's stock would be given a significantly higher valuation. So thanks again, and have a good evening.
Well, thank you. But I'd like to add, Matt, that previous like big data work was great. But current AI is a whole new ball game. But we are monitoring that capability. So we have this confidence.
Okay. Great.
Your next question comes from [ Peter Ruh ] with Bluebird Advisory.
The elephant in the room is your capital structure. If you gave a $50 million dividend, that would be about 5%. You would still have over USD 700 million to buy an AI company. In America, we say show us the money and quit talking about AI, every other sentence, because you're a Cayman-based Chinese company. You don't have a lot of credibility. Mr. Tang did not have enough respect for shareholders to be on this call today. I have great respect for the big company he's built, but he evidently doesn't want or maybe this is my question, do you need to ask the Chinese government to distribute a cash dividend or to buy back shares? Is there some legal Chinese reason where you cannot distribute the money because an American shareholder who's looking at your balance sheet, makes no sense why you do not have a dividend.
Last quarter, Ms. Mei said, you want to be considered a growth company, which is why you didn't want to do a dividend, but you're not even considered a value company right now and paying a dividend would restore some credibility in the American economy amongst shareholders because right now, Chinese companies don't have a lot of credibility among American investors. And you did lift on the American Exchange. So you did access American Capital, and you need to respect that. And I'm wondering, is there a legal reason why you cannot distribute a dividend or do a bigger buyback than a few million dollars?
Thank you for your question and for you joining the call, and I respectfully disagree with some of your point. But let me say the following. First of all, there is no such restriction whatsoever. And it's our decision. So to put our funding, money into higher value-generating activities, and as a matter of fact, we did a dividend before. So as I mentioned, it's not new to us. And so -- and we've been doing cash like a share buyback, and we'll do more. But we are also aware that our float is not that great. So if we buy more and more, there will be limited float for larger institutional investors. So I'm not buying this kind of -- I respect American investors, global investors. And actually, I felt no good when our share price declined due to many factors out of our control. But we've been trying so hard in the past years to produce great results quarter-over-quarter. And I believe with our new strategy, with our ongoing dedication, the company will do great. And as a matter of fact, last year, the value of the company grew over 100%. Of course, it's from a very humble base. We were not happy about. But we've also been happy about its recent development. So that's my feedback to you, sir. And so I think we will just have to work harder to build a solid company for our shareholders and partners. Thank you.
Well, last quarter, Ms. Mei said that you would do a more proactive approach to speaking to retail investors since you really have very few institutional investors. And I don't think in the past 3 months that you've had any event where you reached out to the retail American investment community and instituting a small percentage dividend whether it's $20 million, $30 million a year would -- in state, would instill some confidence in the investing public and even the institutions that you respect your shareholders that it's not just a company from Mr. Tang that you respect the shareholders and going to share some of the revenue as a display of strength. You bounce from lending to insurance. Now your insurance is down 50% from last quarter. So evidently, you're not really going to be a big insurance player. Now you're trying to pivot and you're looking to buy another company to try a different direction. So there's a lot of lack of confidence in the strategic direction of this company and instituting a dividend as a prior person said, like some of your competitors have would instill some good confidence and probably would get the stock price up significantly and on the radar screen. You need to learn to walk before you can run and having a dividend would instill some confidence among American investors.
Let me elaborate a bit more regarding the point you just made. And first of all, let me report that we've done quite a bit of work regarding communications with retail investors. For example, we rebuilt our website, Investor Communications content, and I was part of it. And I personally wrote our AI strategy. And there are 3 pages that I'm very excited about. So if you can go please take a look at them. And I'd love to have your comment. And also, we've taken some remarks from KOLs in the U.S., we are incorporating their suggestions in our communications. And so the retail investor communication work is being done in a thoughtful way. And secondly, let me say, insurance business is our core business. And as a whole, it grew nicely last year 2023, and we expect the insurance business will grow nicely this year and in future years. And lastly, I'm not sure where the concept of us buying a company to do AI came from probably due to my not doing great communication or making it clear. No, we're not going to buy any company. We're going to develop our own AI capability. And also, we are going to make some strategic investment and strategic partnerships in a smart way. So this is how we're going to build our AI capability because there are just so few great AI native guys out there, right? Like Microsoft had to invest in OpenAI to develop its capability. It didn't really just do AI in-house. So I think Microsoft did the right thing. We are doing the right thing of doing it in-house at the same time doing strategic partnerships and investments that's really serving the -- going to serve the shareholders and the company well in my view. But of course, as I mentioned earlier, we're going to report our progress in a thoughtful way. Hope -- when there's more visibility, you will feel more comfort.
Just on retail investor communications. In fact, we have been increasing our retail investor communication for recent months. If you look at our website, we have been publishing more news regarding Yiren business update to the public. So we are tentatively being more active in enhancing or exposing in public, especially in the U.S. market. And apart from the news that will lead previously. If you look at our website, you can see it. And if you can -- if I search Google it, you can see the latest business update from us. Apart from that, we also build our own social media platform, and we have an official account on LinkedIn and also at Twitter, and work in progress on that, and we will publish the latest business news on that as well. And if you have any questions, please call us, and you can ask a question on that as well. And apart from that, we will -- in the future, we will release more [indiscernible] and enhance our communication with retail investors, but not only retail investors, but institutional investors as well. I will intend more international conference, some of them in domestic China and some in Hong Kong and also hopefully in the U.S. as well. So there's a lot of things happening around and just stay tuned.
Your next question comes from [ Boyd Hinds ] with ACI.
Thanks for squeezing me in here. I had a question -- some questions about your e-commerce segment. That appears to be the fastest-growing segment within the company right now. And I was wondering if you could just kind of give us a little bit more details about what are the things that are driving that growth? And what are your expectations for the growth in 2024? If you could also talk about its margins and how they compare with the margins in your other divisions, that would be great.
I'll first offer some big picture strategic thoughts and Mei can please add to it. And so basically, this is our strategy to enhance, strengthen our customer relationship and also basically cross-selling to an ever-growing and happy customer base. And also by selling them more and more things they really need, they really like. We know them better. So this is the strategic rationale. Since this business had a low base, of course, the growth rate has been quite stellar. I'm not sure it can grow as fast going forward. But seems like our product cross sold to this through -- to our customers are quite well received. So -- but I hope also with like AI content, we will be able to please them more. So can Mei please provide further details.
Yes. For our lifestyle business line, I think we have a very good growth in the last year. I think the key driver is our customer [indiscernible] have more and more MAU, they can just have more attachment on our app. And I think that we have a lot -- some of very interesting services like some sales development because we have some program or our customers cannot learn some courses. They are interested even including our financial planning and AI event. And also, I think in the future as our growth of customer acquisition I think this part of the business has a very healthy growth as well, especially for AI empower new kind of business services as well, I think. So we have very confident on this new year that's going to help our customers will just spend more time on our app. And I think that would be even better understand our customer behavior and to have a better judgment on there, even a payment habit as well. So I think that's going to be very key to our services.
Yes, it's a great -- I'd like to add like a channel to sell digital goods video content, membership, IT, membership and so on. So with some good discount or...
Can you speak to my question about the margins. I know that your overall margin for the year in all divisions, your pretax margins are approximately 54%, which is a stunning number in terms of its profitability. You also sort of referenced in your guidance that you expect the healthy net margins to continue, although you didn't really give us a numerical value. So I guess this is sort of a 2-part question. One is like asking about what are the kind of margins you're getting in your e-commerce division? And how is that going to contribute to fiscal year '24? And then in general, as part of your guidance for the healthy margins to continue, does that mean that you expect margins to exceed what you achieved in fiscal year '23?
Do we have such details? And can you please...
Yes, just like Mr. Ning just mentioned, we have some more kind of membership like IT or some startup. I think at the margin, just like you just mentioned like [indiscernible] something, I think that -- yes, that's the range.
Your next question comes from David Tuff, a Private Investor.
So my question really is very similar to 2 other callers before. And just to put a fine point on it, you've got roughly $800 million in cash, you're selling at less than 2x earnings. I repeat what both of these callers said, if you instigated a dividend, the last caller said $0.50, something like that.
What effect would that have? It would diminish your capital by 5% by nothing. But it would telegraph to the world that you were a real company that you did not have, and I was happy to hear this from the last caller, you were not constrained by your government to not pay out that money. So that's good. I mean, I hope that's true.
But it would -- what it would do would be to attract a great deal number more of investors, which would enable you to buy back more stock which would dramatically accelerate the press of your stock. Now you say, well, you want to attract institutional investors. For institutional investors, would get interested if that happened. But right now, they are less than 5% of your shareholders, less than 5%, focus on the 95% of your shareholders -- and everything else will follow. All the good stuff you're saying you're doing a great job with the AI and all that stuff. All of that will become known if you do this simple thing and beyond me why you're not doing that. Other than that keep on doing what you're doing, but please consider this other change, okay?
Thank you. We took your point.
Your next question comes from [ Andre Julian Hudu with Julian ].
So great results, congratulations. I've been a shareholder for some time also. I wanted to clarify for other investors and also pass you some questions. But looking at the other earnings calls and the fast rates, which I've been present also to. You have 2 speakers, mostly 2 questions. So clearly, there are newer investors, which found your company, as you already -- I think I understand for the eighth person asking a question, and usually, you have 1 person or 2 people asking questions.
Also, the fact that Mr. Ning Tang is not here, and I want to congratulate him also. It is not a problem in my option because maybe he has personal life issues or other stuff, but again is that in the last quarters, I'm looking and all earnings calls transcripts, you can check it online. Mr. Ning Tang, the CEO, was present for all of them.
So now maybe he's still in the stock price, it increased a bit. So he's free [indiscernible] location or something, which is -- he is rightful. So for newer investors as they are in this call, I would like to state that Mr. Ning Tang was in every earnings call and he had quite insightful questions and answers with the 1 analyst which was talking guys from Morgan Stanley, which I really appreciate also.
Now as the question part, I wanted to also -- before asking you stuff, I want to state that this is a Cayman-based company, but also Tencent, Alibaba which Charlie Munger owns, Warren Buffett's partner, they're all Cayman-based companies. So this is a trait of a Chinese company. So it's not a problem that YRD, Yiren Digital is a Chinese Cayman-based company because all the major companies are Cayman-based companies.
Furthermore, I would like to congratulate to the fact that you are still growing at 30% even to 20% actually growth in the middle range is the guidance and 39% is the growth in the revenue for 2024 at the upper bound. So that's great growth after growing 50%, 100% per year in the last 2 years or something like that. And I would like to ask you -- and the last thing, sorry, I'm stating fact. 2,100 employees or something like that, 2,500 employees you had. I would like investors also to search on in Chinese or on the Chinese side, the post of the employees having team building and other activity. So this company is legit, and it has tons of employees, 2,100 or something if you can clarify, but I found it on the Chinese side of your Investor Relations, and it's quite hard to find, but you can search LinkedIn and all that, and you will see that this company is very nice.
Okay. My last question -- my last question and my question actually is the dividend. Of course, everybody stated about the dividend. I appreciate how we are performing financially, and I understand that you want to invest into growth opportunities and also into AI, you're an AI company, and you're already using AI before it was popular. Now my only thing is could you talk with Mr. Ning Tang for a 5% dividend? Like the last caller said that it would decrease your cash not even by 4% or 5% for a 10% dividend. But a 5% dividend will decrease it by 2%. It's just a confidence thing to a symbolic dividend. I understand you want to continue growing 40% and it's better for you to reinvest in the business, I can clearly agree. But you could consider if you want -- and my question is, would you consider a smaller dividend just for the sake of pleasing or becoming it to the eyes of investors.
Thank you. And this is Ning Tang speaking. And frankly, I didn't quite catch the first part of your remarks due to line quality, but sounded like you expressed comfort about the business, but thank you. And the second part I got. And again, about the dividend and points taken, and we will surely consider all remarks, suggestions, ideas from shareholders and also interested parties please, believe we...
I'm a long-time shareholder, by the way. I think not as long as the person from Morgan Stanley, but from the depths of the company. Anyway, my question -- actually statement, I want to say it is, I think there are many new investors here or actually, if you would look at competitors or similar companies in the fintech area, [indiscernible] Giant tech fintech company, it increased 3x, so 200% growth in the stock price after in March 29 of last year, it issued the dividend, which is 16% dividend for the year 2023. So it increased 16% for the current stock price, by the way, for the old stock price, sorry, currently smaller -- for the current stock pricing pattern. So the idea is that they issued a dividend on 29 March last year, so same period is today, let's say, and stock price increased 2x -- sorry, 3x, so 200%, 3x from $2 to $7 after they issued the dividend. So the news of the dividend. So that's the impact that the dividend can do. And today, in the premarket Lufax, Alex on NASDAQ, I think it increased 45% in the premarket because they issued a huge dividend. And these are companies which have less cash and they're generating less cash than you are generating and you could do just a symbolic one or like they are doing less cash, but they have quite high dividends, not sustainable for some, but whatever, but not my comments to say. But your company is the best financially and it has $800 million in cash, which increased $240 million increase in cash from last year in December 2022. So in Q4 -- from Q4 to Q4 year-on-year, you increased $240 million your cash. And also your book value increased $210 million, if you take total assets minus total liabilities. So the company is trading below cash, and it's growing at 40%. And dividend would bring confidence and again, your competitors they increased widely after dividends 3x.
Clear. We got the point.
Thank you. There are no further questions at this time. If you do have further questions after the call, please direct them to our Investor Relations team. That does conclude our conference for today. Thank you for participating. You may now disconnect.