Shares of Yiren Digital Ltd (NYSE: YRD) tumbled 6.50% in pre-market trading on Thursday following the release of its fourth quarter and full-year 2024 financial results. The China-based fintech company reported a significant year-over-year decline in profits despite revenue growth, while its 2025 outlook fell short of market expectations.

For the fourth quarter of 2024, Yiren Digital reported net income of RMB 331.4 million (US$45.4 million), a sharp 42% decrease from RMB 571.3 million in the same period of 2023. This decline came despite a 14% year-over-year increase in total net revenue to RMB 1,452.2 million (US$199.0 million). The company's adjusted EBITDA also saw a significant drop, falling to RMB 313.9 million (US$43.0 million) from RMB 684.8 million in Q4 2023.

The profit decline was largely attributed to increased provisions and operating expenses. Provision for contingent liabilities surged to RMB 250.7 million in Q4 2024, compared to a reversal of RMB 1.5 million in the same period of 2023. Additionally, allowance for contract assets, receivables and others more than doubled to RMB 203.1 million. The company cited a growing volume of loans facilitated under its risk-taking model and a prudent approach to future market uncertainties as reasons for these increases.

Looking ahead, Yiren Digital provided a cautious outlook for 2025, projecting total revenue between RMB 5.5 billion to RMB 6.5 billion. This guidance suggests potential for flat or minimal growth compared to the 2024 revenue of RMB 5.8 billion, which may have disappointed investors expecting stronger growth prospects. The company also faced challenges in its insurance brokerage business, with revenue from this segment declining 57.6% year-over-year in 2024 due to ongoing impacts from regulatory changes.

While Yiren Digital highlighted positive developments, such as growth in its financial services business and advancements in AI technology, the market's negative reaction suggests concerns about the company's profitability and growth trajectory in the face of regulatory and market challenges.