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spk00: Good morning, everyone. This is Ni Cong Jun from WaterDrop Investor Relations. It's my pleasure to welcome everyone to WaterDrop's third quarter 2013 earnings conference call. All participants are in listening mode in our English line. As a reminder, today's conference call is being recorded. Please note that discussion today will contain forward-looking statements made under the proper provision of U.S. private securities and the Litigation Reform Act of 1995. Forward-looking statements are subject to risk and uncertainty that may cause actual results to differ materially from our current expectations. Potential risk and uncertainty include but are not limited to those outlined in our public findings with the SEC. The company does not undertake any obligation to update any forward-looking statement except and require an applicable law. Also, this code includes discussion of certain non-debt matters Please refer to our earnings release for consideration between NGAP and GAAP. Joining us today on the call are Mr. Chen Peng, our founder, chairman, and CEO, Mr. Yang Guang, co-founder, director, finance VP, and GM of international business, Mr. Zhu Zetao, GM of crowdfunding and pharma tech business, Mr. Chen Ruichen, board secretary, and I would be happy to take some of the questions in the mentoring line at the end of the conference call. Hello, everyone. This is Shen Peng. Thank you for joining our third quarter 2013 earnings conference call. This quarter, the domestic economy in China is still in the recovering process. Virus factors, including adjustments in product policies, have temporarily impacted the life insurance system. With the improvement in industry transparency and standardization, coupled with fewer gradual acceptance of new product policy in the market. The company believes that the life insurance industry is entering a new development stage. Facing both opportunities and challenges, the company actively responds to regulatory directions, striving to enhance business health and efficiency, prioritizing user certification, the company leveraged its key insight into user needs to solidify user service and product innovation capabilities, embracing industry change with an efficient and dynamic approach. In the third quarter, the company continued to focus on creating value for users, achieving a resilient financial performance with approximately $6.9 billion in revenue, maintaining a profitable trend for the past seven quarters, GAAP profit reached $36.3 million, showing a QQE growth of 67% and demonstrating the sustainable and high-quality development. With sustainable net profit and positive operating cash flow at the end of September in the context of continuous share repurchase and acquisition of Chenanbao, the company still maintains a robust cash reserve and ability to organic growth. The combined cash-cash equivalents and short-term investments are about $3.1 billion, providing flexibility and stability for the company to navigate uncertainties and support long-term growth. All business models of the company performed well in the third quarter, consolidating a leading position in the industry. WaterDrop Insurance Marketplace focuses on enhancing business health, optimizing the product metrics through excellent demand insights and the quality improvement, and it continues to contribute stable net profits. Secondly, our WaterDrop medical crowdfunding platform continues to improve our service and risk control mechanism, accumulating a serving over 3 million patients, emphasized on fund transparency and credibility. actively demonstrating the company's commitment to authenticity. The companies are here to be user-centric, consistently enhancing service quality, and advocating for the transformation of service-oriented consultants with the principle of users first, service foremost. In terms of digital clinical trial solution business, the eFind platform continues to deepen the collaboration with well-known domestic and international pharmaceutical expanding the range of recruited disease types, leveraging technological advantages, we continue to explore innovative opportunities in pharmaceutical field. In addition, we continue to invest in R&D to empower business development. In the third quarter, the company iterated and upgraded our AI technology across various aspects of the product, operations, and service. With the implementation of our technology, the company will also seek the export opportunity to the entire industry. Meanwhile, the company continues to prioritize and enhance its ESG efforts, striving to do a sustainable development of the company and society. Virus initiatives related to environmental protection, employee rights, corporate governance are systematically advancing. In September, the company collaborated with IIGF to initiate the online insurance industry ESG whitepaper, contributing to the practice and development of ESG information disclosure for the industry. In addition to business development, the company actively fulfilled the CSR. In August, due to the flood in Beijing, Autoshop public welfare platform collaborated with well-known charitable foundations to assist the stricken area. The platform launched a special topic on our homepage, and we donated many suppliers to the Beijing Youth Development Foundation. As of September 30, 2003, the platform has collaborated with 112 public charitable organizations in areas such as serious illness assistance, emergency disaster relief, and education support. raising a total of over $1.3 billion, with over 70 million participants. Leveraging our business and technology advantage, we actively participate in the construction of multi-level medical systems, implementing one-stop-assisting tools, such as , and so on, in many cities. In terms of share repurchase, as of November 30, 2023, the company has cumulatively repurchased about 38.5 million areas from the open market, spanning over 87.4 million U.S. dollars. This reflects the company's strong confidence in its inner value and long-term sustainable development. The repurchased shares will continue to be used for ESOP to enhance internal dynamic and promote mutual growth with our employees. The above is a brief review of business performance in Q3. Although facing the challenging micro-environment, we're still fully confident in ourselves and in the industry. Looking forward to the last quarter of this year, our strategies include frequently driven online and digital transformation. The insurance business will continue to be user-centric, striving to achieve long-term healthy and stable development. Meanwhile, we will continue to enhance team efficiency, consolidate the business foundation, and provide users with professional and staff-for-service. Secondly, the crowdfunding business will continue to adhere user-first and easy-to-reach service models, leading the industry towards high-quality development. We will also adhere to transparent operations and implement strict risk management will actively fulfill the CFR. Thirdly, leveraging big data, the pharmaceutical business will continue to increase industry penetration globally in order to construct a long-term growth engine. Fourthly, the company will make use of its Enbol cash reserves and seek cooperation and investment opportunities around insurance and healthcare sectors. list, the company will accelerate technology empowerment and enhance AI abilities to build core technology competitiveness, thereby supporting the implementation of long-term strategies and empower the industry. In summary, the company will continue to prioritize user value, focusing on high-quality development and advancing business synergy and organic growth. constantly expanding business boundaries to better bring insurance and healthcare service to billions through technology. And next, I will pass the runway to introduce the development of our insurance business in this quarter. In the first three quarters, the gross rate of life insurance slowed down against the backdrop. The FYP reached $16.95 billion in this quarter, with 38% long-term insurance propulsion. Insurance-related income reached $6.2 billion, and the operating profit reached $1.5 billion. Among them, The FYP of short-term insurance business reached a 10.5 billion. During this quarter, the company actively utilized the AI technology to enhance user acquisition capabilities and the service quality. On the customer acquisition side, the number of new users increased by 20% year-over-year. The company actively developed the facial TPT using the LUT model to enhance content production capabilities, driving a significant increase in WeChat channel views, with a sequential growth of 16% in the following numbers. The company also continued to upgrade its intelligence dialogue chatbot, driving a sequential increase of 6% in the renewal rate for short-term insurance, and it's remaining above 90 percent. Long-term insurance business further developed in the third quarter, achieving a FYP of $640 million, an increase of 17 percent year-over-year, and 9 percent quarter-over-quarter. The average premium per policy increased by 43 percent year-over-year and 4 percent sequentially. Brokerage income increased by 11% year-over-year and 18% sequentially. The company adheres to improving the capability of long-term insurance service teams and continuously optimizing the service quality, achieving a sequential increase of 23% in FYP of private domain operations. The platform's long-term insurance product offerings further expanded. The proportion of life insurance users increased sequentially, serving an almost 2% increase in the first-year renewal rate. In the third quarter, the company demonstrated resilience in developing new service models. Like in our life planning segment amid a market with declining interest rates, the company continued to build content capabilities and online planning service around the combination of life planners and e-insurance. The team continues to grow, achieving a new monthly FYP record despite the challenging market conditions. In the online brokerage sector, the company continues to enhance the functionality of our app, advancing towards industry-leading tools. In this quarter, FYP of Offline brokerage increased by 7% year-over-year, and the average productivity per capita improved by 16% year-over-year. Regarding Shenlanbao, water drop insurance marketplace and Shenlanbao preliminary explored business synergy, significantly enhancing content marketing capability. The monthly FYP of Shenlanbao posed a new high during this quarter. In Q3, the company is optimizing its insurance products to meet the rising demand. In the health insurance sector, the company introduced water job launching of patient and emergency insurance. It is a groundbreaking product and is the first in the industry to cover medical expenses in below secondary level community hospitals and township hospitals. which address the shortcomings of existing product in the market. Targeting users with pre-existing conditions, the company upgraded its service by introducing Waterdrop IWU Cancer Recurrence Insurance. This product provides comprehensive coverage with high coverage amounts, offering flexible options for a wide range of users. Additionally, the company launched Waterdrop Blue Ocean No. 3 Series unit insurance, further enhancing the experience for sub-health users. The company also responds to public product policy shifts in savings insurance by offering diverse options tailored to different segmental population and scenarios. In Q3, WaterDrop continued to enhance its insurance technology capabilities investing in large models and AI technology to empower our business and deliver high-quality insurance service. The company utilized the algorithms and AI to automatically identify potential intentions in the pre-sales process, significantly improving efficiency by 20%. With the assistance of AI technology, salesmen were able to achieve more refined user segmentation effectively engaged with our users. The company also launched large-modal technology to create an insurance assistance based on our water drop insurance knowledge big data. This assistance can answer questions related to insurance application claims, coverage responsibilities, premiums, and so on, assisting our staff members to promptly addressing to users' concerns. Additionally, the company successfully launched an intelligent copywriting assistant with content production capabilities to assist our salesmen in crafting more accurate and professional personalized content. Since its launch, over 1,000 salesmen have utilized this tool, significantly improving our efficiency. The above was about insurance business performance in Q3. Now, Dr. Tao will introduce the program of WaterDrop core funding and digital clinical trial solutions. Thank you, Raleigh. At the end of Q3, WaterDrop's medical core funding platform has accumulated 445 million donors, assisted over 3 million patients, and raised over $61.3 billion. Both user numbers and fundraising amounts continue to grow. In Q3, Waterdrop Operating Transparency Committee further enhanced platform interference. The platform revamped the fundraising information display page with four different models, like information disclosure, platform verification, public confirmation, and fund disclosure. These provide a more comprehensive representation of key details and to enhance transparency. Consultant Service, we conduct the first WaterDrop Consultant Service Month in August. We standardized our consulting operations with the release of Service Handbook and improved overall service quality and risk awareness. As a result, overall user certification rose to 98%, and the NPS for Fundraiser increased from 55% to 70%. in Q3 will continue the transition to service-oriented consultants in 45 strategic hospitals nationwide. This approach received high praise from both hospitals and patients. The platform will further improve the efficiency of service-oriented consultants while maintaining service quality. We prioritize user experience, hosting the first donor and fundraiser open day. in September with the theme Open and Transparency Gathering Trust. The company's CEO, Shen Peng, and myself gathered with donors and fundraisers to have deep communications on fundraising service experience, fund transparency, and case authenticity. The company will continue to listen to user feedback, focus on technology innovation to enhance service efficiency and transparency. We'll honor the trust of every user due to clean, controlled solution business show stable and healthy development in this quarter, with a quarterly revenue of about 27.6 million, representing a year-on-year growth of 60.7%. New in Q3, the eFind platform expanded its collaboration with over 135 pharmaceutical and CROs, finding over 90 new projects with a rapid expansion. Benefiting its excellent ability of recruitment and top project management, collaborations with leading MNCs really deepened this quarter. The platform entered into an exclusive participant recruitment partnership with the RISIS clinical trial project with one of the world's top five MNCs. Additionally, supply process for initiatives with two top five MNCs with formal collaboration expected in Q4. The e-farm platform continues to expand the application of cutting-edge technology to accelerate new drug development. Leveraging big data and structured information from clinical trial projects, the platform used AI-driven matching systems to enhance efficiency in connecting patients with suitable projects. In patient service, due to our wide service unit patient base, we have developed an efficient private domain platform about patient management and core expertise in medical service. The platform offers patient management and integrated service, such as patient selection, medication management, medical service, innovative payment solutions, and data insight, and so on. providing the digital marketing solution covers the entire product life circle. In Q3, a formal collaboration has been merged with a leading MNC focused on the health management of chronic disease patients. And that's all, and now I'll pass to Yangguang for the next part. Thanks, Zitao. Hello, everyone. I will now walk you through our financial headlines for the third quarter. Before I go into details, please be reminded that all numbers quoted here will be in RMB, and please refer to our earnings relief for the detailed information on our financial performance on both year-over-year and quarter-over-quarter basis, respectively. In Q3, despite a unique period of product adjustment, the company demonstrated robust profitability. The company revenue was $686 million, a slightly QQ increase from $679 million. For segmented report, it is the first quarter that we started to consolidate the financial results of Shenanbao, and the report exists The results enter the insurance-related segment. Our insurance-related income was $619 million, showing a 3.7% QOQ increase. Core funding service fees were $36 million. Digital clinical solution income was about $27.6 million, with a remarkable 60.7% year-over-year growth. Operating costs and expenses increased by 7.6 percent year-over-year, decreased by 4.4 percent in QOQ. Operating costs decreased by 8.5 percent year-over-year to $313 million, mainly due to, firstly, a $19.5 million decrease in the cost of one-year health insurance coverage related to termination of mutual aid plan, which occurred the same quarter last year. Second reason was 9.4 million decrease in cost of fuel and services. S&M expenses increased by 36.1% year-over-year to 187.7 million. It was primarily due to, firstly, the consolidation of Chenanbao, which generated S&M expense of 28.1 million. a 14.4 million increase in marketing expenses to third-party traffic channels, and certainly a 9.1 million increase in personal cost and share-based comprehensive expenses. In this quarter, the company practically addressed certain advertising strategies. There was a 41.3 million major decrease in marketing expenses to third-party traffic channels, partially affected by the consolidation of Shenanbao. SNM expenses decreased by 8.2% sequentially. GNA expenses increased by 39.7% year-over-year to $114.6 million and increased by 19.4% sequentially. Both QAQ and YY virus due to the consolidation of Shenanbao and the increase in professional service fee. R&D expenses decreased by 5.7 percent year-over-year to 73.9 million. The decrease was primarily due to personal costs and share-based comprehensive expenses. Adjusted net profit attributed to the company in Q3 was 74.8 million. The gap net profit was $6.3 million, and we have generated debt profits over the past seven quarters. As of the end of September 2003, the company had combined cash, cash equivalents, and short-term investments of $3.1 billion, indicating sufficient cash reserves. Overall, the business performance in Q3 was stable. Looking ahead, we will continue to focus on user value and sustainable high-quality development. And ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining. Have a good time.
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