Huize Holding Limited

Ladies and gentlemen, thank you for standing by and welcome to Weeds Holding Limited's fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, we will have a question and answer session. Today's conference call is being recorded and a webcast replay will be available. please visit WIES' IR website at ir.wies.com under the Events and Webcast section. Now I'd like to hand the conference over to your speaker host today, Ms. Harriet Hu, WIES' Investor Relations Director. Please go ahead, Harriet.

Thank you, Operator. Hello, everyone, and welcome to our earnings conference call for the fourth quarter and fourth year of 2020. Our financial and operating results were released earlier today and are currently available on both our IR website and the Newswire. Before we continue, I would like to refer you to our safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. Please also note that we'll discuss non-GAAP measures today, which are more thoroughly explained in our earnings release and followings with the SEC. Joining us today are our founder and CEO, Mr. Cunjun Ma, COO, Mr. Li Jiang, co-CFO, Mr. Minghan Xiao, and co-CFO, Mr. Ronald Chen. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights for the fourth quarter of 2020. Mr. Chen will then provide details on the financial results for the period before we open up the call for questions. I will now turn the call over to Mr. Ma.

Hello, everyone. Thank you for attending Huize 2020's fourth quarter and full-year performance conference. 2020 is a year that is meaningful to Huize. We are not afraid of winter and winter, and we will go back to the United States. We officially landed in Las Vegas and won the title of the first insurance e-commerce. February is the peak of the domestic epidemic. It is not easy for us to successfully go public. Therefore, on behalf of the Huize team,

Hello, everyone, and thank you all for joining Hui Ze's fourth quarter and four-year 2020 earnings conference call. 2020 marked an important milestone for Hui Ze. We officially listed on NASDAQ despite the challenging capital market conditions. True to our roots as one of the pioneers in China's online insurance industry, In February, the pandemic was at its worst in China, and it was not an easy task for us to complete our IPO. Therefore, I would like to express my gratitude to all shareholders and investors for your support and trust.

Looking back at 2020, despite the challenges of the pandemic, with the experience and core advantages of the deep-rooted insurance industry and the Internet, based on the long-term strategy and the leading digital development concept, and achieved a record-breaking performance. In the year, the total cost of platform development increased by 50% to RMB30.2 billion, and the total revenue growth increased by 22.9% to RMB12.2 billion. It is worth mentioning that in the fourth quarter, we were able to grasp the opportunity of economic recovery and industry rebound, We fire the uncertain macro conditions throughout the year.

We deliver robust results due to our years of experience in the insurance industry, the competitive advantages of our online platform business model, unique focus on long-term insurance product distribution, and our leading digital development capabilities. During the year, total GWT facilitated on our platform increased by 50% year-over-year to RMB 3 billion, while total operating revenue increased by 22.8% year-over-year to RMB 1.22 billion. Particularly in the fourth quarter, we capitalized on the recovery trends in the industry and overall economy. With both total GWP and total operating revenue increasing by more than 50% year-over-year, you reach new quarterly highs.

In terms of the financial strategy, Huize pursues the development of long-term user value, rather than the logic of short-term flow transformation. It is also in the market change that defends uncertainty. The long-term strategy of differentiation provides our financials with the ability to fight risks. has also contributed to the development of the platform. Over the years, the proportion of long-term health insurance accounts has increased to 93.4%, while in 2019, the proportion was only 87.4%. Long-term health insurance total health insurance has increased by 50.6%, reaching RMB 21.4 billion. At the same time, we have started to disclose the rate of health insurance in the second quarter. Long-term health insurance and health insurance On a business strategy front, Huize pursued the long-term development of user value in place of short-term traffic monetization. Our differentiated long-term insurance product strategy

enhanced our resilience during the March downturn and generate sustainable growth momentum. In 2020, long-term life and health GWP accounted for 93.4% of total GWP, increasing from 87.4% in 2019. Meanwhile, GWP for long-term health insurance increased by 50.6% year-over-year to RMB 2.14 billion. Over the past three consecutive quarters, persistency ratios for long-term life and health insurance in the 13th and 25th months have remained about 94%. We believe that Huize's capabilities in online acquisition of high-quality clients as well as its higher client retention are both economic modes which are difficult for our competitors to replicate.

In terms of product innovation, based on a wide range of real user data and insurance transaction data, we continue to strengthen the specific protection needs of users, the understanding of product setting mechanisms and risk pricing, and output more valuable customized insurance products. Over the years, we have not only launched the online product IP Darwin series, but also created the market-famous Darwin No. 3 heavy-duty line, as well as the first customized heavy-duty line,

In terms of product innovation, leveraging our massive and multidimensional user data and insurance transaction data, we've been able to design more valuable and customized insurance products for our clients with deep understanding of their insurance needs. For example, we launched the Darwin 3 Critical Illness Insurance, which was yet another success of our original Darwin product line. We also took the lead in the customization of annuity products and launched our first online version of Join Life Annuity, which was also a unique feature and innovation in China's online insurance market. GWP for co-developed insurance products with our insurer partners totaled RMB 1.29 billion and accounted for 42.7% of total GWP, compared with 36.3% in 2019. In terms of user service, we will continue to use users as our main focus, constantly improving functions, improving services, and optimizing user experience.

In 2020, The security system will be fully upgraded. Self-insured entry will be coupled with artificial assistance. The security speed will be increased by five times. In the year, the number of cases of assistance will increase by 22% to 4.3 million cases. The number of cases will increase by 71% to 2.42 billion cases. The epidemic will accelerate the online consumption of insurance. The difference in service and good market reputation will help us to attract and transform new users.

Regarding our client services, we maintain our user-centric focus, constantly improving our platform functions and services to optimize user experience. In 2020, Pulsar further upgraded its client service systems, combining an automatic portal with human assistance and increased its service speed by up to five times. During the year, the number of claim cases assisted by Hui Ze increased by 22% year-over-year to 43,000, and the claim amount increased by 71% year-over-year to RMB 242 million. As the pandemic accelerated online insurance consumption, our differentiated services and market reputation enabled us to continue attracting and converting new users. At the end of 2020, the number of Quasar's accumulated insurance clients had increased to 6.85 million.

In terms of technology applications, we have improved the performance of AI algorithms, data intelligence, and machine learning, technology is involved in key business areas. From insurance consumption, collect data. From data, mention professional knowledge. Then apply knowledge to the insurance service scene. To achieve a double win in cost-effectiveness and value improvement. For example, at the front end, we launched the smart application AI technology plan in the year. It can quickly calculate and handle customer input information. The best insurance plan for automatic generation not only greatly improves the efficiency and productivity of HuiZhe consultants, and further enhance the customer experience. From the middle end, HuiZhe's new consultant workstation has been officially introduced into use within the year, and is involved in user image and will analysis. Through the strong support of the knowledge base for consulting, and support from the audience, we provide the customer with immersive interactive experience. And at the back end, our intelligent inspection system can translate, calculate, and analyze multi-channel

Moving to technology development, we embedded AI algorithms, data intelligence, and machine learning into our key business processes. We accumulate data from transactions, extract knowledge from this data, and apply the knowledge to our services. in order to achieve win-win in terms of cost reduction and efficiency improvement. For example, on the front end, we launched AI proposal application in 2020. This application can quickly process user input and recommend optimal insurance products. It has not only boosted the efficiency and productivity of our consultants, but also improves our client experience. On the middle end, Quidra's new consultant workstation has been officially put into use. It provides analytical tools such as user portraits and user preference to empower our consultants. Meanwhile, the same screen explanation function also provides clients with an immersive and interactive experience. On the back end, our intelligent inspection system can transcribe, calculate, and analyze multi-channel voice and text information to improve the efficiency of our compliance personnel and reduce operating and compliance risk.

At the same time as business and performance double growth, Weize's industry value and status have also been further recognized. For the first time in a year, Weize Research Institute has released the 2020 China Internet Insurance Intermediate Service Platform Beyond our operational and financial growth, our industry value and positioning also continue to gain recognition. During the year,

Huren Research Institute released a list of top 10 China digital insurance agencies in 2020, with Huize placing among the first tier level of companies in terms of innovation capabilities and market performance over the past two years. At the same time, Huize was included in KPMG's 2020 China Leading FinTech Top 50 list. as a result of our development in insurance technology. This was also the fourth consecutive year that we've been shortlisted. 我将主要带领团队在以下几个方面集中发力。 Such achievements are the driving force behind our ongoing development and advancement. Looking ahead, we are confident in the prospects of the online insurance industry in China, and we aim to further establish HuiDe as the go-to digital insurance service platform for new generation consumers empowered by data and technology. In order to achieve this goal, our team will focus on the following aspects in 2021.

First, we will fully embrace digitalization

continuously strengthen our technology research and development, as well as talent acquisition, and enhance Hui Ge's core competencies. At the same time, we will optimize our corporate culture and governance structure to ensure better adaptation to the ongoing digital transformation.

Yeah.

Second, we will promote a comprehensive strategic upgrade by expanding our offline business in core cities such as Shanghai and Shenzhen by setting up high-value client service centers to further optimize the service experience and maximize client lifetime value.

Third, we will strengthen our collaboration with upstream and downstream partners along the industry value chain to enrich our product offerings

and improve service capabilities. We expect Huize to become a more open platform with a fuller range of products and services in its ecosystem related to insurance, including medical and healthcare. 其次,我们将充分利用资本市场功能并发挥其价值积极物色市场上的优质标的通过投资、订购、完善自身价值定位和市场布局进一步实现我们的发展战略 Fourth, we will take full advantage of the capital market, actively identify high-quality investment targets, and improve our platform's value proposition and market positioning through mergers and acquisitions to further realize our development strategy.

This concludes my prepared remarks for today.

I will now turn the call over to our CFO, Mr. Ronald Tam. He will provide an overview of our key financial highlights for the quarter.

Thank you, Mr. Ma and Harriet, and hello, everyone. It's Ron here. In summary, we are very excited to report yet another strong set of results for the fourth quarter in which we have delivered record quality numbers again for both total GDP facilitated on our platform as well as total operating revenues. which has beaten our previous guidance given to the market. For the first time in a single quarter, we've managed to facilitate over 1 billion RMB in first-year and renewal premiums. The corresponding strong top-line performance continues to reflect, importantly, the underlying recovery trend in China's insurance industry following a containment of COVID in the country, as well as the increasing adoption of online purchases of insurance products by our key target customers, which is represented by a new generation of young mass affluent consumers from the high-achieved cities in China. From a product perspective, our key focus in critical illness products, particularly co-developed products with our insurer partners, continue to drive a large part of the GWP growth in our long-term health segment of the business. With total GWP contribution of 589 million RMB in the quarter, which is up 61% year-over-year, Mr. Ma earlier mentioned Darwin 3 earlier in his prepared remarks, which we co-developed together with Sinatay Life Insurance, was the best-selling critical illness product during the quarter. And we continue to see strong momentum being carried into the new year for Q1 of 2021, ahead of the transition to the new critical illness definition regime for the overall industry. In addition to critical illness, we have also successfully ramped up distribution of savings insurance products, including annuities, as well as whole life insurance during the quarter, which amounted to a first year GWP of 228 million RMB during the quarter, as we capitalized on the seasonally strong market demand for savings insurance products during the year end and pre-Chinese New Year period. Our effort in broadening our product portfolio also reflects our continuing focus in providing our customers with additional products along the life cycles, which in turn helps create better engagement with our users, and obviously drives higher customer lifetime values for the platform. Overall, total GWP facilitated during the quarter totaled RMB 1 billion, of which 613 million was first year premiums, which is up 40% year over year, and 433.5 million in renewal premiums, which is up 1.1 times year over year. Here, I would like to highlight the continued strong renewal metrics, which again demonstrates the high-quality clients that our platform is able to acquire through our multi-channel marketing strategies. And we continue to see very robust persistencies during the quarter, with 13- to 25-month persistency ratios being maintained at about 94%. Now turning to our revenue line. Total operating revenues for the Q4 was RMB $388.1 million, again a record quarterly high, which was up by 53% year-over-year, and outperformed our guidance previously given to the market in our Q3 results. The increase in revenue was primarily driven by the increase in brokerage income, due to the 63% increase in total GWP facilitated in the quarter. Cost of revenue for Q4 increased to $291.2 million, primarily due to increased services paid to our user traffic channel partners. Selling expenses for the quarter increased by 15.7% year-over-year to 71.5 million RMB, which was primarily attributable to an increase in advertising marketing spend in the quarter, which increased by 43% year-over-year. And here you can see that we proactively increased marketing spend during the quarter to capitalize on the significant market demand for critical illness products in the period. G&A expenses for the quarter increased by 8.1% year-over-year to 37.3 million RMB. This increase was primarily attributable to the increase in G&A salaries and professional service expenses and offset by a decrease in share-based compensation expenses. RMB expenses for the quarter grew by 33.9% year-over-year to RMB 15.8 million as we continue to invest in AI applications for our platform and increasing R&D and data analytics headcount. During the fourth quarter, we have recorded a gap net loss of RMB 27 million. We continue to maintain robust liquidity and strong financial position. And at the quarter end, we had a combined balance of cash and cash equivalents of approximately 62 million US dollars. Now, with regard to our outlook for the first quarter of the year, as we have touched briefly upon earlier, we invested quite heavily in marketing spend in the last quarter And we have also undertaken incentive campaigns with our channel partners in a bid to capture this proportionate market share during Q4 in light of the significant market demand for the old definition critical illness products. And we are now seeing such strong demand spilling over in the first quarter of the new year. And as a result, we are now on track to achieve yet another record quarter for total operating revenues. As for our formal Q1 guidance for revenues, We currently expect total operating revenues for Q1 to be in the range of 650 to 700 RMB a million, which represents at the low end over 1.6 times growth year over year. This forecast reflects the company's current and preliminary views on the market and operational conditions, which are obviously subject to change caused by various uncertainties, including those related to the ongoing COVID-19 pandemic. With that, this concludes our prepared remarks for today. And we will now open up the call to Q&A. Thank you, operator.

Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. When asking the question, please state your question in Chinese first, then immediately repeat your question in English for the convenience of everyone in the call. Once again, it's star and the number one on your telephone keypad. Your first question comes from the line of Michelle Ma of Citigroup. Please ask your question.

Can you hear me? I'm City Insurance Analyst Michelle. Thank you, Mr. Guan, for giving me the opportunity to ask this question. Congratulations on achieving a good result. I would like to ask two questions. The first is about the new products that are on the market after we set them up. Its price is compared to our old products. How is it? How is the competitiveness of this new product? And how is the sales situation so far in February? I understand that maybe we have a very strong number in the first quarter. It may be because in January it is a re-definition. In February, the price of the new product and its previous activity and competitiveness are the first question. My first question was about the new critical units product and the new definition of critical units and how the prices of new products compared to the old version is still very competitive and how the overall sales in February. And the second question is about some new regulations which will be implemented this year and the next year on 1st of February, 1st of May, and 1st of January next year. What are the biggest challenges management to be compliant with these new regulations? Thank you.

Thank you, Michelle. It's Ron here. Let me take the questions. for the team. So the first question regarding the new critical illness product, I think it's still very early to say, given that we have just launched a new Darwin number five, literally today. So, you know, results are still yet to be seen. But I would believe that the new product, obviously, we would like to say that given that it's another iteration of the product, and again, this time we are working with Sinatate Life Insurance, we believe that the new product should be able to drive sales probably in the second half of this year. And for any new product to be coming online, it would require a period of marketing and education for the insurance clients at large through our direct channels and also through our 2P marketing channels. So I think it's still very early days to tell, but we are obviously confident that the new definition product would also be very well received by the market. The strong numbers that we have previewed for Q1 is mainly coming from the old definition product, which we, early in the previous remarks, we commented that the spillover demand coming from Q4 into the Q1, especially given the deadline of January 31st for most of the products in the market, we see significant demand in that month of January. So, that's really the answer to the first question. And to the second question regarding regulatory changes, I would say that given where we are in the industry as one of the leading operators, we are in very constant dialogue with the regulators, and in actual fact, we are one of the consultative members on the boards of the relevant regulatory bodies in terms of coming up with drafting of the relevant policies for the new regulatory measures. And so to that effect, I think that we are already anticipating such changes, and I think most of the regulatory changes focused on making sure that the sales process of insurance products are done in a compliant way. For example, they're now requiring that all conversations or all interactions of customers could be tracked and could be provided to the client on a required basis. To that effect, we are very proud to say that we have already online a system that would be able to achieve this this requirement so that clients can request for any records of conversations they have with a consultant. To the other point on the regulatory changes, for example, they are now requesting or setting some certain requirements for insurance companies itself to meet in order that they can provide insurance products online. For example, core solvency ratios requirements, credit rating requirements for consecutive quarters, And these requirements or these new measures will come into effect in the new year, next year. And I think that the regulators have given adequate time for the industry participants both on the insurance company side as well as the insurance brokerages like ourselves to adapt to the new changes. And for the insurance companies, I think that they were very likely to undertake measures to strengthen the capital basis, strengthen the balance sheets in advance for these new measures to come into effect. So overall, I think that the industry is coping with the changes. And I think as one of the leading players in the market, we are very well positioned to manage these changes. I think that's the answer to the second question.

Okay, thank you.

Your next question comes from the line of Joey Yang of CLSA. Please ask your question.

Hi.

Can you hear me? First of all, thank you very much to the management for giving me this opportunity to ask questions. Congratulations to the management for the results in 2020, especially in the fourth quarter. Very good performance. I have three small questions here that I would like to ask. First of all, on the selection of our sales products, President Tan just mentioned that Darwin 5 is online today. I also noticed this product. At the same time, we also noticed that we are actually selling some common products on the market, which are products that are also sold on other platforms. I would like to ask the management level what is the balance between their custom products and ordinary products? Which product can bring us better revenue? And will the management level have a bias? So my first question is about the products. So we understood that Darwin's number five officially launched today. And we also understood that Huize is an open platform that sells lots of products that are not customized. So could management help us understand the difference between the two kinds of products? Which one could offer us a better profit margin? And is there a preference between the two types of products? Then the second question, I would like to ask the management level, if we use brokerage income as a insurance fee, then note that in fact the fourth quarter has a slight decline compared to the previous quarter. I calculate that the take rate of the fourth quarter is about 37%. Then I want to ask what caused this, because we also saw that the first year premium actually increased the proportion. So my second question is about the take rate in 4Q. We noticed that there was a slight decrease in 4Q compared with previous quarters. And at the same time, we also see that the structure of the premium, the first year premium actually accounted for like 60% of the 4Q premium. So I was wondering what's the driver of the decreasing take rate in 4Q? Is it because of selling of more short-term insurance products? in core cities such as Shanghai and Shenzhen, to build offline services and offline service centers for high-end customers. I would like to ask how the situation is going now. And when we hire people offline, what policies do we have to ensure that the best talent can come to our company? And my last question is related to the offline services centers as Mr. Ma has mentioned. I would like to ask about the latest progress of this offline services development and also about what's the selling point or what's our to attract the talented, the talent employee to our offline services centers.

Hey, thank you, Joey. Thanks for following us and for your questions. Why don't I take the questions on behalf of the team again? So the first question is really about the product mix of our GWP and whether we have any preference towards customized or co-developed products versus the standard products that we can take off the shelf like other brokers. I think the clear answer here is that first of all, I think that we always come from the customer's perspective first. which product is the best suitable product for their circumstances. And I think typically when users come to our platform, they're being attracted by the very good value for money, critical illness products that we are co-developing with our insurance company partners. And therefore, the answer to this question naturally would be that we have a slight preference towards the customized or co-developed products that we co-manufacture with like Sinatay and the likes of Boson UnitedHealth. because oftentimes these products represent the best saleable money products currently available at any given point in time in the marketplace. And so naturally, customers would prefer to inquire about these products. And I think from our perspective as a corporate, we do prefer co-developed products given that we would be able to cultivate and deepen our relationships with our upstream insurance partners, deeply engage with them, and therefore lead to better economic arrangements for us down the road. For example, Darwin number five is the second time that we have worked with CineTay and therefore we will be looking to receive better treatment from the insurance company partners. And I think also the way that we can demonstrate to the overall industry as to our high persistencies will give a lot of comfort to our insurance partners to partner up with us in future versions of the products. So therefore I think that's the nobody answered the first question. And the second question regarding the take rate, I think the explanation to this is really the particular product mix as it pertains to first year premiums in the fourth quarter. I think in the fourth quarter we have done 21% of our first year premium in annuities. And we also additionally achieved 16% of our first year premiums in whole life insurance. This is an entirely new product segment that we've entered in the fourth quarter. And so combined, that is 37% of the first year premiums in the quarter. And typically, as I think the market and investors have come to understand, annuities typically carry the lower commission rate for the first year premium compared to the likes of critical illness or long-term life. And therefore, it's really the product mix being a bit slanted towards annuities in the fourth quarter. In the fourth quarter, in the Chinese New Year period in the industry, there is the so-called Kaimeng Hong, which is a phenomenon in China, and both insurance companies pushed you know, savings-related insurance products during the time. And therefore, as a brokerage company in a core, we're naturally also aligned with the market development in that respect. And therefore, there's a higher contribution for minority and savings-related products in the fourth quarter, leading to a slightly lower, you know, overtake rate. So it's a product mix factor coming into play. So for the third question regarding the plan for going offline, I think, you know, I can make a few remarks here, and maybe the team would like to to add on to this. I think the plan for us is to really go out in offline presence in this new year. Last year, we mentioned about this, but then due to COVID, we were pulling back the plans. But this year, given how we are seeing strong momentum for the last two quarters going into the new year, I think we're much more confident in pushing this initiative. And then a few factors I'd like to point out here. One is that the offline presence will enable us to have better interaction and better engagement with our existing user base. We have 6.8 million users right now, and obviously we have proprietary in-house data to these users. And if we can just achieve the top 10% of this user base and then rank those in terms of our data, we can really have a list of high value customers to approach. And with these offline service centers, we are able to reach out to these customers. In the first phase, I think we were very focused on the first key cities and for the first phase of the initiative, I think we're looking at Shanghai and Shenzhen and probably hiring less than 100 people to really speed up this new initiative. And I think for the hiring side of things, we are looking to attract professional talent from the marketplace. I think the value proposition that Crazy can provide to these consultants would be that, one, they can leverage on our online business leads to be routed to their respective offline centers, and therefore they can make use of this list to capture new customers. And also they can leverage on our internal user database, as I just mentioned earlier, to cultivate repeat purchases or increasing lifetime values for the platform. And so we're expecting these new consultants to be delivering high-value products to our customers and more differential services as well.

Thank you, Mr. Tan. Very clear.

Thanks, Joey.

Your next question comes from the line of Brian Lee of AMTD Group. Please ask your question.

Hi, Mr. Tan. Thank you for giving me the opportunity to ask this question. I'm Brian, TMT analyst at AMTD Group. I also congratulate the company for achieving an outstanding performance. I have a simple question about finance. I see that on this account payable, it increased by 100 million at the end of this year compared to the end of last year. I want to ask, of course, this is a better improvement for the company's cash flow. So I want to ask, what is the reason for this change? I will briefly translate it. I have noticed that you just add 100 million on the account payable on your balance sheets. So could you please give more color on this item? Thanks.

Sure. Thanks, Brian, and thanks for joining the call today. I think the simple answer to this is the strong month of December that we have experienced as a business. And therefore, a lot of the, you know, the business has generated this account payable balance at the end of the year. So it really has to do with the short month of December from a business perspective.

Your next question comes from the line of Jan Lee of Huatai Securities. Please ask your question.

So my first question is about the M&A mentioned by Mr. Ma just now. This year, your company are going to acquire more M&A deals, and my question about what's a potential target. So my second question is still about the offline service center. So what are the main functions of those offline service centers? So thank you.

Okay, thank you. It's Ron here. Let me take the first question and maybe for the second question, Ma Dong or Jiang Long can answer. Okay, so first question about the M&A targets. I think we are prioritizing our investment targets I think in three major brackets. I think the first major bracket will be possibly some of the existing channel partners that we are working with for the past three years. I think some of those could be interesting collaborations from a capital perspective for us to better integrate into these distribution marketing channels. So that's one area. The second area is similar online or even offline brokerages. This will be very synergistic to our core business. For online, our focus would be a horizontal expansion for us and then to capture market share. For offline, it would be a complementary business strategy to our online business so that we can accelerate the achievement of an online to offline business model. So I think those two could be the key focus for us. And the third area could be other insurtech platforms, platforms that have innovative technologies in the business processes, whether it be the front end, you know, in terms of AI customer service, or the middle to back end where they have very strong technologies in terms of customer service and, you know, online support, and also underwriting and claims processing and so forth. So I think this will be the major M&A target areas for us to be looking at.

This is the second question. Then for us in the offline customer center, we have designed several solutions for operation. Logically speaking, we want to rely on the current advanced digitalized system to be able to reach users more efficiently and more deeply, especially among our more than 6 million users. We have analyzed that among this group of users, there is a group of extremely high potential, high value users. As for our strategy, due to the fact that we are in the process of testing, it is inconvenient for us to release too many strategies here. Please look forward to it. We believe that these new network points will give us future performance, especially for us, Okay, thank you.

Thank you. That's Mr. Ma commenting on the second question and I'd like to translate here for the team. So the second question relating to the key strategy for the offline centers plan that we just mentioned. I think that we are echoing the points that we have made earlier. I think we are really trying to leverage on the core online platform that Hojai has built over the last 15 years to more efficiently serve differentiated high value customers who are existing users of Hojai. Because given we have the internal data on all our customers, we are able to extract a segment of the high value customers for us to initially focus at serving higher value products to this customer segment. And given that we're still in the initial testing phase or wording up phase of this business plan, I think that we would like the market to give us time and we will be keeping the investor base updated in our subsequent course as to the progress of this new offline business plan. Operator, may you take the call again.

Once again, if you wish to ask a question, please press par 1 on your telephone feedback. Your next question comes from the line of C.C. Wang of Independence Investment. Please ask your question.

Hello, can you hear me? Hello. Yes. Okay, thank you. We understand that Huize leverages self-media to tap into new users and meeting customers, but it seems that Huize, the brand itself, As an online insurance aggregator, it's not well known to end users to now. Do you have any plans to enhance the brand agreements to a household name? My second question is, because we are listed overseas, even with such a bright future, it seems that it is not enough to attract overseas investors. Although we had a good rebound before the recent downturn, but it seems that there is still not enough attention in the past year. For example, compared to an American company, Lemonade, which has a revenue of about $60,000 in 2019, but their market value is up to $5 billion. On the other hand, we have a So Huize has achieved a record high financial performance, and although there was a surge of price before the recent downturn, I think that Huize is still a low profile to overseas investors. For example, comparing to a U.S. company, Lemonade, a similar insurance tech company that has only 60K revenue, its market cap is already like 50 billion. Does WHOISA have any plan to raise investors' awareness and exposure to adjust their cap estimation? Thank you.

Thank you. It's Ron here. I'll take these questions for the team. And for the first question on our overall brand recognition in the market, I think we have been around for 15 years. And I think that the proud thing that we like to say about our company is that we are built on very limited capital support over the years before the IPO. On a very stringent budget, we have been able to build up this platform to where it is today. and we have been very stringy on spending on our brand advertising or marketing in the consumer space. Therefore, I think that the business model that we have devised and the way that we can leverage on social media channels as our partners has really scaled the business to where it is today and has enabled us to achieve ultimately a listing in the U.S. market. I think itself is a very big achievement. Obviously, there's still a lot of work to be done and we recognize that we can do a lot more on the branding side. In the new year of 2021, I think we are now earmarking more and more funds in terms of really building up a bigger brand presence in the consumer market as well as the capital markets. That's the first question. For the second question, I think that the reason why I guess we have been a bit under the radar over the last year has a couple of external factors at play as well. I think when we were listed, we were very much hit by the unfortunate timing of COVID-19 at its outbreak, and we were actually the first Chinese IPO to get done after COVID broke out in January of last year. And subsequently, various things have happened as well. For example, the scandals surrounding Luckin Coffee in the U.S. market has led to a confidence crisis in the overall smaller cap names, on Chinese ADRs in the U.S. And then the ongoing U.S.-China trade friction has also led to a slightly depressed market sentiment towards Chinese stocks. But then you have seen that in the last one to two months, you can see that liquidity of the stock of a company has improved significantly. And I think we have to thank the overall market for recognizing the work that we have been doing at the company and the financial performance has also been leading to more and more investors being on board with our story, I guess. And we have also been doing a lot of investor outreach work over the last six to eight months. And we are in constant investor dialogue with very prominent and reputable institutional investors in the marketplace. So I think that the overall recognition in the capital markets have been improving, and we will be doing a lot more in this coming year in terms of investor relations, investor outreach, and hopefully we can bring this stock to a higher level and also to create much better liquidity for the investors.

Thank you.

As there are no further questions at this time, I'd like to hand the conference back to our management for closing remarks.

Okay, thank you very much everyone for joining this call and appreciate the strong participation. And we look forward to the next call for the second quarter, first quarter of 2021. Thank you very much.

Thank you for joining us today. Thank you.

Thank you.

Ladies and gentlemen, this concludes our conference for today. Thank you for participating. You may now all disconnect.