Yuanbao Inc.

Ladies and gentlemen, good day and welcome to Yuanbao Inc's fourth quarter and fiscal year 2025 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Stella Liu, investor relations and strategy associate director. Please go ahead.

Thank you, operator. Please note that today's discussion will contain forelooking statements. made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion. A general discussion of the risk factors that could affect Yuanbao's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, Please see the earnings release issued earlier today. Joining us today on the call from Yuanbao's senior management are Mr. Ray Fang, our chairman and chief executive officer, and Mr. Ray Wan, our chief financial officer. Mr. Fang will deliver his remarks in Chinese, followed by an English translation. All figures will be in RMB unless otherwise noted. We will conclude the call with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yuanbao's investor relations website. I will now turn the call over to our Chairman and CEO, Mr. Fang. Please go ahead, sir.

大家好,欢迎参加元宝2025年第四季度及全年财报电话会。 2025年四季度,我们以强劲的业绩表现为全年划上了圆满的句号,也为未来的稳健增长奠定了基础。 The total revenue of the quarter is RMB 11.75 billion, which is 32.2%. The net profit is RMB 3.37 billion, which is 15.4%. The net profit rate is 28.7%. So far, Yuanbao has achieved profit in 14 consecutive quarters. In the whole year, the company's total revenue is RMB 3.73 billion, with 33.1% growth. The net profit of RMB is 3.08 billion yuan, with 51% growth. The net profit rate increased by 3.5% last year, reaching 29.9%. This significant growth has fully verified the sustainability of our business model, as well as our success in scale operation and detailed management. By the end of the year, Hello everyone, thank you for joining us today for our first quarter and full year 2025 earnings conference call.

We concluded the year with strong performance in the fourth quarter of 2025, laying a solid foundation for sustained growth going forward. Our total revenues for the quarter reached $1.18 billion, reflecting a year-over-year increase of 32.2%. Net income was $337.4 million, up 15.4% year-over-year, with a net margin of 28.7%. With this performance, we achieved profitability for 14 consecutive quarters. For the full year, total revenues reached $4.37 billion, representing a year-over-year increase of 33.1%. Net income was $1.31 billion, up 51% year-over-year, with net margin improving by 3.5 percentage points to 29.9%. This strong growth further validates the sustainability of our business model and underscores the success of our skilled operations and disciplined management. As of the end of 2025, we held $4.04 billion in cash reserves, providing a solid financial foundation to support continued investments in model and big data capabilities, as well as for the continuous expansion of our business.

In terms of operation, we also achieved significant progress. In the fourth quarter, the number of new insurances was 7.9 million, which increased by 34.5%. The number of new insurances reached 3,066,000 points, with a growth of 36.7%. This growth is due to our continuous strengthening of AI capabilities. By the end of the year, the number of AI teams has reached more than 10% of the total number of employees in the company. Our scale network has more than 4,900 models, and we are analyzing more than 5,700 features. Through the continuous delivery of models and the continuous accumulation of business data scale, From an operational perspective, we also made significant progress.

In the fourth quarter, the number of new policies increased by 34.5% year-over-year to approximately 7.9 million. For the full year, new policies reached approximately 30.7 million, representing a year-over-year increase of 36.7%. This growth was supported by the continued strengthening of our AI capabilities. As of the end of the year, our AI team accounted for over 10% of our total workforce. Our model network included more than 4,900 models capable of analyzing over 5,700 labels. Through continuous model iteration and the ongoing accumulation of business data, we are able to understand and serve a vast user base with greater efficiency and precision, supporting an industry-leading intelligence service ecosystem.

当前,三叶健康鞋行业迈入高质量发展的新阶段。 从国家金融监管总局为健康保险锚定高质量发展方向, to the first edition of the National Health Service and Human Resources Department's joint release of the three health innovation drugs, and then to the recent government work report in 2026, it clearly proposed a comprehensive multi-layered medical insurance system, emphasizing the acceleration of the development of commercial health insurance. This series of policies opened up a wide space for the development of the industry. At the same time, in 2026, which is the year of the opening of 1555, the government work report proposed The commercial health insurance industry is now entering a new phase of high-quality development.

A series of supportive policies have created substantial growth opportunities for the sector, from the National Financial Regulatory Administration setting the strategic direction for high-quality development in health insurance to the joint release of the inaugural Commercial Insurance Innovative Drug Catalog by the National Healthcare Security Administration and the Ministry of Human Resources and Social Security. Moreover, the recent 2026 Government Work Report explicitly called for improving the multi-tiered healthcare security system and accelerating the development of commercial health insurance. Meanwhile, as the 15-5 year plan period begins, the government work report proposed to deepen and expand the AI Plus strategy, promoting the commercialized and large-scale applications of AI in key industries and sectors. AI is fundamentally reshaping the service models and operational efficiency of the insurance industry from the ground up. Technological capabilities have become a key differentiator in industry competition, providing strong momentum for high-quality development.

在监管持续引导行业回归保障本源, 服务实体经济和民生保障的背景下, 我们既通过科技能力以更低成本 more efficient, reach a wider audience, and realize the universal service. And with professional services, we provide affordable and affordable insurance, realizing the universal insurance ecosystem. We rely on the natural AI model, network, and big data capabilities. In product customization, the key part of the proposal recommendation, compensation, and service, we realized the smart operation, and continued to increase the demand, survey, and service efficiency.

As regulators continue to guide the industry to return to its core focus on protection and better serve the real economy and people's livelihood needs, we are leveraging our technology to reach a broader population at lower cost and with higher efficiency, advancing the accessibility of insurance. At the same time, our professional services enable us to provide tailored and affordable protection solutions, bringing the inclusive insurance ecosystem fully into practice. Leveraging our proprietary AI model network and big data capabilities, we have implemented intelligent operations across key areas such as product customization, insurance plan recommendations, claims processing, and service. This enables us to continuously enhance our understanding of user demand and improve service efficiency, reach populations that were previously underserved, and promote broader inclusivity and accessibility of the insurance protection.

This quarter, we continue to advance the upgrade and unification of large-model platforms. AI capabilities have matured over the past few days and have entered the scale-up application stage. Through industry language, enhanced training, and integration with the knowledge base, The model continues to improve performance in insurance professional questions, multi-person dialogue, and payment analysis scenarios. At the same time, we have improved the unified model service and multi-model travel mechanism, effectively improved system stability and exposure efficiency, and reduced the cost of AI application development on the business side. Currently, the large model platform has stabilized support for pre-service, post-service, and service self-discipline and other core scenarios.

In the fourth quarter, we continue to advance the upgrade and unified development of our large language model platform. Our AI capabilities are becoming increasingly mature and have entered a stage of large-scale deployment through domain-specific augmented training and knowledge-based integration. Model performance has continued to improve in scenarios such as insurance domain Q&A, multi-tier dialogue, and policy interpretation. Additionally, we further refined our unified model serving architecture and multi-modal routing mechanism, effectively enhancing system stability and integration efficiency while reducing the cost of AI application development on the business side. Our large language model platform now reliably supports key scenarios, including pre-sales consultation, post-sales service, and service quality inspection. Model usage has continued to grow steadily. Further strengthening is foundational support for our business.

与此同时,我们加快保险智能体在售前、客服、理赔辅助等场景的应用落地。 业务覆盖范围持续扩大。 The smart body has been widely used in product explanation, proposal recommendation, customer service analysis, and practice support and response. This has helped to improve the stability of service efficiency and service quality. The multi-modal capability has been divided into the collection of information, which has greatly improved the efficiency of processing. In addition, the company is continuously improving the ability of the framework and knowledge warehouse to improve the level of complex task processing, and to promote the overall use of

At the same time, we accelerated the deployment of insurance agents across scenarios such as pre-sales, customer service, and claims assistance, with adoption across our business continuing to expand. These agents are now widely used in areas such as product explanations, insurance plan recommendations, customer service quality inspection, and agent-assisted responses. significantly improving service efficiency and quality consistency. Our multimodal capabilities have also been applied in claims document classification and information extraction, substantially improving processing efficiency. Furthermore, we are continuously strengthening our insurance vertical agent framework and knowledge base capabilities, enhancing agents' ability to handle complex tasks and driving steady growth in both model usage and business penetration.

The improvement of technical capabilities is the most important value for users to be aware of. In terms of products, we continue to deploy, cover, and improve medical insurance, intensive care insurance, accident insurance, and other types of insurance products. We continue to upgrade the range of insurance, and provide sufficient insurance for general prices. Among them, we have introduced innovative products in terms of medical insurance and intensive care insurance, which are also recognized by the market. to accurately meet the difference in security needs of different user groups. Our product strategy is always focused on the two major dimensions of the pool. In terms of the pool, we rely on AI technology to achieve accurate access. Based on thousands of network models, we recommend the individualization of product service to connect users and security needs at a lower cost and higher efficiency, to significantly improve the reliability of insurance. We have always been around the needs of different groups of people to continue to innovate. For women, new citizens, and sick groups, and other specific groups, we have innovated and developed new decorative products to expand the scope of the protection, so that the protection can be covered to more people who have not been effectively served.

Technological advancements ultimately need to translate into tangible value for our users. On the product side, we continue to expand and refine our insurance product matrix, covering a wide range of offerings, including medical insurance, critical illness insurance, and accident insurance. We also continued to upgrade the scope of our coverage, leveraging affordable pricing to deliver adequate protection. Among these offerings, the innovative products we have launched in medical insurance and critical insurance have been well received by the market, effectively addressing the diverse protection needs of different user segments. Our product strategy has always focused on two key dimensions, accessibility and affordability. In terms of accessibility, we leveraged AI technology to enable precise user targeting. Supported by a network of thousands of models, we delivered personalized product and service recommendations, effectively connecting users with their protection needs at lower cost and higher efficiency, significantly improving the accessibility of insurance. We continued to innovate to meet the protection needs of different populations, developing dedicated products for specific user segments, such as women, new urban residents, and individuals with pre-existing conditions. These efforts allowed us to expand coverage and reach more users who were previously difficult for us to serve effectively.

In terms of the meeting, we continue to upgrade the responsibility of guaranteeing and focus on creating products such as zero-face compensation and million medical insurance in order to increase the actual compensation experience to ensure the high cost of guaranteeing. At the end of last year, after the country released the first version of the Sanbao innovation drug list, we jointly and quickly expanded the drug coverage range of the super medical insurance million medical insurance product series. In terms of affordability, we continue to upgrade coverage benefits, launching products such as our zero-deductible million RMB medical insurance plan to deliver a strong value

proposition and enhanced claims experience. At the end of last year, following the release of the inaugural National Commercial Insurance Innovative Drug Catalog, we partnered with insurers to quickly expand the drug coverage of our Super Medical Insurance, Indian R&B Medical Insurance product series, responding to public demand for access to advanced treatments and high-quality medications under the new policy cycle. The combined focus on accessibility and affordability forms the core approach we follow to ensure that ordinary people obtain insurance that is both accessible and affordable, and be satisfied with insurance claims.

2025 is the key year for China to move towards the starting point of AI. China's creative power is developing rapidly. Yuanbao, as a benchmark power in the field of insurance technology, Technology innovation, product service, and other dimensions have achieved solid progress. We have verified the sustainability of the business model through stable performance growth. The deep application of AI technology has built up the core competitive barrier. In the year 2015, the health insurance policy has been continuously released. The value of the technology is even more prominent, promoting the sale of general insurance to high-quality development. 2025 was a pivotal year as China moved towards an AI inflation point driven by strong momentum in science and technology innovation.

As a leading player in the insurtech sector, we made solid progress across technological innovation in our product and service offerings. Through steady business growth, we further validated the sustainability of our business model while building a strong competitive mode through the deep application of AI technologies. As China enters its 15th five-year plan period, supportive health insurance policies continue to gain traction while advanced in technology are playing an increasingly important role in driving the continued development of inclusive insurance. Looking ahead, we will remain committed to our mission of leveraging technology to promote inclusive insurance. We will continue to delve into cutting edge technology, cultivate new industry frontier, and further integrate large scale AI models with insurance scenarios, enabling agents to create value across more stages of the insurance value chain.

We believe that the value of technology is not only to improve efficiency and reduce costs, but also to truly understand and respond to the real security needs and risk scenarios of each user. Only by deepening technology into the industry and strengthening people's lives can we create sustainable commercial value and deep social value. Yanbaozhan always follows national policy and strategic orientation, using AI as the core engine

We believe the true value of technology lies not only in improving efficiency and reducing costs, but also generally understanding and responding to the real everyday protection needs and risk scenarios that users face. Only by deeply integrating technology into industry and embedding it in people's daily life can we create sustainable commercial value alongside meaningful social value. Looking ahead, we will continue to align closely with national policy priorities and strategic priorities, leveraging AI as our core engine to deepen our focus on inclusive insurance. We remain committed to leading the industry forward contributing to the development of multi-tiered health care security system, safeguarding public well-being, and supporting the advancement of the Health China Initiative. Now.

下面请我们的CFO来为大家介绍一下我们四季度及2025财年的财务表现。 谢谢各位。

Now, I'll turn the call over to our CFO, Ray Wang, to present our financial results for the fourth quarter and full year 2025. Thank you, everyone.

Thank you, Mr. Fong, and thank you, everyone, for joining today's earnings conference call. I will now provide an overview of our 2025 fourth quarter and full year financial results. Building on the past few quarters' momentum, we delivered a strong financial performance in the fourth quarter, Both served by an expanding user base, deeper AI integration across our operations, and a continued improvement in operational efficiency. We strengthened both our top and bottom lines during the quarter and further improved our cash generation capacity. Our total fourth quarter revenues reached $1.18 billion, representing a robust 32.2% year-over-year increase. This growth was primarily driven by significant increases in both our insurance distribution and system services business. Breaking out the revenue mix, revenues from insurance distribution services reached $401.1 million, a 35.1% year-over-year increase. This growth was primarily fueled by a higher number of policies purchased on our platform, underpinned by more precise consumer targeting and enhanced marketing capability. Revenues from system services totaled $774.1 million, up 31.1% year-over-year, This growth was driven by ongoing improvements to our AI integrated full consumer service cycle engine, which further enhanced our marketing solutions and precise analytics services for insurance carriers. In addition, the increase reflected an extended provision of system services to both existing and newly acquired insurance carrier partners. Turning to our expenses, Total operating costs and expenses increased by 30.2% year-over-year to $780.4 million. Operations and support expenses decreased by 13.7% year-over-year to $36.7 million, mainly due to our improved operating efficiency and effective cost control measures. Selling and marketing expenses rose by 47.7% year-over-year to $552.3 million as we continue to invest in our marketing capabilities to attract new consumers and retain existing ones. General administrative expenses decreased by 22.5% year-over-year to $79.6 million, primarily due to product-related bonuses accrued in the fourth quarter of 2024, with no similar accruals in 4Q and 25. R&D expenses grew by 39.1% year-over-year to $111.7 million, reflecting our intensified R&D effort and the expansion of our R&D team aimed at reinforcing our leadership as a technology-driven online insurance distributor. Our strong top-line growth and improved operational leverage drove continued profitability improvement. In the fourth quarter of 2025, net income increased by 15.4% year-over-year to $337.4 million, with net income margin remaining healthy at 28.7%. Non-GAAP-adjusted net income rose by 13.2%, to $354.5 million, with a non-GAAP income margin of 30.2%. Now I would like to briefly walk you through the highlights of our four-year results. For 2025, our total revenues increased by 33.1% year-over-year to $4.37 billion. Specifically, revenues from insurance distribution services reached $1.45 billion, up 33.8% year-over-year, while revenues from system services totaled $2.92 billion, growing by 33.2%. Moving to expenses, total operating costs and expenses increased by 25.2% year-over-year to 3.04 billion. Breaking this down, operations and support expenses remain largely stable at 167.5 million. Selling and marketing expenses rose by 23.9% year-over-year to 2.22 billion. G&A expenses increased by 20.2% year-over-year to 286.8 million. R&D expenses increased by 58% year-over-year to $365.1 million. In terms of profitability, net income increased by 51% year-over-year to $1.31 billion, with a net income margin of 29.9%. Non-GAAP adjusted net income rose by 48.6% to $1.3 billion, with a non-GAAP net income margin of 31.6%. Our cash position remains solid, reaching $4.04 billion at the end of the year, up 72.9% year-over-year and 7.7% from the end of third quarter. Operating cash flow inflow was $290.7 million for the fourth quarter and $1.5 billion in 2025. To conclude, our results for the fourth quarter of the full year of 2025 underscore the resilience and scalability of our business model. As we move forward, we will continue to focus on scaling operations, driving high-quality growth, enhancing operational efficiency, and maintaining a strong liquidity position. These priorities will empower us to invest with confidence to sustain our momentum in building long-term value for our shareholders. Thank you, and I would now like to open the call to Q&A. Operator, please go ahead.

Thank you. We will now begin the question and answer session. To ask a question, please press Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. We will now take our first question from the line of Amy Chen from Citi. Please ask your question. Amy, your line is now open.

Hi, this is Amy Chen from Citi and thank you for the opportunity to ask a question and congrats to the management on a robust set of four-year results. My question is firstly on the top line and bottom line growth guidance for the year of 2026. And we also noted that your selling and marketing efficiency actually improved quite a lot in the year of 2025 and we're wondering about the sustainability of such improvement. going on into 2026 and onwards. 简单翻译一下中文, 问题是想请教一下2026年我们收入和净利润增长的指引, 然后想请教一下未来营销效率提升的空间在哪里,谢谢。 多谢Amy, 对于2026年盈利指引, 我们目前没有给出明确的指引, 但是我们预计今年收入和利润可以保持健康的增长趋势,

In the context of competition in the industry, we have maintained and maintained the increase and maintenance of revenue growth and profit rate in the past 14 seasons, which has proven that the operational efficiency of the technical drive is constantly improving. It has formed a very effective, both large-scale expansion and a positive cycle of cost optimization, and a non-simple market return. We think that in the future,

We didn't give specific earnings guidance on 2026, but we expect to maintain our revenue and net profit growth momentum in 2026. Despite intensified industry competition, we have sustained both revenue growth and margins past 14 quarters, demonstrating ongoing improvements to our tech-driven operational efficiency This has created a self-reinforcing flywheel effect, will scale extension and cost optimization fuel each other, moving us beyond reliance on market talent.

We will now take our next question from the line of Yue Xu from China Securities. Please ask your question, Yue. Your line is now open.

Okay. Hello, everyone. Thank you for your question. My name is Yue Xu from China Securities. So regarding the dividend plans, do we have a specific plan or timeline for dividends in the coming year? And thank you for the question. Thank you for the chance of the question. We continue to continue to evaluate through diversified operations and capital market strategies, including wind and gold strategies, to achieve the maximum and best strategy of shareholder feedback. Of course, shareholder feedback is the core part of our long-term strategy. We are also steadily evaluating and advancing this process for long-term sustainable development. It is a key technology, but it has not yet given a clear shareholder feedback time frame.

We continue to evaluate the best strategies to maximize shareholder returns through various operational initiatives and capital markets opportunities, including potential dividend policies. Shareholder returns form a core pillar of our long-term strategy, and we are steadily advancing this process to support long-term sustainable development. And we didn't give a specific timeline on the dividend payout plans.

We will now take our next question from Thomas Wong of Goldman Sachs. Please go ahead, Thomas. Your line is now open.

Okay. My question is really on 2020's outlook on sales and also on marketing as well. Thank you, Thomas. We expect that as insurance products continue to innovate, consumers' needs will continue to grow in health. The value of user experience will also be significantly improved. This will help to gradually improve our overall user flow and promote the overall face of the industry. For 2026, we expect that on the basis of balance growth and profit,

We expect consumer demand to remain healthy as we continue to innovate and iterate insurance products, significantly enhancing user value and experience. This should help improve user retention and support stronger industry fundamentals. Looking ahead up to 2026, as we balance growth and profitability, We aim to maintain sales and marketing expenses as a percentage of revenue broadly stable with only a modest potential risk increase.

Thank you. We will now take our next question from Sintao Chen of CICC. Please go ahead. Sintao, your line is now open.

Good evening, Sintao. Thank you for giving me the opportunity to ask a question. First of all, I wish the company a good performance. 我想请教一下管理层,在四季度和2025年全年的增长当中,这个新用户和老用户的贡献分别是多少? 公司目前的这个保单的续约率大概是一个什么的水平? 未来公司应该打算如何去提高这个客户的留存率? 谢谢。 So my question is, in the fourth and fourth year 2025 growth, what's the contribution breakdown between new users and existing users? What's the company's current customer policy renewal rates? How do you plan to improve customer retention in the future? Thank you.

Thank you. As of this year, our customer assurance rate has not changed significantly compared to the previous year. However, our flow strategy mainly includes the following three aspects. First, product innovation. Continuous promotion of product innovation increases the sense of compensation rate and users. In the end, it helps consumers to better understand the value of commercial insurance. Second, user education. Through content marketing and the concept of transforming consumers, we lead them to see insurance as a cost transformation and to see it as a guarantee. Because short-term insurance usually belongs to timely consumption, it is very similar to social media and public traffic platforms. This brings us a natural transformation and efficiency advantage. The third is the trend of the industry. From a long-term trend, as the value of the product increases, the return rate will naturally rise. Although this may lead to We did not provide a detailed breakdown of user composition in our quarterly report.

However, given our continued significant investment in customer acquisition and the fact that inclusive health insurance remains an emerging and policy-supported growth market. The majority of our current users are still new users. Year to date, our customer renewal rates have not changed significantly compared with the prior fiscal year. Our retention strategy focused on three key areas. First, product innovation. We continue to drive product innovation to improve payout ratios and user value perception. ultimately helping consumers better recognize the value of commercial insurance. Second, user education. Through content-driven marketing, we aim to shift the consumer mindset from viewing insurance as just a cost to recognizing it as essential protection. As short-term insurance products resemble instant consumption purchases, they align perfectly with social media and public traffic platforms. which gives us a natural edge in conversion efficiency. Third, industry trends. Looking at the long-term trend as product value improves, client ratios will naturally trend upward. While this might lead to some commission pressure, it will be offset by higher retention rates. As a result, we expect user lifetime value to remain stable or potentially rise meaningfully.

Thank you. We will now take our next question from Xiaoyue Ding of CITIC Securities. Please go ahead, Xiaoyue, your line is now open.

Good evening, management. Congratulations on the strong performance of the company. Thank you, management, for accepting my question. I have a question about policy. I would like to ask about the recent two meetings. In the two meetings, it has been further proposed to accelerate the development of commercial health insurance. My question is the two sessions highlighted the importance of speeding up the development of commercial health insurance and implementing a long-term care insurance system. So from a policy perspective, what drivers can we expect in the future?

Thanks. Thank you for this question. We think this policy environment is a very direct example of the company. Mr. Fang mentioned it just now. First of all, we observed the core points of the report, including the promotion of commercial health insurance, innovation of drug routes, and the acceleration of the development of commercial health insurance, as well as encouraging the construction of a universal insurance system. This confirms that commercial health insurance is diversifying, and it emphasizes the importance of universal health insurance development based on the core formation status in the supply chain. At the end of last year, the first version of the commercial health insurance innovation drug route After the launch of the new policy, we have quickly expanded the scope of the drug coverage of the super health insurance million medical insurance product series. In the new policy, we accurately respond to the need of the public's need for advanced medical treatment and high quality drugs. In the policy, we also encourage general insurance system construction to support the care and assistance of people with disabilities and other difficult groups. We, Yuanbao, have always surrounded the needs of different groups of people, and continued to develop exclusive products for women, new people, pregnant women, and people with specific group innovations, to expand the scope of security and cover more people who have not been effectively served. These are all powerful catalysts that will push us to expand the coverage range of commercial insurance through online channels and continue to increase the value of consumers through product innovation. This policy serves as a direct and significant catalog for us.

As Mr. Fang also mentioned it earlier, First, the report highlights key initiatives such as launching the commercial insurance innovation drug catalog, accelerating the development of commercial health insurance, and encouraging the development of an inclusive insurance system. These priorities reaffirm the role of commercial insurance as the core component of China's diversified medical payment system and emphasize the importance of inclusive development. At the end of last year, following the release of the inaugural National Commercial Insurance Innovative Drug Catalog, we partnered with insurers to rapidly expand the drug coverage of our Super Medical Insurance, Million R&B Medical Insurance product series, responding to public demand for access to advanced treatments and high-quality medical medications under the new policy cycle. The policy also encourages the development of an inclusive insurance system and highlights support for vulnerable groups, such as individuals with disabilities or cognitive impairment. We consistently innovate to meet the protection needs of different populations, developing dedicated products for specific user segments, such as women, new urban residents, and individuals with pre-existing conditions. These efforts allowed us to expand coverage and reach more users who were previously underserved. These policy directions serve as strong catalysts for expanding the reach of commercial insurance through online channels, while continued product innovations enhance the value delivered to consumers. Our AI capabilities allows us to translate complex and involving policy shifts into the precise insurance finds its customer commercial logic. we are well positioned to convert this policy talent into a tangible long-term business growth.

Thank you. We will now take our next question from Yingying Xu from Zhejiang Securities. Please go ahead, Yingying. Your line is now open.

Thank you for giving me this opportunity to ask a question. I would like to ask the company to evaluate the current AI agent Could you assess the current development of AI agents and their impact on the company's business model? Do you foresee any potential threat to the company's competitive mode?

Thank you. Pretty hard one. We think the key is whether the use of the scene is true. Currently, insurance sales are mainly happening in the real-time consumption scene where users are leisurely and leisurely. And in the current AI agent's platform scene, the user mentality is to focus on seeking solutions. It is user search information, not consumption. What kind of short video content platform users are actively responding to? The transition logic and efficiency of the scene requires a careful thinking and verification. The core problem is whether users spend a lot of time in their daily lives on certain content platforms. Will they disappear, or will they turn these users' time into the delivery of the human body? From what we can see so far, in the environment of FDU and GU, or in the environment of FDU turning into GU, consumers are actively searching. As for the discovery environment based on passive mentality, there is still a big difference between information and media.

AI agents are definitely a promising direction, but the key questions lies in the specific usage scenarios. Most insurance sales today happen in instant consumption context, moments when users are engaged with leisure content. In contrast, on knowledge or Q&A platforms where AI agents typically operate, users are in an active problem-solving mindset rather than a consumption mindset and differs from content platforms where information is pushed to consumers. The core question is whether the content platforms where users currently spend a significant amount of their daily time will disappear or evolve into places where users spend time interacting with intelligent agents. We see a clear distinction between search-driven environments, such as SEO or GEO, where consumers are actively looking for answers and discovery-based environments where consumers' engagement tends to be more passive.

Thank you. We will now take our next question from Jitsun from Shenwang Hongyuan Securities. Please go ahead, Jitsun. Your line is now open. Good evening, everyone.

I'm Jitsun from Shenwang Hongyuan Securities. Thank you for taking my question. This is Jackie Sun from Shenwang Hongyuan Securities. Congratulations on the result of fiscal year 2025. I have one question for the management team. How do you perceive the impact of the ongoing wave of AI application iterations on the company's businesses?

Thank you. Thank you. the security knowledge system and product structure, so that AI can better understand the security products and user needs. The second is data accumulation. Through a large number of business data, we are constantly improving the depth, optimization, promotion, and service capabilities. The third is our intelligence capability. We are actively deploying the intelligence model, which will distinguish AI, that is, discriminative AI, and generate AI, that is, large-model AI, and deeply dive into customer service from sales advice AI will gradually develop from tool-based applications into intelligent service systems, such as AI insurance consultants and long-term customer risk management assistants. Yuanbao's future direction is to build an AI-driven insurance service platform, making AI an important gateway to connect users and insurance products.

Broadly speaking, AI in insurance is rapidly moving from the exploration phase to large-scale implementation in terms of large language models, with different types of institutions focusing on different areas. Yuanbao's core competitive edge in AI has been anchored by three key areas from day one. First is our deep vertical expertise. We have built a comprehensive insurance knowledge system and structured product capabilities which enable our AI to better understand both insurance products and user needs. Second is our data capabilities. We leverage massive amounts of business data and continuously iterate and optimize our user understanding and recommendation and service engines. Third is our agentic capabilities. We are actively deploying an agentic approach to embed both discriminative AI and generative AI across the entire lifecycle, from self-consulting to customer service. This includes applications such as intelligent insurance planning and AI-powered supported tools for our customer service team. Looking ahead, we believe insurance AI will evolve from tool-based applications into a full-cycle intelligent service ecosystem. taking on roles like AI insurance advisors and long-term customer risk management assistance. Yuanbao's strategic direction is to build an AI-driven insurance service platform, positioning AI as the primary gateway connecting users with insurance products.

Thank you. And that concludes the question and answer session. I'd like to turn the conference back to the management for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly or present a financial communication. Our contact information for IR in both China and the U.S. can be found in today's press release. Have a great day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.