Yuanbao Inc.

Ladies and gentlemen, good day and welcome to Yuanbao Inc's first quarter 2026 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 forelooking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures. For 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 Senior Management are Mr. Rui Fang, our Chairman and Chief Executive Officer, and Mr. Rui Wan, our Chief Financial Officer. Mr. Fang will deliver his remarks in Chinese, followed by an English translation. 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.

Hello, everyone. Welcome to Yuanbao's first quarter call of the first quarter of the year. In the first quarter of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year of the year In terms of scale expansion and profit margin, we have achieved a good development. This quarter, the total revenue of the company is RMB13.16 billion, which is 35.6% of the total profit. The net profit is RMB3.88 billion, which is 31.4% of the total profit. The net profit rate is 29.5%. This performance reflects that we are working on product innovation, product recommendation, Hello, everyone.

Thank you for joining us today for our first quarter 2026 earnings conference call. Please note that all figures will be in RMB unless otherwise noted. In the first quarter of 2026, we extended the solid growth trajectory we established last year while maintaining a healthy balance between business expansion and profitability quality. We generated total first quarter revenues of $1.32 billion, representing a year-over-year increase of 35.6%. Net income reached $388 million, up 31.4% year-over-year, with net income margin at 29.5%. This performance underscores our comprehensive strength in collaborating with insurers to drive product innovation, personalized recommendations, refined operations, claims service, and advanced AI integration. As of the end of the first quarter, our cash reserves totaled $4.74 billion providing a strong financial foundation for continued investment in technology, deeper application of AI and big data, and capturing structural opportunities within the industry.

與此同時,我們不斷加強數據和模型能力建設。 截至一季度末,公司模型矩陣已包含超過五千個模型, 可對超過五千八百個特徵進行分析,在需求洞察, The key role played in the optimization of the full chain of services such as product recommendation and compensation service In addition, with our abundant cash reserves and the continued strong business cash flow We are very happy to announce that the board has approved the annual cash share of $1.26 per ADS and the $15 million share repurchase plan We think Meanwhile, we continue to strengthen our data and modeling capabilities.

As of quarter end, our model matrix comprises more than 5,000 models capable of analyzing over 5,800 labels. playing a critical role in end-to-end service optimization across demand identification, product recommendations, and claims service. In addition, supported by our robust cash position and sustained robust operating cash flow, we are pleased to announce that our Board of Directors has approved an annual cash dividend of US$1.26 per ADS together with a US$15 million share repurchase program. We believe this action underscores the strength of our financial foundation and reflects our ongoing commitment to enhancing shareholder returns as we steadily grow the long-term value of our company.

Currently, the insurance industry is moving towards a high-quality development stage with structural optimization, value optimization, and ecological integration as the core. Requirements are changing rapidly. The consumer risk insurance policy continues to be strengthened, and the configuration action is more proactive. At the same time, with the rapid promotion of the multi-level medical insurance system in the country, commercial health insurance continues to improve its role in medical health, innovation medicine support, and family risk management. The large industry environment continues to improve, not only broadening the growth space of the industry, but also creating a stronger external environment for commercial health insurance, which is also focused on health insurance.

The insurance industry is entering a new phase of high-quality development, characterized by structural optimization, value-driven efficiency enhancement, and ecosystem integration. At the same time, the demand side is undergoing a fundamental shift. Consumers' awareness of risk protection continues to strengthen, and insurance purchasing behavior is becoming increasingly proactive. Meanwhile, the accelerated development of China's multi-tier healthcare protection system is expanding the role of commercial health insurance across healthcare services, innovative drug payment solutions, and family risk management. The overall industry environment continues to improve, expanding the industry's long-term growth potential and creating more favorable external conditions for the commercial health insurance market. on which Yuanbao is focused.

At the same time, the supply chain is also in the process of market change. Accelerating supply chain upgrade in the field of health insurance is an example. With the full coverage of DRG and DIP payment methods, innovative medical and innovative medicine security needs are continuously released. The range of mobile medical insurance is constantly expanding and upgrading, increasing the coverage of advanced medical projects. In addition, insurance and services The supply side of the industry is also keeping pace with market dynamics, accelerating iteration and upgrades to better meet evolving consumer demand.

For example, in the health insurance sector, The nationwide rollout of DRG-DIP payment systems has significantly increased demand for coverage related to innovative medical treatments and drugs, driving continued expansion and upgrading of medical insurance product coverage and border protection for advanced medical treatments. In addition, the insurance plus services ecosystem model is becoming an increasingly mainstream industry trend. insurance products are now being more deeply integrated with wider ecosystems, such as health management, rehabilitation, and convalescent services. As a result, industry competition is evolving from pure product supply capabilities to a broader context of ecosystem integration.

In this context, Yuanbao has always focused on products and services as the core, and is building a long-term development foundation. In terms of products, Yuanbao and Baoshi continue to carry out the supply of products, tightly covering the population of people with diseases, new citizens, etc. In the first place, we fully included in the product the new trend of Sanbao innovation drug, following the policy of the industry, to meet the needs of the general public for prevention and treatment and the protection of high-quality drugs. At the service end, Yuanbao is deeply involved in the whole process of liquefying with its technological ability, and is good at self-sufficiency liquefying, with the help of Yuanbao Co., Ltd. to make preliminary assessments on small and low-risk cases, and rely on the self-proclaimed li-pay review system. Through the technology of automatic verification of li-pay materials and automatic calculation of li-pay amounts, we effectively improve the efficiency of insurance companies' li-pay, optimize user li-pay experience, and significantly improve the timely response of small and low-risk li-pays.

Against this backdrop, we have consistently placed products and services at the center of our long-term development strategy. On the product side, we continue to work closely with insurance carriers to enhance and iterate our inclusive insurance offerings with a focus on addressing the needs of specialized customer segments, including individuals with pre-existing conditions and new urban residents. We acted swiftly to fully integrate the commercial insurance innovative drug catalog into our product offerings, keeping pace with emerging policy trends and broadening public access to advanced therapies and high quality medications. On the service side, we have integrated our technological capabilities throughout the claims process with the launch of our intelligent claims assistance feature. which assists partner insurers in conducting preliminary reviews of low-value, low-risk claims. Our proprietary claims review system automatically verifies claims documents and calculates claims amounts, improving insurers' claims processing efficiency, enhancing the overall user claims experience, and significantly shortening response times for small-value claims.

In the process of the industry, the role of Internet insurance has also changed fundamentally. It is no longer just an online extension of traditional sales channels, but has evolved into an industry-based facility. Through data and technology to connect the needs of its users, products, levels and service capabilities, it has become a key principle of driving the promotion and efficiency of the insurance industry. Especially in the health insurance and insurance insurance field, The product is diversified in terms of terms, responsibilities, security, rules, and payment procedures. The consumer is more inclined to use the online channel to obtain information, compare, plan, and use AI tools to assist in understanding and choosing. The core of industry competition is from the flow of acquisition and product sales, gradually turning to AI technology capabilities, professional service capabilities, and long-term user-reliability. Amid this industry evolution, the role of internet insurance has undergone a fundamental transformation

It is no longer merely an online extension of traditional insurance distribution channels. Instead, it has evolved into industry infrastructure by leveraging data and technology to connect user demand, insurance product, supply, and service capabilities. It has become a pivotal force driving business model upgrades and reshaping industry efficiency. This shift is particularly evident in the health insurance and inclusive protection segments, where product offerings have grown increasingly diverse, while policy terms, coverage benefits, underwriting rules, and claims processes have become more specialized and comprehensive. Consumers increasingly prefer to obtain information and compare solutions online, leveraging AI-powered tools to better understand and select insurance products. As a result, the industry's competitive focus is gradually shifting away from pure traffic acquisition and product sales towards the comprehensive development of AI capabilities, professional service expertise, and long-term user trust. Against this backdrop, Yuanbao has prioritized the development of integrated AI capabilities as a core strategic initiative for organizational upgrading. Our AI insurance large language model has now been deployed at scale and is deeply integrated into our core business operations, delivering meaningful improvements in both operational efficiency and user experience.

在AI技术应用方面,我们构建了基于多智能体协同的智能服务体系,面向消费者推出了智能化保险咨询与规划应用。 In terms of AI applications,

We have developed an AI-powered service system based on multi-agent collaboration and launched an intelligent insurance consultation and planning tool for consumers. The system focuses on key stages of the insurance decision-making process, offering functions such as interpretation of product coverage and benefits, underwriting eligibility assessment for users with pre-existing medical conditions, insurance planning suggestions, and policy explanation and comparison. Through multi-tiered conversations, the system continuously refines user profiles to deliver personalized insurance consultation and planning services.

技术上,公司以保险专业知识库与领域模型能力为核心, 构建覆盖产品条款、核保规则及服务流程的结构化知识体系。 Currently, the company's knowledge library has covered thousands of insurance products and terms and conditions, and embedded professional knowledge data that covers the insurance, medical, and service processes. The data is listed in millions or more. At the same time, the model training and optimization of the insurance scene, the improvement of the understanding ability of complicated language, health status description, and protection rules, From a tech standpoint, we have built a structured knowledge system centered on a insurance

expertise, knowledge base, and domain-specific modeling capabilities, covering product clauses, underwriting rules, and service workflows. The knowledge base currently encompasses thousands of insurance products and their policy details with millions of accumulated professional knowledge, data, interest, spending, insurance, health care, and service processes. training, and optimization tailored to insurance scenarios. The system consistently enhances its own understanding of complex semantics, health condition descriptions, and policy rules. Architecturally, a multi-agent collaborative mechanism enables modular execution of tasks, such as requirement comprehension, information completion, knowledge retrieval, and solution generation. improving response quality and stability across complex consultation scenarios.

業務效果方面, 上述能力有效提升了用戶對保險產品的理解程度與決策效率, 增強諮詢過程的專業性與信任感。 同時,通過將專業知識與服務能力的產品化沉澱, 持續提升消費者保險諮詢服務的標準化、 專業化與智能化水平。 On the upgrade of organizational capabilities, the company will integrate AI ability construction as the core strategy, and drive AI Agents in the company's full-scale process of scale deployment and deep deployment. Accelerate from tool-based AI to organizationalized AI. Form a three-layer structure of base, skills, and scenarios. Support the fast assembly and stable operation of AI in complex business scenarios.

In terms of business outcomes, these capabilities have measurably enhanced users' understanding of insurance products, improved their decision-making efficiency, and strengthened the professionalism and trustworthiness of the consultation process. At the same time, by productizing professional knowledge and service capabilities, we continue to improve the level of standardization, professionalism, and intelligence in consumer-facing insurance consultation services. We have adopted integrated AI capability development as our core strategic organizational upgrade strategy, driving the large-scale deployment and deep integration of AI agents across all functions and processes, and accelerating the paradigm shift from tool-based AI to organization-wide AI. Our three-tier architecture of Platform plus skills plus scenarios enables rapid composition and reliable operation of AI agents across complex business scenarios.

最后,在行业影响力建设方面,今年5月, 元宝联合清华大学武道股金融学院中国保险与养老金融研究中心 连续第五年发布《2025年中国互联网保险消费者共产报告》。 to continue to track the behavior change in the eyes of Chinese Internet insurance consumers. This not only provides important reference for the industry, but also allows us to better grasp the consumer trend of offline, intelligent, and rationalization, and to refute these anomalies in the construction of product matching, AI service, and operating system, and further consolidate the leading position of Yuanbao in the Internet insurance field.

Before I conclude, I want to touch on industry influence and thought leadership. In May this year, Yuan Bao, together with the China Center for Insurance and Pension Finance Research at Tsinghua University PBC School of Finance, released the 2025 China Internet Insurance Consumer Insights Report for the fifth consecutive year. The report continues to track evolving consumer behavior and changing demand trends in China's internet insurance market. It serves as a valuable reference point for the industry, while allowing us to develop deeper insights into the ongoing shifts toward digitalization, intelligent services, and increasingly rational consumer decision-making. We incorporated those insights into our product matching capabilities, AI-powered services, and operational system development. reinforcing Yuanbao's leading position in the Internet insurance industry.

Looking forward to the future, in the context of the start of the 15-5 plan, the health strategy of China continues to fall to the ground, the comprehensive improvement of residents' health insurance awareness, the professionalization and individualization of insurance services, and the day-to-day need for full-time planning, the industry is accelerating its expansion from scale to high-quality development. This is based on the long-term commitment of Yuanbao's technology drive, users as the basis, and the new strategy direction of the general meeting. Facing the future, we will continue to surround the integration of AI ability construction, deepen the landing and application of AI Agents in the entire insurance service process, and continue to improve user demand survey, product recommendation, consulting services, and other capabilities, and realize the double upgrade of operating efficiency and user experience. to build a healthy and protected ecosystem for the whole life cycle, rely on stable financial basics, continuous profitability, deep data and large model technology accumulation, and long-term insight into the real needs of users. We are confident in the opportunity to grasp the industry structure, and continue to provide users with more professional, convenient and reliable insurance services.

Looking ahead against the backdrop of the launch of the 15th Five-Year Plan and the ongoing implementation of the Healthy China Strategy, public awareness of health protection is rising and the demand for more professional, personalized and full lifecycle insurance services is growing with it. The industry's accelerating transition from skill-driven expansion to high-quality development aligns closely with Yuanbao's long-standing strategic focus on technology-driven development, user centricity, and commitment to inclusive protection. Going forward, we remain focused on building integrated AI capabilities deploying AI agent deployment across the full insurance process. We will continue to enhance our ability to identify user needs, match users with suitable products, and deliver advisory services, thereby upgrading both operational efficiency and user experience. These efforts will lay a solid foundation for establishing a full lifecycle health and protection ecosystem. Supported by our solid financial foundation, sustained profitability, extensive data assets, and large model capabilities, as well as long-term insights into users' real needs, we are confident we can capture the industry's structural opportunities. We will continue to provide users with more professional, convenient, and trustworthy insurance services, generating long-term sustainable value for consumers, partners, and shareholders. while helping to strengthen China's multi-tiered medical protection system and safeguarding public well-being. Now, I'll turn the call over to our CFO, Ray Wang, to present our financial results for the first quarter of 2026. Thank you, everyone.

Thank you, Ms. Xiaofang. And thank you, everyone, for joining today's earnings conference call. I'm pleased to walk you through our first quarter 2026 financial results. We started the year with a strong all-around performance, marked by healthy double-digit top line growth, solid profitability, and a strengthened cash position. We also continued to make meaningful progress on integrating AI more deeply across our organization. Total revenues for the first quarter came in at $1.3 billion, a 35.6% year-over-year increase. This growth was broad-based with meaningful contributions from both insurance distribution system services. Looking at our revenue mix, insurance distribution services contributed $411.3 million, a 27.8% year-over-year increase. This reflected a higher volume of policies purchased through our platform, supported in part by our targeted marketing initiatives. System service revenues totaled $904.6 million, up 39.8% year-over-year. Growth year was led by continued refinements to our full consumer service cycle engine, which enabled us to deliver more effective marketing and customer-related services to our partnered insurance carriers. Deepened engagement with both existing partners and newly onboarded carriers also contributed to the increase. Turning to expenses, total operating expense costs for the quarter rose 29.1% year-over-year to $878.6 million. Operation and support expenses came in at $47.5 million, up a modest 6% year-over-year. Selling and marketing expenses increased 29.4% year-over-year to $638.2 million, reflecting our continued investment in consumer acquisition engagement. General admin expenses were $86.6 million, up 30% year-over-year, primarily driven by higher salaries. Research and development expenses rose 39.7% year-over-year to $106.3 million as we continue to grow our R&D headcount and broaden our technical capabilities, which remain core to differentiating our online insurance distribution platform. Before the operating line, income tax expense for the quarter was $69.4 million compared with $6.7 million a year ago, primarily driven by a higher effective tax rate during the quarter. Net income for the quarter was $387.6 million, a 31.4% year-over-year increase, with a net income margin of 29.5%. Non-GAAP adjusted net income reached $408.8 million, up 31% year-over-year, with a non-GAAP adjusted net income margin of 31.1%. Our cash position grew during the quarter. As of March 31, 2026, our cash and cash equivalents, time deposits, restricted cash, short-term investments, and long-term bank deposits totaled $4.74 billion, an increase of 71.4% year-over-year and 17.4% from year-end 2025. Net cash provided by operating activities in the quarter was $721.3 million, reflecting the underlying cash generation power of our business. This balance sheet strength provides us with ample flexibility to continue investing in our strategic priorities, including the build-out of our integrated AI capabilities. Our financial performance enabled us to invest in growth while also delivering on our commitment to long-term shareholder value. Let me now turn to how we are returning value to our shareholders. First, regarding the dividend, the Board has approved an annual cash dividend of US$1.26 per ADS or US$0.21 per ordinary share. The record date is set for a close of business on July 2, 2026. We expect to pay ordinary shareholders on or around July 21, 2026, and ADS holders on or around July 28, 2026. Please note that precise timing of receipts may vary based on the processing efficiency of the respective brokerages. Future dividends remain subject to the approval of our Board of Directors. Second, regarding the share repurchase program, the Board has authorized us to repurchase up to US $15 million of our ordinary shares in the form of ADS over a 12-month period. As Mr. Fong mentioned, this reflects our Board's confidence in our long-term growth prospects. We plan to fund these repurchases entirely from our existing cash balance. The Board will review this program periodically and may adjust, suspend, or discontinue it based on market conditions. To close, our first quarter results reinforce both the durability of our growth model and our ability to expand while maintaining financial discipline and strong profitability. This financial strength also supports both a cash dividend and a share repurchase program, underscoring our commitment to capital discipline and direct shareholder returns. Looking ahead, we will remain focused on driving high-quality revenue growth, unlocking further operating leverage, and delivering lasting 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 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 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 proceed to take our first question. And our first question comes from the line of Amy Chen of Citi. Please ask your question. Amy, your line is open.

Hi, this is Amy from Citi Research, and I would first like to congratulate the management on a quarter of their robust results. So my question is on marketing efficiency. So year to date in 2026, have you seen continuous improvement in marketing efficiency? And I would like to learn more about how AI deployment has enabled this, and in particular, in which phase, say, customer acquisition or conversion or post-sale services where AI helped the most. 我简单翻译一下就是想请教一下管理员2026年到现在是否有看到的那种营销效率有进一步的优化, 然后也想请教一下AI在其中的赋能具体是在哪一些环节,谢谢。

Thank you, Amy. In fact, in the context of the expansion of our business scale, our customer efficiency has always been very stable. This is mainly reflected in our sales and market promotion costs, and it continues to show a good business leverage effect. But from the perspective of AI, the entire customer model and the entire engine have always been driven by AI, so there has been no change in this aspect. or continue to use AI to do the entire supply and demand cycle. Although the size of the expansion is usually accompanied by the rise in the supply and demand cost, our technology drives the engine and improves its capabilities. This is part of the trend, which is why in the past 15 seasons, we have always maintained a relatively healthy energy consumption process.

Our customer acquisition efficiency has remained robust as our business scale has expanded as reflected in our sustained operating leverage in selling and marketing expenses. And our customer acquisition usually based on core engine, but we don't have any changes Now, while rising acquisition costs typically accompany business growth in this industry, our tech-driven engine and continuous improvements help offset this trend. Over the past 15 quarters, we have successfully controlled cost growth and stabilized margins amid intense competition. So from an AI perspective, our model has consistently being AI driven with no major changes.

Thank you. We will now take our next question from the line of Yue Xu from China Security Company. Please ask your question. Yue, your line is open.

Okay, so congratulations on another strong call, and my question regards on the marketing policy. We see some new rules from April 2026 banning using personal accounts to market financial products, including insurance products. So just wondering how much will this impact our customer acquisition model? I would like to thank the management for giving me the opportunity to ask this question. Congratulations to the company for achieving a strong performance in the first quarter of 2021. We noticed that in April of 2020, the management department released some new policies on financial products and online marketing. I would like to ask the management how they view this policy, and whether it will benefit or lose the impact of our stock market model.

Thank you. In fact, so far, the release of this management method has not caused any real impact on our customer model. This is because we have always insisted on compliance and have already established a perfect marketing behavior management system and equipped with a comprehensive compliance review process. On the other hand, our core business logic and deep cooperation with private insurance companies, all product terms are To date, the release of this regulation hasn't had any material impact on our user acquisition model.

First, prioritizing compliance, we have long established marketing management systems and mandatory compliance reviews. Furthermore, our core business model is built on deep collaboration with licensed issuers. All of our product terms are either filled with or approved by the regulators, ensuring ongoing compliance across our operations. We are also committed to maintaining long-term, proactive communication with regulatory authorities to ensure our corporate strategy remains aligned with the latest policy directions.

Thank you. We will now proceed to take our next question. And the question comes from Thomas Wong of Goldman Sachs. Please go ahead, Thomas. Your line is open.

Thank you, Ms. Wang. I would like to ask, we have seen a positive trend, and we have seen a lot of plans for the future. My question is on shareholder return. So it's good to see that we've got positive return profit and the dividend and the buyback. Can you just give us a little bit of follow-up on your thinking and how you think about shareholder return in the future?

Thank you. Thank you, Thomas. According to the disclosure of this quarter, we have already proposed two very core proposals. This is actually relatively consistent with our previous expectations and market communications. One is to implement an annual limited stock market of $1.26 per share of ADS, a total of 27 shares, and a total of $1500 million in stock return plans. This series of actions has fully realized our long-term confidence in the future of business scenarios and improved long-term corporate value. As Mr. Fang emphasized, this not only reflects the health of the company's financial year, but is also an important part of our capital configuration strategy. We also hope to ensure the future development of the company through this kind of return on capital, and continuously create sustainable returns for shareholders. Of course, for the shareholder return policy in 2026, we will make corresponding announcements.

As disclosed in today's first quarter results, our board has approved two core initiatives, an annual cash dividend of 1.26 US dollar per ADS and a share repurchase program of up to 15 million US dollar, which is aligned with what we communicated with the market before. This action fully demonstrated our long-term confidence in our business outlook and our firm commitment to enhancing long-term corporate value. As our chairman, Mr. Fang, emphasized, this reflects both our healthy financial fundamentals and a key component of our capital allocation strategy. Through shareholder return strategies, we aim to steadily create sustainable value for our shareholders while securing the complete future growth. And for 2026, we will review our shareholder return policies again.

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

Hi, management. This is Chen Tsingtao from CICC Research. Thank you very much for the opportunity to ask a question. And congratulations on the excellent result in the first quarter. So we noticed that the company recently co-published the 2025 China Online Insurance Customer Insights Report with Tsinghua University, which highlights the acceleration of online insurance distribution and points to AI as a key driver in consumers' purchase decisions. So could management add some color on whether the Company plan more strategies or scenarios around AI-empowered consumer decision-making to enhance consumer outreach and drive higher conversion. Thank you. 管理層晚上好。 首先非常感謝管理層給我提問的機會。 也祝福管理層再次取得非常優秀的業績。 那我們也關注到公司近期和清華大學聯合發布了 2025年中國互聯網保險消費者洞察報告。 其中也提到保險產品銷售的線上化在加速。 並且AI正在成為消費者構想決策的一個重要的助力。 I'd like to ask the management team, in this phase of the decision-making process, whether the company will have more specific strategies or landing scenarios in the future to strengthen the accuracy of the customer response and improve customer transformation?

Thank you. Thank you, Mr. Chen. We actually already have it. We have built a smart service system based on multi-intelligence systems and launched smart insurance consultation and planning applications to consumers. This system is deeply involved in the various phases of user decision-making. Provide from product terms analysis, lead and head insurance, assist judgment, to personalized plan planning and comparison full process service. Through multiple conversations, constantly supplementing user information, we can not only solve the problems of complex and difficult insurance terms, but also significantly reduce the threshold of decision-making for users, and improve the professionalism and trust of consultation. At the technical bottom, we have covered thousands of products, hundreds of professional data, as the core of the insurance knowledge library. by accurately understanding the complex health conditions and investment rules in the field model that is optimized for the insurance scene. Through the collaboration of multi-intellectuals, we will need to understand the knowledge, unlock, and program production, and modularize to ensure the high quality and stability of the service. This system has standardized our service capabilities. In the future, we will continue to rely on self-taught technology and deepening AI Yes, absolutely.

For example, this quarter, we developed an AI-powered service system based on multi-agent collaboration and launched an intelligent insurance consultation and planning application for consumers. This system has been deeply embedded across all decision-making stages, providing full process support such as policy interpretation, pre-existing condition assessment, and personalized plan comparison. Through multi-term conversations that progressively enrich user profiles, we have addressed the pain point of complex policy terms, significantly lowered the barriers to user decision making, and enhanced both professionalism and trust. On the technical side, our core is a structured knowledge system spanning thousands of products and millions of data points, coupled with a domain-specific model optimized for insurance scenarios to precisely understand complex health conditions and underwriting rules by modularizing user intent comprehension. knowledge retrieval, and plan generation through multi-agent collaboration, we ensure high service quality and consistency. This system has successfully standardized and prioritized our service capabilities. Moving forward, we will continue to leverage our proprietary tech to deepen AI application in precision, reach, and decision support, consolidating our leadership in intelligent insurance services.

Thank you. We will now take our next question from Yuan Liao of Citix. Please go ahead, Yuan. Your line is open.

Hi, everyone. Thank you for accepting my question. My question is, we are seeing a rapid development of AI agents. How do you see the impact of AI agents on our business model and competition? Thanks, management, for taking my questions. Congrats for the strong results. And my question is about the AI agent influence on our business model and the competition landscape. So how should we think about the impact of the agent era on our business model and competition? Thank you.

Thank you for this question. Actually, regarding the market focus on AI agent and new entrances, is it possible to become the mainstream scene of insurance sales? I think we still need to observe further. There are two main sales models in the market. One is to reach out through the online information flow system. The other is to reach out through traditional agents. The core principle is that we need to understand how the agent AI will affect the sales model of content consumption platforms in the future, and whether it will speed up the traffic detection and distribution mechanism of SEO and GU. But for Yuanbao, our products are mainly distributed through mainstream Internet platforms. In the foreseeable future, these platforms may still occupy a large amount of users' time. But we do believe that some products may be affected by AI agent technology in the future. For example, those that require users to invest in high decision-making mindsets or longer decision-making cycles, products with relatively high health insurance costs, and products that are highly dependent on active search or e-commerce discovery channels. With the maturity of AI intelligence, these areas may face some changes. More importantly, AI in the field of information discovery and search applications is essentially helping more efficient educational customers in the industry. When consumers can understand insurance products more easily, the general awareness, trust, and overall penetration rate of commercial insurance will be steadily improved.

Regarding whether new entry points like AI agents can become mainstream channels for insurance sales, we believe the viability of this scenario remains to be seen. There are two methods of serving today. One is online through infant assistance, and the other is through traditional human agents. The key is to understand how agentic AI will reshape the sales dynamics of content consumption platforms. and whether it will transform SEO or GEO discovery methods. We believe that major internet platforms where we currently distribute our products will continue to command a significant share of user time spent in the foreseeable future. That said, we do believe that products requiring more user might share for decision making, such as higher premium products which are typically sold through search or e-commerce discovery channels, will potentially be affected by the advent of authentic AI capabilities. More importantly, the widespread use of AI for information discovery and search will better educate consumers about insurance products. This in turn will help raise awareness, build trust, and drive the overall adoption of commercial insurance.

Thank you. We will now proceed to take our next question from the line of Yingying Xu from Zhoushan Securities. Please go ahead, Yingying. Your line is open.

Okay. Congratulations on the company's success. Thank you for giving me the opportunity to ask a question. My question is mainly about the customer flow and warranty rate. In addition to relying on continuous flow to make up for it, Thank you for taking my question and congratulations on the results. My question is about customer retention and renewal rates. Aside from continued traffic acquisition, could management share what customer engagement and retention initiatives, Yuanbao is currently focusing on to better balance conversion efficiency and user experience and further improve policy renewal rates.

Thank you. Thank you. It's still very important for us through online customers, because we believe that the domestic commercial health insurance market still has a great room for improvement. We will continue to invest in innovative products and services to continuously optimize user experience. In terms of product innovation, we will use deep customization of co-branded products, such as zero-cost compensation, medical insurance, multiple compensation, heavy-duty insurance, and other high-quality products, to improve the reliability and value of users from the source. In addition, we are currently promoting more advanced services, such as deep-diving into the technology Through the introduction of AI, we have achieved a more efficient and faster response from Li Pei. This not only allows us to have more authentic positive material that can convey the user's reputation to the market, but more importantly, it can basically strengthen the user's trust in us. And trust is the key mechanism for us to pull the long-term guarantee rate. We believe that as long as we continue to coordinate and innovate on the product,

customer acquisition through online channels remains very important to us because we believe that China's commercial health insurance market remains significantly underpenetrated. We continue to invest in new products and services for our consumers to improve user experience. In terms of product innovation, we collaborated with insurers to deeply customize high perceived value products, such as zero deductible medical insurance and multi-client critical illness plans, building user stickiness from the start. Additionally, we are continuously rolling out value-added services, particularly the deep integration of our technology capabilities throughout the entire claims process. By leveraging AI, we have enabled our partner insurance to achieve significantly more efficient and faster reaction times when handling user claims. This not only provides us with tangible, positive user experience stories to share with the market, but more importantly, it fundamentally strengthens user trust, which is the cornerstone for improving long-term policy renewal rates. We believe that our efforts to continually collaborate with insurers to innovate and increase the awareness of the value of short-term commercial insurance policies will lead to improved matrix.

Thank you. We will now take our next question from the line of Chi Chi Sun of Shenwang Hongyuan Securities. Please ask your question, Chi Chi. Your line is open.

Good evening, leaders. Congratulations to EZBOW for receiving a very bright idea. I am from the analysis department of Shenzhen Hongyuan Stock Exchange. Thank you for giving me this opportunity to ask a question. I would like to ask about the company. Previously, you mentioned that you were going to do some innovative business exploration on the main business plan. Is it convenient to share the specific layout direction of the plan and the corresponding exploration? When do you expect it to have a more obvious effect? This is Jackie Sun from Shenwang Hongyuan Securities. Congratulations on the impressive result of the first quarter of 2026. As previously mentioned, on top of Yuanbao's core business, the company is planning to explore some innovative initiatives. Could you please share more details on the specific areas and strategic direction of this exploration? And when should we expect to see metaphor progress or tangible results from this effort? Thank you.

We are always exploring and evaluating innovative and new business while remaining anchored in our core business.

However, our current explorations are not yet at a disclosable stage. Therefore, we have no specific details to disclose at this time.

Thank you. 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 Trader and the US 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.