Waterdrop Inc.

Good morning, ladies and gentlemen, and thank you for standing by for WaterDrop, Inc.' 's third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a Q&A session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to Mr. Chen Rui Chen. Please proceed, Mr. Chen.

Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. private securities and the Education Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public findings with the SEC. The company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. Also, this call includes discussion of certain non-GAAP measures Please refer to our earnings list for a reconciliation between non-GAAP and GAAP. Today's conference is managed by the company's founder, chairman, and chief executive, Shen Peng. The company's joint founder, chairman, financial deputy, and international business department general manager, Yang Guang. The company's chairman, insurance technology business group general manager, Ran Wei. The company's chief executive and medical technology business group general manager, Zhu Zetong. And I am the secretary of the company's board of directors, Chen Weichen. The management floor will introduce the company's situation in Chinese and the basic line-in. At the same time, we also provide choices for English, the same-sex line-in, and the common meeting. Next, please, Mr. Shen.

Hello, everyone. Thank you for participating in the third quarter of the company's third quarter of 2023. First of all, I would like to give you a review of the industry. In the third quarter of 2023, the domestic economy is still in the process of recovery. The third quarter is affected by various aspects such as product policy adjustment. and short-term suppression of human rights businesses. With the increase in industry transparency and specifications brought by industry supervision, and the gradual acceptance of new product policies by the global market, companies believe that the human rights industry is entering a new development stage. Faced with challenges, companies actively respond to the direction of supervision, and work hard to improve the health and business efficiency of their businesses. Companies insist on being the first users, and use the price of the needs of users, not only to make users serve the product's innovative ability, You go down and you can't do it. You know, you know, you know, you know, you know In the past two years, the share price has increased by 67%. This shows that the company's business can continue to develop at a high level. Under the ongoing financial crisis, the company's three-year operating cash flow continues to decline. This shows the stability of the selection ability. As of the end of September, the company's cash balance has been replenished. Under the ongoing repurchase of stocks and the acquisition of shenlanbao, the company has cash and the short-term investment of cash and short-term investment of short-term investment of short-term investment of short-term investment of short-term investment of short-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of long-term investment of The company has achieved good performance in all areas of business in the past three seasons. The company continues to improve its business health. The company continues to improve its business health. The company continues to improve its business health. The company continues to improve its business health. The company continues to improve its business health. The company continues to improve its business health. It is a control system that provides continuous online service. The total number of service patients is more than 3 million. It continues to focus on funding transparency, security, and sustainability. Through the four-in-one plus tax rate, it proves the full range of deep-rooted policy, and the urgent need for an active and transparent enterprise. At the same time, it persists to continue to improve service quality, promote service type, and question type. to build a user-oriented service system. The general medical platform, with its excellent resource capability, will continue to develop and cooperate with domestic and foreign well-known pharmaceutical companies, continue to expand the scope of recruitment and recruitment, focus on the development of pharmaceuticals, and take advantage of the technical advantage of the platform to continue to explore new opportunities in the medical field. With the development of the business, the company continues to invest in research and development. In the third quarter, the company continues to carry out the upgrade of AI technology, From product, industry, service and other aspects, to achieve full chain of negative energy. With the decline of the negative energy of our own technology, the company continues to explore the outside output of the technology. The public interest in ESG. The company continues to focus on ESG construction and improvement. This leads to the realization of sustainable development of enterprises and society in both directions. Stimulating the Internet insurance company The second stage of information disclosure and practical development At the same time as the development process The company is actively taking on social responsibility In August, the typhoon affected the Jinyanji area The first typhoon broke out and the flood broke out The water and land construction joint of the well-known construction association Chiyuan disaster area On the main line Chiyuan typhoon flood flood two levels To the Beijing Youth Development Foundation Donation of 1,000 emergency rescue packages to help 1,000 public workers and people in distress. As of September 30, 2023, a total of 112 construction sites, such as big hospitals, emergency resorts, educational institutions, etc. have been built on the water supply platform. The total collection is more than 12.9 billion yuan. The number of donors is more than 70 million times. With the advantage of business and technical market, The development of a multi-layered medical care system was actively involved in the development of a multi-layered medical care system. The construction of a multi-layered medical care system was actively involved in the construction of a multi-layered medical care system. The construction of a multi-layered medical care system was actively involved in the construction of a multi-layered medical care system. The construction of a multi-layered medical care system was actively involved in the construction of a multi-layered medical care system. The construction of a multi-layered medical care system was actively involved in the construction of a multi-layered medical care system. The construction of a multi-layered medical care system was actively involved in the construction of a multi-layered medical care system. The construction of a multi-layered medical care system was actively involved in the construction of a multi-layered medical care system. The construction of a multi-layered medical care system was actively involved in the construction of a multi-layered medical care system. The construction of a multi-layered As of October 30, 2023, the company has accumulated 38.5 million shares in the public market, accounting for about $87.4 million. This reflects the company's long-term and sustainable development ambitions for the future. At the same time, the shares will continue to be used in the shareholding plan to encourage the company's internal strength to increase and employees to grow together. In the future, the situation of the last three seasons of the company is simple. The industry and personal development of the company are full of confidence. Looking forward to the next season of 2023, the company will seek higher quality growth under a reasonable profit margin. The company's business strategy is to focus on the user as the center of the water security business, and the health and safety technology as the driving force, and continue to enhance the business performance and expand the service ecosystem. to maintain a long-term healthy and stable development. At the same time, to enhance the long-term efficiency, continuously optimize the product structure, and consolidate the business infrastructure to provide professional and warm services to users. Second, to keep up with the business, to continue to insist on using the center of the company, and to replace the service model to lead to high-performance development in the industry. At the same time, to continue to stick to the transparent operation of funds, and to implement strict control management. three four five Accelerate the promotion of technology to enhance the ability of AI to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to build the core of technology to It is even better to use the Internet technology to promote people's use of public transport to protect their families. Next, let's talk about the situation of the third quarter of the insurance business of this company.

Hello, everyone. Next, I would like to introduce the situation of the third quarter of the insurance business in all four aspects. First, the performance of the business. In the first three quarters, the cost of human resources and industry insurance was slowed down. Under this situation, the cost of the insurance business of the third quarter is 16.95 billion yuan. The long-term warranty value increased to 38%, the insurance-related revenue reached 6.2 billion yuan, and the net profit reached 1.45 billion yuan. Among them, the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the short-term operation of the The company actively develops water-based water-based water-based water-based water-based water-based water-based water-based water-based water-based water-based water-based water-based The insurance warranty rate continues to remain at more than 90% high. Long-term business further develops. In the third quarter, the long-term achievement of the public insurance fee of 6.4 billion yuan increased by 17% compared to the increase of 9%. The unit insurance fee increased by 43% compared to the increase of 4%. The commission income achieved the same increase of 31% compared to the increase of 40%. The company insists on improving the long-term service team's ability to continue to optimize the maturity The quality of the service personnel is 23% better than the size of the private domain. The brand long-term supply is further enriched. The risk of users is improved by a ratio of 2% with the long-term insurance fee of the first year. On the other hand, the new model of exploration supports sustainable growth. In the third quarter, the company is in the model of happiness of planners and managers. It shows a positive trend and continues to develop. On the part of the planner, in the face of the market environment of interest rates, the company continues to surround the planner. In addition to the moon treasure, the ability to collect content and the ability of the online planner to serve students and planners, the scale of human resources continues to grow, and the monthly insurance fee increases significantly. On the part of the new infrastructure, the company continues to improve the water and land treasure, Three, product use innovation. In the third stage, I want to continue to increase the supply of health insurance and supply of health insurance. The demand for continuous optimization of health insurance products. In terms of health insurance, we will introduce water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water-based, water In the case of COVID-19, we will upgrade the service of the COVID-19 population again, provide a customized water-based care-free resuscitation, change the product's protection rights, and cover a wide range of people, flexible choice of responsibility insurance, and provide comprehensive protection for patients. In addition, the company will also launch the water-based South China Sea No. 3 heavy-duty health insurance, further optimize the health insurance experience of the COVID-19 population, and improve the safety capabilities. In terms of health insurance, the economy will definitely adjust the requirements Adjusting the structure and surrounding the user's property requires the choice of more steps. In the face of the crowd of customers, the product provides a variety of insurance services and insurance strengths. Fourth, technology cooling. Three-phase water-based continuous construction of insurance technology capabilities. Strengthen the investment of large-scale AI technology and active cooling business. Achieve high-quality insurance service. The company is dedicated to computing and artificial intelligence technology construction model. In the pre-release period before the end of the year, We hope to increase the time efficiency by 20%. With the help of AI technology, the salesperson can make more useful and effective customer service. The company has also used a large-scale technology to reach the insurance company's insurance assistant, so that they have the ability to answer the questions such as capital, interest, insurance responsibility, and insurance fee, and can help the salesperson to improve their skills in real time. Thank you, everyone.

First, I would like to introduce the situation of the fundraising business. Since the end of the third quarter, the number of donors has accumulated up to 4.45 billion. The number of patients who have been collected has exceeded 3 million, reaching 3.03 million people. The total amount of funding has exceeded 6.13 billion yuan, as the number and the amount of funding have continued to increase. In the third quarter, the transparent water supply will further improve the transparency of the platform in order to increase the service level of consultants by increasing the value of the service. the key information of the case, help the donor fully understand the case, the situation of the applicant, the platform, the situation of public supervision, and the situation of the case funding. By increasing the authenticity of the payment case information, the support of the donor will be further improved. In terms of improving the service level of the consultant, in August, the company held the first Sui Yi Chou Consulting and Consulting Service Institute, held the consultant service level-related selection activities, and submitted the consultant service manual. In terms of values, the payment service process and requirements, In this series of recommendations, the consultant service in the quarter has significantly improved. The overall customer satisfaction has increased to 98%, and the MPS of the collection has also increased from 95% to 70% in the previous year. In the first quarter, 45 companies in the country have been transferred from business internship to service service. a strategic cooperation with the hospital to develop a service consultant cooperation. Service consultants in most departments have established a well-informed cooperation model and have received good reviews from the hospital and patients. The platform will continue to enhance the work efficiency of service consultants, and maintain good service quality, performance, and efficiency. The company continues to mobilize user experience. In September, we held the opening day of the first donation user opening day, which is the theme of trust-making in the name of open and transparent meeting. CEO Shen Peng, and the person in charge of this machine, and the donor, the payment service provider, represent and co-operate with him. In order to experience the payment service service, fund transparency, and make the case true, we conducted in-depth communication, and received positive feedback and constructive feedback from the users. In the future, we will continue to listen to the users' voices, and focus on the users. Increase the investment in technical innovation, and work hard to enhance the efficiency and transparency of the service, and not disappoint the trust of each user. Next, I would like to introduce the progress of digital clinical trials and solutions. In the business of digital clinical trials and solutions, In the third quarter, business maintained a stable and healthy development. The quarter revenue was about 27.6 million yuan, which increased by 60.7% in total. In the third quarter, the number of general platform cooperation requests and deals reached 135, and the number of new collaboration projects reached 90, which increased by 10 in the second quarter, maintaining a continuous rapid growth in the number of cooperation projects. It benefits from the excellent customer recruitment ability and project quality management level of the general platform, In the third quarter, the general platform will further deepen cooperation with the world's leading transnational pharmaceutical companies. The platform will establish cooperation with the transnational pharmaceutical companies of a global TOP5 to engage in cooperation with Chinese experts in the field of clinical disease clinical trials, and will assist its clinical trial improvement and development. The platform will establish cooperation with transnational pharmaceutical companies of a global TOP15, and will launch a supply chain process with two TOP5 transnational pharmaceutical companies, and is expected to officially start cooperation in Q4. The general platform continues to explore the application of advanced technology assistance and new research and development technology based on large-scale data and hidden experimental project structural information through patient and project AI intelligence comparison continues to improve the efficiency of patients looking for projects and patients looking for projects In terms of patient service WaterD is based on the service of free and large-scale patients, accumulating the core advantages of a high-efficiency nursing patient management system and medical professional service, creating a one-stop patient nursing management system. To meet corporate needs, through patient selection, medical management, medical service, innovative payment and digital survey, etc., integrated services provide digital marketing and sales solutions around the product's lifetime. We hope that the international drug industry, which is leading in the global market, will continue to work together to manage the health of chronic patients. These are the business reports of the third quarter. Next, Yang Guang will introduce the financial performance of the third quarter of the company.

Hello, everyone. Next, I will briefly introduce the financial performance of the US company in the third quarter of 2023. Please note that all the financial data mentioned below are in RMB units. In addition, the financial data and the situation of the same currency can be further referred to by our press release on the IR website. From the income side, the company has still shown steady profit performance during the special period when the three-season financial structure was adjusted. The company received 6.86 billion yuan, called the 7.72 billion yuan of the three-season in 2022, and the same decline was 11.1%, called the 6.79 billion yuan of the 6.79 billion yuan of the 3.2-season in 2023, From the distribution point of view, this quarter, the company completed 60% of Shennanbao's revenue. Shennanbao, this company, has fully integrated into the range of our companies. The relevant business performance is included in the insurance business version. In the third quarter, the insurance business revenue is 6.19 billion yuan, which is 3.7% higher than the previous year. The revenue of the first business is about 36 million yuan, which is 19.5% lower than the previous year. The total cost of the digitalized clinical trial is about 27.6 million yuan, with a downfall of 6% and an increase of up to 60.7%. From the cost-benefit point of view, the total cost of the company and the cost-benefit have increased by 7.6%, with a downfall of 4.4%. The total cost of the company from 3.41 billion yuan in the third quarter of 2022 to 8.5% is 3.12 billion yuan in the third quarter of 2023. The decline is mainly due to the final settlement data from the same period last year, which occurred at a cost of 1,950 million yuan related to the water and land household. Second, the recommendation and service cost were reduced by about 9.4 million yuan. In other words, the operating cost was reduced by 6.3% in the second quarter of 2023, mainly because the recommendation and service cost were reduced by about 2,140 million yuan. The sales fee is about RMB1.81, RMB1.88. In the third quarter of 2022, RMB1.38 has increased by 36.1% in total. As Shilinbao enters the core range in this quarter, the sales fee has increased by about RMB2810 million. Compared to the same period in the summer, the investment has increased by about RMB14.4 million compared to the same period this year. Third, the cost of personnel and stock rights have increased by about 9.1 million yuan. In comparison, the sales cost has decreased by 8.2% compared to the 2.05 billion yuan in the second quarter of 2023, mainly because the third quarter of the company has adjusted some of the flow strategy. The flow of the third wave has decreased by 41.3 million yuan compared to the flow cost, but the increase in the amount brought by Xinlanbao has partially diminished. The management cost is about 1.15 billion yuan in the third quarter. In the third quarter of 2022, 8,204 million yuan was increased by 39.7% in total. In the second quarter of 2023, 96 million yuan was increased by 14.4% in total. The same increase is mainly due to the influence of Shunanbao and the increase in the professional service fee of this quarter. The annual cost of this quarter is about 7,394 million yuan. In the third quarter of 2022, 7838 million yuan was reduced by 5.7% in total. The loss of 86.66 million yuan in the second quarter of 2023 fell by 14.7% from the previous year. The decrease in the same ratio mainly comes from the decrease in human resources costs and equity opportunities. The company's continued profits in the third quarter have been adjusted to 74.82 million yuan in net profit and 36.33 million yuan in net profit. Since the end of 2022, the company has achieved a steady profit in seven consecutive seasons and has continued to achieve steady results. As of September 30, 2023, the company's bank account cash and cash reserves and short-term investment in Russia's RMB 3.1.4 billion, cash abundance on the account, continued to produce positive economic activity. At the same time, cash flow with investment activities and financing activities is used to support the company's long-term planning and strategic layout. In general, the 3G industry has also shown strong resilience. In the future, we will continue to enhance the value of users and better utilize the value created by shareholders. This is the financial situation of 2022 3G companies. Next, let's move on to Q&A. Thank you. Thank you, Yang Guang. Listeners, we will now start the Q&A session.

If you have any questions, please press the alarm button and then press 1. If you have any questions, please press the alarm button and then press 2. In addition, we can also broadcast on the news platform. If you participate through the news platform, you can also ask questions through text on the platform. Okay, the question received from the senior analyst Wang Huan is, thank you for the sharing of the company management program. Can the management program adapt to the company's 24-year business development? Thank you for the question, Wang Huan.

In the face of 2024, the company will continue to rely on users to create value and pursue high-quality growth while protecting reasonable profits. The specific guidance is that first of all, the annual profit and income will increase by two figures. In fact, the insurance operating profit is more than 8%, and the additional medical income will continue to increase. In order to realize the guidance, we will continue to implement the policy. On the insurance business, the center of the user is driven by the insurance technology to continue to improve the performance of the business, expand the service ecosystem, and pursue long-term health and safety development. At the same time, it continues to improve the performance of the team, not only optimize the product structure, but also consolidate and expand the market, and provide professional and friendly services to users. Second, the water supply business continues to adhere to the center of the user, and the service model leads to the high-end development of the industry. At the same time, continue to stick to the funding transparency, implement strict control management mechanisms, and launch enterprises to make decisions. Third, medical business continues to rely on the big data advantage of water supply companies to actively explore new service models to quickly improve the efficiency rate of domestic and foreign medical customers to build new long-term health engines. Fourth, based on the relative sufficient mental preparation, The company continues to seek ecological cooperation and investment acquisition opportunities without insurance and medical documents. Fifth, speed up the promotion of technology and energy, strengthen AI and other energy construction and build a core technology supply chain, support the long-term strategic implementation of business, and enhance the industrial performance of energy.

The second question on the platform comes from Mao Qingqing from Zhongxing. What is the reason for the growth of the management layer? Thank you for your question. I am Yang Guang.

Next, I will answer this question. In the third quarter, under the supervision of Shilinbao, the company's long-term business has made a breakthrough. The scale of our three-quarter system has reached RMB6.4 billion. The scale of the long-term business has increased by 9%. The increase in long-term insurance premiums rose by 38%. The increase in long-term interest rates led to a 9% increase in the overall take rate. The increase in insurance-related income increased by 3.7%. In terms of expenses, after a moderate increase in investment in the first half of the year and a certain amount of business data, the company took the initiative to reduce the short-term income of low-income RRIs and reduce their external investment. The third-party traffic of the third quarter of the third quarter of the third quarter of the third quarter of the third quarter of the third quarter of the third quarter of the third quarter of the third quarter of the third quarter of the third quarter of the third quarter Thank you, Yangguang.

The third question on the platform is from Rick Zhao from At The Moment Stanley. His question is, we have seen frequent monitoring actions recently, including the policy of insurance merger. What impact will the company's new rules and views have on the company's insurance industry?

Thank you for your question, Rick. I am Yangguang. Actually, the company has been strictly following the requirements of monitoring to regulate public funds. The current policy of the financial supervision department has little impact on the business of the company's Internet security. The new policy of the financial supervision department has little impact on the business of the company's Internet security. The relevant policies are beneficial to the long-term regulation and health development of the industry. On the one hand, it will make it possible for the insurance center to be more realistic and reasonable, and more transparent. On the other hand, the strict environment will be more beneficial to the development of high-quality institutions, and the long-term value and adherence to the user-centered enterprise will get more market estimates. Since the second half of 2021, the water-based insurance industry has begun to actively transform into a high-quality development model to actively diversify users' needs, to increase the conversion rate of online customers, to build service numbers on the users' end, and to create private and public users' private platforms such as WeChat and WeChat, using AI technology to provide users with high-quality In the service section of the insurance education content, based on the mature direct seller or face-to-face business model, the next step is to explore the In the end of 2023, Thirdly, the company's insurance business has reached more than 1.14 billion users per season, and the number of insurance fees per season has exceeded 5.1 billion RMB. The company is continuing to use Internet technology to help people in large numbers and ensure the strength of 100,000 families. In the future, the company's insurance business will continue to embrace the policy of upgrading users and continuing to use users and industry-wide values.

Thank you, Mr. Liang. Thank you, Li Ming. I'm Zhe Tao. Ordinary platforms are designed to become the most powerful, largest-scale, and most comprehensive comprehensive trading platform in China. In 2024, the platform will focus on several aspects. The first is to deepen the relationship with head pharmaceutical companies, especially the cooperation between multinational pharmaceutical companies. How to get in? How to become the best choice among the top service providers in China? In the third quarter, the general platform has cooperated with 135 leading pharmaceutical companies, not only domestic but also domestic leading pharmaceutical companies, as well as many international leading pharmaceutical companies. The platform will continue to expand new cooperation projects with existing customers, and seek to establish cooperation with more pharmaceutical companies to increase the penetration rate of pharmaceutical companies in and outside the country. Second, on the basis of consolidating and developing the benefits and advantages of consumers in the mainstream field, the platform will continue to expand in the field of chronic diseases and blood diseases, In the future, we will further enhance the advantages of the anti-fungal tumor field based on big data advantages and digitization capabilities. We will continue to optimize the equipment efficiency and service quality, and drive the improvement of the customer price of the tumor project, and expand the coverage range in the field of skin adenomyosis, infectious diseases, and other areas. Thirdly, we have already made a breakthrough in the field of clinical trial digitization and patient service. Next, Thank you, Zhe Chao. Due to time constraints, this meeting ends here. Thank you to all participants and analysts for participating. Thank you.

We are now approaching the end of the conference call. Thank you for participating in today's conference. You may now disconnect. Have a good day.