Waterdrop Inc.

Good morning, everyone. This is Tracey Lee from Water Drops Ambassador Relations. It's my pleasure to welcome everyone to Water Drops' first quarter 2024 earnings conference call. All participants are in listening mode in our English line. As a reminder, today's conference call is being recorded. Please note that discussion today will consist of forward-looking statements made under the state proper provisions of the U.S. Private Security and the Litigation Reform Act of 1995. Forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from our current expectations. Potential risk and uncertainties include but 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 it required any under applicable law. Also, this could include discussion of certain NANGAP errors. Please refer to our earnings release for our consideration between NANGAP and GAP Joining us today on the call, Mr. Yang Guang, Co-Founder, Director, Finance VP and GM of International Business. Mr. Yang Wei, Director and GM of Insurance Business. Mrs. Xu Xiaoying, Head of Finance. And Mrs. Jessamyn Lee, Board Secretary. We'll be happy to take some of the questions in a minute or so at the end of the conference call. Hello, everyone. Thank you for joining us for our first quarter of 2004 earnings conference call. Since the beginning of 2004, the domestic economy remains on track for recovery, leading to a steady growth in the personal insurance industry. For what it does, the company continues to pursue high-quality development while improving our quality and efficiency. In terms of our financial performance, total revenue of Q1 reached $705 million, up 16.3% year-over-year, yet net profit attributes of the company reached $80.6 million, a significant increase of 62.2% year-over-year. Since Q1 of 2002, we have continuously recorded profitability for nine consecutive quarters. In Q1, all our business segments maintain robots. For our insurance business, we actively optimize the product offerings for new service models and continue to deepen AIGC empowerment. Insurance premiums significantly increase sequentially, representing operating margins of over 20%. For what is our medical core funding, we are actively participating in multi-level medical assistance systems to continue improving service quality. Segment loss was further reduced. For healthcare-related business, we continue to collaborate with domestic and international pharmaceuticals, expanding to digital marketing solutions. During Q1, our revenue increased 7.3% worldwide. In the first quarter, we continued to invest in R&D. Right now, we have obtained four LOM-related patents and submitted over 10 more patent applications. We are committed to improve efficiency in the entire insurance service loop. For our CSR and ESG efforts, what a job we're here to sustainable development in ESG management, implementation, and as well as fiscal error. In the latest rating published by IIGF, our rating reached to A-, requesting a great look forwarding at ESG. As of the NFQ1, our charity platform has partnered with 112 public charity organizations, launched more than 15,000 projects, Taihui Bank, one of the multi-level medical assistance platforms we joined, was awarded a 2093 Project of the Year in the 8th China Charity Annual Conference. For the capital market, we recently paid our first special cash dividend since listing. We look forward to bringing more value to our shareholders in the future. Regarding share buyback, as of the end of May 2024, the company has cumulatively repurchased 45.5 million ETFs in the open market for a total configuration of about $95.9 million. The repurchase shares will continue to be used for ESOPs to motivate our talented team. This is a recap of our performance in Q1. For the full year of 2024, WaterDrop's financial guidance remains unchanged. First, a profitable year with double-digit revenue growth. Second, insurance operating margin above 8%. sustainable growth, and healthcare-related revenue. To achieve our goals, we will implement the following strategies. For insurance business, we will adhere to our user-first principle, further optimize traffic conversion, explore new service models and product innovation, invest in AIPC, starting business operations to improve efficiency for both ourselves and industry. For medical core funding, we will continue to take advantage of technology capabilities to ensure sustainable development while fulfilling social values and meeting user needs. For healthcare business, we will swiftly boost the penetration worldwide, expanding the comprehensive service capability to more disease categories, and actively exploring digital marketing to broaden business boundaries. With abundant cash reserves, We're seeking suitable partnership and M&A targets around insurance and the healthcare sectors. Looking ahead, the company will continue to strengthen its business value and barriers getting by our mission and value will continue to see more segmentation opportunities. And now I will pass to Ranwei to discuss our insurance business in Q1. Thanks, Young. This quarter, our insurance business demonstrates steady growth. The total FYP reached about $1.75 billion, increased by 3.7% year-over-year. Insurance real estate income was $610 million, up by 13.1% worldwide. Upgrading profit for the insurance business reached $130 million. FYP for short-term insurance products was $1.15 billion in the first quarter, representing a sequential increase of 15.9%. Notably, new policy FYP growth by 41.6% exponentially. We have continually improved online traffic conversion, and based on the user profile of each content distribution platform, we specifically optimized our product offering accordingly. Our policy renewal rate remains at a high level, consistently above 95%. which indicates strong user recognition. FYP for long-term insurance products amounted to $600 million in Q1, representing a QQE growth of 13.4%. The contribution of YFYP generated for long-term insurance products to overall FYP was further increased. The FYP of live insurance products to overall long-term product increased to 56.4%. We saw a sequential increase in productivity per capita by 6.4%. The overall quality of long-term policy further improved, with the first-year retention rate increasing by 2% per percentage point sequentially. We continue to develop our offline brokerage business. In Q1, we launched our new brand of offline brokers, FitMeFiction, aimed to provide more comprehensive offline service and strengthening our brand awareness. On Shenanbao, we got a sequential increase in FYP. And our job insurance marketplace at Shenanbao really enhances synergy in sales resources, content marketing, and product partnerships. Our capability in catering various products to meet user needs continues to improve. During this quarter, we launched KeyBall, A long-term medical insurance product that guarantees renewal for 20 years and aims to provide high value coverage for females, especially for females. Our will show who. Disability income insurance for the elderly has exceeded 10 million in FYP for the first month they launched, reflecting a strong market demand. Targeting the market segment, we have successfully upgraded one of our star products, Xie Haoyun, to version 2.0, which gained top recognition on virus platforms. For people with pre-existing conditions, we upgraded our Pukudao to over zero waiting period and extended its real age up to 105 years old. The overall carrier insurance product achieved 100 million FYP during Q1, continually to gain users Trust. Moving on to technology empowerment, in Q1, we continued to expand the application of our visual TFT. The accuracy and efficiency of our large-language model has been significantly improved. Our AI broker has reached 90% of the average level of human broker in health insurance sectors. capable of conducting independent dialogue with our clients for up to 40 minutes. Meanwhile, our AI co-pilot, which has been widely internally tested, reached an accuracy rate of over 90% in the insurance knowledge QA, significantly boosting the efficiency of sales, quality controls, and others. We also actively explore external applications to empower the industry, with several partnerships currently under negotiation. By now, we have obtained four LLM-related patents and submitted over 10 more patent applications. Looking ahead, we will remain dedicated to positioning ourselves as a forefront. This concludes my remarks for today, and we now have to just meet. and a review of medical crowdfunding and healthcare business. Thank you, Ronway. As of the NFQ 1.4, around 456 million people donated 63.8 billion to over 3.17 million patients through our 40 job medical care funding. We stand to focus on transparency and keep strengthening our risk management mechanism. For instance, Before manual verification, we integrated algorithm recognition to identify false or fake medical documents and mitigate related risks effectively. In addition, for patients with a high risk of passing away, we saw all the donations are made in batches according to the stage of treatment. Reducing the risk of fund misappropriation. We believe that the higher authenticity we have, the greater the zones in CVS would be. In the meantime, we constantly prioritize user experience and constantly improve service quality. For urgent cases, we open up an advanced payment application portal for patients who have passed the risk control review. When patients need to withdraw the funds, but 24 hours public notice period has an end, we will use our own funds as advance payment. This ensures that the patients can promptly get the funds for their treatment. During Q1, we actively participate in multi-level medical assistance programs initiated by local governments in China. In February, On International Rare Disease Day, WaterDrop launched a special rare disease care program on top of our existing support initiatives. By the end of Q1, more than 67,000 patients with rare disease have asked for help through our WaterDrop medical crowdfunding platform. And we received donations of more than 1.5 billion yuan from 48.9% million donors. We contribute through our platform, the WaterJob Medical Co-Funding, charitable funds, and collaboration with pharmaceuticals. We provide a fast track for rare disease patients to respond, as well as dedicated consultants and support. WaterJob Charity works with the charity funds to help these Patients seek medical resources, get local medical insurance policy updated, and so on. Through that, we've continuously updated our care initiatives for patients, bringing more hope to those in need. In Q1, our healthcare-related business continued its momentum. We expanded our digital capabilities in clean supply solutions and multi-channel marketing solutions For this quarter, healthcare-related income reached 25.3 million, representing an increase of 7.3% year-over-year. The number of corporations, pharmaceuticals, and CROs reached 179, and the number of new programs reached 88. Those figures remain high-level, leveraging a broad patient base and strong digital abilities. eFunds platform continued to enroll the standard suitable candidates for our pharmaceutical clients. In Q1, eFunds platform successfully enrolled over 800 patients. As of the date, about 7,800 patients were enrolled. Our performance has been recognized by our clients. For instance, in Thrizes, going for trial projects for global top five MNCs, we worked at the exclusive Chinese third-party patient recruitment partner and successfully enrolled over 60 patients within three months, which is 20% faster than the regular time needed. As we have fulfillment against resignation in the industry, we continue to deepen our cooperation with leading pharmaceuticals and CROs, both domestically and internationally. We have already cooperated with seven out of the global top 10 pharmaceuticals. The CRO business continued to steady development as our reputation and influence strengthened. We want a new bid for clinical trials projecting the field of cell therapy for listing pharmaceutical in Q1. In addition to key clinical trials, our platform completed their initiation in the first quarter, including the smooth launching of new brand centers. Looking ahead, we'll continue to explore potential digitalization in the healthcare sector. The platform will continue to build and improve integrated solutions across the entire industry chain. In Q1, we further expanded in the field of digital multi-channel marketing, leveraging our experience in patient management for chronic disease. We saw an increasing number of clients. the cooperation with MNCs after they depend. Meanwhile, we sign a strategic cooperation with the leading domestic pharmaceuticals. We believe that the water job will become a preferred partner in marketing for more and more pharmaceuticals. The above concludes my speech. Now I will have to meet with Xu Taiying, the head of finance, to discuss the company's financial performance. Thank you, Jasmine. Hello, everyone. I will now walk you through our financial highlights for Q1. Before I go into details, please be reminded that all numbers quoted here will be in RMB. And please refer to our energy list for detailed information on our financial performance on both the year-on-year and quarter-to-quarter basis, respectively. We are thrilled to kick off 2024 with solid financial results. The company revenue in Q1 amounted to $705 million, representing a QQ growth of 16.3%. The revenue structure is more diversified, which the insurance-related income amounted to $607 million. The corresponding business contribute revenue of $67.4 million, and the healthcare-related income of about $25.3 million. with all three business segments growing steadily. At the same time, the company also continued to focus on operational efficiency, with overall operating costs and expenses of $658 million, up 10.5% year-over-year and 4.4% quarter-over-quarter. Among them, Q1 operating costs were Approximately $331 million operating costs showed a year-over-year increase of 33.6% because of the competitive function involved, representing a sequential increase by 9.6%, mainly due to an increase in the referral and the receipt. In terms of expenses, S&M expenses amount to $182 million, representing an increase of 5% and 4.2% on YOY and QOQ basis, respectively, which maintain a healthy and steadily trained and benefiting from our effective cost control. QNA expenses amount to $89 million, representing a decrease of 7.1% and 7.3% on YOY and QOQ basis. R&D expenses amounted to $56 million, the decrease mainly due to the impact of team restructuring. In Q1, our profitability improved significantly. Net profit attributed to the company's ordinary shares amounted to $80.6 billion, an increase of 62.2% year-over-year and 36.5% quarter-over-quarter. Since Q1 of 2002, we have continuously recorded profitability for two consecutive years. we generate a net cash inflow from our operating activities of $179 million. Looking ahead, we will continue to create value for our users and shareholders with great profitability and growth. And ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining. Have a good time. The conference has now concluded. We thank you for attending today's presentation, and you may now disconnect.