Waterdrop Inc.

Good morning, ladies and gentlemen, and thank you for standing by for WaterDrop, Inc.' 's third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to Ms. Jasmine Lee. Please proceed, Ms. Lee.

Thank you. Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the US private securities and the Litigation 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 your public filings 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 release for reconciliation between Nangap and Gap. First of all, I would like to invite Shen Peng to speak.

Hello, everyone. Thank you for participating in the third quarter of the company's launch in 2024. In the third quarter, the company is determined to pursue healthy business and sustainable development, and the plan is to maintain stability. The total total revenue in the quarter is 70.4 billion yuan, which is about 9,281 million yuan, which is more than 150% of the total growth. In the first three quarters of 2024, the company's total revenue reached RMB20.8 billion, and the total growth was 1.8%. The total net profit was about RMB2.6 billion, and the total growth was 42%. Since the first quarter of 2022, the company has maintained a steady growth rate in the 11th quarter in a series of consecutive quarters. In the quarter, we have seen a rise in the value of new customers and a rise in the number of new customers. In the insurance business, we focus on providing health care for pregnant women and children, expanding the corporate network, and promoting the development of new products and services. The annual cost of insurance is up to 20.4 billion yuan, which is a significant increase compared to the previous year. The business has made more than 20% of its operating profit. In addition to the water-based insurance, the water-based insurance actively adopts the law and personal assistance network platform management methods. The number of users and the number of payments has continued to increase, while losing more and more risk. Normal medical business requires the ability of a single person to start a cooperation network, not only to expand, but also to increase the number of patients at the same time. In addition, I would like to introduce here the importance of the company's AI field, namely, as a technology company in the health industry and in the health insurance industry, to actively capture large models and then step up to the logic point. After two years, based on the internal business environment and the accumulation of long-term AI technology, and the opportunity for timely acceleration of AI technology, we are currently developing a large-format, face-to-face, three-point application solution called AI-top-3. The AI-top-3 platform is equipped with mature AI out-of-the-box capabilities and transformation capabilities, which can support the Chinese cryptocurrency industry in audio, sales, and customer service. to help our ecological cooperation partners to improve service efficiency. After the second quarter of this year, AI TopSales platform has reached the new milestone of global commercialization. On the one hand, we have further reduced the amount of waste and waste cooperation, and the first time achieved cooperation in the field of health insurance. What is more helpful is that AI TopSales has begun to monitor the non-mobility industry, explore service e-commerce, education, We need to do a lot of things. This is also included in the industry at present. We have established the test image of 10 customers. Eight of them started to train. This reflects the basic market space of the market. The company will continue to invest in R&D. I want AI applications to build the next-generation core experience. We are very grateful to our shareholders and investors for their long-term support for us. In addition to the business of business, In addition to the promotion of the company's value, it also adopts the method of non-return and return, which is the opportunity to return to the stock market. By the end of November 2024, the company has accumulated about 50.9 million shares in the public market, which is about 1.02 billion US dollars. These returns will be used for the resumption of the stock market. At the same time, the company has recently completed the second special promotion of the last year. In the field of enterprise and social development, the topic has always been a possible development concept. After the recovery and development of the society, at the end of September, the water and land engineering platform opened a project with 155 public works and 12 public works. There are 1.55 million engineering projects on the line. In this week, the company also released a report on ESG in 2022. Also, Zhejiang University of Technology and the Green Technology and Engineering Institute jointly organized the online insurance industry in ESG to publish the book. and provided valuable reference for the Internet security industry ESG implementation. In recent years, the company has won the Grand Prize of ESG Connect Leadership Organization and the Grand Prize of ESG Disclosure, showing the company's importance for ESG work and the commitment to ESG. The above are the overall introductions of the company's three seasons. In the future, the company will continue to add technology Okay, thank you very much.

In the third quarter, the insurance company's first-year insurance fee was about RMB20.4 billion, with an increase of 20.04% and an increase of 14.8%. The insurance-related income was about RMB600 million, with an increase of 3% and an increase of 4.7%. The operating profit was about RMB1.2 billion, and the operating profit continued to remain above 20% in the first half of the year. In the third quarter, to further optimize the distribution channel acquisition efficiency. Q3, the number of new users remains stable. In order to reach the same number of users, the company provides a specific user demand, optimize the distribution method, and improve the user experience. Q3, the same number of users contribute to the new order, and the fee is increased. As the user image gradually diversifies, the company deeply understands the needs of the distribution group, and continues to deal with the supply and demand of insurance products. In this way, with a report as an example, The company offers a wide range of exemptions and exemptions, and has been able to invest in products to reduce the threshold for users to invest. Individual products, new and special equipment services, and enhanced user protection. The product contribution of the third-party delivery system is 2 million yuan per year. In terms of mother-in-law reduction, the product evidence is gradually improving, and the good luck 3.0 version continues to obtain user recognition, and the progeny is completed and online. All areas are covered by the need for mother and baby protection. Short-term medical insurance, military support, driver's license, short-term single-soldier insurance, the ratio has increased by 14.9%. The company also continues to optimize service quality. In September, the Water and Water Insurance Service Training Conference was held, and a number of insurance companies were formed. The third service alliance, the whole process of improving user service experience. In terms of insurance, the annual official insurance fee was reached at 6.7 yuan. Thank you. Thank you. Thank you. There are more than 10 life-saving programs for high-frequency brain diseases to fully cover the health risks of the brain. At the service level, WaterDiBao continues to reach the WaterDi member system, covering more than 30 full content, providing long-term users with health management, medical care, color channels, and financial management, as well as high-end customized service content within emergency rescue. In the system, Net sales long-term, annual continuous rate increased by 1.3 percent. Shennanbao also presented a good increase in the third quarter. Independent contribution of 2.6 billion yuan from the share price has increased significantly. The quarter is also further strengthened. The plan is to build more people and increase the share price of people. In the third quarter, Shennanbao and Shudibao continue to produce and cooperate. In fact, Shudibao has a large model to support Shennanbao's content production and customer experience. As for the current agent, the mobile phone has been released, the brand has been upgraded, and the comprehensive comprehensive service system has been built, and the whole area has been expanded. A series of service content, such as updating the sales system and deepening mid-range service, has been added to the agent's selection. The company also continues to develop advanced large-scale model capabilities in the field of insurance. As of the end of September, the company has applied for more than 40 large-scale related patents and has obtained six authoritative patent inventions. As of now, We have covered 7,378 mainstream web-based products in the water-based water-based large door system. This year, with the help of water-based water-based large door systems, we have integrated the functional optimization of detailed business scenarios, water-based self-developed and automated scenarios. Among them, AI agents are the first to appear on the web for the first time in the system. Effectively replacing AI scenarios, we have used AI initialization in the form of AI initialization plus artificial integration to greatly increase the efficiency of AI. Thank you, everyone. As of the end of Q3 of the second quarter, the number of cases of water droppings has accumulated about 4.66 billion, and the number of sick patients has accumulated up to 3.32 million, and the amount of money collected has exceeded 6.63 billion yuan.

The number of users and the amount of payments continues to increase. On September 5, 2024, it is the ninth day of China's charity, and it is also the first day of the new modification of the Chinese People's Republic of China Charity Law. On the same day, the Ministry of Civil Affairs, the National Internet Administration, the Ministry of Industry and Information, the Ministry of Public Security, the Ministry of Finance, and the Directorate General of Supervision jointly proposed a method of managing the personal assistance network service platform. It clarified the management measures of the personal assistance network service platform, including the specific requirements for spending standards, capital management, The implementation and implementation of these industry laws and regulations has improved the regularization and transparency of the industry, and also provided a solid legal guarantee for the positive development of the industry. We are even the lifeline of WaterDash. This quarter, WaterDash continues to follow the wind control strategy to improve information transparency. For example, we use the public monitoring and reporting mechanism to ensure that the platform can clearly and timely transmit to the public the latest progress such as the verification of reporting cases and the management of information. and protect a transparent and efficient monitoring environment with the public. At the same time, as a technology company, WaterD is also constantly exploring the negative energy of the technology platform. For example, WaterD is using algorithmic technology to realize high-precision warning cases all day long. Even in non-work times, such as from 1 a.m. to 6 a.m. in the middle of the night, the platform can actually do emergency processing such as termination of payments, cancellation of payments, and so on through intelligent recognition of high-precision questions. This ensures that risk cases can be quickly stopped. At WaterD, we believe in technology. In the future, we will continue to protect every heart through technological innovation and a perfect wind control mechanism. This quarter, the medical related business of the company maintains steady growth. In terms of digitized clinical trial business, in the third quarter, the platform successfully recruited 909 patients. Since the establishment of the business, more than 9,500 patients have been recruited, maintaining a steady growth trend. That is due to the excellent treatment efficiency and treatment quality. broadening and deepening. In this quarter, the number of cooperation drugs and CROs has reached 184, and the number of newly signed cooperation projects has reached 88. In this quarter, the platform has played the role of the main partner or exclusive recruitment partner in many projects. As an example of a rare type of clinical trial project, the general platform, as the exclusive recruitment partner of the head of the cross-country drug industry, uses the accuracy analysis and intelligent matching of the case data of a large number of patients, to assist the partner to achieve the group goal beyond the expected. With the development of the industry, the head of the pharmaceutical industry also pays attention to the key functions of new technologies such as artificial intelligence and big data in the development of new drugs. Due to the professional advantage of general medicine in the field of digitalization, the platform has been invited many times to share special topics with domestic and foreign pharmaceutical companies and has been widely recognized, which has also contributed to the continuous expansion of cooperation in the field of cooperation adaptation and cooperation. Digitalization is all about marketing business. In the system, the platform is more widely used in various areas of patient service, and the efficiency of application AI technology is greatly improved. For example, in the patient consultation part, our intelligent assistant can quickly and accurately respond to patient consultation and provide professional medical services. In the diagnosis part, we use AI language to understand technology, assist in artificial screening, and ensure high standards and professionalism of services. In addition, the brand also uses structured medical data and large models to guide patients to complete intelligent follow-up, effectively increasing the full management awareness and reliability of infectious disease patients. Facing the future, The platform will cooperate with industry partners to explore more applications and possibilities of AI technology in medical scenarios to help digitalize the industry. Next, the financial department will introduce the situation of the company's financial performance in the third quarter. Thank you, Jinru. Hello, everyone.

Next, I will briefly introduce the financial performance of the mobile company in the third quarter of 2024. Please note that all the financial data mentioned above are in the RMB unit. In addition, financial data and the same balance can further refer to the information released by the company's RR website. This quarter, the water and land companies continue to optimize their financial performance, and the growth of profit-making ability is significant. From the income aspect, our total income is 70.4 billion yuan. Comparing to achieve 4.1% growth, the insurance business contribution income is about 600 million yuan, and the balance growth is 4.7%. The total cost of the water pump is about 65.8 million yuan, and the return is about 5%. The total cost of the water pump is about 24.3 million yuan, and the return is about 17.4%. From the cost of the water pump, the operating cost of this quarter is 3.41 billion yuan. Compared with the previous 3.19 billion yuan, the return has increased by 6.7%. This is mainly due to the cost of the water pump in this quarter, which was about 32.6 million yuan in the previous quarter. From the point of view of the sales cost, this period is about 1.73 billion yuan, which is 10% of the total growth. This is mainly due to the fact that the business has increased the investment strength on the basis of the high efficiency of the government, which drives the increase in the current third-party flow investment. The total cost of this period is 1.11 billion yuan, which is about 17 million yuan, which is mainly due to the reduction of the real estate value related to Shennanbao. The cost of R&D is about 5,300 million yuan, which is about to maintain stability. From the perspective of profit and cash, the company's profit and loss capacity increased again in the third quarter, with a net profit of 9,280 million yuan, which is 2.5 times that of the same period last year, and a health growth of 5.1% in return. The risk-free business profit and loss rate has also continued to stabilize at more than 20% of the high water level. Under the continuous net profit, we still maintain the constant positive cash flow in this quarter. The company's account has plenty of cash reserves. As of September 30, We will continue to adhere to our business philosophy and strategic choices, and continue to encourage companies to achieve steady growth. The above is the financial situation of the 2017 fiscal year. Next, let's move on to the Q&A session.

Thank you. Okay, thank you, Xiao Ying. Dear listeners, we will now begin the Q&A session. If you have any questions, you can press the signal button on the phone, then press 1. If you want to answer a question, press the signal button, then press 2. In addition, this meeting will also be broadcast on the Jinmen Finance platform. If you are participating through the Jinmen platform, you can also ask questions through text on the platform. The first question I received here is from Thank you for your question. Let me answer this question.

Compared to the same period last year, Q4 has maintained a stable income and profit situation this year. However, due to the fluctuation of the season of insurance business, Q4 is usually a relatively low income season in all four seasons of the year. This year, each period will still maintain this trend. In 2024, the insurance industry, under the guidance of relevant policies, is going through a period of transformation and adjustment. The company has also done business deployment and resource investment adjustment on the insurance segment. Although there have been challenges in the short term, we are very optimistic about the positive development of the future industry and the company's competitiveness. Looking at the whole year of 2024, the company is expected to achieve about 5% growth at the income end and pay the net profit of the same large growth. Thank you, Xiao Ying. Jeffrey, there is another question. The second question is, how does management view the trend of opening up medical insurance and commercial insurance data and how will it affect the company's business plan in the future?

Thank you, Jeffrey. I can answer this question.

In terms of the information sharing of medical insurance and health insurance, we believe that the future policy is to focus on product calculation, health insurance and health insurance, and other aspects to improve health insurance development, especially to be able to directly expand the supply of product to the patient group. In the field of health insurance, In the past two years, the health insurance industry has been the focus of the focus of the water safety business. In the third quarter, the first-year budget for water-based health products contributed nearly 200 million yuan. So we are closely monitoring the structure of relevant policies. If LiPo data is more open, we will actively join forces to explore more customized products that meet the needs of users. In addition, in terms of user service, WaterBee has been strengthening the construction of the content system in the past two years to improve the user's need for insight, coverage and service capabilities. In Xiaohongshu, Thank you.

Thank you, everyone. The third question is still about insurance business. It's from Edwin Liu from CLSA. The question is, I noticed that in Q3's performance, the insurance fee increased by 20%, but the insurance-related income increased by 3%. I would like to ask the management team why the change in insurance fee and income is not consistent. Thank you for the question.

I will continue to answer it. The insurance fee to the total transfer rate is called take rate. If we look at it in the same way, we... um um Okay. The next question is from Zhang Muyang from China. His question is,

Note that the AI application of the company has started to have external business landings. Could you please share with the management team the impact of this business mistake on the company's TNL and the subsequent planning?

Thank you for the question. I am Shen Pang. I will answer this question. Let me first introduce the development process of the software company in AIGC. As early as 2021, that is, before the big model came out, and on this basis, we developed an AI-based application that is close to the real-world. Currently, our AI is already online in the internal business environment. The cost of each month's contribution has exceeded one million yuan, and it has been of great use to the insurance industry. In addition, we have also made some attempts in the field of innovation. As I mentioned just now, 3G is one of our latest applications, and it has optimized the traditional human resources. From a cost perspective, we must pay attention to it. As I just mentioned, some of the improvements have been made. In addition, we are also actively researching how to make this kind of digital service capacity based on large-scale models so that it can accommodate a large number of industries and industries that are in need of training. The training has also begun to cooperate with some potential clients, and we have carried out a standardized test training to measure the progress. I hope that there will be a clearer progress in 2025. Thank you. Thank you. Thank you.

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