Waterdrop Inc.

Good morning, ladies and gentlemen, and thank you for standing by for WaterDrop, Inc.' 's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a Q&A session. As a reminder, today's conference is being recorded. I would now like to turn the meeting over to Ms. Jasmine Lee. Please proceed, Ms. Lee.

Thank you, Alison. 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 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 SEC. The company does not undertake any obligation to update any forward-looking statement except as required in the applicable law. Also, this call includes discussion of certain non-GAAP measures Please refer to our earnings release for reconciliation between non-GAF and GAF. 今天与会的公司管理层有 公司创始人 董事长 兼首席执行官沈鹏 公司董事 保险科技事业群总经理燃卫 公司财务部门负责人徐晓英 以及我本人 公司董事会秘书李杰儒 管理层将在中文线路 基本线路介绍公司情况 同时我们也提供英文同传线路 供参会者选择 First of all, I would like to invite Shen Peng to speak.

Hello, everyone. Thank you for participating in the first quarter of the water company's performance release call in 2015. In the first quarter, the overall business of the water company was quickly developed and maintained a stable profit. In the first quarter, the company's revenue reached 7.5 billion yuan, which is the same as the increase of 7%. The amount of net profit is about 1.1 billion yuan, which is the same as the increase of 34.2%. The government has shown that This is the third consecutive quarter of the company's 13th quarter to achieve a strong gap. In terms of business, the insurance business continues its active growth strategy, with 19% of the total cost of insurance growth, and 8% of the total income of the insurance business. The business serves as a first-class personal assistance network service platform, actively supporting the supervision of women, and has accumulated a total of 3.7 million patients. We need to stabilize the delivery. The total number of patients is 11,217. Within the quarter, we will continue to deepen the energy development of large-scale insurance, and create a standard application for the insurance industry. The cost of development in the first quarter is 56 million yuan, and the return on investment is 3.6%. Water-based and water-based AI insurance experts in various product scenarios are gradually expanding. The situation in China has become more and more obvious. Overseas, progress has widened. Cooperation. The company continues to pay attention to shareholder reports. By the end of May 2025, the company has accumulated about 54.2 million shares in the public market, which is about 10.7 billion US dollars. The company has also completed the third cash-out since its listing in May. The total is about 7.3 million US dollars. The water supply company is also actively responding to and taking care of society, and persists in sustainable development. As of March 31, 2025, the water supply industry platform has 117 public-private partners, and more than 1.55 million public-private projects have been launched, including the first time to support the work of Xizang, Dizhen, and Jiuzai. Finally, According to the company's expectations for this year and the whole year, we are looking forward to a further increase in revenue in the following quarter. We expect annual revenue to exceed more than 20% year-on-year. In the second half of the year, the growth of the company's drive business will increase, and it is expected to have a certain degree of negative influence on the whole family. Next, we will introduce the development of the insurance business in the first quarter by the General Manager of the Insurance Technology Development Group.

Thank you, Mr. Wang. In the second half, the company is the core of the water and health brand. In the flow scene such as Douyin, Shibinghao, Xiaohongshu, etc., RTA capability is integrated into the individualized and refined investment. At the same time, it is explored to provide upgrade insurance and maintenance services for mass users, drive the company's apartment channel insurance and mass user contribution insurance in the same way, Thank you. and for the first time, it has been introduced into the market to provide a variety of full-fledged rights to the health insurance companies. At the end of April, the company co-branded the full-fledged health insurance, which is a health insurance product that is free of charge and guarantees health insurance. People with chronic illnesses and people with lower health conditions can apply for health insurance. Health insurance can be up to 105 years old. The health insurance border has been redefined. The annual health insurance fee for long-term testing is up to 5.9 billion yuan. Thank you very much. . . . . . . . . . . The AI application continues to improve its performance in each part of the business. The AI quality control assistant improves the quality management efficiency through the AI large model. The quality control efficiency increases by 83%. The AI insurance expert has also achieved significant progress in terms of various product conditions. Medical insurance experts are not released. Can be based on the user's request to serve in multiple scenarios on the phone. Under the phone scenario, three months can contribute more than two million yuan. The so-called this quarter in the initial service scenario is also not easy. In the third month of March, the first landing of MoYinXian flagship service has been able to speed up the delivery of security orders and produce security fees. In the customer service part, we deployed the AI customer service in the security service field to be able to reach 52% of the solution rate in 724 hours. Under the individual segment of the field, 94% of the service is covered. In addition to medical insurance, vehicle insurance, and customer service, we are actively developing and continuing to expand the operating scene of AI insurance experts. The above is the progress of the insurance business in the first quarter.

Next, Mr. Dong Shifeng will introduce the development of this quarter's insurance and medical business. Thank you, everyone. As of the end of March 2015, the number of donations of water-based insurance has accumulated about 4.75 billion yuan, and the number of hospitalized patients has accumulated up to 3.47 million yuan, and the amount of savings has accumulated over 6.88 billion yuan. The number of users and payment amounts continue to increase. In order to make this goodwill transfer more secure and reliable, WaterDiChou focused on three things this season. The first thing is that we optimized the process design. In the node where the case starts, we added the part of the user signing the electronic help promise. Through this payment help promise, we clarified the platform's help orientation to the user, and proclaimed WaterDiChou's social supervision reporting mechanism and relevant legal rules. Just like we need to do a health notice when investing in insurance, WaterDip is also building a defense line from the source. In addition, WaterDip has continued to carry on its own wind and tea control capabilities in the system infrastructure this quarter. We have built a standardized survey guide for real estate, commercial vehicles, income, and three wind and tea control high-frequency scenarios, which has accumulated the official evidence chain of 92% of cities in the country, local business brands, and so on, which has effectively improved the efficiency and quality of risk verification. Thank you very much. In the first quarter, we expanded the number of cooperative projects in the fields of general medicine, digitalized clinical recruitment platforms, long-term care, and chronic disease. In the first quarter, we expanded the number of cooperative projects in the fields of general medicine, digitalized clinical recruitment platforms, long-term care, and long-term care. In the first quarter, we expanded the number of cooperative projects in the fields of general medicine, Since the establishment of the business, the total number of patients in the group is 11,217. The digitalized clinical trial business income in the region is as high as that of the previous generation. At the same time, we have the advantage of a model of algorithmic calculation. We have the advantage of a model of algorithmic calculation. Okay. Thank you. Hello, everyone. Next, I will briefly introduce the financial performance of Shidi's company in the first quarter of 2025.

Please note that all the financial data mentioned above will be used as a unit. In addition, We can refer to the information released by the company's RR website in further reference. In the first quarter of 2025, the performance of the local companies has been good. The total revenue of the company is 7.54 billion yuan, which is 7% of the total growth. In terms of insurance, the contribution income of insurance companies is about 6.58 yuan, which is 8.4% of the total growth. The total income of the local companies is about 67.1 billion yuan, which is stable. In terms of operating costs, the company focuses on efficiency and quality improvement. The overall operating cost of the first quarter is about 6.78 billion yuan, which is about 3% higher than the income increase. In addition, the operating cost of this quarter is 3.74 billion yuan, which is 13% higher than the same period last year. Due to the increase in the service fee, there are 3,770 million yuan in sales. At the same time, the cost of the digital clinical experiment to solve the problem has increased by 2.8 million yuan. The cost of sales is 1.12 billion yuan. In the same period last year, it fell by 9.75 million yuan. The decline is mainly reflected in the service fee and related operating costs. Through the live application of AI capabilities, we continue to improve the internal operating efficiency. This quarter, there are 5.9 million yuan and 5.6 million yuan. Thank you. Thank you. but the structure of the cost of development will be further adjusted, and the introduction of more AI capabilities will be added, and further assistance to the company's internal operating efficiency improvement and exploration of the external energy industry. From the perspective of profits and cash flow, the company achieved a net profit of $1.08 billion in a quarter, with a significant increase of 34.2%. As of the end of the first quarter of 2025, the company's cash flow remained neutral at about $35.4 billion, The current cash flow continues to be positive. Each quarter, the current cash flow of 9,450 million yuan has been achieved. The subsequent business growth has provided sufficient funding support. As mentioned above, the strong performance of the first quarter shows that the water company continues to grow steadily and healthily, and has made good progress in multinationals. In the future, we will insist on the development route of technology to drive growth and promotion, and continue to deliver steady performance. This is the financial situation of this quarter's water company. Next, let's move on to the Q&A session.

Thank you, Director Guan. Dear audience, 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 withdraw the question, please press the signal button, then press 2. In addition, this meeting will also be broadcasted on the Jinmen Financial Platform. If you are participating through the Jinmen Financial Platform, you can also ask questions on the platform. Thank you for your question. Let me answer this question.

The sales cost of a company is about 1.72 billion yuan. Overall, we saw a 9.75 million discount in the same period as last year, and the sales cost decreased in the same way, mainly because this quarter we dropped the application of AI in the customer service and the previous year, and some of the artificial effects and costs have been reduced, and the operating costs and external payment fees have been reduced. In this period, if we look at the thoughts of the progress this year, on the basis of monitoring efficiency and user experience, we will increase the number of customers in each quarter and drive high-quality growth. Thank you.

Thank you. Thank you. . . . . As you can see in the first quarter report, although the revenue of the first quarter has increased by more than 100%, the investment and increase of our top line has been released gradually in the first quarter. In the first quarter, we are mainly polishing and optimizing the models, In the second quarter, we have already started to steadily expand. If we look at the second half of the year, we will expect to further increase investment in the second half of the year. So by Q2, Q3, and Q4, the rate of income per quarter will gradually increase. Especially in the second half of the year, we expect the overall rate of income to exceed the rate in the first half of the year. At the same time, we also need to pay attention to the fact that in the second half of the year, because we have a strategy to increase investment, there is a possibility that there will be a certain pressure on the current profits. In terms of the whole year, the net profit of the overall scale may decrease slightly. But overall, in terms of the delivery of performance from the business team to the management team, we are still trying to achieve the performance that surpasses the guide. But from the perspective of the insurance economy, it is a business that has been serving users for many years. So from the perspective of a financial report, the investment in the current period will actually be based on the growth of income and profit in the future. So our investment in the current period is still very necessary from the perspective of strategic evaluation within the company. This is an explanation of the overall performance guidance of the company this year. Let me see if there are any more questions. There is a question about AI. It's from Li Chengzong, an analyst at the National Bank of China. His question is about AI technology. Is there a standard that can be optimized for the improvement of our performance? And based on the current practice of the company, what are the different values that large-scale applications will have for the insurance industry? Mr. Yang, please answer this question.

Okay, thank you for the question. At present, we have two series of AI search engine in the insurance service scene, which are AI Agents and AI Components. In the current development stage, the former belongs to productivity change, and the latter belongs to productivity efficiency. Our AI insurance expert series is currently positioned so that AI can automatically complete service delivery. Currently, in medical insurance service scenarios and insurance consultation, customer support scenarios, and so on, it is possible to complete constant communication. The insurance expert series of applications, while ensuring user experience, can effectively reduce service costs by implementing productivity changes. This is the most directly visible For example, in the scene of a long-term consultation, First, the AI assistant completes the previous consultation, identifies user needs and product image, and then provides service to the AI team. Although this direction is not a structural productivity change, it can still improve the productivity efficiency of the AI service industry. With the development of machine-made large-scale technology, Our view is that in the future, the core business areas of the insurance industry, such as customers, insurance, pricing, compensation, and customer service, can basically be participated and handled by AI, and the business must be done with the least human support. We also believe that the industry may have an AI-native and cost structure-based service model. In terms of performance, whether it can replace the service nodes directly or assist the school, it can ultimately improve the performance of the school. Currently, we have multiple AI test projects that are being promoted at the same time under the different scenarios of each business. For the time being, there has not been a complete change in the performance of the school, but the goals of each test project are set separately. For example, our AI medical examiner is currently UAI can fully implement a medical blood sales, and the unit can generate a guarantee of 2 million yuan. And it is expected that by the end of the year, it can increase to about 10 million yuan per month. Part of the customer service scenarios covered by the insurance service, the coverage rate of the credit card can reach more than 90%. And it is expected that by the end of the year, the customer service can cover more than 50% of the entire scene consultation work on the line. . . . . . . . Thank you, everyone. I don't see any more questions.

If you have any questions, you can ask them on the phone. You can also ask them on the financial platform. Ladies and gentlemen, thank you for joining WaterDrop, Inc.'

's first quarter 2025 earnings conference call. The conference is now concluded. We thank you for attending. And you may now disconnect.