Waterdrop Inc.

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Good morning, everyone. This is Tracy Lee from WaterDrop Investor Relations. It's my pleasure to welcome everyone to WaterDrop's fourth quarter and official year 2025 earnings conference call. All participants are emailing in our English line. As a reminder, today's conference call is being recorded. Please note that discussion today will come from forward-looking statements made under the safe harbor provision of the U.S. Privacy Security and the Litigation Reform Act of 1990-5, forward-looking statements as subject to risk and incentives that may cause actual results to differ materially from our current expectations. Potential risks and incentives include, but not limited to, those outlined in our public findings to the SEC. The company does not undertake any obligation to update any forward-looking statement, except as required and applicable law. Also, this call includes discussion of certain non-debt matters, which refer to our earnings bill list, forward consideration between non-debt and debt. Joining us today on the call are Mr. Chen Peng, our founder, chairman, and CEO, Mr. Ran Wei, director and GM of the insurance business, Mrs. Xu Xiaoying, head of finance department, and Mrs. Li Jielu, board secretary. We'll be happy to take some of the testings in the mentoring line at the end of the conference call. Now, let's invite our CEO, Shenpeng to start. Dear investors and analysts, thank you for joining Wooded Rabbit Horse Quarter in the fiscal year 2025 earnings conference call. Looking back at 2005, we executed firmly on our AI-plus insurances strategy, delivering technical progress in both AI application and business growth. Our financial performance grew up, we saw significant top-line and bottom-line expansion further solidify our core fundamentals. For the fiscal year 2005, our revenue reached $3.98 billion at 43.5%, with our net profit attributable to ordinary shareholders reached $570 million, registering year-on-year growth of 64.8%, Notably, we met our guidance to the market and have now delivered gap profitability for 16 consecutive quarters. Our interest segment was SML with revenue surging 51.3% and operating margin of roughly 18%. Furthermore, our LLM integration significantly added the value of our medical performance platform our platform has raised funds for 3.68 million patients with its watch. And our series of clinical trial solutions enrolled over 4,000 patients this year. Reflecting their strong performance in the second half of 2025, our board approved our fifth cash dividend of $0.03 per EDS, totaling $10.8 million. This will be paid in leader late April to early May to shareholders' record as of April 24, 2006, U.S. EC time. Meanwhile, our share repurchase is on track with $60.7 million ADF repurchase for about $118 million for the end of February 2006. On the technology front, we are accelerating our shift to become a native company. As of the year end, 2005, we filed 72 LLM-related admin applications, including nine international ones. Throughout the year, we deployed the multi-model AI agent spending tasks, tactics, voice, and virtual interactions across all core workflows, from acquisition and conversation, style, productivity, and customer service to quality control and R&D. Every stage is now production-ready, delivering memorable operating games. This capability is unified from, under the, what is called C-Sort AI, our company-wide platform for the considering scenario-specific agents, now also open to industry partners. Beyond engineer use, we are pioneering open collaboration infrastructure via our WaterDrop Guardian AI co-pilot, which is called CloudSquare. Built on a distributed architecture design, our CloudSquare enables a different AI agent to autonomously communicate and collaborate. Early demos have already validated its core workflow, seamlessly multi-round dialogue, and automatically processing. In terms of the ESD, we partnered with 119 organizations to launch over 15,500 projects, earning global recognition for our poverty reduction efforts and upgrading our ESD rating to 8+. As we enter our 10th anniversary in 2016, Our goal is to move beyond just using AI tools to becoming truly AI-native companies. We aim to digitally reconstruct our entire value chain, embedding AI as a structural competitive advantage. We expect to sustain the momentum this year with moderately higher investment in marketing and AI, targeting double-digit growth in both revenue and profits. Now I will talk to Yanwei to introduce the development of insurance business. In the fourth quarter, our insurance business continued its strong momentum. Insurance-related income surged 125% year-over-year to $1.31 billion, while operating profits rose 42% year-over-year to $160 million. On the traffic side, we have sharpened our real-time user identification. Leveraging our self-deployed 50-milli-second data models, we can now capture potential user attributes with milliseconds perception in high-concurrency traffic. This allows for hourly hot updates and rapid AD testing, which has significantly improved the accuracy of our high-quality traffic filtering, and laid a solid foundation for our FYT growth. Regarding product supply, our market first has been launched in version 2.0 this quarter. The new zero deductible feature now covers both prohibited long-term medical costs and routine medical expenses. Additionally, our pre-existing condition products gained strong traction with FYP at nearly 70%. Well, disability insurance contributed about $1,000,000 in FYP, validating our long-term strategy. Most importantly, AI is now embedded in every node of our service chain. On the user side, our AI Pro insurance agent on the mini program shows a 33% of sequential increase in premiums, while our AI medical insurance experts generated over 15 million in FIP at 145% quarter to quarter. We have also expanded the AI capabilities to standard health products, WeCom generating incremental mock premiums of over $1 million. For human agent empowerment, our Life Center co-pilot has cumulatively assisted in over 370,000 carriers as of this quarter end. Our what is up CEDAW AI platform is now formally operational and having completed the full quarter rollout of the core module, like workflow agents, batch testing, and proactively task triggers, this infrastructure powers our self-AI planner deployed across both the WeChat official accounts and mini programs to handle the product recommendations, business facilitation, and user-agent matching, We have even opened the platform to our partners and insurers to uplift the industry-wide efficiency. In Azure South, our AI customer service agents handle over 1.4 million queries per month. They add power quality control co-pilot to per capita efficiency to 2.75 times that of the menu-only baseline. And this concludes the insurance business update for the fourth quarter. Now I will talk to Board of Directors to introduce the progress of our medical profiling and the healthcare business. Thank you, Randall. As of the end of 2005, approximately 419 million people have cumulatively donated a total of $72.3 billion to 3.68 million patients through what is our medical profiling platform. This quarter, while maintaining robot platform governance and user experience, we strengthened risk control in two key areas. To protect our user privacy, we have fully upgraded our system with large library models capable of identifying sensitive data and applying dynamic data masking in real time. For critical information frequently seen in their campaigns, like user ID numbers, bank accounts, and the medical record IDs, we have moved from the manually reduction to automatically detection and masking. And this guarantees end-to-end security for user data across our entire platform, fundamentally preventing any risk of information theft, Secondly, our content authenticity. We deployed a new model combining medical knowledge graphs with credential validation. This system can cross-reference the clinical logic to precisely identify the fabricated receipts, ensuring every donation can reach those patients who are truly in need. On the user service front, we launched a standardizing inquiry toolkit To bring fully clarity to our service scope of fee structures and campaign deadlines, this initiative reinforced our commitment to transparency and ensure our users are fully informed. And moving to the healthcare business, our e-funding platform is in high quality growth, partnered with 224 pharmaceutical companies and NCOs. and enrolled in a record of 14,555 cumulative patients. Initiate 131 new programs. Once again, setting a new cognitive enrollment record. This quarter, we achieved a major milestone that was proprietary drug patient matching technology the first of this kind in China was officially granted a national invention patent. By combining deep neural networks with mature language processing, our technology achieves end-to-end perception matching between patients and clinical trials. It uses rule-based filtering for structured data like age and lab results while analyzing unstructured medical records against of that child's criteria to uncover the hidden match. The due in-gen approach strengthens the weeks of the manually screened workload down to minutes, strongly accelerating the clinical trial process. And building on this, we significantly expand our reach out to welcome you to grow our patient base in complex and rare cases Our revenue, the clinical trial revenue related to chronic disease surges 30% this quarter compared to the previous three quarter average. This strengthens the ability of the multiple disease departments and have made a solid foundation for our sustainable long-term growth. And now I will have to check in our head of finance department to discuss our financial performance in this quarter. Thank you. Hello, everyone. I will now walk you through our financial highlights for the fourth quarter and the fiscal year 2025. Before I go into details, please be reminded that all numbers quoted here will be R&D, and please refer to our earnings release for detailed information on our financial performance on both the year-on-year and quarter-to-quarter basis, respectively. In the fourth quarter, our performance growth accelerated significantly, with quarterly revenue more than doubling year-on-year to $1.41 billion at 105.5%. For the four-year 2025, revenue reached $3.98 billion at 43.5% year-on-year, concluding the year on a strong note. Second, the insurance business remained a stable crunch zone, with four-year insurance-related income reaching approximately $3.58 billion, at 51.3% year-on-year. The other segments accounted for about 10.1% of the total revenue, with medical profiling services at $260 million, and the digital clinic for triathletes in town at $118 million. Operating costs for the quarter reached $680 million, at 109.2% year-on-year, driven by a $320 million increase in cost and the referral and services, and the 26.8 million dollars on SMS costs. Driven by rapid business expansion, operating costs and expenses in the fourth quarter rose to 1.33 billion at 109.4% year-on-year. For the four year operating costs and expenses increased 39.1% from the 21.4. below the pace of revenue growth. Sales and marketing expenses were roughly 510 million at 178.4% a year, with significant improvement in customer acquisition efficiency. The company proactively scaled up investments, resulting in a roughly 280 million a year increase in marketing expenses for third-party traffic channels. G&A expenses were 77.1 million, a multi-year-on-year increase of 4.6%, mainly due to a 6.7 million increase in allowance of party losses and 5.2 million in professional services, partially affected by 6.5 million reductions in personnel costs. Research and development expenses were were approximately 66.2 million, up 21.9% year-on-year, primarily driven by a 6.4 million increase in personnel costs and a 5.8 million rise in cloud services. How many profits improved significantly year-on-year? Net profit attributed to the company's ordinary shareholders for the fourth quarter was 152 million, up 52.7% year-on-year, For four years, the net profit attributed to the ordinary shareholders reached about $570 billion, up 54.8%. The company can maintain an ample cash position of about $3.25 billion, as of the end of 2021, providing strong support for our future growth. And this concludes our financial review for the fourth quarter and the future year from our site. Ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining. Have a good time.