Waterdrop Inc.

Good morning, everyone. This is Tracy Lee from WaterDrop Investor Relations. It's my pleasure to welcome everyone to WaterDrop's first quarter's 106th earnings conference call. All participants are in listen-only mode in our input 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 State Harbor Provision of the U.S. Private Securities and the Litigation Reform Act of 1995. forward-looking statements accepted risk and insurgencies limit cost actual results to differ materially from our current expectations. Potential risk and insurgencies include but not limited to those outlined in our public findings with the FDC. The company does not undertake any obligation to update any forward-looking statements accepted as required in the applicable law. Also, this call includes discussion of certain mindset measures. please refer to our earnings release for a compilation between non-debt and debt. Joining us today on the call are Mr. Chen Peng, our founder, chairman, and CEO, Mr. Yuan Wei, director and GM of the insurance business, Ms. Xu Xiaoying, head of the finance department, and Ms. Li Jielu, board secretary. We will take questions in the mentoring line at the end of the conference call. Now, let's invite our CEO, Chen Peng, to start. Dear investors and analysts, thank you for joining Waterdrop's first quarter 206th earning conference call. In the first quarter, we continued our last year's growth momentum with total revenue of 1.24 billion yuan at 64.8% year-on-year and net profit attributable to ordinary shareholders of more than 98 million yuan. Since the first quarter of 2022, we have maintained a gap of profitability for 17 consecutive quarters. By second, our insurance business continued its user acquisition strategy with insurance-related income at 74.1% a year. As this capability has been validated, we sharpened our focus on user experience while continuing to optimize our traffic channels and user targeting in patients. The Kribani business remains stable, having raised medical funds for a cumulative 3.75 million patients by the end of the two months. And our digital clinical trial solution business is the standard enrollment growth, with more than 15,500 patients enrolled to date. On technology front, we are accelerating our shift toward an AI-native company. As of March 31st, 2006, we had filed 75 LLN-related patent applications, including nine international ones, and we recently granted two more national innovation patents in intelligence, semantic understanding, and the multimodal recognition. This technology will be progressively applied to the insurances narrowed, which has inhaled in the customer service and claims, improving service quality and efficiency. On capital returns, we continue to share our growth with our shareholders. In early May, we completed our fifth cash dividend since our IPO, totaling approximately $10.8 million. Our share repurchase program also continued steadily. By the end of May 2006, we had repurchased approximately 61.8 million ADFs in the open market for about $120 million. As of the end of May 2006, accumulated cash dividends and share repurchases since IPO had totaled approximately $170 million. Meanwhile, we remain committed to giving back to society. At the end of the Q1, the Water Drop Charity Platform has partnered with 119 public charitable organizations and launched over 15,500 charity programs. Looking ahead, we aim to seize industry opportunities and to make growth our top priority this year. Building on our proven user targeting capabilities, we will increase in marketing investments further. For 2026, we are targeting approximately 40% top-line growth with operating profit scale is expected to remain what we stable. We expect with this current investment to allow greater profit potential in the coming years. And the user-based extension will further support the company's long-term development. And that covers our overall performance in G1. Next, I will walk through each of the business segments in detail. Hello, everyone. This is Gamla A. Let me walk you through the progress of the insurance business. In first quarter, insurance-related income reached $1.15 billion at 74.1% year-over-year, with operating profit of $115 million. Our operating margin of Q1 is 13.3%. The year-over-year top line growth mainly reflects the continuation of our last year user acquisition strategies. In the first quarter, we continued to step up public domain user targeting and increase our investment in traffic and AI, driving significant premium growth. And on a quarter-over-quarter basis, while the income declined, our insurance operating margin rose by 2 percentage points. This was mainly because we proactively cut some lower ROI channels during this quarter. At the same time, we are actively expanding into other high-quality traffic channels while running our mature ones with refined operations, enhancing our traffic infrastructure, and optimizing our model to drive a continuing improvement in ROI. On the supply side, we are committed to getting users more diverse offerings, product offerings, which continue to earn user recognition. During the quarter, FYP from our pre-existing condition products rose 24.3% year-over-year. And the disability insurance products contributed 89 million in FYP. At the product level, we continue to iterate. For example, we upgraded our inclusive cancer worry-free medical insurance service, expanding the coverage for out-of-the-hospital prescriptions and related medical devices, as well as a range of advanced cancer services. We also recently launched a show for cancer-specific disease products with a singular health disclosure and lower the bar to lifelong cancer protection. On the service side, we took multiple steps to improve the customer experience. We launched a dedicated customer complaint hotline to make it easier for users to raise concerns, and we also connected payment channels with our customer service system. expanding frontline operations, and enable faster refund processing. And for elderly customers, we simply find procedures for the children acting on their behalf and introduce a faster track service channel. Together, these initiatives upgrade our after-sales service capability. We also continue to apply our LLM capabilities and AI tools to students streamlined workflows, and improved operating efficiency. The user-facing AI applications contributed approximately 87 million yen in incremental premiums into one, 17.7% sequentially. Through real-time support on our mini-programs, WeChat, phone calls, and WeCom, including our AI Pro insurance and AI medical insurance experts, WeCom AI, and other tools. Our frontline consultants, Koyi.ai, have handled more than 10,000 underwriting inquiries to date. In late March, we began internal beta testing of the cloud co-pilot on CRM and WeCom, bringing together our product knowledge base, Koyi.ai, and other two agent tools. So our consultants can get instant answers on products in the writing and other common questions with less switching between the systems and documents. Co-pilot also supports the sales reviews, top track replay and refining, and performance analytics. In after sales service, Our AI user service agents are now in regular operation, supports more than 1 million service interaction per month. And the AI service quality co-pilot continues to deliver efficiency of more than twice the manual-only basis in this baseline. On the AI infrastructure side, our low-cost platform, Waterboxx Digital AI, now offers more than 30, The purpose-use agents, each tailored to a specific scenario for our internal team and external clients in all the user-facing work. So, that concludes our insurance business update for the first quarter. Thank you, Rhonda. This is Debu. And now, next, I will walk you through our first quarter performance for Bonnie and the healthcare business. As of the end of March 2016, approximately 494 million people had cumulatively donated a total of 73.5 billion to 3.75 million patients through the WaterDrop Medical Profunding platform. This quarter, we pursued the two priorities for WaterDrop Medical Profunding, the anti-capability viewing and the better service in linguistic diverse regions. For AI review, we complete an quarterly upgrade involving towards an AI-assisted model without compromising with the control quality. Our risk model can structure the contained material quickly and apply the preset rules for preliminary screening, short-term intake, and the first-class review and create our risk specialist for complex cases. Secondly, we improved the service for patients in linguistically diverse communities, including areas where a minority language is spoken. And this quarter, we systematically refined our service workflows and adapted the review standard to their real needs. We added a minority language specialist to work alongside our existing campaign consultants on upfront consultation, and the documents of guidance and dispute resolution, and reducing the communication costs caused by language barriers. In addition, we set up a dedicated service team in which the translator and the risk control specialist can track each case end-to-end and promptly resolve the bottleneck, ensuring a strict risk control compliance while respecting local culture sensitivity. Turning to our healthcare business, we sustain a high-quality growth quarter, broadened LLM application across the core business scenarios. We partnered with 243 pharmaceutical companies and zero and initiated services for 128 new programs. Our e-farm platform's single quarter patient enrollment rose 16% year-over-year. and the newly signed product in this quarter increased 53%, reflecting the wider commercial coverage and the deeper client engagement. As of the end of the first quarter of 2006, the platform has had a cumulatively enrolled over 15,500 patients. In January 2006, our intelligent drug patient matching technology secured a national invention of the patent which is the first of this kind in China. This quarter, we focused on viewing our upstream data structuring capabilities and connecting it with a matching engine. Across part of our service workflow, the platform has now established a standardized pipeline from the data structuring to intelligent product matching, promptly generating suitability recommendation against the trial protocols. Supported by this AI capability, we continue to build our case library, medical case library, and complex indications and reattentives with a more balanced mix across therapeutic areas, strengthening the foundation for sustainable midterm to long-term growth. And that covers our core funding and healthcare expenses. Hello, everyone. This is Xu Xiaoying. I will now get through our financial headline for the first quarter of 2006. Before I go into details, please be reminded that all members who are here will be R&D, and please refer to our earnings release for detailed information on our financial performance on both the year-over-year and quarter-to-quarter basis respectively. In the first quarter of 2006, Georgia's total revenue reached $1.24 billion, up 64.8% year-over-year, sustaining rapid growth. At second, the insurance-related income contributed approximately $1.15 billion, up 74.1% year-over-year. while the non-insurance business together accounted for about 7.8% of the revenue, with profiling services of approximately $16.73 million, and digital compliance solution income of approximately $24.2 million. Our total operating costs and expenses for this first quarter were approximately $1.16 billion at about 71.5% year-over-year. Operating costs for this quarter reached $487 million at 30.1% year-over-year, driven by our business extension. Cost of referral and services increased by about $53.9 million, while short message service cost and the personal cost arose by $38.9 million and $17.3 million, respectively. Thousand marketing expenses reached $541 million, a significant increase from $172 million in the same period last year, mainly because we approved a progressively scaled-up target investment over the past year and reinforced momentum. Marketing expenses for third quarter traffic channels rose by approximately 361 million euros a year. General and administrative expenses were 71.7 million, down 4.3% euro a year, mainly due to the lower professional services risk order. Research and development expenses were about 62.7 million, a 11.5% euro a year increase. currently due to an approximately 6.7 million rights in cloud and the technology and the technical services. For the first quarter operating profits was around 79.95 million, a modest year operating price of 5.3%. However, affected by the net operating items in this quarter, The net profit attributable to all in-year shareholders was approximately 98.4 million, down 9.1% year-over-year. As of the end of March 2026, the company maintained an amble cash reserve with cash and cash equivalent to short-term investments and other cash positions totaled about approximately 2.88 million. That is 2.88 billion. And on the capital returns that were actual through May 1st, 2026, we repurchased a cumulative repurchase total of approximately $61.8 million for about $120 million, and it recently completed a tax dividend of approximately $10.8 million. Overall, the growth momentum of our core business agreement sprung in the first quarter. What does that feel? Over 64.8% year-on-year revenue growth. And by stepping up, the investment in traffic and AI continues to strengthen our long-term competitiveness. And ladies and gentlemen, that will conclude today's conference call. Would you thank you for joining? Have a good time.