Waterdrop Inc. Price & Performance (WDH)

Hello, everyone. This is Chen Peng. [indiscernible] 2024, Waterdrop delivered solid performance across all business [indiscernible] Driven by our integrated scenario ecosystem and the sustainable AI investments by fully upgrading products and services we have established new benchmarks for AI implementation in the industry. In Q4, our total revenue was about $687,000,000 The annual revenue RMB2.77 billion up by 5.4% YY. In terms of the profit and the net profit, [indiscernible] to ordinary shareholders in this quarter was over RMB99.6 million and the annual profit results have doubled, achieving our financial guidance to The company has remained profitable for twelve consecutive quarters. I'm also pleased to announce that based on our stable operation in the second half of twenty twenty four, and a significant year over year increase in profits with both approval the company was soon launched its third cash dividend. Cash dividend with $0.02 per ordinary shares and dollars per The shareholders of ordinary shares and ADS as of closing date of 04/11/2025 U. S. Standard Time are entitled to the dividend. Moreover, if our business maintains healthy operations, we plan to distribute dividends semiannually. To reward the support of our shareholders and investors. In addition to dividends, the company also continued to actively repurchase from the open market As of the February 2025, the company has cumulatively repurchased about 52,100,000.0 ADS in the open market costing approximately $104,000,000 We remain committed to social responsibility and sustainable development.

As of the end of twenty twenty four, Wodie Software platform has partnered with 115 public charities and holds over 15,000 charitable projects. Furthermore, we will also win many ESC achievements in in Q4, including AESD rating from unit United Equator and Chudin. As a milestone, Waterdrop Medical Profounding Has Been Officially Recognized As A Pioneer In China's medical profiling sector. Following new legislation changed the platform security designation from the Ministry of Civil Affairs on 12/25/2024, becoming one of the first batch [indiscernible] [indiscernible] online service platform for individuals seeking financial help [indiscernible] [indiscernible] global attention in AI innovation. We believe AI powered industry will redefine productivity As a tech driven company, we have launched AI tools and [indiscernible] using large language models in twenty point four especially in online sales and broker support. With deep sync integration, we will we are accelerating AICTC development. At the end of the phase earnings call, we will share our insight and latest breakthrough on AI. For 2025, we will focus on business growth targeting 20% annual revenue growth with quarterly increments Based on current projections, we expect financial performance of Q1 to maintain stable growth and the profitability. Subsequent quarters may see strategic investments aligned with a federated revenue growth.

That concludes my remarks. Now I will turn turn it over to Shi Chong Ying for the financial update. Thank you, Chunpeng. Before I go into details, please be reminded that all numbers quoted here will be in RMB and please refer to our earnings release for detailed information on our financial performance on both the year over year and quarter over quarter basis, respectively. In In Q4, the company delivered solid performance with total revenue reached $687,000,000,000 up 4.2% in a Y O Y for for full year 2024 our revenue totaled 2,770,000,000.00 In 2024, our non insurance business accounted for near 15% of total revenue. Our corresponding service fees amounted to $267,700,000 while digital clinical trial solution income reached $91,100,000 collectively reflecting [indiscernible] Through AI driven efficiency, enhancement and refined operation management, Our total operating cost and expenses in Q4 amounted to about RMB600 34,000,000, remaining stable compared to the same period last year For the full year of 2024, overall operating costs and expenses decreased by 1.7% from last year. Breaking this down, in Q4, operating costs increased by 7.2% year over year. To RMB323.8 million. This was primarily driven by an increase of RMB39.1 million in cost of referral and service fees, partially offset by a decrease in personnel costs.

Sales and marketing expense increased by 4.1% year over year to RMB182 million this quarter, This resulted from our strategic expansion in customer acquisition, due to an increase RMB30.2 million in marketing expenses, for third party traffic channels. And partially offset offset by a decrease of $22,800,000 in personal costs. General and administrative expenses declined significantly to RMB73.7 million down 23.2% year over year, mainly attributable to a decrease in allowance for credit loss. And professional service fee. R and D expenses stood at RMB54.3 million, a 9.3% decrease from the same quarter of last year primarily reflecting optimized personnel costs However, our AI investment remains unwinding. In fact, we plan to increase investments in 2025 to further strengthen our technology edge. We have sustained remarkable profitability and double our annual net profit attributable to our ordinary shareholders. We continue to generate a positive operating cash flow during the week this quarter. As of 12/31/2024, our cash position was 3,670,000,000.00, providing a robust support for future growth initiatives. And this concludes our financial overview. I will now pass to our BOSECC subsidiary, Jasmine, to update our business development. Thank you, Xiaobin. In Q4, our insurance business such representing 24.5% year over year growth.

We're showing a 7% quarter on quarter decrease Insurance related revenue reached RMB $580,000,000, down 1% Y o Y and 3% quarter on quarter. While operating profit stood at RMB103 million with an 18% operating margin. During this quarter, our short term insurance, as I FIP surged 44.2% YY to 1,430,000,000.00 yen driven by breakthroughs in public customer acquisition from the real time marketing optimization and the new payment channels leveraging user insights we introduced more inclusive short term insurance products in this quarter. Including medical plans tailored for individuals with pre existing conditions. For long term insurance product, FYP reached $460,000,000. With a slight sequentially decrease impacted by the product suspension of last quarter and the holiday reason in this quarter. In Q4, we optimized our team staffing while maintaining high productivity per capita. Furthermore, we sustain our efforts to enhance and diversify our long term insurance offering with disability income, insurance along achieving an FIP in nineteen ninety million The company is also continued to develop its online planner model. In the fourth quarter, Shenlang Bao independent independently contributed approximately RMB90 million in FIP. For our medical performing business, as of end of twenty twenty four, around four seventy million people of accumulated, they donated 67,500,000,000.0 about 3,400,000 patients through our platform.

Our platform processed thousands of companion applications and over 50,000 image submissions. With risk control remaining a top priority. To enhance efficiency, we implemented a two dual model AI framework. On one hand, lightweight models now detected pixel level image tampering in milliseconds. Reducing false positive rate from 0.3% to an industry leading 0.1%. On the other hand, summarizing experience from the cumulative cases from the past eight years extracting more than one seventeen hundred characteristics to assist the medical consultants in making reasonable prediction of the diseases and reducing the risk of cost by fraud and misappropriation. Following twenty twenty four's regulation update, and the government official designations, what is your as the China's largest online service platform for individuals seeking financial help? We will continue setting standards through technology driven transparency and user centric operation. During this quarter, our digital point of trial solution income continued its growth. Realizing a year on year increase of 22.9%. We collaborated with a total of 177 pharmaceuticals in CRO Moreover, we enrolled eight eighty patients in initiative service for 79 new programs. During the fourth quarter of twenty twenty four. Addition, the platform leveraged AI models to enhance doctor patient service across scenarios like health management, automatic science content creation and education digital avatars.

Multiple initiatives have been lost both in efficiency and user experience [indiscernible] ensuring compliance This is a key progress of each business line in this this quarter. Next, we will invite Yan Wei, the GM of each the insurance business to deliver a keynote on OneDrive's AI driven insured hedge. Thank you, Jervu. Dear investor and analyst, [indiscernible] it's a great honor to present Waterdrop achievements in AI and other intra tax during the earnings conference. Autozh has been deploying AI since 2019, starting with machine learning algorithms, OCR and NLP, technology to optimize insurance product recommendation. Mismatching and risk control, boosting online conversion rates and service efficiency. We established a series of digital infrastructure, including data middle [indiscernible] intelligence marketing system, smart CRM system and AI risk control system. Enhancing user experience will strengthen our intra tech leadership This journey also cultivated a cross functional R and D team combining insurance expertise with AI capabilities. That means this transformative way Waterdrop has developed [indiscernible] insurtech competitive barrier for AI application. Which can be divided into four core areas. Firstly, we have built a multi dimension [indiscernible] digital avatars and other innovations. Covering channels such as WeChat, WeCom and [indiscernible] This enables seamless transaction between service while accumulated multidimensional data.

Secondly, we have established a fully fully digitalized service chain. Demand identification, product matching, [indiscernible] conversational ability of general purpose LLMs, our service chain requires not only massive knowledge bases but also precise control over the entire service workforce to ensure high reliability. Currently, we handle tens of thousands of highly complex insurance inquiries in daily basis. Nearly over eight years we processed 100,000,000 scale private data assets, in the insurance industry. Including 112,000,000 operations data on knowledge base of over 7,000 products and a massive structured service data entries. This real world data is in reposable training material for building insurance specific LON. Lastly, distinct from general purpose LLMs, What is Allpass developed a vertical knowledge graph? For insurance scenario. Combining recommendations insight and service conversion. Across hundreds of refined operational nodes, we employ specialized tours such as family coverage gap analysis algorithm, customer design, decision making, psychology models and resolution framework for customer objections. For example, our model can generate customized insurance plan in real time based on user lobbying duration, consultation keywords family structure and other features. It's four in one capability system integrating scenarios, service, data and knowledge, ensuring the rapid implementation of orders of AI.

Solution, while General Purpose LLM still struggle with [indiscernible] our vertical models can already deliver definite answers to our users. Overall, the combination about the multiple scenarios and online data has offered irreplaceable strategic value insurance LOM. Next, I will demonstrate how our AI has delivered measurable results Over the past two years, we have actively adopted cutting edge fundamental and technologies while developing AI applications tailored to our business scenarios. I want to share some examples. Firstly, our insurance AI agent has end to end self decision making capability. [indiscernible] integrated the ability of [indiscernible] decision execution Leveraging multi agent collaboration technology In the medical insurance scenario, it it enables fully automatic decision making. Up to 15,000,000 conversations. For example, a single call can automatically complete process like understanding user needs, how health risk modeling and the policy interpretation. Our AI agent can support modular agent units collaboration in real time and the flexible transition across health insurance, auto insurance and other scenarios. The system rates over 7,000 products and it can respond within two seconds. Moreover, our AI agent can dynamically optimize MLM algorithm by learning from the operation feedback [indiscernible] through over 100,000 daily interactions. And secondly, we also continue to optimize our model through two main approach.

The first one is knowledge distillation. This method used technology like SFT and China fraud reasoning. It impacts millions of insurance related knowledge to the model. Making it comparable to the senior human competence. The second is reinforce fine tuning of the cell strategy. We integrated the deep sea and other open source frameworks with our [indiscernible] GRPO algorithm. This has increased model accuracy by 20%. Furthermore, our AI agents can make the multi model interaction with our users such as real time coordination of voice, text, and the image. Minimize the user waiting time. We also upgraded it with an emotion adapt system. It can dynamically adjust picking speed and modifies its pump based on semantic analysis. For example, our AI agent will slow down by 20% when it interacts with elderly users. Over the past two years, our 48 LOM related patents have been granted. With over 100 patents filed and nearly 100 AI innovations. Woodruff is one of the first insurtech companies capable of enabling AI agents to independently close deals in complex scenarios. Next, I will want to show you our detailed AI application results. Following a development path from simple automation to advanced integration, our LLM application now focus on two directions. [indiscernible] and AI agent directing serving users.

All our Copilot application we have quality control Copilot and self copilot. Our quality control copilot can replace the manual sampling of service recording and perform tax analysis. With 88% accuracy level of human scores across voice and text, text channels, we expect the frontline quality control [indiscernible] To to be reduced by 40%. Significantly improving efficiency. And our South Copilot can enhance self efficiency by enabling rapid summarization of client intent and tailored product recommendation. This tool elevates the service quality and conversion rate empowered our human agent to better meet client needs and achieve the self targets. About our AI agent, we have three different applications including AI health insurance agent, AI service assistance and AI insurance planner. For our AI health insurance agent, it can directly serve customers via voice based conversation. [indiscernible] like single session lapping up to fifteen minutes outperforming junior agent efficiency. It currently generates millions of insurance premiums per month. Project to reach tens of millions by year end. Building on this, our AI auto insurance agent have entered daily training with two P and C insurers with selected projects already in user beta testing. All our AI service assistance for Xiaohui embedded in our app.

This 20 fourseven AI assistant handles Q and A about user policy and the products we were interested in, By 2025, we expect AI to reduce case transferring rate by 50% and improving efficiency by 50% compared to human agents. Leveraging deep search long chain reasoning ability, we are developing an AI insurance planner to provide real time high quality family insurance consultation and planning service. Enhancing user experience and growth potential. And talking about the future outlooks, in the next three to five years along with the technology and the application trends that I just mentioned, based on our industry know how. We will further consolidate our leading position in the Internet industry. Thank you for listening. As And ladies and gentlemen, with that, we will conclude today's earnings conference call. We do thank you for joining. Have a good time.