Waterdrop Q1 2024 Earnings Call Transcript

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Provided by Quartr
June 5, 2024

There are 1 speakers on the call.

Operator

Good morning, everyone. This is Tracy Li from Waterdrop Investor Relations. It's no further to welcome everyone to Waterdrop's 1st Quarter 20 24 Earnings Conference Call. All participants are in a listen only mode in our English line. As a reminder, today's conference call is being recorded.

Operator

Please note that discussion today will consider forward looking statements made under the Safe Harbor provisions of U. S. Private Securities and the Litigation Reform Act of 1995. Forward looking statements are factored to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but not limited to those outlined in our public filings with the SEC.

Operator

The company does not undertake any obligation to update any forward looking statements except as required under applicable law. Also, this call includes discussion of certain non GAAP measures. Please refer to our earnings release for our reconciliation between non GAAP and GAAP. Joining us today on the call are Mr. Yan Huang, Co Founder, Director, Finance VP and GM of International Business Mr.

Operator

Yuan Wei, Director and GM of Insurance Business Mrs. Xixiao Yin, Head of Finance and Mrs. Jasmine Li, Board Secretary. We'll be happy to take some of the questions in the minimally line at the end of the conference call. Hello, everyone.

Operator

Thank you for joining us on our Q1 2024 earnings conference call. Since the beginning of 2024, the domestic economy remains on track for recovery, leading to a steady growth in personal insurance industry. For Wodidraw, the company continues to pursue high quality development while improving our quality and efficiency. In terms of our financial performance, total revenue of Q1 reached RMB705 1,000,000 up 16.3% year over year. GAAP net profit attributable to the company reached $80,600,000 a significant increase of 62.2 percent year over year.

Operator

Since Q1 of $200,000 we have continuously recorded profitability for 9 consecutive quarters. In Q1, all our business segments maintained robust. For our insurance business, we actively optimized the product offerings for new service models and continue to differ AIGC empowerment. Insurance premiums significantly increased sequentially, representing an operating margins of over 20%. For Wodetong Medical core funding, we are actively participating in multi level medical assistant system to continue improving service quality.

Operator

Fending loss was further reduced. For healthcare related business, we continue to collaborate with domestic and international pharmaceuticals expanding to a digital marketing solution service. During Q1, our revenue increased 7.3% yoyo y. In the Q1, we continued to invest in R and D. By now, we have obtained 4 LLM related patents and submitted over 10 more patent applications.

Operator

We are committed to improve efficiency in the entire insurance service loop. For our CSR and ESD efforts, we will draw both here to sustainable development in ESD management, implementation and as well as disclosure. In the latest rating published by RIGF, our rating reached to A- requesting a great leap forward in ESG. As of end of Q1, our charity platform has partnered with 112 public charity organizations, launched more than 15,000 projects. Hapibang, 1 of multilaborne medical assistant platform we joined was awarded a 20 93 Project of the Year in 8 China Charity Annual Conference.

Operator

With the Capital Market, we recently paid our first special cash dividend since listing. We look forward to bring more value to our shareholders in the future. Regarding share buyback, as of the end of May 2024, the company has cumulatively repurchased 45,500,000 ADS in open market for a total consideration of about $95,900,000 The repurchased shares would continue to be used for ESOP to motivate our talented team. This is a recap of our performance in Q1. For the full year of 124, Waterdrop Financial guidance remains unchanged.

Operator

First, a profitable year with double digit revenue growth. 2nd, insurance operating margin above 8% 3rd, sustained growth in healthcare related revenue. To achieve our goals, we will implement the following strategies. For insurance business, we will adhere to our user first principle, further optimize Trepakom's conversion, explore new service models and product innovation, invest in AITC, starting business operations to improve efficiency for both ourselves and industry. For medical core funding, we will continue to take advantage of technology capabilities to ensure sustainable development while fulfilling social value and submitting user needs.

Operator

For healthcare business, we will swiftly boost the penetration worldwide, expanding the comprehensive service capability to more diverse categories and actively exploring digital marketing to broaden business boundaries. With abundant cash reserves, we're taking suitable partnership and M and A targets around insurance and healthcare sectors. Looking ahead, the company will continue to strengthen its business value and the barriers hidden by our mission and value will continue to see more segmentation opportunities. And now I will pass to Ren Wei to discuss our insurance business in Q1. Thanks, Yang.

Operator

This quarter our insurance business demonstrates steady growth. The total FIP reached about RMB1.75 billion increased by 3.7% year over year. Insurance related income was RMB610 1,000,000 up by 13.1% worldwide. Operating profit for the insurance business reached RMB130 1,000,000,000. RFP for short term insurance products was RMB1.15 billion in the 1st quarter, representing a sequential increase of 15.9%.

Operator

Net volume new policy FIT grew by 41.6% sequentially. We have continually improved online traffic conversion and based on the user profile of each content distribution platform, we specifically optimized our product offering accordingly. Our policy renewal rate remains at a high level consistently above 95%, which indicates strong user recognition. SIP for long term insurance products amounted to RMB600 1,000,000 in Q1, representing a QoQ growth of 13.4%. The contribution of YYP generated for long term insurance products to overall FIP was further increased.

Operator

The FIP of life insurance products to overall long term product increased to 56.4%. We saw a sequential increase in productivity per capita by 6.4%, the overall quality of long term policy further improved with the 1st year retention rate increasing by 2% percentage points sequentially. We continue to develop our offline brokerage business. In Q1, we launched our new brand of offline brokers, Yixing Chen aimed to provide more comprehensive offline service and strengthening our brand awareness. On Xianlan Bao, we got sequential increase in FIP and oil drop in insurance marketplace at Xinlianbao, we enhanced synergy in sales resources, content marketing and product partnerships.

Operator

Our capability in catering various products to meet user needs continue to improve. During this quarter, we launched TiwiBio, a long term medical insurance product that guarantees Tiwi's renewal for 20 years and aims to provide high value coverage for females, especially for females. Our Weushoku disability income insurance for the elderly has exceeded RMB10 1,000,000 in FIP for the 1st month it launched, reflecting a strong market demand. Targeting the market segment, we have successfully upgraded one of our star products, JiahaoYun to version 2.0, which gained top recognition on virus platform. For people with pre existing conditions, we upgraded our to over 0 waiting period and extended its enrolled age up to 105 years old.

Operator

The overall carrier insurance product achieved RMB100 1,000,000 fyp during Q1, continuing to gain user trust. Moving on to technology empowerment. In Q1, we continued to expand the application of our visual activity. The accuracy and efficiency of our large language model has been significantly improved. Our AI broker has reached 90% of the average level of human broker in health insurance sector, capable of conducting independent dialogue with our clients for up to 40 minutes.

Operator

Meanwhile, our AI co pilot, which has been widely internally tested, reached an accuracy rate of over 90% in the insurance molecule rate, significantly boosting the efficiency of sales, quality controls and others. We are also actively exploring external applications to empower the industry with several partnerships currently under negotiation. By now we have obtained 4 LLM related patents and submitted over 10 more patent applications. Looking ahead, we will remain dedicated to positioning ourselves as a forefront. This concludes my remarks for today.

Operator

And I will now pass to Jasmine for an overview of the Medical Group Funding and Healthcare Business. Thank you, Ramway. As of the end of Q1, 24, around 456,000,000 people immediately donated 63 point 8,000,000,000 to over 3,170,000 patients through our Woodland Drug Medical Group funding. We sustained focus on transparency and keep strengthening our risk management mechanism. For instance, before manual verification, we integrated algorithm recognition to identify false or fake medical documents and mitigate related risk effectively.

Operator

In addition, for patients with a high risk of passing away, we saw all the donations are made in batches according to the stage of treatment, Reducing the risk of fund misappropriation, we see that the higher authenticity we have the greater the dose include the app move will be. In the meantime, we constantly prioritize user experience and constantly improve service quality. For urgent cases, we opened an advanced payment application portal for patients who have passed the risk control review. We when patients need to withdraw the found that 24 hours public notice period hasn't end, we will use our own funds as advanced payment. This ensures that the patients can properly get the funds for their treatment.

Operator

During Q1, we actively participated in multi level medical assistance programs initiated by local governments in China. In February, on International Rare Disease Day, we will launch the special rare disease care program on top of our existing support initiatives. By the end of Q1, more than 67,000 patients with rare disease have helped through our Waterdrop Medical Profounding platform and received donations of more than RMB1.5 billion from RMB48,900,000 donors. We contribute through our platform, the Waterdrop Medical Co funding, charitable funds and collaboration with pharmaceuticals. We provide a fast track for rare disease patients to respond as well as dedicated consultants and I find a random support.

Operator

What is your charity view? What's with the charity funds to help these patients seek medical resources, get local medical insurance policy updated and so on. Through that we've continuously updated our care initiatives for patients, bringing more hope to those in need. In Q1, our healthcare related business continued its momentum. We expanded our digital capabilities in Clean Boot Thai solutions and multi channel marketing solutions.

Operator

For this quarter, healthcare related income reached RMB25.3 million representing an increase of 7.3% year over year. The number of corporations, pharmaceuticals and CROs reached 179 and the number of new programs reached 88, those figures remained high level. Leveraging a broad patient base and strong digital ability, Yifan's platform continued to enroll sustainable candidates for our pharmaceutical clients. In Q1, Yifan's platform successfully enrolled over 800 patients. As of the date about the 7,800 patients were enrolled.

Operator

Our performance has been recognized by our clients. In fact, in the right clinical trial product for global top 5 MMC, we work at exclusive Chinese third party patient recruitment partner and successfully enrolled over 60 patients within 3 months, which is 20% faster than the revenue time needed. As we fulfillment against vaccination in industry, we continue to deepen our cooperation with leading pharmaceuticals and cros, both domestically and internationally. We have already cooperated with 7 out of the global top 10 pharmaceuticals. The CRO business continued to a steady development as our reputation and influence strengthened.

Operator

We won a new bid for a clinical trial project in the field of cell therapy and forward lifting pharmaceutical in Q1. In addition, 2 key clinical trials version of our platform completed their initiation in the Q1, including the smooth launching of new brand centers. Looking ahead, we'll continue to explore potential digitalization in the healthcare sector. The platform will continue to build and improve integrated solutions across the entire industry chain. In Q1, we further expanded in the field of digital multi channel marketing, leveraging our experience in patient management for chronic disease.

Operator

We saw an increasing number of clients. The cooperation with MNCs after they depend. Meanwhile, we signed a strategic cooperation with the leading domestic pharmaceuticals. We believe that the water drop will become a preferred partner in marketing for more and more pharmaceuticals. The above concludes my speech.

Operator

Now I will pass to Mr. Zhitaiying, the Head of Finance to discuss company's financial performance. Thank you, Jasmine. Hello, everyone. I will now walk you through our financial highlights for Q1.

Operator

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 a year on year and quarter over quarter basis respectively. We are thrilled to kick off 2024 with solid financial results. The company revenue in Q1 amounted to RMB705 1,000,000 representing a QoQ growth of 16.3%. The revenue structure is more diversified, of which the insurance related income amount to RMB607 1,000,000.

Operator

The corresponding business contributed revenue of RMB67.4 million and the healthcare related income of about $25,300,000 with all three business segments growing steadily. At the same time, the company also continued to focus on operational efficiency with overall operating costs and expenses of RMB 6 58,000,000 up 10.5% year over year and 4.4% quarter over quarter. Among them, Q1 operating costs were approximately RMB335 1,000,000. Operating costs showed a year over year increase of 33.6 percent because of the consolidation of churn volume, representing a sequential increase by 9.6%, mainly due to an increase in the referral and the receipt. In terms of expenses, S and M expenses amount to RMB 100 and 82,000,000 representing an increase of 5% and 4.2% on which maintained a healthy and steady trend.

Operator

And benefiting from our effective cost control, G and A expenses amounted to RMB89 1,000,000 representing a decrease of 7.1% and 7.3% on Y o Y and Q o Q basis. R and D expenses amounted to RMB56 1,000,000. The decrease mainly due to the impact of team restructuring. In Q1, our profitability improved significantly. Net profit attributed to the company's ordinary shares amounted to RMB80.6 million, an increase of 62.2% year over year and 36.5% quarter over quarter.

Operator

Since Q1 of 2022, we have continuously recorded profitability for 2 consecutive years. We generated a net cash inflow from our operating activities of RMB179 1,000,000. Looking ahead, we will continue to create value for our users and shareholders with great profitability and growth. And ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining.

Operator

Have a good time.

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Waterdrop Q1 2024
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