Huize Q4 2024 Earnings Report

Huize EPS Results

• Actual EPS: -$0.04
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Huize Revenue Results

• Actual Revenue: $39.18 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Huize Announcement Details

• Quarter: Q4 2024
• Date: 3/24/2025
• Time: Before Market Opens
• Conference Call Date: Monday, March 24, 2025
• Conference Call Time: 8:00AM ET

Huize (NASDAQ:HUIZ), together with its subsidiaries, offers online insurance product and service platform through various internet channels in the People's Republic of China. The company provides life and health insurance products, such as critical illness, illness and disease, annuity, and term and whole life insurance products; and property and casualty insurance products, including travel, individual casualty, and corporate liability insurance products. It also offers offline insurance intermediary and brokerage services. The company also provides digital and technology development services; investment, technology development, internet information, management, and financial consulting services; business management and catering services; and insurance agency services. Huize Holding Limited was founded in 2006 and is headquartered in Shenzhen, China.

Huize Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by and welcome to Huizi's Fourth Quarter and Full Year twenty twenty four Earnings Conference Call.

[Operator]

At this time, all participants are in a listen only mode. After the management's prepared remarks, we will have a question and answer session. Today's conference call is being recorded and a webcast replay will be available on Waitr's IR website at ir.huita.com under the Events and Webcasts section. I'd now like to hand the conference over to your speaker host today, Mr. Kenny Lo, Huite's Investor Relations Manager.

[Operator]

Please go ahead, Kenny.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

Thank you, operator. Hello, everyone, and welcome to our fourth quarter and full year twenty twenty four earnings conference call. Our financial and operational results were released earlier today and are currently available on both our IR website and Global News Wire services. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forward looking statements. Please also note that we will discuss non GAAP measures today, which are more horribly explained in our earnings release and filings with the SEC.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

Joining us today are our Founder and CEO, Mr. Chenjun Ma COO, Mr. Li Jiang Co CFO, Mr. Minhan Xiao and Co CFO, Mr. Ron Tam.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

Mr. Ma will start the call by providing an overview of the company's performance and operational highlights, followed by Mr. Tam, who will go over our financial results for the fourth quarter and full year of 2024. Before we open up the call for questions, I will now turn the call over to Mr. Ma.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

In 2024, the insurance industry continued to deepen the implementation of unified commissions and fees in reporting and underwriting. The industry entered a 2% year. Further, China State Council released its 10 measures, which outlined comprehensive regulations for the high quality development of the industry. In response to these policy directions and market trends,

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

we

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

proactively adjusted our strategic focus and expanded our diversified and customized product offerings. As generative AI accelerates the transformation of the industry, we have implemented a forward looking AI plus strategy, transitioning from the application of intelligent tools to a comprehensive restructuring of our service ecosystem. This strategic shift has enhanced the product matching and service efficiency, establishing Huizi as the benchmark for the intelligent transformation of the industry. Meanwhile, our accelerated international business development has built a strong second growth engine, following high quality sustainable growth. As a result, in 2024, total revenue increased by 4.5% year over year to RMB1.25 billion and both gross written premiums, GWP and first year premiums FYP facilitated across our platforms achieved record highs.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

In 2024, JWP amounted to RMB6.16 billion, up by 6% year over year. Full year FYP reached RMB3.42 billion, up by 31% year over year. In terms of our product mix measured by FYP, whole life premiums contributed RMB1.84 billion, surging by 76% year over year, while long term health insurance contributed RMB520 million, up 2% year over year. Influenced by the downward adjustment in assumed interest rates, we registered stable growth in savings insurance products, accounting for 68.6% of total FYP, representing a year over year increase of 5.5%. Meanwhile, our short term insurance business recorded robust double digit growth with premiums up 23% year over year to approximately RMB550 million further strengthening the diversity of our product portfolio.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

Driven by profound customer insights and outstanding service capabilities, we remain committed to delivering a premium service experience to high grade customers. By the end of the fourth quarter, our cumulative number of insurance users further increased to 10,600,000 with 380,000 new users added during the quarter. The average age of customers who purchased long term insurance products in 2024 was 35.1 years old, among which 68.4% were located in higher tier cities, reflecting our high quality customer profile. The average FYP plus size for savings products reached approximately RMB75000 in 2024, up by 39% year over year. By the December 2024, '13 month and twenty fifth month persistency ratios for long term insurance both exceeded 95%, continuing to outperform industry averages.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

As of the end of the fourth quarter, we maintained strong partnerships with 139 insurance companies continuing to develop and launch customized products across a diverse range of insurance categories. In 2024, we partnered with Aviva Cofco to launch HuoMendia, a customized participating whole life insurance product that combines protection and investment features, which receive widespread market recognition. Additionally, we partnered with Ping An to introduce the upgraded Changshan An No. Two long term medical insurance product, which has been continually optimized in three key areas, including ease of enrollment, lower deductibles and enhanced value added services to better meet the growing public demand for high quality healthcare protection. In the fourth quarter of twenty twenty four, JWP contribution from our customized insurance products accounted for 53.1% of total premiums, reflecting the recognition and confidence in our product development capabilities from both customers and the broader insurance industry.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

In 2024, the insurance industry accelerated its transformation toward greater intelligence and efficiency. Upholding a long term commitment to digitalization, we have developed substantial advantages in both product and sales data alongside industry leading technological innovation capabilities. During the year, we launched an intelligent client services system, combining smart navigation with human assisted services to provide a 20 fourseven response mechanism. Additionally, we developed an intelligent assistant for our mid to high end medical insurance products to assist our client service personnel with product recommendations, policy interpretation and after sales support. This system has achieved a 95% accuracy rate in responses and significantly accelerated the development of our intelligence surface ecosystem.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

In Q4, we launched the FENGCOM underwriting risk control engine system, establishing an intelligent, automated and digital underwriting risk control platform to enhance risk management across multiple scenarios and insurance product types. Leveraging Forida's nineteen years of operation, our proprietary phone phone system integrates multi dimensional internal risk data, including underwriting claims and fraud detection and connects to high quality external data sources to build a robust and aligned data system. We proprietarily developed a disease classification system and algorithm tagging technology to accurately identify high value insured individuals and high concentration risks. By incorporating external data such as fraud indicators, credit risk, occupations and place of residence, we achieved more comprehensive risk assessment capabilities and significantly enhanced underwriting precision. Meanwhile, we customized risk control rules and modules according to the specific characteristics of different insurance products, enabling the flexible application of risk control rules and models to provide customized risk management solutions.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

These have been successfully implemented in various products including Guardian Critical Care, Littube and Xiaoxing An. Our verification engine with automated rules has reduced underwriting time to just one point zero one seconds per case on average, drastically improving operational efficiency. Since its launch, the Fengtong system has maintained a positive controllable risk identification rates of between 230% across different product categories. Key products saw a monthly claims reduction of seven percent and helped insurance products cumulatively reduced claims exposure by over RMB300 million. Overall, the system has achieved a claims ratio below the industry average.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

These outcomes have significantly strengthened business quality and showed a seamless user experience and created a positive cycle between risk management capabilities and business growth. Backed by our exceptional technological strength, robust business capabilities and extensive expertise in the Chinese market, we made significant and rapid strides in our international expansion in 2024. Our international brand, Honey InchiTech, successfully completed the acquisition of Red NAM's leading digital insurance platform, GlobalCare. In Q4, GlobalCare achieved a 32% sequential increase in total policies issued, with revenue growing 33% sequentially. As a strategic shareholder, HONI Inchutec has begun to undertake a comprehensive technology and business empowerment at GlobalCare.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

In October 2024, we launched GlobalCare.bien, a shelf insurance comparison platform integrated into the GCL app, offering Vietnamese consumers the high quality transparent and user friendly insurance purchasing experience. Vietnam is a pivotal component of our international strategy and representing a significant strategic milestone in our long term ACN expansion strategy. Looking ahead, we plan to bring the AI agent model to core Southeast Asian markets, including Vietnam accelerating the localization and implementation of Huizi's proven intelligent surface model from China. This will further enhance insurance surface efficiency and user experience in these markets. We believe the success and insights gained from our Vietnam operations in 2024 will strongly support our further expansion into Singapore and Philippines in 2025 and other Southeast Asian markets in the longer term, helping us to achieve our target of 30% international business revenue contribution by 2026.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

In February 2025, amid rapid advancements in China's AI large language models, we fully integrated DeepSeek into the Huizi app. This milestone enables seamless AI driven interactions throughout the entire insurance purchasing journey, from consolation to policy issuance. We are among the first organizations in the insurance sector to deeply embed the AI model into consumer facing services and to establish an around the clock intelligent insurance service model. By introducing the AI agent model, our AI powered app now delivers 20 fourseven personalized insurance advisory support, giving customers always on intelligent service at their fingertips. This innovation significantly optimized the purchase process and holistically improves the user experience.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

In the first month since its launch, the AI powered Huizab achieved breakthrough results. Customer acquisition effectiveness significantly improved with an activation rate exceeding 40%. New users, self purchase rates and premium conversion efficiency also showed improvements. Combining our natural language processing capabilities with the comprehensive insurance knowledge base from Huizi, our intelligent recommendation system, Right Pick, precisely matches customers with suitable insurance products, further improving sales conversion rates. Additionally, the AI model's real time interaction capabilities ensure timely responses to customer inquiries.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

In the first month after the app's launch, the daily average number of users have exceeded 40,000, delivering a more convenient and efficient insurance service experience for our customers. Looking ahead to 2025, our focus will be on developing an intelligent needs assessment system for user needs, precisely matching user profiles with product recommendations, further enhancing conversion rates and setting a new benchmark for high quality digital development within the industry. In 2024, we demonstrated strong resilience amid industry shifts by leveraging profound market insights and product innovation to adapt our strategies with agility and achieve rapid high quality growth in our international business. Looking ahead to 2025, we will deepen collaborations with insurance partners and develop more innovative customized products tailored to evolving market demands. By harnessing cutting edge AI technologies like DeepSeek, we aim to further enhance service efficiency and elevate customers' experiences while continually pursuing breakthroughs in product design and risk management to reinforce our leading market position.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

Meanwhile, we will capture international market opportunities and expand our footprint in Southeast Asian markets. Through these initiatives, we aim to enhance our brand influence and build a more resilient innovation driven international business framework. Ultimately, we are committed to reinforcing our competitive position in the international market and delivering sustainable long term value for customers, shareholders and partners. This concludes my prepared remarks for today. I will now turn the call to our CFO, Mr.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

Ron Tan, who will provide an overview of our key financial highlights for the fourth quarter.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Thank you, Mr. Ma and Kenny. Good evening, everyone, in Hong Kong, Asia, and good morning for those in The Americas. I realize there's very long opening remarks, so I'll be brief here on the results highlights. So despite the challenging macroeconomic and regulatory environment over or in 2024, I think we have delivered a very resilient performance with both total GWP and FYP facilitated on a platform reaching record highs of RMB6.2 billion and RMB3.4 billion, respectively.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Our total revenue has increased 4.5% year over year and achieving our second consecutive year of non GAAP profitability. We have achieved this by leveraging our efficient omni channel distribution network, which integrates both online and offline channels, focusing on acquiring high quality customers, offering innovative high value products and deploying our proprietary AI solutions throughout the ecosystem. More importantly, we have also made significant progress in our international expansion strategy, which will help act as a key growth driver for our long term sustainable development going forward. Over the course of 2024, we continue to strategically prioritize long term insurance products in China, which have accounted for over 90% of our G2P for the past five years. Our omni channel distribution network and sophisticated AI tools are significantly enhancing our customer acquisition and engagement capabilities.

[Ronald Tam, Co - CFO at Huize Holding Limited]

We have acquired approximately 380,000 new customers during the fourth quarter, increasing our total customer base to date of 10,600,000. Repeat purchases for our long term insurance products have increased by 3.3 percentage points to 40.2% in 2024, which underscores our ability to capture and capitalize on the LTP potential of a high quality customer base through both upselling and cross selling. Our open platform architecture continues to empower our international our internal financial advisers and also external independent financial advisers, IFAs, with total FIP from our 2A business increasing by 17% to RMB415 million in 2024. I would also like to highlight several key achievements that drove our solid performance throughout the year. Our thirteen and twenty five month persistencies have reached a stable 95% over the year.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Average ticket size for long term savings products have surged by 39% to over RMB75000 and premiums facilitated by our short term health and P and C products also increased by 23% to RMB548 million in 2024. In terms of our liquidity position, our financial position remains very strong and robust with a combined balance of cash and cash equivalents of RMB $233,000,000 or US32 million dollars as of the end of twenty twenty four. In terms of our international expansion, PONI Inshotek, our international arm, continues to serve as the cornerstone of our growth strategy and delivered exceptional results in 2024. Total revenue of our international businesses has grown to RMB228.7 million in 2024, with international revenue contribution reaching 18% for the year ended 2024, which is on track in achieving our stated 30% target by 2026. In Vietnam, we continue to make meaningful strides in integrating the local operations with the border expertise and capabilities of the Greater Group.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Following the completion of the acquisition in Q3, our Vietnam business has achieved an impressive sequential growth with gross written premiums increasing by 29% sequentially and revenue by 33%. Global Care has launched a customized family accident insurance product, which was co developed with the Military Insurance Corporation, one of the leading P and C insurers in Vietnam. In addition, we are making steady progress toward expanding into Singapore and The Philippines markets with entry plans within the next twelve months. This will further diversify our revenue streams and create new growth drivers to enhance long term shareholder value creation. Notably, on the AI front, we were among the earliest in China's intratech space to deeply integrate Deep6 model in February 2025.

[Ronald Tam, Co - CFO at Huize Holding Limited]

We deployed inside our mobile app for Quasar. This enables us to deliver real time customized and data driven recommendations to our customers, which will strengthen customer acquisition and engagement capabilities for distribution partners and IFAs going forward. This also provides a very scalable model for technological foundation to accelerate our international expansion. In summary, we believe we are ideally positioned to capitalize on the opportunities, which is created by China's evolving industry landscape, which is poised for healthy and long term sustainable growth across the entire value chain. Through Pony Intratec, we will leverage our proven business model refined in China and advanced proprietary AI solutions to tap into the tremendous growth opportunities across Southeast Asia and the rest of the world, particularly in the young middle class demographic.

[Ronald Tam, Co - CFO at Huize Holding Limited]

We are confident that our cutting edge technology and targeted market penetration strategy will solidify our position as Asia's leading insurance technology platform, connecting consumers, carriers and distribution partners digitally and efficiently through our data driven and AI powered solutions. And with that, we'll now open up the call to questions. Thank you very much and over to you, operator.

[Operator]

Thank you. We will now begin the question and answer session. We will now take our first question from the line of Qingqing Mao from CICC. Please ask your question, Qingqing.

[Qingqing Mao, Analyst at China International Capital Corporation (CICC)]

I have two questions. My first question is about the commission tax regulation. I think it has been in place for almost one year. Has the one off impact of this regulation already subsided? And has market competition improved since its implementation?

[Qingqing Mao, Analyst at China International Capital Corporation (CICC)]

My second question is on AI. Could you please elaborate on the specific ways in which AI technology can improve your operations? And what can we expect in terms of the financial outcome? That's all.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Okay. Thank you, Qingjing, for joining us again and for continued support over the years. So your question is on two sides. The first one on the regulatory commission caps and the effects of that on the brokerage channels. I think the answer is the regulations have been rolled out and officially implemented over the course of the year.

[Ronald Tam, Co - CFO at Huize Holding Limited]

And I think that the whole industry has now migrated into the new so called new normal. Ever since September one of last year, all the new products that have been launched by the insurance companies have already incorporated the new commission structure. So the short answer is yes, I think the impact has been felt and I think it's already fully reflected in our financial results for the Q4 and also for the rest of the industry and our peers that are also listed in the public markets. I think that similar results have been felt through across the industry. In terms of the regulatory impact itself on the focus channels and agencies that's already been felt, we would like to note that for the regulatory implementation on the Thai agency channel, this has not yet been implemented, and we are expecting this to be effective sometime towards middle to later part this year.

[Ronald Tam, Co - CFO at Huize Holding Limited]

And with that expectation, we do believe that it could be incrementally positive for the brokerage agencies channels including ourselves, given that right now the regulatory framework has not been fully implemented across all different channels. So again, the fourth quarter results have fully reflected the new regulatory environment for our business models and as well as for the rest of the industry. In terms of the competitive landscape, we would like to comment that very likely with the implementation of the commission caps, Market share is likely to be more consolidated among the top tier players, including ourselves and maybe some of the listed peers. And as a result, we do believe that the competitive dynamics would become relatively more in terms of long term perspective, more healthy and more sustainable and very likely that the market share will be increasingly consolidated and concentrated among the top tier players. So I guess that's the first question.

[Ronald Tam, Co - CFO at Huize Holding Limited]

And I think that for Quizlet, I think that we have a natural advantage when smaller players exit the market and while market share is concentrated in top players because we have a very flat hierarchy and much lower nimble cost base compared to maybe in particular the traditional brokers that's operating in the market for a long time, we do have a very natural cost structure advantage, particularly with respect of customer acquisition. They've always been rely on the platform model, the open platform model to acquire customers rather than an agent led model. That's number one. And number two, I think the AI evolution and the actual deployment of AI technology across our different business scenarios on our platform has also accelerated that advantage towards the online operators or digital players like ourselves. So on AI technology, I think that Mr.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Ma has actually shared a lot of details on how AI tech is being implemented across our operations. I think that in terms of the financial outcome, if you will, right, so what would that translate into our financial results? I think very likely that over the course of next few years, you'll see that the biggest contribution from AI is that the fixed cost base could be much more nimble and I think the efficiency can be much more amplified. Basically, with less human resources investment, we can then support a much scalable operations. So meaning that operating leverage would likely increase by multifold, scalable business growth without the need of deploying a lot more human resources to support, for example, the conversion of customers or especially in the customer service front.

[Ronald Tam, Co - CFO at Huize Holding Limited]

I think that AI can resolve or deal with 95% of the customer inquiries and services that's required on a normal cost business. And I think that the AI agent would be a key anchor for us going forward in terms of further investments into improving customer journey and using and utilizing AI as a major tool, a scalable tool to acquire customers at large. So that is something that we have already launched through the Deepsea integration in February. We're seeing some initial encouraging results and I think over the course of the next few quarters, we'll be happily sharing additional milestones that we as we achieve them. So hopefully that answers the questions, Qingqing.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Thank you.

[Operator]

All right. Thank you. We will now take our next question from the line of Amy Chen from Citi. Please ask your question, Amy.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Thank you. Thank you, Amy, again for joining us again and continuing to support us. Maybe I can help you translate your questions.

[Amy Chan, Vice President at Citi]

I can translate the question. Yes, yes. So I have two questions. The first one is regarding to the trends of operating expenses in the fourth quarter. We noted that actually both selling expenses and G and A expenses saw significant year over year growth in the fourth quarter last year.

[Amy Chan, Vice President at Citi]

I wanted to ask what's the main rationale behind this trend? And the second question is regarding to the gross profit margin as well as net profit guidance for the year of 2025. We noted that actually after the rationalization of commission in the broker channel, the gross profit margin actually was compressed to around 30% in the year of 2024. I'm wondering if we would likely to see some margin improvement going ahead to the year of 2025, given our investments in AI and the potential improvement in efficiency? Thank you.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Thank you, Amy. So three questions. I think the first one, let me address that first. So there are some sequential growth on some of the expense accounts. I think that one of the main reasons to do that is we actually implemented some further restructuring in Q4 in terms of our personnel headcount in the fourth quarter.

[Ronald Tam, Co - CFO at Huize Holding Limited]

So that has led to some one time or one off costs associated with that exercise. And we do have made some further AI investments in Q4, so that has led to some modest increase in the expense items. So I think over the course of 2025, I think one of the key focus was obviously to further utilize and deploy AI throughout the whole business operations on offense on the front end, on the mid office and back office. I think there's a lot of room for us to further drive cost savings and efficiency in the mid to back office in the terms of double digit percentage. So AR definitely would be leveraged and deployed at large in terms of not just customer acquisition and customer service, but also on the normal cost business operations.

[Ronald Tam, Co - CFO at Huize Holding Limited]

So I would note that in Q4, those are relatively one off trends. So in 2025, I think that we are still targeting to drive a year over year decrease in the operating expense ratios across the three key line items there. In terms of gross margin trends, I think, yes, you do note that correctly that there has been some depression in gross margins over the course of the last few quarters. But I do note that in Q, in Q4, in Q4 of this year or in 2024, our group gross margin has actually recovered to around 34.7%. So I think that our outlook for 2025 is definitely to maintain at least that kind of the low to mid-thirty range gross margins.

[Ronald Tam, Co - CFO at Huize Holding Limited]

And ideally, the investments that we're making on the AI front would drive further gross margin improvement and expansion, particularly on the customer acquisition front because that hopefully would drive more scalable direct 2C customer acquisitions at low cost. So I think hopefully, the gross margin line can improve further. And in terms of the guidance for 2025, we do guide towards a profitable full year of 2025, and we are targeting mid single digit kind of net profit margin for now. I think that the earnings growth will also be driven by our continued business momentum in the international revenue front. Obviously, I'm referring to the large contribution right now from our Hong Kong business.

[Ronald Tam, Co - CFO at Huize Holding Limited]

So and also, we will be further deploying investments into the two new Southeast Asian markets that we mentioned just now in the call. And also, invest will be made in AI. So overall, I think 2025, we're looking at a profitable year and looking at a reasonable mid single digit type of profit margin net profit margin.

[Amy Chan, Vice President at Citi]

That is very clear.

[Ronald Tam, Co - CFO at Huize Holding Limited]

Thank you.

[Operator]

Thank you. We have reached the end of the question and answer session. And with that, I'll now turn the conference back to Mr. Kenny Lo for closing comments.

[Kenny Lo, Corporate Development and IR Manager at Huize Holding Limited]

Thank you, operator. In closing, on behalf of HoiZeus management team, we would like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• Kenny Lo, Corporate Development and IR Manager
• Ronald Tam, Co - CFO

Analysts

• Qingqing Mao, Analyst at China International Capital Corporation (CICC)
• Amy Chan, Vice President at Citi