Yuanbao Q2 2026 Earnings Report

Yuanbao EPS Results

• Actual EPS: $1.26
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Yuanbao Revenue Results

• Actual Revenue: $204.92 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Yuanbao Announcement Details

• Quarter: Q2 2026
• Date: 9/11/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, September 10, 2026
• Conference Call Time: 8:00AM ET

Yuanbao (NASDAQ:YB) Inc. (NASDAQ: YB) is a China-based insurance technology company that operates a digital platform for the distribution of insurance products. The company uses online and mobile channels to connect consumers with insurance offerings from participating insurers.

Yuanbao’s business primarily focuses on health and life insurance products, along with related digital insurance services. Its platform is designed to support product discovery, application, and policy management, while helping insurance providers reach individual customers through technology-enabled distribution.

The company serves customers in China through its online platform. Publicly available information about Yuanbao’s broader operating history and leadership is limited, so additional details about its management and geographic expansion are not included here.

Yuanbao Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong second-quarter growth: Revenue increased 30.1% year over year to RMB 1.39 billion, while net income rose 35.6% to RMB 413.2 million, producing a 29.7% net margin. Insurance distribution revenue grew 30.4% and system services revenue increased 22.8%.
• Positive Sentiment: Yuanbao reported continued momentum in AI and health-insurance innovation, including expanded coverage for people with pre-existing conditions and upgrades to its Super Medical Insurance products. Its AI claims tools achieved 95% document-classification accuracy and approximately 94% key-field extraction accuracy, helping insurers reduce settlement times for claims below RMB 10,000 by 41%.
• Positive Sentiment: The company ended the quarter with RMB 5.16 billion in cash, cash equivalents, deposits, restricted cash, and short-term investments, up 50.9% year over year. Management said it plans to maintain or increase dividends subject to profitability and cash flow, while its $15 million buyback program had repurchased approximately $1.6 million of ADSs through August 31.
• Negative Sentiment: Operating expenses rose 21.9% year over year, with operations and support costs surging 139.1% largely because of the newly launched advertising-services business; income-tax expense also increased materially due to a higher effective tax rate. Management provided limited detail on the new business’s longer-term margins, policy volumes, average premiums, and overseas expansion, indicating that these areas remain relatively uncertain.
• Neutral Sentiment: Management expects commercial health insurance and AI-agent distribution to offer long-term opportunities, but acknowledged that AI insurance transactions remain at an early stage and that complex, personalized advice still faces hallucination and accuracy limitations. The company said upcoming online-marketing regulations have not materially affected customer acquisition so far because of its compliance systems and partnerships with licensed insurers.

Presentation

[Operator]

Ladies and gentlemen, good day and welcome to Yuanbao Insurance second quarter 2026 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Stella Liu, investor relations and strategy associate director. Please go ahead.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Thank you, operator. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion. A general discussion of the risk factors that could affect Yuanbao's business and financial results is included in certain filings of the company with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. Joining us today on the call from Yuanbao's senior management are Mr. Rui Fang, our chairman and chief executive officer, and Mr. Huirui Wan, our chief financial officer. Mr. Fang will deliver his remarks in Chinese, followed by an English translation. All figures will be in RMB, unless otherwise noted. We will conclude the call with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yuanbao's investor relations website. I will now turn the call over to our chairman and CEO, Mr. Fang. Please go ahead, sir.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Hello, everyone. Thank you for joining us today for our second quarter 2026 earnings conference call. In the second quarter of 2026, we maintained steady growth momentum with both revenue and profitability improving in tandem. Total revenue for the quarter was RMB 1.39 billion, a year-over-year increase of 30.1%. Net income was RMB 413.2 million, up 35.6% year-over-year, with a net income margin of 29.7%. As of the end of the second quarter, our cash reserves totaled RMB 5.16 billion, providing solid support for our continued investment in AI technology, our product innovation in collaboration with insurance carriers, and our ability to capture structural opportunities within the industry.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

We continued to invest in strengthening our data and modeling capabilities. As of the end of the second quarter, our model matrix had exceeded 5,100 models, which are capable of analyzing more than 5,900 labels, covering the full range of scenarios from needs identification and product recommendation to claims assistance, driving improvements in both service efficiency and the user experience. In addition, the $15 million share repurchase program we announced last quarter continues to progress steadily. As of August 31, 2026, we had repurchased approximately 114,000 ADS for a total consideration of approximately $1.6 million, reflecting our ongoing commitment to delivering capital returns to our shareholders.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

In recent years, commercial health insurance has seen both development opportunities backed by a continuous stream of favorable policy signals. In March this year, the 2026 report on the work of the government exclusively called for accelerating the development of commercial health insurance and promoting the high quality development of innovative drugs and medical devices in order to better meet the public's diverse needs for medical treatment and medication. In July, the State Council issued the National Health Plan for the 15th Five-Year Plan period, encouraging an increased supply of innovative health insurance products covering areas such as health intervention, specialized medical care, and innovative drugs.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Prior to that, the National Financial Regulatory Administration explicitly stated in its Guiding Opinions on Promoting the High-Quality Development of Health Insurance that it supports the development of commercial medical insurance products targeting specific groups such as individuals with pre-existing conditions and rare diseases. Against this backdrop, we continue to deepen collaboration with insurer carriers and accelerate product iteration, adhering to a strategy built on affordable pricing, comprehensive coverage, and quality service. We are working to further improve the quality and expand the reach of the inclusive health protection by lowering enrollment barriers, enriching coverage benefits, and enhancing the service experience.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

On the product side, Yuanbao's Super Medical Insurance series has improved over many years in response to customer needs and now offers tiered coverage spanning basic outpatient and emergency care, general medical treatment, and premium medical care so that users of different ages, needs, and budgets can all find a plan that fits them. In June this year, our Super Medical Insurance series underwent a comprehensive upgrade focused on addressing pain points across users' full treatment journey. This upgrade advanced simultaneously across three dimensions: good doctors, good medicine, and good rehabilitation. It added access to special needs medical resources at public hospitals, expanded coverage for advanced drugs and medical devices, and introduced coverage for inpatient rehabilitation for specific conditions, extending health protection further across the full cycle of treatment plus rehabilitation.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Notably, even as we substantially upgraded our coverage, we stayed true to our principle of affordable pricing, improving quality without raising prices.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

This year, Yuanbao has also been actively exploring new approaches to protection for individuals with pre-existing conditions, responding to national policies that encourage insurance for this population. In May, we partnered with insurers to launch Complete Guardian · Million-RMB Medical Insurance, which waived health disclosure requirements and covers general pre-existing conditions within the scope of benefits, effectively lowering the eligibility threshold for individuals with pre-existing conditions to obtain medical protection. On the critical illness side, we launched a no health disclosure version of Guardian Insurance million RMB critical illness insurance, further extending critical illness protection to more people who need it. From medical insurance to critical illness insurance, we continue to use product innovation to broaden access to health protection, directly addressing the real protection needs of the more than 400 million people in China living with pre-existing conditions.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

On the technology innovation front, we continue to advance the application of multimodal AI technology, of course, insurance business scenarios, building multimodal understanding and analysis capabilities tailored to the insurance industry. Insurance operations involve large volumes of unstructured information, including images, documents, videos, and text. By leveraging our multimodal models and proprietary knowledge system, Yuanbao enables AI to more accurately recognize, understand, and analyze this complex content, turning unstructured data that was once difficult to put to use into truly usable data assets.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

In claims assistance service scenarios, we applied multimodal models to intelligently parse various types of materials, including medical records, diagnostic certificates, medical invoices, and examination reports, enabling document recognition, information extraction, fact consolidation, and review assistance. The system also cross-analyzes key information across materials from different sources to generate structured claims case files, and combines with our insurance knowledge base to support liability analysis and user service, thereby improving insurance carriers' claims processing efficiency, consistency in review standards, and user experience. These capabilities have already been deployed in medical insurance claims assistance scenarios, achieving material classification accuracy of 95% and an average key field extraction accuracy of approximately 94%. Compared to the vendor solutions previously tested, our current solution shows improvement in both processing efficiency and accuracy.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

In user growth scenarios, we applied multimodal models to intelligently understand and analyze business content. In this way, we effectively identify product information, expression characteristics, and user feedback across images, news, and text, and combine this with business performance data to support content analysis and strategy optimization, improving user outreach efficiency and business operations. At the same time, we continue to build our insurance domain knowledge base. We have structured core content covering product terms, medical knowledge, service workflows, claims rules, and historical cases into a professional knowledge foundation that underpins our AI application. We also deeply integrated the knowledge base with multimodal models and agent technology, further enhancing the accuracy, interpretability, and business adaptability of AI in complex insurance scenarios, and driving the evolution of insurance services from a traditional manual processing model toward an AI-assisted human machine collaborative model.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Finally, turning to our industry influence and the frontier practices. We continue to support industry development through professional research and drive insurance service upgrades through technology innovation. We also continue to strengthen our industry influence, drawing on deep insights to capture structural opportunities in the industry. in May, together with the Research Center for China Insurance and Pension Finance at Tsinghua University's PBC School of Finance, we published the 2025 China Internet Insurance Consumer Insights Report. The report systematically tracked shifts in consumer behavior, took an in-depth look at the trends towards online, intelligent, and more rational consumption, and comprehensively examined the direction of industry evolution and AI-driven upgrades. This provided important references for high-quality development across the industry. More importantly, we have channeled these insights deeply into our joint product innovation with insurers in service upgrades, further strengthening our overall competitiveness in internet insurance.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

We are also translating our technological advantages into strong operating efficiency and delivering on our service commitments. According to our 2026 first half claims report released in July, intelligent claims assistance helps partner insurance carriers shorten the claim settlement time for a small claim under RMB 10,000 by 41%. At the same time, we introduced our claims follow-up service and upgraded our claims mediation service, bringing greater warmth to our service through technology and achieving a dual improvement in user experience and operating efficiency.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Looking ahead, as the 15th Five-Year Plan continues to advance, the multi-tiered health care security system continues to improve, the artificial intelligence rapidly empowers industry across the board. The insurance sector is entering a new phase where technology innovation and rising protection needs converge. How to give more consumers access to health protection that is affordable, high quality, and compassionate is both a defining question for the industry and a direction Yuanbao has long pursued. Going forward, we will continue to strengthen our AI technology foundation, bringing technologies such as AI agents and multimodal models into end-to-end use across our insurance business and upgrading core capabilities, including user insights, product recommendations, user consulting, and claims assistance service. We will also continue to refine our inclusive product matrix, including Super Medical Insurance and Complete Guardian.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Putting into practice our service philosophy of accessible, affordable insurance with high claim satisfaction backed by stable operations, our accumulated technology capabilities, and a deep understanding of user needs. Yuanbao will seize the opportunities presented by the insurance industry's high-quality development, drive innovation in commercial health insurance, support the development of the multi-tiered healthcare security system, and create long-term value for consumers, partners, and shareholders.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Now I'll turn the call over to our CFO, Huirui Wan, to present our financial results for the second quarter of 2026. Thank you, everyone.

[Huirui Wan, CFO at Yuanbao]

Thank you, Ms. Chiffon. Thank you everyone for joining today's earnings conference call. I'm pleased to share an overview of our second quarter 2026 financial results. All figures below are in RMB, unless noted otherwise. We carried strong momentum into the second quarter, delivering robust growth across our core business lines while continuing to deepen AI integration across our operations. Total revenues for the second quarter reached RMB 1.39 billion, representing a 30.1% year-over-year increase. This growth was primarily driven by strong increases in both our insurance distribution and system service revenues. Breaking down our revenue mix, revenues from insurance distribution services reached RMB 457.4 million, a 30.4% year-over-year increase driven by a continued increase in the number of policies purchased through our platform, supported in part by our enhanced targeting marketing efforts.

[Huirui Wan, CFO at Yuanbao]

System services revenue reached RMB 881.9 million, up 22.8% year-over-year, reflecting continued improvements to our full consumer service cycle engine, which strengthened our ability to deliver more effective marketing, analytics, and customer-related services to our insurance carrier partners, along with expanded system services to both existing and new carrier partners. We also generated RMB 52.8 million in revenue this quarter from advertising services, a new revenue stream we began offering this quarter.

[Huirui Wan, CFO at Yuanbao]

The newly provided advertising services, powered by the company's proprietary intelligent marketing platform, offer customers integrated intelligent marketing and traffic optimization solutions. Turning to expenses, total operating costs and expenses increased by 21.9% year-over-year to RMB 941.3 million. Operations and support expenses were RMB 97.8 million, up 139.1% year-over-year, primarily due to costs associated with our newly launched advertising services. Selling and marketing expenses increased 12.8% year-over-year to RMB 679.3 million, consistent with our ongoing focus on consumer growth and retention.

[Huirui Wan, CFO at Yuanbao]

General administrative expenses were RMB 64.8 million, up 36.3% year-over-year, primarily driven by higher professional service fees and increased personnel-related costs. Research and development expenses increased 21.7% year-over-year to RMB 99.5 million, driven by continued headcount growth in our R&D organization and ongoing investment in technical capability building, which remain key pillars of our positioning as a technology-driven online insurance distributor. Below the operating line, income tax expense for the quarter was RMB 59.9 million, compared with RMB 11.1 million a year ago, primarily driven by a higher effective tax rate during the quarter. Net income for the quarter was RMB 413.2 million, a 35.6% year-over-year increase with a net income margin of 29.7%. Non-GAAP adjusted net income reached RMB 431.2 million, up 32.6% year-over-year, with a non-GAAP adjusted net income margin of 31%. Our cash position grew during the quarter.

[Huirui Wan, CFO at Yuanbao]

As of June 30th, 2026, our cash and cash equivalents, time deposits, restricted cash, and short-term investments totaled RMB 5.16 billion, up 50.9% year-over-year and 8.8% from the end of the first quarter. Net cash provided by operating activities in the quarter was RMB 419.1 million. Before I close, let me provide an update on our shareholder return progress. Under our $15 million share repurchase program, as of August 31st, 2026, we have repurchased approximately 114 ADS for a total consideration of approximately $1.6 million, reflecting our continued commitment to returning capital to shareholders. To conclude, our second quarter results reflect the durability of our growth model and our ability to scale with discipline. Looking ahead, we will remain focused on high-quality growth, operational efficiency, and a healthy liquidity position, giving us the flexibility to invest in our strategic priorities while continuing to deliver long-term value for our shareholders.

[Huirui Wan, CFO at Yuanbao]

Thank you. I would now like to open the call to Q&A. Operator, please go ahead.

[Operator]

Thank you management. We will now begin the question and answer session. To ask questions on the phone, please press star one and one and wait for your name to be announced. For the benefit of all participants on today's call, if you wish to ask your questions to management in Chinese, please immediately repeat your question in English. One moment for our first question. Our first question comes from the line of Amy Chen of Citi. Your line is open. Please go ahead.

[Amy Chen, Analyst at Citi]

Hi, this is Amy Chen from Citi. Thank you for the opportunity for asking these questions. I have two questions. I will first say them in Chinese and then English. [Foreign language] How do you think of licensed celebrities promoting insurance products via live streaming? Will you adopt similar approaches going forward?

[Amy Chen, Analyst at Citi]

Would this lead to more intense market competition in terms of online distribution of insurance products going forward? [Foreign language] Do you think agentic economy would reshape insurance distribution industry? How do you plan to capture the opportunities related to agentic? Thank you.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Recent regulations have made clear that online marketing of financial products must be conducted through licensed institutions and by licensed individuals. Licensed celebrity live streaming is essentially a new form of customer education and traffic conversion within this compliance framework. Leveraging public influencers' reach, we believe that live streaming is merely a traffic entry point. The real barrier to insurance sales lies in back-end product interpretation and matching consumers with the right products. Therefore, we focus on forming traffic into Yuanbao's own service ecosystem, rather than relying on external personal IP.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

As for industry competition, celebrity participation may temporarily raise the intensity of traffic exposure and intensify customer acquisition cost competition for standardized products. However, stringent regulatory restrictions have limited how far fan economy monetization can go. Over the long term, competition will continue to center on industry know-how, proprietary data assets, and ecosystem synergies. What matters more to us is that as this industry expands and the public's awareness of insurance grows through live streaming and other formats, overall market penetration will continue to rise, and we can capture shares through differentiated technology and service.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

We believe AI agents could become a new entry point for insurance sales. Yuanbao currently distributes primarily through mainstream internet platforms, and for the foreseeable future, these super platforms will remain the dominant holders of user time, so our existing distribution base remains solid. At present, user interactions with general purpose AI are confined to information inquiries. The conversion path for transactions such as e-commerce or insurance purchases remains relatively weak and is not yet sufficient to support a full insurance purchase journey. Even so, our China Internet Insurance Consumer Insights report found that AI agents, through their convenience and the continuous advancement of large language model technologies, have significantly lowered the barrier for users to access insurance information and meaningfully improved efficiency in the consultation experience. For standardized, relatively simple insurance inquiries, there is no question that AI's capability now rivals those of human agents.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

That said, we are also clear-eyed that for complex in-depth coverage needs and personalized plan design, AI may still be subject to hallucinations and accuracy limitations, and the technology is still maturing. On the implementation front, we are actively integrating our insurance-focused vertical AI agent with external high-traffic platform ecosystems, participating in the early-stage development of this emerging traffic arena. We acknowledge that the application of AI agents in insurance scenarios is still at an early stage with both the ecosystem and our capabilities still maturing. At the same time, we firmly believe this represents an important shift in traffic entry points and how users interact, and it is an emerging trend and market that deserves close attention. Thank you. Next question.

[Operator]

One moment for our next question. The next questions will come from the line of Yue Xu from China Securities. Your line is open. Please go ahead.

[Yue Xu, Analyst at China Securities]

[Foreign Language] Okay.

[Yue Xu, Analyst at China Securities]

My first question is regards of the digital ad month opting on major internet platform lately. How is that impacting our customer acquisition ROI? Also, are you seeing any shifts in demand for short-term insurance? My second question regards to overseas business progress. Could management team update on Hong Kong brokerage business since securing license last summer?

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

If customer scale were held constant, continuous optimization of our models and products would keep driving ROI higher. However, we continue to grow ad spend and ad spend into new user segments, and external traffic competition dilutes ROI to some extent. Currently, our ROI is holding at a fairly stable level, and we have not seen any negative impacts from softer advertising demand yet. The demand base for short-term insurance products in China remains substantial. The key is whether we have coverage products that match that demand. We will continue to iterate on coverage terms and upgrade deductible rules to serve different tiers of user needs and keep unlocking incremental growth.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

We continue to explore various new business while strictly managing the ROI performance of new initiatives. Currently, we don't have any other new update. Thank you. Next question, please.

[Operator]

The next question. The next question comes from Thomas Wang of Goldman Sachs. Your line is open. Please go ahead.

[Thomas Wang, Analyst at Goldman Sachs]

Two questions. Thank you for the opportunity. Firstly, on the advertising business, just want to see initial expense is quite high, but want to see what management view on medium to long-term margin. The second point is on the trend in terms of number of policies sold during the quarter and also the average ticket size. Thank you.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

For the advertising new business, right now, we don't disclose any details, but right now is on healthy trend. As for the average price of our product, also we don't disclose any details in our quarterly report, but our momentum continues healthy. Thank you. Next question, please.

[Operator]

One moment for our next question. Next up, we have the line from Ling Tan from Haitong International. Your line is open. Please ask your question.

[Ling Tan, Analyst at Haitong International]

I have two questions. Thank you management for taking my question. My first question is regarding the new advertising service revenue. What exactly is the new advertising service revenue disclosing this quarter's revenue breakdown? My second question is regarding AI. In first half, the company continued to roll out its multi-agent AI claim system and step up investment in AI across claim underwriting and user conversion. What quantify improvement have this AI capability actually delivered in customer acquisition cost, policy, quality and claim cost? What is the CapEx plan for R&D investment going forward? Thank you.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Advertising services are a new service offering that was introduced during this quarter, specifically referring to services provided to insurance carriers. Our newly launched advertising services are built on our proprietary intelligent marketing platform, which provides clients with integrated intelligent marketing and traffic optimization solutions. Advertising services represented a small share of total revenue in this quarter. This quarter, in our claims assistance scenarios, we used multimodal models to intelligently parse a variety of materials including medical records, diagnosis certificates, medical invoices, and examination reports, enabling document recognition, information extraction, fact consolidation and review assistance. These capabilities have now been deployed in medical insurance claims assistance scenarios, achieving a documented classification accuracy of 95% and an average key field extraction accuracy of approximately 94%. As of the end of the quarter, our AI team continued to account for over 10% of the total workforce.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Moving forward, we will continue to prioritize deep, consistent investment in our core technology capabilities. Thank you. Next question, please.

[Operator]

Our next question will come from the line of Xintao Chen of CICC. Your line is open. Please go ahead.

[Xintao Chen, Analyst at CICC]

[Foreign Language] So I have two questions.

[Xintao Chen, Analyst at CICC]

The first question is, in the first quarter earnings release, you announced a dividend share buyback program. Could you provide some guidance on the dividend and buyback policies for 2026 and 2027? The second question is, besides focusing on improving new customer conversion efficiency, how does Yuanbao leverage AI to enhance the retention of existing customers? Thank you.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Our future dividend payout ratio range will need to be assessed based on profitability and approved by the board of directors.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

While maintaining robust profit growth, we will remain committed to creating long-term value for our shareholders. Subject to our healthy cash flow and strong profitability, going forward, we plan to maintain or grow shareholder dividends. On the buyback side, we have announced a $50 million share repurchase program over a 12-month period. Moving ahead, we will evaluate whether to extend or adjust the program based on how it is actually executed.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

On one hand, we use our AI engine to optimize user conversion and retention directly, both before user exposure, for example, by reducing the number of impressions needed to convert a user, and more importantly, after exposure.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

On the other hand, as mentioned, we use multimodal technology to help insurers enhance claims processing efficiency and the overall user experience. We also continue to build out our proprietary insurance knowledge base, forming the professional knowledge foundation that supports our AI applications. By converting our technology advantages into superior operational efficiency, we can better deliver on our service commitments and enhance the consumer experience, which in turn improves user retention and drives repeat repurchase. Next question, please. Thank you.

[Operator]

Just one moment for our next question. Our next question will come from the line of Jiqi Sun from Shenwan Hongyuan. Please go ahead.

[Jiqi Sun, Analyst at Shenwan Hongyuan Securities]

[Foreign Language]

[Jiqi Sun, Analyst at Shenwan Hongyuan Securities]

Thanks for the opportunity. This is Jiqi Sun from Shenwan Hongyuan Securities. I have two questions. With the Administrative Measures for the Online Marketing of Financial Products scheduled to take effect in September, what does management see as the greatest challenge in the company's marketing compliance transition? How do you plan to ensure a smooth transition? The second question is, with the company's current ample cash reserves, how does the management assess the sustainability of its future dividend policy? Is management considering establishing a regular dividend mechanism tied to net income or free cash flow? Thank you.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

To date, the introduction of this regulation has not had a material impact on our customer acquisition models. This is mainly due to two factors. First, we have always prioritized compliance and have already built a comprehensive marketing management system paired with a mandatory compliance review process. Second, our core business model is deeply tied to licensed insurance carriers, and all of our product terms go through strict regulatory approval or filing procedures to ensure our operations remain compliant. At the same time, we maintain ongoing proactive communication with regulators, striving to keep our corporate strategy closely aligned with the latest policy directions.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

While maintaining robust profit growth, we will remain committed to creating long-term value for our shareholders. Subject to our healthy cash flow and strong profitability going forward, we plan to maintain or grow shareholder dividends. Thank you. Next question.

[Operator]

Please hold for our last question. Our last question comes from the line of Liao Yuan of CITIC. Please go ahead.

[Yuan Liao, Analyst at CITIC]

[Foreign Language] Thanks management for taking my questions.

[Yuan Liao, Analyst at CITIC]

I have two questions. The first one is about your AI. Could you share the penetration and attach rate of your multi-agent AI insurance advisor tool and the efficiency gained from AI agent in B2B client support and quality monitoring scenarios? The second question is about your capital allocation. Given the strong cash position in last quarter shareholder return program, could management share more detail about your future capital allocation plan? Thank you.

[Rui Fang, Chairman and CEO at Yuanbao]

[Foreign Language]

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

By combining our knowledge base with multimodal models and agent technology, we have further improved AI's accuracy, interpretability, and business adaptability in complex insurance scenarios, driving the evolution of insurance services from traditional manual processing towards an AI-assisted human machine collaborative model. From a long-term value perspective, using AI to assist or replace manual customer service and claim support can improve the user service experience and raise user LTV. Automating our modeling and development workflows also accelerates the pace of model iteration. According to our 2026 first half claims report we released in July, this was driven by our proprietary AI-assisted claims assistant, which relies on three AI agents working together efficiently for case organization, preliminary liability review, and conclusion interpretation. It works alongside our intelligent claims assistance feature to empower our insurance carrier partners, helping insurance carriers shorten claim settlement time for small claims under RMB 10,000 by 41%.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

At the same time, by launching value-added services such as claims follow-ups and continuously upgrading others, such as claims mediation, we brought more warmth to our service through technology, achieving improvements in both user experience and operating efficiency. We intend to maintain a disciplined capital allocation strategy, striking a balance among investments in our existing business, potential new growth opportunities, prudent liquidity management, and shareholder return. Thank you.

[Operator]

For the questions. That concludes the question and answer session. I would now like to turn the conference back over to management for any additional or closing comments.

[Stella Liu, Investor Relations and Strategy Associate Director at Yuanbao]

Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly or our present financial communications. Our contact information for IR in both China and the U.S. can be found in today's press release. Have a great day. Thank you.

[Operator]

Today's conference call, thank you for your participation. You may now disconnect your line.

Participants

Executives

• Stella Liu, Investor Relations and Strategy Associate Director
• Rui Fang, Chairman and CEO
• Huirui Wan, CFO

Analysts

• Amy Chen, Analyst at Citi
• Yue Xu, Analyst at China Securities
• Thomas Wang, Analyst at Goldman Sachs
• Ling Tan, Analyst at Haitong International
• Xintao Chen, Analyst at CICC
• Jiqi Sun, Analyst at Shenwan Hongyuan Securities
• Yuan Liao, Analyst at CITIC