Q2 2025 Waterdrop Inc Earnings Call

Speaker #4: Good morning, everyone. This is Tracy Lee from Waterdrop Investor Relations. It's my pleasure to welcome everyone to Waterdrop's second quarter 2025 earnings conference call.

Tracy Lee: Good morning, everyone. This is Tracy Lee from Waterdrop Investor Relations. I'd like to welcome everyone to Waterdrop Inc.'s second quarter 2025 earnings conference call. All participants are in listening only mode in our English line. As a reminder, today's conference call is being recorded. Please note that the discussion today will contain forward-looking statements made under the safe harbor provision of U.S. private securities and the Litigation Reform Act of 1995. Forward-looking statements are subject to risk and uncertainty because the actual results differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. The company does not undertake any obligation to update any forward-looking statement except as required in applicable law. Also, this call includes discussion of certain non-GAAP narratives. Please refer to our earnings release for reconciliation between non-GAAP and GAAP.

Speaker #4: All participants are in listen-only mode in our English line. As a reminder, today's conference call is being recorded. Please note that discussion today will contain forward-looking statements submitted under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

Speaker #4: Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC.

Speaker #4: The company does not undertake any obligation to update any forward-looking statements, except as required by applicable law. Also, this call includes discussion of certain non-governmental matters.

Speaker #4: Please refer to our earnings release for consolidation between non-GAAP and GAAP. Joining us today on the call are Mr. Shen Peng, our founder, chairman, and CEO; Mr. Ranwei, director; and GM of insurance business.

Tracy Lee: Joining us today on the call are Mr. Shen Peng, our Founder, Chairman, and CEO; Mr. Ran Wei, Director and GM of the Insurance Business; Ms. Xu Xiaoying, Head of Finance; and Ms. Jasmine Li, Board Secretary. We'll be happy to take some of those questions in the manager line at the end of the conference call. Good morning, everyone. This is Shen Peng. In the second quarter, we are pleased to see the integration of AI with the insurance and healthcare sectors begin to deliver satisfying results. Revenue growth accelerates further, with quarterly revenue reaching ¥840 million, up 23.9% year on year. Powered by AI, the company's improved operational efficiency significantly, driving an 85.9% year-on-year increase in operating profit and lifting the operating margins by 3.9 percentage points. Our insurtech business leverages technological innovation to bring inclusive protection for more users.

Speaker #4: Mrs. Xu Xiaoying, head of finance department. And Mrs. Jasmine Lee, board of secretary. We'll be happy to take sample questions in the meeting line at the end of the conference call.

Speaker #5: Good morning, everyone. This is Shen Peng. In the second quarter, we are pleased to see the integration of AI with the insurance and healthcare sectors begin to deliver satisfying results.

Speaker #5: Revenue growth accelerates further, with quarterly revenue reaching $840 million, up 23.9% year-over-year. Powered by AI, the company's improved operational efficiency significantly. Driving an 85.9% year-over-year increase in operating profit and lifting the operating margin by 3.9% points.

Speaker #5: Our insurtech business leverages technologically innovative solutions to bring inclusive protection to more users. Our Waterdrop guidance AI application suite has been rolled out across customer acquisition, sales, writing, customer service, quality assurance, and other key processes.

Tracy Lee: Our Waterdrop Guardian AI suite has been rolled out across customer acquisition, sales, underwriting, customer service, quality assurance, and other key processes. With that, FYP in Q2 increased 80% year over year, and productivity per capita improved significantly. Waterdrop Medical Crowdfunding has also upgraded its risk assessment system by integrating large language model capabilities in case authenticity and transparency. As of June 30, it has raised medical crowdfunding medical bonds for 3.54 million patients. With the market rebounding, the number of patients enrolled in our E-Find Platform also reached a historical high. With nearly 1,000 patients enrolled in the second quarter of 2025, our operations remain robust and improving. We keep improving our AI technology stack. Our self-development multi-agent collaboration framework can be reused a lot. It helps us quickly build different types of agents, chatbots, and let AI agents collaborate within milliseconds.

Speaker #5: With that, FYP in Q2 increased 80% year-over-year and productivity per capita improved significantly. Waterdrop's medical corresponding platform has also upgraded its risk assessment system by integrating large language model capabilities, encased authenticity, and transparency.

Speaker #5: As of 30 June, it has raised medical funds for $3.54 million patients. With a market refunding, the number of patients enrolled in our e-fund platform also reached a historical high.

Speaker #5: With nearly 1,000 patients enrolled in the second quarter of 2025, we're operations remain robust and improving. We keep improving our AI technology stack, our self-development multi-agent collaboration framework, can be reused a lot; it helps us quickly build different types of agents, chatbot, and let AI agents collaborate within milliseconds.

Speaker #5: Thanks to this, we can provide more stable AI agents to handle more and more complex situations. We are also creating proxy word reward models and as the GRPO algorithm.

Tracy Lee: Thanks to this, we can provide more stable AI agents to handle more and more complex situations. We are also creating proxy reward models and the GRPO algorithm. This allows agents to break away from fixed scripts and change their communication strategies according to what customers do. To fix the slow responding issue when making AI agent calls, we use a distributed key value cache. It significantly speeds up the inference of the first token. As of June 30, the company has submitted 60 patent applications related to large language models, with nine of them filed internationally. Our AI-driven business innovations were recently included in Harvard Business School's case collection, receiving recognition from world-renowned academic institutions. Based on these technologies, we will continue to expand the use of AI in our insurance and healthcare sectors, constantly creating value for our business and the industry.

Speaker #5: This allows agents to break away from fixed scripts and change their communication strategies according to what customers do. To fix the slow response issue, when making AI agent calls, we use a distributed key-value cache; it significantly speeds up the inference of the first token.

Speaker #5: As of June 30, the company has submitted 60 patent applications related to large language models. With nine of them filed outside the international. Our AI-driven business innovations were recently included in Harvard Business School's case collection.

Speaker #5: Receiving recognition from the world-renowned academic institutions. Based on this technology, we will continue to expand the use of AI in our insurance and healthcare sectors.

Speaker #5: Constantly creating value for our business and the industry. The company also actively engaged in social return initiatives. As of June 30, 2025, our Waterdrop welfare platform has collaborated with 118 public charitable organizations.

Tracy Lee: The company also actively engages in social return initiatives. As of June 30, 2025, our Waterdrop Welfare Platform has collaborated with 118 public charitable organizations. It has initiated over 15,500 public welfare projects. In July, it participated in the relief efforts for the plague disease in North China, providing assistance to the affected people through monetary and material donations. This year marks our ninth anniversary of the company's start to establish. We are very grateful for the continuous support from our shareholders and investors over time. The company has actively conducted share repurchase in the open market for four consecutive years. To keep repaying shareholders' trust, our board recently approved two new initiatives. On one hand, we are pleased to announce that our board has recently approved an enhanced cash dividend of $10.9 million, representing a 50% increase over the previous dividend.

Speaker #5: It has initiated over 15,000 and 500 public welfare projects, in July it participated in the relief efforts for the flood disease in North China.

Speaker #5: Providing assistance to the affected people through monetary and material donations. This year marks our ninth anniversary of the company's established. We are very grateful for the continuous support from our shareholders and investors.

Speaker #5: Over time, the company has actively conducted share repurchase in the open market for four consecutive years. To keep repaying shareholders' trust, our board recently approved two new initiatives.

Speaker #5: On one hand, we are pleased to announce that our board has recently approved an enhanced cash dividend of 10.9 million dollars, representing a 50% increase over the previous dividend.

Speaker #5: The dividend per ordinary shares was 0.3 cents, and the dividend per ADF will be 3 cents. The board has also optimized a fixed annual share repurchase plan.

Tracy Lee: The dividend per ordinary share was $0.003, and the dividend per ADS will be $0.03. The board has also authorized a fifth annual share repurchase plan. Since our first share repurchase plan was launched in 2021, we have repurchased approximately 55.7 million ADS for $109 million as of August 31, 2025. Looking ahead, we will build on the current performance and make further efforts to achieve the business goals for the year of 2025 and the medium long-term business development, striving to create more value for our stakeholders. Next, I will now pass the relevant to introduce the development of the insurance business in Q2. Thank you, Shen Peng. In Q2, our insurance business delivers robust growth. The first-year premiums reached ¥3.2 billion, up 80.2% year over year, and 53.1% quarter over quarter. Insurance-related revenue was about ¥740 million, up 28.7% year over year, and 12.2% quarter over quarter.

Speaker #5: Since our first share repurchase program was launched in 2021, we have repurchased approximately 55.7 million ADFs for $109 million as of August 31, 2025.

Speaker #5: Looking ahead, we will build on the current performance and make further efforts to achieve the business goals for the year of 2025. And the median long-term business development.

Speaker #5: Striving to create more value for our stakeholders. Next, I will now pass the round to introduce the development of the insurance business in Q2. Thank you, Shen Peng.

Speaker #5: In Q2, our insurance business delivered robust growth. The first-year premium reached 3.2 billion yuan, up 80.2% year-over-year and 53.1% quarter-over-quarter. Insurance-related revenue was about 740 million yuan, up 28.7% year-over-year and 12.2% quarter-over-quarter.

Speaker #5: Operating margin improved to 23.1%, up by near 2% points year-over-year. Driving our driving by our deeper AI integration. For short-term products, we increased investment in customer acquisition and the technology, representing FYP to 2.43 billion, up 95% year-over-year and 62.1% quarter over quarter.

Tracy Lee: Operating margin improved to 23.1%, up by nearly 2 percentage points year over year, driven by our deeper AI integration. For short-term products, we increased the investment in customer acquisition and the technology, representing FYP to ¥2.43 billion, up 95% year over year, and 62.1% quarter over quarter. In customer acquisition, we continuously tap into AI capabilities, iterate on user outreach and recommendation AI models, and drive continuous breakthrough in customer acquisition from the public domain. We are increasingly applying AI tools to enhance the production, speed, and the quantity of marketing materials to support front-end customer acquisition efforts. At the same time, we utilize AI to facilitate better conversion of different scenarios. For example, our new AI Insurance Expert model on the app and the mini program use a large language model for real-time matching and converts nearly 50% better than the traditional advertising slot.

Speaker #5: In customer acquisition, we continuously tap into AI capabilities. We integrate user outreach and recommendation AI models and drive continuous breakthroughs in customer acquisition from a public domain.

Speaker #5: We are increasingly applying AI tools to enhance the production speed and the quantity of marketing materials to support front-end customer acquisition efforts. At the same time, we utilize AI to facilitate better conversion of different scenarios, for example, our new AI pro insurance model on the app app and the mini program use large language model for real-time matching and convert nearly 50% better than the traditional advertising flow.

Speaker #5: In the voice services scenario, AI medical insurance experts continue to improve efficiency. In Q2, it assisted in achieving a 165% increase in the scale of insurance premiums compared to the Q1.

Tracy Lee: In the voice service scenario, AI Insurance Expert continues to improve efficiency. In Q2, it assisted in achieving a 155% increase in the sale of insurance premiums compared to Q1 and plans to continue expanding in the second half of the year. In the week of scenario, AI Insurance Expert launched at the end of March, and by June, lifted FYP per lead 58% compared to that in May. Products, we expanded our portfolio. We have new long-term medical plans such as Chen Yi Bao, Tian Yi Bao, which require no health declaration and guarantee renewal for five years. We also rolled out Gummi Bao, a mid-to-high-end plan with zero deductible and nationwide eligibility, and the version 6.0 of our maternity series, Jiaoying, was the first in the market to accept expansion mother with pre-existing conditions.

Speaker #5: Endpoints continue expanding in the second half of the year. In the WICOM scenario, AI medical insurance experts were launched as of the end of March and, by June, lifted FYP per lead.

Speaker #5: 58% compared to that in May. Products. We expanded our portfolio. We had new long-term medical plans such as training about time involved, team involved, which requires no health declaration and guarantee renewal for five years.

Speaker #5: We also rolled out the grooming ball, aimed at high-end plans with zero deductible and nationwide eligibility, and version 6.0 of our maternity Serious Health Unit.

Speaker #5: With the first in the market to accept expansion mother with pre-existing conditions. Our products for people with pre-existing conditions contributing a quality premium of 300 million yuan.

Tracy Lee: Our products for people with pre-existing conditions contributed a quarterly premium of ¥300 million, a year-on-year increase of 146.6%. In terms of long-term insurance, we actively explore the efficiency improvement of AI tools for online sales consultants and planners, which contributes to the long-term FYP reaching ¥770 million, a year-on-year increase of 45.4%, and a sequential increase of 30.5%. With the assistance of AI tools, the productivity of traditional online sales teams has achieved a double-digit growth both year on year and quarter over quarter, and Shen Lan Bao independently contributed FYP of ¥210 million. We've given online sales consultants and planners an insurance product knowledge base query tool called LifePlanner Copilot. It's based on a large language model. The knowledge base has information on about 7,000 insurance products. It helps consultants search for relevant insurance contract terms in real time. In total, it has handled 300,000 insurance product-related consultations.

Speaker #5: A year-on-year increase of 146.6%. In terms of long-term insurance, we actively explore the efficiency improvement of AI tools for online sales consultants and planners, which contributes to the long-term FYP reaching 770 million yuan.

Speaker #5: A year-on-year increase of 45.4% and sequential increase of 30.5%. With the assistance of AI tools, the productivity of traditional online sales team has achieved a double-digit growth both year-on-year and quarter over quarter, and Shen Lan Bao.

Speaker #5: Independently contribute FYP of 210 million yuan. We provide online sales consultants and planners. The insurance product knowledge base query tool costs like the planner co-pilot.

Speaker #5: It's based on large language model; the knowledge base has information on about 7,000 insurance products. It helps consultants search for relevant insurance contracts terms in real time.

Speaker #5: In total, it has handled 300,000 insurance product-related consultations. After months of internal testing, we launched the QE AI at the end of August.

Tracy Lee: After months of internal testing, we launched the KLEE AI at the end of August. Think of it as an insurance book of the deep sea. It delivers expert and writing answers for every enforced product with industry-leading accuracy. We plan to open the platform to our partners to accelerate AI adoption across the industry value chain. Besides tools for agents, we have launched an AI super pre-sales assistant on WeCom. It can receive customer consultation 24/7. It can figure out what customer's insurance needs and their intention to buy insurance on its own, match suitable products based on customer's situations, and make an appointment with the most appropriate salesman for them. According to the data since its launch, the AI assistant is more efficient than human assistants and has effectively improved the team's work efficiency. By the supply side of long-term products, we keep pushing health insurance innovation.

Speaker #5: Think of it as an insurance-focused deep seek. It delivers expert underwriting answers for every enforced product with industry-leading accuracy. And we plan to open the platform to our partners to accelerate AI adoption across the industry value chain.

Speaker #5: Besides tools for agents, we have launched an AI super pre-sales assistant on WICOM. It can receive customer consultation 24/7. It can figure out what customers' insurance needs and their intention to buy insurance on its own.

Speaker #5: Match suitable products based on customers' situations and make an appointment with the most appropriate salesman for the according to the data since it's launched.

Speaker #5: The AI assistant is more efficient than human assistance and has effectively improved the team's work efficiency. By the supply side of long-term products, we keep pushing health insurance innovation.

Speaker #5: We kept refining our teaching doctor of critical units. Aligned with EV health declarations and introduced the cost-effective study threshold series. Critical units plan and roll out a no health declaration income protection insurance product.

Tracy Lee: We kept refining our $16 critical units, aligned with ED health declarations, and introduced the cost-effective beneficial series from critical units plan and rolled out a no health declaration income protection insurance product. Besides disability insurance, crossed over $100 million in quarterly FYP for the first time and are scoring for a strong user acceptance. Since its rollout at the end of March, our AI customer service agents have scaled rapidly, aiding voice support alongside text. In June alone, it handled 216,000 service sessions, lifting first contact resolution rates. Online insurers now achieve a 100% AI coverage. Meanwhile, in Q2, our AI quality control assistant boosted Q&A efficiency by 94% compared with traditional manual ways. This concludes the insurance business update. Now I will hand it over to our Board Secretary, Jasmine, to review our Q2 progress in Waterdrop Medical Crowdfunding and healthcare sectors. Thanks, Ran Wei.

Speaker #5: Besides feasibility insurance crossover across 100 million yuan to in quarterly FYP for the first time. Underscoring full a strong user acceptance. Since it's rolled out at the end of March, our AI customer service agent has scaled rapidly.

Speaker #5: A voice support alongside text. Text. Enjoying alone, it handled 215,000 service sessions, lifting first contact resolution rates online insurers now achieved a 100% AI coverage.

Speaker #5: Meanwhile, in Q2, our AI quality control assistant boosted Q&A efficiency by 94% compared to the traditional manual method. This concludes the insurance business update. Now, I will hand over to our board secretary, Jasmine, to review our Q2 progress in Waterdrop core funding and healthcare sectors.

Speaker #6: Thanks, Ranwei. As of the end of June 2025, around 480 million people accumulatedly donated 70 billion yuan to about 3.54 million patients through our Waterdrop medical core funding platform.

Tracy Lee: As of the end of June 2025, around 480 million people cumulatively donated $70 billion to about 3.54 million patients through our Waterdrop Medical Crowdfunding platform. Guided by TechForGood, we again increased R&D investment on our personal medical crowdfunding and risk controls. For case-level risk, large language model metrics can now identify 15 high-risk scenarios, like suspected identities, abnormal spending, or ethical violations. It does this by analyzing every word in the campaign's context, comments, and hidden clues, which greatly improves the detective accuracy. For phone-level risk, a dynamic monitoring algorithm checks the diagnosed timeline, commercial insurance payouts, and the fundraising speed. If anything is wrong with the fund, it will automatically limit or pause the campaign. Manual review will be carried out within minutes. To address malicious promotion activity, we have developed an abnormal behavior recognition model.

Speaker #6: Guided by tech for good, we again increased R&D investment on our personal medical core funding risk controls. For case level risk, large language model metrics can now identify 15 high-risk scenarios, like suspected identities abnormal spending or ethical violations.

If any uh, anything wrong with uh, found it will automatically limit or post the campaign.

Then many review will be carried out within minutes.

Tracy Lee: We incorporated crucial factors such as donation conversion rates, information dissemination patterns, and assessed characteristics. This model shows the top accuracy in the industry. This model can detect and stop the malicious campaigns in real time. On May 27, we partnered with Guangzhou Civil Affairs Bureau to launch the Waterdrop Co-Help. It is the first project under our new designation as a government-endorsed platform that integrates social and public welfare resources. This program strives to ensure that welfare resources can accurately reach the target population by integrating the system with Sweetheart Bank's platform. At the same time, in places like Guangzhou Co-Help space and hospitals, the platform keeps improving its serviceability and actively responds to and explores the government-enterprise collaboration innovation model. Turning to our healthcare business, we continue to advance on a steady and upward trajectory.

To address Malaysia's promotion activities. We have developed an abnormal behavior, recognition model. Uh, we incorporated crucial factors such as donation, conversion rate information, uh, disinformation patterns and assess characteristics.

This model shows the top accuracy in the industry. This model can detect and stop the malicious campaign in real time.

On 27th may we partner with gwangju,

Civil Affairs, bureaucracy to launch the water drop. Uh, cool help.

It is the first project and our new designation, as a government endorsed the platform that it integrates social and public welfare resources, this program project ensure that welfare resources can accurately reach the target public, um, population by integrating the systems with 3 of them to perform. At the same time in place, like, control call, Health, space and hospitals. The platform team is improving its serviceability and actively respond to and explore the government. And Enterprise collaboration Innovation models.

Tracy Lee: Digital clinical trial business has entered a phase of rapid scale-up, coupled with efficiency gains. E-Find Platform expanded its collaboration to 198 computable and contract research organizations. Meanwhile, we initiated service for 114 new programs. The number of patients enrolled also reached a historic high, with 999 patients enrolled in Q2 of 2025, representing a 34.2% year-over-year revenue growth. Our digital-only channel marketing business also accelerated. We renewed our three-year contract with a leading global multinational pharmaceutical. Through the application of AI in patient services and health education management, we achieved a 105% increase in productivity per capita, representing a substantial enhancement in our service capability. Looking ahead, we will deepen our large language model capabilities and algorithmic precision to unlock further growth as healthcare digitalization accelerates. Now I will hand over to Xu Xiaoying, our Head of the Finance Department, to discuss our financial performance in this quarter.

Trying to our Healthcare business. We continue to advance on steady and upward trajectory digital clinical trial business has entered a phase of Rapid scale up coupled with efficiency, efficiency gains. If I'm platform expanded, its collaboration to 198 some suitable and contracted research organization. Meanwhile, we initiate a service for 114 new programs. The number of patient enrolled about reached

um,

the also reached a historic high with 999 patients enrolled in in Q2 of 255 representing a 34.2% year-over-year, revenue growth, our digital, uh, only Channel marketing business. Also accelerated. We renew our 3 year contract with a leading Global um moving action uh pharmaceutical through the application of AI in a patient services and health education management. We uh achieve the 105% increase in productive care per capita representing a sub Central enhancement in our service capability.

Looking ahead, we will deepen. Our error am capability capabilities and algorithmic, um, position to unlock further growth and Healthcare student life's position of salaries. Now, I will hand over to our head of Financial finance department, discuss our financial performance in this quarter.

Tracy Lee: Thank you, Xiaoying. Thank you, Jasmine. Hello, everyone. I will now walk you through our financial highlights for the second quarter of 2025. Before I go into detail, please be reminded that all numbers quoted here will be R&D. Please refer to our earnings release for detailed information on our financial performance on both the year-over-year and a quarter-over-quarter basis, respectively. On the basis of steady growth in the previous quarter, the company has further achieved significant year-on-year and quarter-on-quarter growth in both revenue and profit this quarter. As Shen Peng and Ran Wei just mentioned, the further development of the company's AI application improved the efficiency of our business operation in multiple events, including customer acquisition, sales, service, and quality control, providing strong motivation for the performance growth in the second quarter. In Q2, Waterdrop Inc.

And profit this color and shrimp Hong. And the Rami just mentioned the further development of companies, AI application was improved the efficiency of our business operation in multiple events.

Including customer acquisition, sales, service, and quality control, providing strong motivation for the performance growth in the second quarter.

Tracy Lee: achieved remarkable financial results with a total revenue amounting to ¥838 million, representing a year-on-year increase of 23.9% and a quarter-over-quarter increase of 11.2%. By segment, the insurance business contributed ¥739 million, showing a year-on-year increase of 28.7%. The crowdfunding service fees generated ¥67.4 million, remaining stable on year-on-year. The digital clinical trial solutions yielded ¥27.7 million, with a year-on-year increase of 34.2%. Meanwhile, the company has been making its operation more efficient. In the second quarter, the total of operating costs and expenses were around ¥741 million, which is about 18.7% higher than the same period last year. The gross rate of the cost and expenses was lower than that of the revenue. This quarter, the operating cost was for ¥416 million, a 30.5% increase from last year. This was mainly because the cost of referral and service fees went up by about ¥73.4 million this quarter.

In Q2 a water, drop achieved a remarkable Financial results with both. Um,

The total revenue amounted to $838 million, representing a year-on-year increase of 23.9% and a quarter increase of 11.2%.

By segments, the insurance business contributed $739 million, showing a year-on-year increase of 28.7%. The core funding service fees generated $6.

67.4 million them remaining stable on year on year.

The digital clinical trial Solutions used.

27.7 million with a year-on-year increase of 34.2%. Meanwhile, the company has been making its operation more efficient.

In second quarter the total operating costs and expenses were overall 741 million which is about 18.7% higher than the same period last year as a growth rate of the cost and expenses were lower than that of the revenue.

This quarter, the operating cost was for 416 million that of 30.5% increase from last year. This was mainly because the cost of referral and service fee was without by about 7 7 3. 4 9

Tracy Lee: Also, during this quarter, the company made additional efforts in the Waterdrop Medical Crowdfunding business to help more users. Moreover, as the company has been enhancing its AI capability to attract more users during this quarter, it acquires users while consuming both efficiency and user experience. The sales and marketing expenses amounted to ¥199 million, representing a 26.3% increase compared to last year. This is primarily due to an increase of ¥44.3 million in marketing expenses for third-party traffic channels. General and administrative expenses decreased by 21.9% year-over-year to ¥73.4 million for the second quarter of 2025. This was primarily because the company tightened its operational control, and the allowance for credit losses was ¥13.4 million less than last year. The R&D expenses were ¥51.9 million, remaining stable for the interior of last year.

This quarter also during this quarter, the company made additional efforts in medical for money business to assist. Um have more users

Moreover, as the company has been enhancing its AI capability to attract more users during this quarter, it is quite, um, it requires users while considering both efficiency and user experience. The South and marketing expenses are managed to $199 million, representing a 26.3% increase, um, compared to, uh,

Compared to last year, this is primarily due to an increase of $44.3 million in marketing expenses for third-party traffic channels.

General and administrative expenses decreased by 21.9% year-over-year to 73.4 million for the second quarter of 2005, this was primarily because the common

My Titan is the operational control, and the allowance for credit losses is $13.4 million, even less than last year.

Tracy Lee: In the future, we will continue to pool resources to accomplish major tasks, adjust the internal structure of R&D expenses, and allocate more resources to the AI capabilities building. In terms of the operating profits, in Q2, the company's operating profits reached ¥97 million, showing a high-speed year-on-year growth of 85.9%. The operating profit margins of the company as a whole and its insurance business have both further improved. Net profit attributed to the company's ordinary shareholders reached ¥140 million, up 58.7% year-over-year. As of 30 June 2025, we held ¥3.4 billion in cash reserves, with operating cash flow remaining positive, providing a solid foundation for continued growth and strategic investment. In conclusion, Waterdrop Inc.'s excellent performance in this quarter further demonstrates its robust operational capability and the effective synergy among its diverse business segments. Looking ahead, we will continue to leverage technology and AI to expand our user base.

The R&D expenses for $51.9 million remained stable compared to the same period last year. In the future, we will continue to allocate resources to accomplish major topics as adjusted. We will also restructure the internal allocation of R&D expenses to devote more resources to enhancing our AI capabilities. In terms of the operating profits in Q2, the company's operating profits reached $97 million, showing a high year-on-year growth of 85.9%. The operating profit margins of the company as a whole, as well as its insurance business, have both further improved. Net profit attributable to the company's ordinary shareholders reached $140 million, a 58.7% increase year-over-year. As of June 30, 2015, we held $3.4 billion in cash reserves.

With our bridging cash with flow, remaining positive.

Tracy Lee: At the same time, we will optimize our operations to enhance efficiency, thereby facilitating the stable growth of business revenue and profits. Additionally, we will persist in creating long-term value for shareholders and society. Ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining. Have a good time.

Operating cash flow, remain positive providing uh, solid foundation for continued growth and Strategic investment in conclusion. Water drops, excellent performance in this quarter, further demonstrate its robust, operational capability and the effective Synergy among its diverse business segment. Looking ahead, we will continue to love technology and AI to expand our user base. As the same time, we will optimize our operations to enhance efficiency. Thereby facilitating the stable growth of business revenue and profits. Additionally, we will persist in creating long-term value for shareholders and society, and ladies and gentlemen, with that, we will conclude today's conference call. We just thank you for joining, have a good time.