Q3 2025 Yuanbao Inc Earnings Call

December 3, 2025

Speaker #1: Please go

Speaker #1: ahead. Thank you, Operator.

Stella Li: Thank you, Operator. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: factors that could affect Yuanbao's business and financial A general discussion of the risk results is included in certain filings of the company, with the Securities and Exchange Commission.

Speaker #2: The company does not undertake any obligation to update its forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures.

Stella Li: 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. Rui Wang, our Chief Financial Officer. Mr. Fang will deliver his remarks in Chinese, followed by an English translation. 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.

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. Rui Wang, our Chief Financial Officer. Mr. Fang will deliver his remarks in Chinese, followed by an English translation. 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.

Speaker #2: For the 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. Wei Fang, our Chairman and Chief Executive Officer, and Mr. Wei Wan, our Chief Financial Officer.

Speaker #2: Mr. Fang will deliver his remarks in Chinese, followed by an English translation. We will conclude the call with a Q&A session. As a reminder, this conference is being recorded.

Speaker #2: 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.

Speaker #2: Please go ahead, sir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir. Ir.

Speaker #2: ir. ir. ir. ir. ir. ir. ir. ir. ir. ir. ir. ir. ir. ir. ir. ir.

Rui Fang: ??????????2025??????????????????????????????????????????????????33.6%??????11.58??????????51.3%?????3.7?????????13????????????????????????37.5?????????????????????????????????????????????????????????????????????????????????800???????41.8%?????????????AI???????????????????????????????????????????????????????????????????????????

Speaker #3: 大家好，欢迎参加元宝2025年第三季度财报电话会。本季度我们继续延续了高质量的增长态势，多项核心指标再创历史新高。总收入同比增长33.6%，达到人民币11.58亿元。净利润同比提高51.3%，自人民币3.7亿元。我们已经连续13个季度保持盈利。截至季度末，公司现金储备达人民币37.5亿元。为我们持续推进技术研发、资本运作及战略拓展提供了有力的财务支撑。这一业绩增长的背后核心是我们在运营的各个环节精耕细作，持续优化的结果。第三季度新保单量达到800万份，同比增长41.8%。主要得益于我们持续强化的AI与数据能力，基于这些能力，我们不仅提升了对目标客群的触达的精准性，更深化了对客户需求的理解，进而反哺至产品创新与科学定价环节，构建了差异化的竞争优势。

Stella Li: Hello everyone, thank you for joining our Q3 2023 earnings conference call. This quarter, we continued our trajectory of high-quality growth, with several core performance indicators hitting new record highs. In Q3, total revenues grew 33.6% year-over-year to RMB 1.16 billion. Net income surged 51.3% year-over-year to RMB 317 million. This marks our 13th consecutive quarter of profitability. As of the end of September, our cash reserves stood at RMB 3.75 billion, providing a solid financial foundation for our continued technological innovation, capital deployment, and strategic expansion. These strong results are a direct testament to our disciplined execution and continuous operational refinement. In Q3, we issued 8 million new policies, with a 41.8% year-over-year increase. This momentum was powered by our enhanced AI and data capabilities, which have improved the precision of our consumer targeting and deepened our understanding of consumer needs.

Speaker #2: Everyone, thank you for joining our third quarter 2025 earnings conference call. Last quarter, we continued our trajectory of high-quality growth, with several core performance indicators hitting new record highs. In the third quarter, total revenues grew 33.6% year over year, to RMB 1.16 billion.

Speaker #2: Net income surged 51.3% year over year to RMB 370 million. This marks our 13th consecutive quarter of profitability. As of the end of September, our cash reserves stood at RMB 3.75 billion.

Speaker #2: Providing a solid financial foundation for our continued technological innovation, capital deployment, and strategic expansion. These strong results are a direct testament to our disciplined execution and continuous operational refinement.

Speaker #2: In the third quarter, we issued 8 million new policies, representing a 41.8% year-over-year increase. This momentum was powered by our enhanced AI and data capabilities.

Speaker #2: We have improved the precision of our consumer targeting and deepened our understanding of consumer needs. These insights feed directly back into our product innovation and scientific pricing processes.

Stella Li: These insights feed directly back into our product innovation and scientific pricing processes, helping us build a distinct competitive edge.

These insights feed directly back into our product innovation and scientific pricing processes, helping us build a distinct competitive edge.

Speaker #2: Helping us build a distinct competitive edge.

Rui Fang: ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Speaker #3: 在产品服务方面，我们始终致力于通过科技降低保险服务的门槛。目前，我们已经覆盖医疗险、重疾险、意外险等多维产品的产品矩阵，并持续推出创新型的普惠解决方案。响应用户的多元保障需求，近日，元宝联合保险公司推出了短期重疾险，以普惠价格撬动百万保额的为核心亮点。通过一次给付加多次报销的并行模式，让保障从确诊当下延伸至后期治疗，实现保障闭环。一张保单即可兼顾安心休养加看病无忧，兼顾一次性的经济补偿和多次的医疗费用报销，为重疾险的普惠创新提供了一个全新解法。当前，我们的创新产品通过险种功能融合与分段式报销等模式，有效优化了成本结构，实现了价格下探与保障提升，显著提升了产品的性价比。更好的契合了市场对普惠保障与支付能力平衡的需求。

Stella Li: On the product service front, we remain committed to using technology to lower the barriers to insurance access. To date, we have built a multi-dimensional product matrix spanning medical, critical illness, and accident insurance, while continuously rolling out innovative, inclusive solutions for diverse user protection needs. Recently, we collaborated with our partnered insurance carriers to launch a short-term and critical illness insurance product. Its core value proposition is high coverage at an affordable price point by adopting a parallel lump sum payment plus multiple reimbursements model. We extend protection from the moment of diagnosis through ongoing treatment, effectively creating a closed loop of protection. This single policy provides both peace of mind during recovery and worry-free medical care, combining one-time lump sum compensation with multiple reimbursements for medical expenses. It represents a novel approach to inclusive innovation in critical illness insurance.

Speaker #2: Only product service front, we remain committed to using technology to lower the barriers to insurance access. To date, we have built a multi-dimensional product matrix spanning medical, critical illness, and accident insurance while continuously rolling out innovative, inclusive solutions for diverse user protection needs.

Speaker #2: Recently, we collaborated with our partnered insurance carriers to launch a short-term and critical illness insurance product. Its core value proposition is high coverage at an affordable price point by adopting a parallel lump sum payment plus multiple reimbursements model.

Speaker #2: We extend protection from the moment of diagnosis through ongoing treatment, effectively creating a closed loop of protection. This single policy provides both peace of mind during recovery and worry-free medical care, combining one-time lump-sum compensation with multiple reimbursements for medical expenses.

Speaker #2: It represents a novel approach to inclusive innovation in critical illness insurance. By integrating insurance features and employing tiered reimbursement, we have optimized our cost structure to lower prices while expanding coverage.

Stella Li: By integrating insurance features and employing tiered reimbursement, we have optimized our cost structure to lower prices while expanding coverage. This significantly improves value for consumers and aligns with the market demand for balancing accessible coverage with affordability.

By integrating insurance features and employing tiered reimbursement, we have optimized our cost structure to lower prices while expanding coverage. This significantly improves value for consumers and aligns with the market demand for balancing accessible coverage with affordability.

Speaker #2: This significantly improves value for consumers and aligns with the market demand for balancing accessible coverage with affordable ability. Turning to the industry.

Speaker #3: 在行业发展方向，商业健康险已成为我国多层次医疗保障体系的重要组成部分。社会医疗保险与商业健康险的关系正迈向协同发展，优势互补的新阶段。普惠健康险对承接人口老龄化与医保压力、激活商业健康险这个巨大的增量市场将起到关键作用，其核心驱动在于满足数以亿计普通家庭未被充分覆盖的健康保障需求。我们认为，释放这一潜力的关键在于构建高性价比、体验优化、运营高效的互联网化服务模式。以此将广阔的市场潜在需求转化为实质性的增长动能。

Stella Li: Turning to the industry landscape, commercial health insurance has become the vital component of China's multi-tiered healthcare protection system. The relationship between social health insurance and commercial health insurance is evolving into a new stage of coordination and complementarity. Inclusive health insurance will play a pivotal role in addressing the challenges posed by an aging population and alleviating the pressure on the public healthcare system, while unlocking a massive incremental market for commercial health insurance. The core driver lies in satisfying the health protection needs of hundreds of millions of underserved families. We believe that the key to unlocking this potential is to establish an internet-enabled service model that delivers cost-effective protection, optimized user experience, and operational efficiency. This is how we translate the latent demand of this vast market into tangible growth momentum.

Speaker #2: The landscape of commercial health insurance has become a vital component of China's multi-tiered healthcare protection system. The relationship between social health insurance and commercial health insurance is evolving into a new stage of coordination and complementarity.

Speaker #2: Inclusive health insurance will play a pivotal role in addressing the challenges posed by an aging population and elevating the pressure on the public healthcare system.

Speaker #2: While unlocking a massive incremental market for commercial health insurance, the core driver lies in satisfying the health protection needs of hundreds of millions of underserved families.

Speaker #2: We believe that the key to unlocking this potential is to establish an internet-enabled service model that delivers cost-effective protection, optimized user experience, and operational efficiency.

Speaker #2: This is how we translate these latent demands of this vast market into tangible growth momentum.

Rui Fang: ????????????AI????????????????????????????????????????????????????????????????????AI????????????????????????????????????????????????????????????????????????????????????????????????????1000?????????????????MCP??????????????????????????????????????????AI????????50%?

Speaker #3: 在智能化建设方面，我们的AI技术与数据体系已深度赋能，核心运营流程将通过自研的大语言模型深度融入风险识别获客、产品设计、理赔处理等核心环节。我们的系统性的构建了以AI为底座的竞争壁垒，推动运营提效和服务升级。首先，大模型赋能研发部门实现全流程智能化升级。在研发流程中，通过引入大语言模型及相关工具链，实现了从文档到代码的效能全面提升。在技术文档环节，大模型完成了超过1,000篇的文档撰写。在编码阶段，我们通过MCP等工具实现了需求拆分、代码编写、单元测试、生成与智能化检测的一站式辅助。三季度期间，AI生成的代码占比近50%。

Stella Li: On the intelligence front, our AI technology and data infrastructure are now deeply integrated into our core operational workflows by embedding our proprietary large language model into critical functions, including risk identification, customer acquisition, product design, and claims processing. We have built a systematic AI-driven competitive mode that enhances operational efficiency and elevates the overall service capabilities. First, our LLMs are driving an end-to-end intelligent upgrade in R&D. By integrating LLMs and associated toolchains into the R&D workflow, we have achieved comprehensive efficiency gains across documentation and coding. For technical documentation, the LLM has generated over 1,000 documents. In coding, tools such as Model Context Protocol provide one-stop assistance, from requirement decomposition and code writing to unit test generation and automated validation. As a result, AI-generated code accounted for nearly 50% of new code developed in Q3.

Speaker #2: At Yuanbao Inc., our AI technology and data infrastructure are now deeply integrated into our core operational workflows. By embedding our proprietary large language model into critical functions, including risk identification, customer acquisition, product design, and claims processing, we have built a systematic AI-driven competitive moat that enhances operational efficiency and elevates the overall service capabilities.

Speaker #2: First, our LLMs are driving an end-to-end intelligent upgrade in R&D by integrating LLMs and associated toolchains into the R&D workflow. We have achieved comprehensive efficiency gains across documentation and coding.

Speaker #2: For technical documentation, the LLM has generated over 1,000 documents. In coding, tools such as the Model Context Protocol provide one-stop assistance, from requirement decomposition and code writing to unit test generation and automated validation.

Speaker #2: As a result, AI-generated code accounted for nearly 50% of new code developed in the third quarter.

Stella Li: Second, our LLMs are empowering our customer service system with intelligent summarization, assisted insights, and multimodal analysis. We have integrated LLM capabilities into customer service scenarios, focusing on call summarization and agent assistant functions. Embedded within the customer service workspace, these capabilities automatically generate service ticket summaries, extract key information post-call, and produce consumer intent labels, action logs, and recommended next steps. On the multimodal front, AI technology is employed to assist in consumer identity verification, while real-time voice analysis captures consumer sentiment dynamics, enabling agents to complete documentation and follow-ups more efficiently.

Speaker #2: Second, 其次，大模型赋能人工客服体系，实现智能摘要、辅助洞察与多模态分析。我们在客服场景中探索性集成了大语言模型的能力，重点围绕通话总结与客服辅助的功能展开。该功能目前已嵌入人工客服工作台，可在通话结束后自动生成服务工单摘要、提炼关键信息，并生成客户诉求意图标签。已完成操作和后续处理建议。在多模态方面，通过AI技术辅助核验客户身份，通过实时语音记录客户情绪变化，帮助客服人员更快地完成记录与跟进。 our LLMs are empowering our customer service systems with intelligent summarization assisted insights and multimodal analysis. We have integrated LLM capabilities into customer service scenarios.

Speaker #2: Focusing on call summarization and agent assistance functions embedded within the customer service workspace, these capabilities automatically generate service ticket summaries, extract key information post-call, and produce consumer intent labels, action logs, and recommended next steps.

Speaker #2: On the multimodal front, AI technology is employed to assist in consumer identity verification. While real-time voice analysis captures consumer sentiment dynamics, it enables agents to complete documentation and follow-ups more efficiently.

Speaker #3: 此外，大模型赋能消费者服务引擎，推动建模与特征挖掘向智能化演进。我们在消费者权周期服务引擎中引入了大语言模型辅助建模与特征自动挖掘技术。该技术能把复杂的特征工程流程自动化和深入化。比如，通过大语言模型来理解去标识化或匿名化的客户行为数据，交互内容、交易数据和产品信息，从中提取了除了有价值的特征，这样一来，可以减少人工手动设计特征的工作，利用大模型生成并筛选出有价值的信息，大幅提升建模速度和效率。

Stella Li: Furthermore, our LLMs are driving the intelligent evolution of modeling and feature mining within our full consumer service cycle engine. By incorporating LLM-assisted modeling and automated feature extraction technologies into this engine, we have been able to automate and deepen the complex feature engineering process. For instance, by leveraging LLMs to interpret pseudonymized or anonymized consumer behavior data, interaction content, transaction information, and product information, the system extracts valuable features. This approach reduces the reliance on manual feature design, allowing the large model to automatically generate and filter critical information, significantly enhancing both modeling efficiency and performance.

Speaker #2: Furthermore, our LLMs are driving the intelligent evolution of modeling and feature mining within our full consumer service cycle engine. By incorporating LLM-assisted modeling and automated feature extraction technologies, we have been able to automate and deepen the complex feature engineering process.

Speaker #2: For instance, by leveraging LLMs to interpret pseudonymized or anonymized consumer behavior data, interaction content, transaction information, and product information, the system extracts valuable features.

Speaker #2: This approach reduces the reliance on manual feature design, allowing the large model to automatically generate and filter critical information, significantly enhancing both modeling efficiency and performance.

Rui Fang: ?????????????????????????????????????????????????????????????????????????????????????????????????AI????????????????????????????????????????????????????????????????????????????AI???????????????????????AI????????????????????????????????????????????????????????????????????????????????????????????????????????????????AI?????????????????????????????????????AI????????????????????????????????????????????????????????

Speaker #3: 目前，保险科技已商业健康险行业正迎来政策支持与技术升级的双重机遇。一方面，国家明确构建多层次医疗保障体系的战略指引下，社会医保与商业健康险的关系已进入协同并重、优势互补的新发展阶段。另一方面，AI技术正在深刻重塑保险行业的运行逻辑。元宝精准把握了普惠健康险市场的增量机遇，在产品端，我们精准补充持续推出创新普惠保险的产品，降低了保险服务的门槛。在AI技术端，我们对业务全流程进行了前瞻性的布局，将AI深度嵌入产品流程决策系统，使其成为经营管理体系的一部分。推动组织不断升级，同时通过模型的持续迭代及业务数据规模的持续积累，我们能够以更高的效率与精准度去理解和服务海量用户，构建引领行业的智能化服务生态。展望未来，我们将继续与AI为引擎，推动服务模式向个性化和主动关怀方向升级。不断拓展新的增长边界，通过AI的深度化和业务数据的持续积累，我们致力于打造更具韧性的商业模式，巩固长期竞争力，为所有利益相关者创造持久的价值。

Stella Li: To summarize, the insurance technology and commercial health insurance sectors are benefiting from the dual tailwinds of policy support and rapid technological advancements. Under the national strategic guidance of building a multi-tiered healthcare protection system, the relationship between social health insurance and commercial health insurance has entered a new stage of synergy and complementary strength. Simultaneously, AI technology is fundamentally reshaping the operational logic of the insurance industry. Yuanbao is capitalizing on the significant growth opportunities in the inclusive health insurance market. On the product side, we are filling market gaps with innovative inclusive insurance offerings that lower the barriers to protection access. On the technology side, we are making forward-looking investments, embedding AI deep into our product design, operational workflows, and decision-making systems. AI has become an integral part of our management framework and a core driver of organizational upgrade.

Speaker #2: To summarize, the insurance technology and commercial health insurance sectors are benefiting from the dual tailwinds of policy support and rapid technological advancements. Under the National Strategic Guidance of Building a Multi-Tiered Healthcare Protection System, the relationship between social health insurance and commercial health insurance has entered a new stage of synergy and complementary strength.

Speaker #2: Simultaneously, AI technology is fundamentally reshaping the operational logic of the insurance industry. Yuanbao is capitalizing on the significant growth opportunities in the inclusive health insurance market.

Speaker #2: On the product side, we are filling market gaps with innovative, inclusive insurance offerings that lower the barriers to protection access. On the technology side, we are making forward-looking investments, embedding AI deep into our product design, operational workflows, and decision-making systems.

Speaker #2: AI has become an integral part of our management framework and a core driver of organizational upgrades. As our models iterate and business data accumulate, we can serve a massive user base with greater precision and efficiency.

Stella Li: As our models iterate and business data accumulate, we can serve a massive user base with greater precision and efficiency, building an industry-leading intelligent service ecosystem. Looking ahead, with AI as our driving force, we will continue to upgrade our service model towards greater personalization and proactive care, while exploring new growth opportunities through the deep integration of AI and the ongoing accumulation of business data. We are committed to building a more resilient business model, reinforcing our long-term competitive edge and creating enduring value for all stakeholders.

As our models iterate and business data accumulate, we can serve a massive user base with greater precision and efficiency, building an industry-leading intelligent service ecosystem. Looking ahead, with AI as our driving force, we will continue to upgrade our service model towards greater personalization and proactive care, while exploring new growth opportunities through the deep integration of AI and the ongoing accumulation of business data. We are committed to building a more resilient business model, reinforcing our long-term competitive edge and creating enduring value for all stakeholders.

Speaker #2: Building an industry-leading intelligent service ecosystem, looking ahead, with AI as our driving force, we will continue to upgrade our service model towards greater personalization and proactive care, while exploring new growth opportunities through the deep integration of AI and the ongoing accumulation of business data.

Speaker #2: We are committed to building a more resilient business model, bringing forth our long-term competitive edge and creating enduring value for all stakeholders.

Rui Fang: ?????? CFO ????????????????????????

Stella Li: Now I'll turn the call over to our CFO, Rui Wang, to present our financial results. Thank you, everyone.

Speaker #2: Now I'll turn the call over to our CFO, Wei Wan, to present our financial results for Q3 2025. Thank you, everyone.

Rui Wang: Thank you, Mr. Fang, and thank you, everyone, for joining today's earnings conference call. I'm pleased to walk you through another quarter's solid financial results characterized by healthy revenue expansion, optimized operational efficiency, improved profitability, and a strong and growing cash position. Our total revenues for the third quarter reached CNY 1.16 billion, representing a robust 33.6% year-over-year increase. This strong growth has primarily driven by sustained momentum across both our insurance distribution and system service revenue businesses. Turning to our revenue mix, revenue from insurance distribution services reached CNY 373.3 million, marking a year-over-year increase of 27.9%. This robust growth was primarily driven by a higher number of policies purchased on our platform, underpinned by more precise consumer targeting and marketing capabilities. System services revenues reached CNY 783.5 million, a 36.9% increase compared with the same period last year.

Speaker #4: Thank you, Mr. Fong, and thank you, everyone, for joining today's earnings conference call. I'm pleased to walk you through another quarter's solid financial results characterized by healthy revenue expansion, optimized operational efficiency, improved profitability, and a strong and growing cash position.

Speaker #4: Our total revenues for the third quarter reached ¥1.16 billion, representing a robust 33.6% year-over-year increase. This strong growth has primarily been driven by sustainable momentum across both our insurance distribution system and service revenue businesses.

Speaker #4: Turning to our revenue mix, revenue from insurance distribution services reached ¥373.3 million, marking a year-over-year increase of 27.9%. This robust growth was primarily driven by a higher number of policies purchased on our platform, underpinned by more precise consumer targeting and enhanced marketing capabilities.

Speaker #4: System services revenues reached ¥783.5 million, a 36.9% increase compared with the same period last year. This growth was propelled by ongoing improvements to our AI-integrated full consumer service cycle engine, which further enhanced our marketing solutions and precise analytics services for insurance carriers.

Rui Wang: This growth was propelled by ongoing improvements to our AI-integrated full consumer service cycle engine, which further enhanced our marketing solutions and precise analytics services for insurance carriers. In addition, the increase reflected an expanded scope of system service offerings provided to both new and existing insurance carrier partners. Moving to expenses, our total operating expenses increased by 31.2% year-over-year to 803.4 million CNY. Operations support expenses were 45.1 million CNY, remaining broadly stable compared with the same period last year. Selling and marketing expenses rose by 23.9% year-over-year to 569.6 million CNY, as we continuously invest in our marketing capabilities to attract new consumers and retain existing ones. G&A expenses increased by 97.8% year-over-year to 93.1 million CNY, primarily due to higher personnel costs, including salary, bonus, and benefits.

This growth was propelled by ongoing improvements to our AI-integrated full consumer service cycle engine, which further enhanced our marketing solutions and precise analytics services for insurance carriers. In addition, the increase reflected an expanded scope of system service offerings provided to both new and existing insurance carrier partners. Moving to expenses, our total operating expenses increased by 31.2% year-over-year to 803.4 million CNY. Operations support expenses were 45.1 million CNY, remaining broadly stable compared with the same period last year. Selling and marketing expenses rose by 23.9% year-over-year to 569.6 million CNY, as we continuously invest in our marketing capabilities to attract new consumers and retain existing ones. G&A expenses increased by 97.8% year-over-year to 93.1 million CNY, primarily due to higher personnel costs, including salary, bonus, and benefits.

Speaker #4: In addition, the increase reflected an expanded scope of system service offerings provided to both new and existing insurance carrier partners. Moving to expenses, our total operating expenses increased by 31.2% year-over-year to ¥803.4 million.

Speaker #4: Operations support expenses were ¥45.1 million, remaining broadly stable compared with the same period last year. Selling and marketing expenses rose by 23.9% year-over-year to ¥569.6 million, as we continue to invest in our marketing capabilities to attract new consumers and retain existing ones.

Speaker #4: G&A expenses increased by 97.8% year-over-year to ¥93.1 million, primarily due to higher personnel costs, including salary, bonuses, and benefits. R&D expenses increased by 56.8% year-over-year to ¥95.6 million, reflecting our intensified R&D efforts and the expansion of our R&D team.

Rui Wang: R&D expenses increased by 56.8% year-over-year to CNY 95.6 million, reflecting our intensified R&D efforts and the expansion of our R&D team. These investments are essential in reinforcing our leadership position as a technology-driven online insurance distributor. As a result of our strong top-line growth and continued operating discipline, our profitability improved meaningfully this quarter. Net income increased by 51.3% year-over-year to CNY 370.4 million, with the net income margin expanding to 32% from 28.2% in the same period last year. Non-GAAP adjusted net income rose by 51.7% to CNY 390 million, representing a non-GAAP net income margin of 33.7%, up from 29.7% a year ago. We maintained healthy cash flow generation during the quarter, further solidifying our cash position.

R&D expenses increased by 56.8% year-over-year to CNY 95.6 million, reflecting our intensified R&D efforts and the expansion of our R&D team. These investments are essential in reinforcing our leadership position as a technology-driven online insurance distributor. As a result of our strong top-line growth and continued operating discipline, our profitability improved meaningfully this quarter. Net income increased by 51.3% year-over-year to CNY 370.4 million, with the net income margin expanding to 32% from 28.2% in the same period last year. Non-GAAP adjusted net income rose by 51.7% to CNY 390 million, representing a non-GAAP net income margin of 33.7%, up from 29.7% a year ago. We maintained healthy cash flow generation during the quarter, further solidifying our cash position.

Speaker #4: These investments are essential in reinforcing our leadership position as a technology-driven online insurance distributor. As a result of our strong top-line growth and continued operating discipline, our profitability improved meaningfully this quarter. Net income increased by 51.3% year-over-year to $374.4 million.

Speaker #1: In the same period last year, adjusted net income (non-GAAP) rose by 51.7% to represent 390 million RMB, a non-GAAP net income margin of 33.7%, up from 29.7% a year ago.

Speaker #1: We maintain healthy cash flow generation during the quarter . Further solidifying our cash position , operating cash flow was 326.1 million RMB , and we ended the quarter with a strong total liquidity balance of 3.75 billion RMB , which increased 82.3% year over year to 9.7% .

Rui Wang: Operating cash flow was 326.1 million CNY, and we ended the quarter with a strong total liquidity balance of 3.75 billion CNY, which increased 82.3% year-over-year, to 9.7% since the end of Q2 this year. This robust liquidity provides us with ample financial flexibility to fund the business growth and pursue strategic investments. To conclude, our Q3 results once again validate the strength and scalability of our business model. Looking forward, we will maintain a prudent focus on high-quality growth, operational efficiency, and a solid liquidity position, empowering us to continue investing with conviction and to drive sustainable growth. Thank you, and I would like to open the call to Q&A. Operator, please go ahead.

Operating cash flow was 326.1 million CNY, and we ended the quarter with a strong total liquidity balance of 3.75 billion CNY, which increased 82.3% year-over-year, to 9.7% since the end of Q2 this year. This robust liquidity provides us with ample financial flexibility to fund the business growth and pursue strategic investments. To conclude, our Q3 results once again validate the strength and scalability of our business model. Looking forward, we will maintain a prudent focus on high-quality growth, operational efficiency, and a solid liquidity position, empowering us to continue investing with conviction and to drive sustainable growth. Thank you, and I would like to open the call to Q&A. Operator, please go ahead.

Speaker #1: the end Since quarter of second year this robust , this liquidity provides us with ample financial flexibility to fund the growth and business pursue strategic investments .

Speaker #1: To conclude , our third quarter results once again the validate strength and scalability of our business model . Looking forward , we will maintain a prudent focus on high quality growth , operational efficiency , and a solid liquidity position , empowering us to continue investing with conviction and drive to growth .

Speaker #1: Thank you . And I would like to open the call to Q&A . Operator . Please go ahead .

Speaker #2: Thank you . We will now begin the question and answer session . To ask a question , please press star one . One on your telephone and wait for your name to be announced .

Operator: Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. There may be a short pause as attendees register their questions. We will now take our first question from the line of Amy Chen from Citi. Please go ahead, Amy.

Speaker #2: To withdraw your question , please press star one . One again for the benefit of all participants on today's call . If you wish to ask a question to management in Chinese , please immediately repeat your question in English .

Speaker #2: There may be a short pause as attendees register their questions. We will now take our first question from the line of Amy Chen from Citi.

Speaker #2: Please go ahead, Amy.

Speaker #3: Hi, this is Amy. Thank you very much for the opportunity to ask a question. First, I want to congratulate the management on another robust quarter, both on the revenue and earnings side.

Amy Chen: Hi, this is Amy Chen from Citi, and thank you very much for the opportunity for a question. First, I want to congratulate the management on another robust quarter, both on revenue and earnings side. I have two questions. The first one being on selling and marketing expenses. So we noted that as a percentage of revenue, actually, the efficiency of selling and marketing expenses has improved both year-over-year and quarter on quarter. I'm wondering what was the driver behind this improvement, and does this have anything to do with seasonality and is it sustainable going forward? And the second one would be on.

Speaker #3: I have two questions . The first one being on selling and marketing expenses . And we noted that as a percentage of revenue , actually , the efficiency of selling and marketing expenses has improved both year over year and quarter on quarter .

Speaker #3: I'm wondering what was the driver behind this improvement, and does this have anything to do with seasonality? Is it sustainable going forward?

Speaker #3: And the second one would be on my.

Speaker #2: We have lost Amy's line there. Maybe we can go on to the next question. We will now take our next question from Shu, from CSC.

Operator: We have lost Amy's line there. Maybe we can go on to the next question. We will now take our next question from Yue Xu from CSC. Please go ahead, Yue.

Speaker #2: Please go ahead . You .

Speaker #4: Hi . Management . Congrats on your sorry result and a strong execution for her . So my first question relates to the recent tax regulation change effective in October .

Yue Xu: Hi, management. Congrats on your solidly delivered and strong execution quarter. So my first question relates to a recent tax regulation change effective in October. So, with a new 15% cap on ad spend deduction, have we seen some material impact on the overall bidding intensity across platforms? And how should we think about the future revenue growth going forward? The second one is we have noticed some peers also expanding into public traffic acquisition. And how should we think about the margin or the customer acquisition cost going forward?

Speaker #4: So, with the newly implemented 15% cap on ad spend deduction, have we seen any material impact on the overall business intensity across platforms?

Speaker #4: And how should we think about the future revenue growth going forward? So, and the second one is we have noticed some peers also expanding into public traffic acquisition, and how should we think about the margin or the cost?

Speaker #4: The customer acquisition cost going forward?

Speaker #1: you . Yeah , Thank this is Ray yuan . I'll the take on Q&A on your first question regarding ad trends and tax regulations .

Rui Wang: Thank you, Yue. This is Rui Wang. I'll take on the Q&A. My first question regarding ad trends and tax regulation. So far, we haven't seen any material impact or changes to our ongoing business. We've been following it very closely as well. However, if this becomes a market-wide standard, it'll affect the entire industry, including advertisers as well as platforms, by driving up ad costs for everyone. As advertising costs rise across the industry, we do believe that players with stronger profitability, operational efficiency, and cost controls are better positioned to stand out and achieve sustainable earnings, leading to potentially market consolidation or stronger growth. On your second question regarding competition in the public domain, yes, we've seen our partners increase investment in external traffic, which validates the success of our business model and technological capabilities, while also underscoring the substantial growth potential of the health insurance market.

Speaker #1: So far, we haven't seen any material impact or changes to our ongoing business. We've been following it very closely as well.

Speaker #1: However , if this becomes a market wide standard , it will affect the entire industry , including advertisers as well as platforms . driving By up at costs for advertising costs everyone as across the industry .

Speaker #1: We do believe that players with stronger profitability, operational efficiency, and cost controls are better positioned to stand out and achieve sustainable earnings, leading to potentially market consolidation or stronger growth.

Speaker #1: On your second question regarding competition , the public domain , yes , we've seen our partners increase investment in external traffic , which validates the success of our business model and technological capabilities , while also underscoring the substantial growth potential of the health insurance market .

Speaker #1: Meanwhile, the increase in external traffic by our partners serves as valuable market education, raising consumer awareness for commercial insurance. Because a portion of the large population still remains uninsured by commercial health plans, this indicates that the industry ceiling is still far from being reached.

Rui Wang: Meanwhile, the increase of external traffic by our partners serves as valuable market education, raising consumer awareness for commercial insurance because a large portion of the population still remains uninsured by commercial health plans, indicating that the industry's ceiling is still far from being reached. Today, commercial health insurance has become an integral component of China's multi-tier medical security system, as Mr. Fang mentioned, and the relationship between social health insurance and commercial health insurance is entering a new stage of synergy and complementary strength. So in our view, the deciding factor in maintaining a competitive edge ultimately comes down to operational efficiency. Now, with our optimized engine, we continue to grow and achieve attractive economics, even at our current scale, and we will continuously train and optimize our engine, which is key to driving efficiency and maintaining our competitive edge. Thank you.

Meanwhile, the increase of external traffic by our partners serves as valuable market education, raising consumer awareness for commercial insurance because a large portion of the population still remains uninsured by commercial health plans, indicating that the industry's ceiling is still far from being reached. Today, commercial health insurance has become an integral component of China's multi-tier medical security system, as Mr. Fang mentioned, and the relationship between social health insurance and commercial health insurance is entering a new stage of synergy and complementary strength. So in our view, the deciding factor in maintaining a competitive edge ultimately comes down to operational efficiency. Now, with our optimized engine, we continue to grow and achieve attractive economics, even at our current scale, and we will continuously train and optimize our engine, which is key to driving efficiency and maintaining our competitive edge. Thank you.

Speaker #1: commercial health insurance has Today , become an integral component of China's multi-tier medical security system , as Mr. mentioned , and the relationship between social health insurance and commercial health insurance is entering a new stage of synergy and strength .

Speaker #1: complementary So , in our view , the deciding factor in maintaining a competitive edge ultimately comes down to operational efficiency . Now , with our optimized engine , we continue to grow and achieve attractive economics , even our current scale .

Speaker #1: And we will continuously train and optimize our engine, which is key to driving efficiency and maintaining our competitive edge. Thank you.

Speaker #4: Thank you. That's helpful.

Speaker #2: We will now take our next question from Amy from Citi. Please go ahead, Amy.

Yue Xu: Thank you. That's helpful.

Operator: We will now take our next question from Amy from Citi. Please go ahead, Amy.

Speaker #3: Hi . This is Amy from city . And thank you for the opportunity . I have two questions . My first question is regarding marketing efficiency .

Amy Chen: Hi, this is Amy from Citi, and thank you for the opportunity. I have two questions. My first question is regarding marketing efficiency. We noted that your selling and marketing expenses as a percentage of total revenue actually improved both year-on-year and quarter-on-quarter. I'm wondering, is there any seasonality in this, or what was the core driver behind this improvement? And going forward, is this level of efficiency sustainable? The second question is regarding shareholders' return. Given our improved top-line growth as well as earnings, what are management's thoughts on perhaps dividends or share buybacks at this point? Thank you.

Speaker #3: We noted that you're selling and marketing expenses as a percentage of total revenue . Actually improved both year on year and quarter on quarter .

Speaker #3: I'm wondering, is there any seasonality in this, or what was the core driver behind this improvement? And going forward, is this level of efficiency sustainable?

Speaker #3: The second question is regarding shareholders returns . You know , given our improved top line growth , as well as earnings , what are management's thoughts on perhaps dividends share or buybacks at this point ?

Speaker #3: Thank you .

Speaker #1: Thank you Amy . in terms So of our marketing expenses , there is some seasonality depending on our acquisition strategy sometimes because we may want to we might we may avoid want to strong acquisition periods such as development .

Rui Wang: Thank you, Amy. So in terms of our market expenses, there is some seasonality depending on our acquisition strategy because sometimes we may want to avoid strong acquisition periods such as 11/11, but we also continuously dynamically adjust our strategy based on growth targets and ROI targets. So we've been adjusting our marketing approach in real time, and different approaches lead to effective outcomes, including potential shifts in age profile, spending power, and consumption habits of our consumer base. Now, what we are seeing here are obviously improvements in our overall efficiency continuously over the last 13 quarters, but going forward, we believe we want to, as mentioned before, have a very balanced growth profile in tandem with our operational efficiency going forward. Now, in your second question regarding shareholder return, we continue to evaluate best strategies in providing the best shareholder return through various operational and capital markets opportunities.

Speaker #1: But we also continuously and dynamically adjust our strategy based on growth targets and ROI targets. So, we've been adjusting our marketing approach in real time and exploring different methods to lead to effective outcomes, including potential shifts in age profile, spending, and power consumption habits across our consumer base.

Speaker #1: Now , what we are seeing here are obviously improvements in our overall efficiency continuously over the last 13 quarters . But going forward , we believe we want to , as mentioned before , have a very balanced growth profile in tandem with our operational efficiency going forward .

Speaker #1: Now, your second question regarding shareholder return: we continue to evaluate the best strategies in providing the best shareholder returns to various operational and capital market opportunities.

Speaker #1: And as you said, dividends are certainly one of them that we are considering. Thank you.

Rui Wang: Like you said, dividends is certainly one of them that we are considering. Thank you.

Like you said, dividends is certainly one of them that we are considering. Thank you.

Speaker #3: Thank you .

Speaker #2: Thank you. We will now take our next question from Yuan Liu from the city. Please go ahead.

Amy Chen: Thank you.

Operator: Thank you. We will now take our next question from Yuan Liao from Citic. Please go ahead.

Speaker #5: Thanks , management , for taking the questions and congrats for the strong quarter results . I have two questions . The first question is about AI and with a rapid development of the generative AI and AI agent .

Yuan Liao: Thanks, management, for taking the questions, and congrats for the strong quarter results. I have two questions. The first question is about AI and with the rapid development of the generative AI and AI agents. So how do you see this impacting your products and business models? Could management share your strategic roadmap regarding future algorithm or product innovation? The second question is about your target market. So how do you view the current market penetration rate within Yuanbao's target demographic, and what potential do you see for the future upside growth? Thank you.

Speaker #5: So, how do you see this impacting your products and business models into management? Share your strategic roadmap regarding future algorithm or product innovation.

Speaker #5: And the second question is about your target market. So how do you view the current market penetration rate within Yuanbao Inc.'s target demographic, and what potential do you see for the future of growth?

Speaker #5: Thank you .

Speaker #1: Thank you again . So the first question so we integrate AI capabilities in various aspects of our operation . As you know on the front end for traffic acquisition , we have built a very strong engine with thousands of models labels and for each consumer , relying primarily on recommendation algorithms which are tree based models or gbms .

Rui Wang: Thank you, Yuan. So my first question, so we integrate AI capability in various aspects of our operation. As you know, on the front end for traffic acquisition, we have built a very strong engine with thousands of models and labels for each consumer, relying primarily on recommendation algorithms, which are tree-based models or GBMs. As for generative AI, we deploy them across our user acquisition journey, as well as internally, as noted by Mr. Fang, on our LLM capabilities and in our earnings highlight. The evolution of our AI agents and AI capabilities will play a crucial role here in both helping with generating innovation and potentially new earnings, as well as continued improvements across our business. So on the one hand, it'll help us continue to elevate consumer experience.

Speaker #1: As for generative AI , we deploy them across our user acquisition journey as well as internally . As noted by Mr. Fong on our LLM capabilities in our and , highlight the evolution of our AI agents and AI capabilities .

Speaker #1: Will will play a crucial role here in both helping with generating innovations and potentially new earnings, as well as continued improvements across our business.

Speaker #1: So, on the one hand, it will help us continue to elevate the consumer experience. On the other hand, it will allow us to continuously capture data insights, creating a feedback loop.

Rui Wang: On the other hand, it will allow us to continuously capture data insights, creating a feedback loop in addition to what we have already to further refine our model performance. On your second question regarding industry penetration, so looking at the industry landscape, commercial health insurance has become a vital component of China's multi-tiered healthcare protection system. The relationship between social health insurance and commercial health insurance is evolving into a new stage of correlation and complementarity, as Mr. Fang mentioned. So we do believe commercial health insurance will play a pivotal role in addressing the challenges posed by aging population and alleviating the pressures on the public healthcare system. So as local economies grow and innovative drug catalogs for commercial health insurance are established, we believe the demand for protection will rise continuously and very naturally.

On the other hand, it will allow us to continuously capture data insights, creating a feedback loop in addition to what we have already to further refine our model performance. On your second question regarding industry penetration, so looking at the industry landscape, commercial health insurance has become a vital component of China's multi-tiered healthcare protection system. The relationship between social health insurance and commercial health insurance is evolving into a new stage of correlation and complementarity, as Mr. Fang mentioned. So we do believe commercial health insurance will play a pivotal role in addressing the challenges posed by aging population and alleviating the pressures on the public healthcare system. So as local economies grow and innovative drug catalogs for commercial health insurance are established, we believe the demand for protection will rise continuously and very naturally.

Speaker #1: In addition to what we have already to further refine our model performance . On your second question regarding industry penetration , so looking at the industry landscape , commercial health insurance has become a vital component of China's multi-tiered health care protection system .

Speaker #1: The relationship between social health insurance and commercial health insurance is evolving into a new stage of coronation and complementarity, as Mr. Fang mentioned.

Speaker #1: So, we do believe health insurance, particularly commercial health insurance, will play a pivotal role in addressing the challenges posed by an aging population and alleviating the pressures on the public health care system.

Speaker #1: So, as local economies grow and innovative drug catalogs for commercial health insurance are established, we believe the demand for protection will rise continuously and very naturally.

Speaker #1: So, the online inclusive model is actually very ideally and perfectly suited to reach these demographics that are underserved by commercial health insurance. In addition, for users who have already purchased short-term policies, they are far from reach.

Rui Wang: So Yuanbao's online inclusive model is actually very ideally and perfectly suited to reach these demographics that are underserved by commercial health insurance. In addition, for users who have already purchased short-term policies, they are far from reaching their protection ceiling. We see tremendous headroom for upselling and cross-selling additional products such as critical illness, accident, etc., and there's huge potential in user purchasing policies for family members. Regarding premiums, we don't see it alone as a key driver. Instead, our focus is on leveraging AI and Big Data for very precise risk assessments, as well as understanding the pain points and needs of our consumers. So we believe this will enable very defined pricing, leading to a healthy and sustainable ROI.

So Yuanbao's online inclusive model is actually very ideally and perfectly suited to reach these demographics that are underserved by commercial health insurance. In addition, for users who have already purchased short-term policies, they are far from reaching their protection ceiling. We see tremendous headroom for upselling and cross-selling additional products such as critical illness, accident, etc., and there's huge potential in user purchasing policies for family members. Regarding premiums, we don't see it alone as a key driver. Instead, our focus is on leveraging AI and Big Data for very precise risk assessments, as well as understanding the pain points and needs of our consumers. So we believe this will enable very defined pricing, leading to a healthy and sustainable ROI.

Speaker #1: They're reaching their protection ceiling. We see tremendous headroom for upselling and cross-selling. Additional products such as critical illness, accident, etc.

Speaker #1: And there's huge potential in user purchasing policies for family members. Regarding premiums, we don't see it alone as a key driver.

Speaker #1: Instead , our focus is on leveraging AI and big data for for very precise risk assessments , as well as understanding the pain points and needs of a consumers .

Speaker #1: we So believe this will enable very refined pricing leading to a healthy and sustainable ROI . So , you know , it's I think a pretty winded of way saying that we have a lot of internal models to calculate the current penetration headroom .

Rui Wang: So it's, I think, a pretty long-winded way of saying that we have a lot of internal models of calculating the current penetration headroom, and we do believe we are very, very far from reaching any level of higher penetration, but additional data analysis, we can discuss further. Thank you.

So it's, I think, a pretty long-winded way of saying that we have a lot of internal models of calculating the current penetration headroom, and we do believe we are very, very far from reaching any level of higher penetration, but additional data analysis, we can discuss further. Thank you.

Speaker #1: And we do believe we are very , very far from reaching any level of of higher penetration . But , you know , additional data analysis , we can discuss further .

Speaker #1: There . Thank you .

Speaker #5: Thank you. Very helpful.

Speaker #2: Thank you. We will now take our next question from Jia Liang Yuan from Huafu Securities. Please ask your question, Jialiang.

Yuan Liao: Thank you. Very helpful.

Operator: Thank you. We will now take our next question from Jia Liang Yuan from Huafu Securities. Please ask your question, Jia Liang.

Speaker #5: Hi . Thanks for taking my question . Congratulations on the strong results . I have two questions . regarding revenue growth First , , could you break down the third quarter growth between new user acquisition and the higher premium user per and looking forward , what do you see as the key driver for sustainable growth over the next three years ?

Jia Liang Yuan: Hi Yue. Thanks for taking my question. Congratulations on the strong reaction. I have two questions. First, regarding revenue growth, could you break down the Q3 growth between new user acquisition and the higher premium per user? And looking forward, what do you see as the key driver for sustainable growth over the next three years? And my third question is about AI. Can you quantify the KPI improvements you are seeing in conventional efficiency? And will exporting these AI capabilities create new revenue streams or pricing power for the company in the future? That's all from me. Thank you.

[Analyst] (Huafu Securities): Hi Yue. Thanks for taking my question. Congratulations on the strong reaction. I have two questions. First, regarding revenue growth, could you break down the Q3 growth between new user acquisition and the higher premium per user? And looking forward, what do you see as the key driver for sustainable growth over the next three years? And my third question is about AI. Can you quantify the KPI improvements you are seeing in conventional efficiency? And will exporting these AI capabilities create new revenue streams or pricing power for the company in the future? That's all from me. Thank you.

Speaker #5: And my short question is about AI. Can you quantify the API improvements you are seeing in conventional efficiency? Will these AI-exposing capabilities create new revenue streams or enhance pricing power for the company in the future?

Speaker #5: That's all from me. Thank you.

Speaker #1: Thank you . On your first question regarding revenue growth . So our revenue growth was driven by multiple factors . Now , for the next 2 to 3 years , we see three key drivers .

Rui Wang: Thank you, Jia Liang. On your first question regarding revenue growth, so our revenue growth is driven by multiple factors. Now, for the next two to three years, we see three key drivers. Number one is market tailwind. As people become more insurance conscious, the penetration rate and growth in health insurance sectors bound to continue to increase. Second is cross-selling and product innovations to tailor to consumer needs because as we understand and analyze more user behavior data, we can recommend and innovate more suitable products. Third is our data advantage. With our growing data scale, we're constantly refining our models to better understand and to have better efficiency and accuracy. This is how we plan to ensure sustainable and healthy ROI. But in terms of the actual breakdown, it's the combination of multiple factors that really drives our revenue as well as our profitability.

Speaker #1: Number one is market tailwind. As people become more insurance-conscious, the penetration rate and growth in the health insurance sector are bound to continue to increase.

Speaker #1: Second is cross-selling and product innovations to tailor to consumer needs, because as we understand and analyze more user behavior data, we can recommend and innovate more suitable products.

Speaker #1: Third is our data advantage. With our growing data scale, we constantly understand and improve our accuracy and efficiency. This is the plan for how we ensure sustainability and health.

Speaker #1: ROI terms But in of the actual breakdown , you know , it's it's it's a combination of factors that multiple drives our revenue as well as our profitability .

Speaker #1: On your second question regarding AI . So as you know , our business off started by a very having strong AI base or machine learning team that built out our engine .

Rui Wang: On your second question regarding AI, so as you know, our business started off by having a very strong AI-based or machine learning team that built out our engine. So AI capabilities and data infrastructure have been very deeply integrated across the entire user acquisition process chain, but now by embedding our large language model capabilities across key functions, including risk identification, customer acquisition, product design, and claim processing, we've systematically built an AI-driven competitive moat that will continuously enhance operational efficiency and elevate our service quality. Now, second, through our current engine, we're able to uncover more consumer needs in real time and week by week, month by month, and co-develop products with insurers that better meet today's market demand. As Mr. Fang mentioned, a new critical illness product. So together with our insurance carrier partners, we launched a short-term critical illness product.

On your second question regarding AI, so as you know, our business started off by having a very strong AI-based or machine learning team that built out our engine. So AI capabilities and data infrastructure have been very deeply integrated across the entire user acquisition process chain, but now by embedding our large language model capabilities across key functions, including risk identification, customer acquisition, product design, and claim processing, we've systematically built an AI-driven competitive moat that will continuously enhance operational efficiency and elevate our service quality. Now, second, through our current engine, we're able to uncover more consumer needs in real time and week by week, month by month, and co-develop products with insurers that better meet today's market demand. As Mr. Fang mentioned, a new critical illness product. So together with our insurance carrier partners, we launched a short-term critical illness product.

Speaker #1: So, AI capabilities in data infrastructure have been very deeply integrated across the entire, you know, user acquisition process. But now, by chain.

Speaker #1: embedding our large language model capabilities across key functions , risk including identification , customer acquisition , product design and claim processing , we've systematically built an AI driven , competitive that that will mode continuously enhance our operational efficiency and our service elevate quality .

Speaker #1: Now , second , through our current engine , we're able to uncover more consumer needs in real time . And , you know , week week , by month by month , and co-develop products with insurers that better meet today's market demand .

Speaker #1: As Mr. mentioned , a new critical illness product . So together with our insurance carrier partners , we launched a short term critical illness product .

Speaker #1: The core highlight is unlocking millions in coverage at an inclusive price point by adopting a parallel lump sum payment plus multiple reimbursement model. And so,

Rui Wang: The core highlight is unlocking millions in coverage at an inclusive price point by adopting a parallel lump sum payment plus multiple reimbursement model. And so in summary, our AI capabilities have enabled us to, number one, on the product front, address coverage gaps through the launch of innovative inclusive insurance products to create and offer more value to our consumers, thereby lowering barriers to insurance services. And number two, on the technology front, establish a proactive deployment across all business processes, embedding AI deeply into product development workflow and decision-making systems to make it an integral part of our operational management framework. Now, whether this is going to create new revenue streams or unlock pricing upside, certainly from existing business model, we do believe that will help us allow us to continue to grow very effectively and efficiently.

The core highlight is unlocking millions in coverage at an inclusive price point by adopting a parallel lump sum payment plus multiple reimbursement model. And so in summary, our AI capabilities have enabled us to, number one, on the product front, address coverage gaps through the launch of innovative inclusive insurance products to create and offer more value to our consumers, thereby lowering barriers to insurance services. And number two, on the technology front, establish a proactive deployment across all business processes, embedding AI deeply into product development workflow and decision-making systems to make it an integral part of our operational management framework. Now, whether this is going to create new revenue streams or unlock pricing upside, certainly from existing business model, we do believe that will help us allow us to continue to grow very effectively and efficiently.

Speaker #1: Our AI capabilities have enabled us to become number one on the product front, addressing coverage gaps through the launch of innovative inclusive insurance products. This creates an offering that provides more value to our consumers, thereby lowering barriers to insurance services.

Speaker #1: And number two , on the technology front , establish a proactive deployment across all business processes in embedding AI deeply into product development , workflow decision and making systems to make it an integral part of our operational management framework .

Speaker #1: Now , whether this is going to create new revenue streams or unlock pricing upside from , certainly existing business model , we do believe that will help us allow allow us to continue to grow very effectively and efficiently .

Speaker #1: But new revenue streams in existing business , we think it will help us expand our potential product offerings . But in terms of diversification , that's also something that we're actively looking at .

Rui Wang: But, new revenue streams in existing business, we think it will help us expand our potential product offerings. But in terms of diversification, that's also something that we're actively looking at. Thank you.

But, new revenue streams in existing business, we think it will help us expand our potential product offerings. But in terms of diversification, that's also something that we're actively looking at. Thank you.

Speaker #1: Thank you .

Speaker #5: Thank you . Ray .

Speaker #6: Thank you .

Speaker #2: We will now take our next question from Ying Ying Shui from Southwest Securities. Please go ahead, Ying Ying.

Jia Liang Yuan: Thank you, Yue.

[Analyst] (Huafu Securities): Thank you, Yue.

Operator: Thank you. We will now take our next question from Ying Ying Xu from Southwest Securities. Please go ahead, Ying Ying.

Speaker #7: Thank you . Management , me this opportunity to ask a few questions . My name is Zhou Ying Ying . I am the chief financial analyst at Southwest Securities .

Ying Ying Xu: Thank you, management, for giving me this opportunity to ask a few questions. My name is Ying Ying Xu. I am the Chief Financial Analyst at Southwest Securities. First of all, I would like to congratulate Yuanbao on another strong quarter. I have two questions for the management team. My first question is about revenue growth. Looking ahead to 2026, I am curious to know what you see as the main drivers of Yuanbao's continued revenue growth. Is it increasing marketing spend, or is it improving the efficiency of your AI models? Is it expanding cross-selling, or maybe achieving higher commission rates with shareholders? Also, how do you expect these factors to change over the next three years? My second question is about competition and brand. Compared to ecosystem players like Ping An Good Doctor, or Ant Insurance, Yuanbao is an independent platform.

[Analyst] (Southwest Securities): Thank you, management, for giving me this opportunity to ask a few questions. My name is Ying Ying Xu. I am the Chief Financial Analyst at Southwest Securities. First of all, I would like to congratulate Yuanbao on another strong quarter. I have two questions for the management team. My first question is about revenue growth. Looking ahead to 2026, I am curious to know what you see as the main drivers of Yuanbao's continued revenue growth. Is it increasing marketing spend, or is it improving the efficiency of your AI models? Is it expanding cross-selling, or maybe achieving higher commission rates with shareholders? Also, how do you expect these factors to change over the next three years? My second question is about competition and brand. Compared to ecosystem players like Ping An Good Doctor, or Ant Insurance, Yuanbao is an independent platform.

Speaker #7: First of all, I would like to congratulate you on another strong quarter. I have two questions for the management team. My first question is about revenue growth.

Speaker #7: Looking ahead to 2026, I am curious to know what you see as the main drivers of Yuanbao Inc. Continued revenue growth.

Speaker #7: In that case, is it caressing marketing spend, or is it improving the efficiency of your AI models? Is it expanding cross-selling? Or maybe achieving higher rates with commission as well? Do you expect these factors to change over the next three years?

Speaker #7: My second question is about competition and branding compared to the ecosystem. Are players like Ping An, Good Doctor, or insurance independent plans?

Speaker #7: I would like to know what strategy you have to strengthen Yuanbao Inc. breed? How will you improve customer loyalty? And do you plan to increase renewal rates over the next 1 to 3 years?

Ying Ying Xu: I would like to know what is your strategy to strengthen Yuanbao's brand? How will you improve customer loyalty, and how do you plan to increase renewal rates over the next one to three years? Thank you.

I would like to know what is your strategy to strengthen Yuanbao's brand? How will you improve customer loyalty, and how do you plan to increase renewal rates over the next one to three years? Thank you.

Speaker #7: Thank you .

Speaker #1: Thank you . Thank you . To answer your first question . Now , in terms of growth , you conduct a very holistic assessment across multiple dimensions , including traffic acquisition and its scale model efficiency enhancements , cross-selling and tailored to various specific market conditions .

Rui Wang: Thank you. Thank you, Ying Ying. To answer your first question, now, in terms of growth, we conduct a very holistic assessment across multiple dimensions, including factory acquisition and its scale, model efficiency enhancements, cross-selling, and tailored to very specific market conditions. So by continuously mining data and refining our modeling capabilities, we aim to maintain very sustainable profitability even as our business continues to scale. So that's something that we've been very consistent about over the last couple of quarters. Now, regarding model efficiency, we're very strictly focused on assessing and ensuring that our customer acquisition costs remain stable or trend flat at the minimum as we continue to expand and grow at a very fast scale. Now, looking ahead, we'll continuously bolster our engine by adding and optimizing models. Our goal is to enhance predictive precision without disrupting our existing infrastructure.

Speaker #1: So, by continuously mining data and refining and modeling capabilities, we aim to maintain very sustainable profitability, even as our business continues to scale.

Speaker #1: So that's something we've been very consistent about over the last couple of quarters. Now, regarding efficiency, our model is very strictly focused on assessing and ensuring that our customer acquisition costs remain stable or trend forward.

Speaker #1: Trend flat minimum as at the we continue to expand and grow at a very scale . Now , looking ahead , we fast will bolster continuously our engine by adding optimizing models .

Speaker #1: Our goal is to enhance predictive precision without disrupting our existing our existing infrastructure . And we haven't provided guidance for for 2026 . But but I guess for for the remainder or full 2025 , we do believe year that we'll grow we'll least at 30% on our revenue basis .

Rui Wang: Now, we haven't provided guidance for 2026, but I guess for the remainder or for year 2025, we do believe that we'll grow at least 30% on a revenue basis and continue to maintain a very similar and healthy profit level. Now, for your second question regarding existing ecosystem players versus how do we plan to strengthen our brand moat and enhance customer stickiness, now, first, we operate on an AI-driven engine model where insurance distribution is powered by technology. We acquire users across the full spectrum of traffic channels without relying heavily on any one, allowing the potential for a stable and scalable source of new consumers, serving as the foundation of our future consumer base.

Now, we haven't provided guidance for 2026, but I guess for the remainder or for year 2025, we do believe that we'll grow at least 30% on a revenue basis and continue to maintain a very similar and healthy profit level. Now, for your second question regarding existing ecosystem players versus how do we plan to strengthen our brand moat and enhance customer stickiness, now, first, we operate on an AI-driven engine model where insurance distribution is powered by technology. We acquire users across the full spectrum of traffic channels without relying heavily on any one, allowing the potential for a stable and scalable source of new consumers, serving as the foundation of our future consumer base.

Speaker #1: And continue to very maintain a similar and healthy profit level. Now, for your second question regarding existing ecosystem players versus the Natalie plan to strengthen our brand moat and enhance customer stickiness.

Speaker #1: Now , first , we operate on an AI driven engine model where insurance distribution is powered by technology . We acquire users across the full spectrum of traffic channels without relying heavily on on any one , allowing the potential for stable and scalable source of new consumers .

Speaker #1: Serving as the foundation of our future . Consumer base . Second , as independent third party insurance distributor . What apart from ecosystem based players is capability to , our for daily collaborative iteration across diverse teams .

Rui Wang: Second, as an independent third-party insurance distributor, what sets us apart from ecosystem-based players is our capability for daily collaborative iteration across diverse teams, including Big Data, AI, business marketing, operation, customer service, etc. Our edge is not derived solely from core model or algorithm. Rather, it stems from a holistic iterative feedback mechanism that requires significant time accumulation to build over the last few years on a day-to-day basis. This involves very much a large part of cross-functional collaboration. So the AI team handles modeling and fine-tuning while data team manages data governance, feature mining, business team, etc. So this integrated system, polished through daily multi-departmental collaboration, we do believe has brought us to where we are currently over the last few years. And we want to continue that operational know-how and operational excellence going forward to build our capabilities. Thank you.

Speaker #1: Including big data , AI , business , marketing , operations , customer service , etc. . Our edge is not derived solely from core model or algorithm .

Speaker #1: Rather , it stems from a holistic , iterative feedback mechanism that requires significant time accumulation to build . Over the last few years , on a on a day to day basis .

Speaker #1: This involves, very much, a large part of cross-functional collaboration. So, the AI team handles modeling and fine-tuning, while the Data Team manages data governance.

Speaker #1: Feature mining . Business team , etc. . So this integrated system polished through daily multi-departmental . We do believe has brought us to to where we are currently and over the last few years , and we want to continue that operational know how and operational excellence going forward to build our to build our capabilities .

Speaker #1: Thank you .

Speaker #2: will now We take our next question Sing Tao from Chen from CI CC . Please go ahead . Sing Tao .

Operator: We will now take our next question from Xingtao Chun from CICC. Please go ahead, Xingtao.

Speaker #4: Thank you . .

Speaker #4: Management For

Speaker #8: Thank you for giving me the opportunity to ask questions, and congratulations on the strong performance in the third quarter. I have two questions for the management.

Jia Liang Yuan: Thank you, management, for giving me the opportunity to ask questions. Congratulations on the strong performance in the third quarter. I have two questions for the management. The first is the efficiency of Yuanbao's model stands out against peers. So what's the key drivers behind this? Going forward, is there further room for improvement in net income margin and ROI? The second one is regarding the competitive landscape. So how does the management view the competitive landscape of the industry over the coming years? Thank you.

[Analyst] (CICC): Thank you, management, for giving me the opportunity to ask questions. Congratulations on the strong performance in the third quarter. I have two questions for the management. The first is the efficiency of Yuanbao's model stands out against peers. So what's the key drivers behind this? Going forward, is there further room for improvement in net income margin and ROI? The second one is regarding the competitive landscape. So how does the management view the competitive landscape of the industry over the coming years? Thank you.

Speaker #8: The first is the efficiency of inbox model stands out against peers . what's the key drivers So behind this going forward ? Is there further room for improvement in net income , margin and ?

Speaker #8: ROI. And the second one is regarding the competitive landscape. How does the management view the competitive landscape of the industry over the coming years?

Speaker #8: you Thank

Speaker #1: Thank you . . So you know , ROI our stems from the full digitization automation of our insurance . You know , full cycle acquisition engine or process , which lead to a comprehensive uplift efficiency across the entire user lifecycle .

Rui Wang: Thank you, Xingtao. So our ROI stems from the full digitization and automation of our insurance full-cycle engine or acquisition process, which leads to a comprehensive efficiency uplift across the entire user lifecycle. Now, this spans every single step of the process from adding a user and user registration, purchase, cross-selling, after-sale services, and claim assistance. So by leveraging our engine to analyze massive user behavioral data, we continue to optimize conversion efficiency at every step. And that's what we want to continuously iterate to enhance our engine. Now, going forward, we do see potential for upside in efficiency, but what we have to balance, as mentioned, is we believe the market has a very large room for additional penetration and growth. So we want to balance growth with profitability such that we are growing at least faster than how fast the market is growing to capture that market share.

Speaker #1: Now , this spans single every step of the from adding pressure process and user registration , purchase , cross-selling after sales services and claim assistance .

Speaker #1: So, by leveraging our engine to analyze massive user behavioral data, we continuously optimize efficiency at conversion every step. And that's what we want to continuously iterate on, to enhance our engine.

Speaker #1: Now, going forward, we do see potential for upside in efficiency. But what we have to balance, as mentioned, is that we do believe the market has a very large additional room for penetration and growth.

Speaker #1: So, we want to balance growth with profitability such that we are growing at least faster than how fast the market is growing, to capture that market share.

Speaker #1: second question regarding competition , and , you then know , so today we haven't any changes to material the landscape . This is primarily because the ad bidding process , at both real time and impartial , placing us on a level playing field with all the advertisers across platforms and including including those in gaming , e-commerce , etc.

Rui Wang: On your second question regarding competition, and then so today, we haven't observed any material changes to the landscape. This is primarily because the ad bidding process is both real-time and impartial, placing us on a level playing field with all the advertisers across platforms, including those in gaming, incomes, etc. The platform bidding mechanism is very industry or player neutral. So with our optimized engine, we continue to grow and achieve what we believe is attractive economics as we continue to scale. So we want to make sure that we continuously train and optimize our engine. Furthermore, our competitive edge is not derived from just a few core models or algorithms. Instead, it stems from a comprehensive iterative feedback loop that has been built by us from one single model and one label starting from day one.

On your second question regarding competition, and then so today, we haven't observed any material changes to the landscape. This is primarily because the ad bidding process is both real-time and impartial, placing us on a level playing field with all the advertisers across platforms, including those in gaming, incomes, etc. The platform bidding mechanism is very industry or player neutral. So with our optimized engine, we continue to grow and achieve what we believe is attractive economics as we continue to scale. So we want to make sure that we continuously train and optimize our engine. Furthermore, our competitive edge is not derived from just a few core models or algorithms. Instead, it stems from a comprehensive iterative feedback loop that has been built by us from one single model and one label starting from day one.

Speaker #1: The platform bidding mechanism is very player industry or neutral. So, with our optimized engine, we continue to grow and achieve what we believe is attractive.

Speaker #1: Economics . As we scale . continue to So we want to make sure that we continuously train , optimize our engine . Furthermore , you know , our competitive edge is not derived from just a few core models or algorithms .

Speaker #1: And instead, it stems from a comprehensive iterative feedback loop that we have built from a single model and one label. You know, starting from day one.

Speaker #1: So, it hinges on a very deep collaboration across multiple specialized teams, and to be able to be very adaptive to the changing external environment. So.

Rui Wang: So it hinges on a very deep collaboration across multiple specialized teams and being able to be very adaptive to the changing external environment. Now, given the vast market potential, we're confident that our sustained iterative capabilities will allow us to maintain our existing position and leadership even as changes in the external environment. Thank you.

So it hinges on a very deep collaboration across multiple specialized teams and being able to be very adaptive to the changing external environment. Now, given the vast market potential, we're confident that our sustained iterative capabilities will allow us to maintain our existing position and leadership even as changes in the external environment. Thank you.

Speaker #1: With vast market potential, we're confident that our sustained capabilities will allow us to iteratively maintain our existing leadership position, even with changes in the external environment.

Speaker #1: you Thank .

Speaker #8: you for Thank your insight

Speaker #8: Thank you for your insight.

Speaker #2: Thank you . We received an online question here from Thomas of Wong Goldman His Sachs . question is please on the provide topics updates sales momentum per policy premium and product mix , the and trend in commission and tick rate rate .

Jia Liang Yuan: Thank you for your insight.

[Analyst] (CICC): Thank you for your insight.

Operator: Thank you. We receive an online question here from Thomas Wong of Goldman Sachs. His question is, "Please provide updates on the following topics: sales momentum, policy premium and product mix, and the trend in commission rate and tick rate." Thank you.

Speaker #2: Thank you .

Speaker #1: Thank you. In the third quarter, our total revenue was mainly driven by revenue from insurance distribution services, which grew by 27.9%. Revenue from system services grew even faster at 36.9%.

Rui Wang: Thank you. So in the third quarter, our total revenue mainly driven by revenue from insurance distribution services growing at 27.9%. Revenue from system services grew a bit faster at 36.9%. Now, in the third quarter, our average premium and short-term policy remained generally consistent with historical levels, so tracking within normal ranges both year over year and quarter on quarter. Now, with the trending commission rate, so as for tick rate, it can be roughly estimated by dividing revenue by premiums. Now, looking at the full year picture, we expect our tick rate to remain relatively stable to historical levels. Now, to emphasize, while tick rate is a very important metric, it's just one of several key factors we evaluate in our broader market strategy to optimize really our ROI. So we focus on balancing all the key drivers, including tick rate.

Speaker #1: Now in the third quarter , average premium and short term for short term policies generally remained consistent with historical levels . So tracking within normal ranges both year over and year quarter on quarter .

Speaker #1: Now, the trending commission with as far take rate, rate. So as can be roughly estimated by dividing revenue by premiums.

Speaker #1: Now looking at the full year picture , we expect our remain take rate to relatively stable to historical levels . Now to to emphasize is very , while take important metric , it's just one of several key factors we evaluate in our broader marketing market .

Speaker #1: Broader strategy to optimize really our ROI . we focus on So balancing all drivers , the key including take rate . But this also includes price per policy , cross-selling , efficiency , customer acquisition , and other operational costs metrics .

Rui Wang: But this also includes price per policy, cross-selling efficiency, customer acquisition costs, and other operational metrics, not just tick rate alone. Thank you.

But this also includes price per policy, cross-selling efficiency, customer acquisition costs, and other operational metrics, not just tick rate alone. Thank you.

Speaker #1: Not just takeaway. The wrong. Thank you.

Speaker #2: That concludes the question-and-answer session. I would like to turn the conference back to management for any additional or closing comments.

Operator: That concludes the question and answer session. I'd like to turn the conference back to management for any additional or closing comments.

Speaker #9: Thank you .

Speaker #9: Once again, thank you for joining us today. If you have any further questions, please feel free to contact us directly or present a communication to our financial team.

Rui Fang: Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly. We're The Piacente Group. Our contact information for IR in both China and the US can be found in today's press release. Have a great day.

Speaker #9: Our contact information is available for both China and the U.S. in the press release. Today's a great day!

Operator: For your participation in today's conference, this does conclude the program. You may now disconnect your lines.

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