Release Date: December 11, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Waterdrop Inc (NYSE:WDH) reported a significant year-over-year increase in net profit attributable to ordinary shareholders, up over 150% for the quarter.
• The company has achieved profitability for 11 consecutive quarters, demonstrating consistent financial performance.
• Waterdrop Inc (NYSE:WDH) expanded its insurance business by targeting specific demographics and launching innovative products, resulting in a significant increase in first-year premiums.
• The AI Top Sales Platform 3.0 reached a new milestone in commercialization, expanding partnerships with insurers and initiating pilots in non-insurance sectors.
• The company has made notable progress in its corporate social responsibility efforts, receiving several strategic awards for its commitment to ESG practices.

Negative Points

• Insurance-related income saw a year-over-year decrease of 3%, indicating challenges in maintaining growth in this segment.
• Sales and marketing expenses increased by 10% quarter-over-quarter, driven by higher marketing expenses to third-party traffic channels.
• The crowdfunding segment experienced a quarter-on-quarter decrease in revenue, highlighting potential challenges in this area.
• General and administrative expenses rose due to the internal loss of intangible assets related to the acquisition of Shenlanbao.
• Operating costs increased by 6.7% compared to the previous quarter, primarily due to a rise in referral and service fees.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with WDH.

Q: Can you elaborate on the key drivers behind the significant year-over-year increase in net profit for Q3 2024? A: Peng Shen, CEO, explained that the significant increase in net profit, which rose over 150% year-over-year, was driven by the company's focus on enhancing user value across its business segments. The insurance business, in particular, saw a substantial increase in first-year premiums and maintained an operating profit margin above 20%. Additionally, the company has been profitable for 11 consecutive quarters, reflecting its commitment to sustainable growth.

Q: How is Waterdrop leveraging AI technology in its operations, and what are the future plans in this area? A: Peng Shen, CEO, highlighted that Waterdrop is at the forefront of integrating large language models into the insurance and healthcare industries. The company launched the AI Top Sales Platform 3.0, which features advanced AI capabilities for outbound calling and conversational interaction. This platform has reached a new milestone in commercialization, with partnerships across various industries. Waterdrop plans to continue investing in R&D to build competitive advantages around AI applications.

Q: What are the recent developments in Waterdrop's insurance business, and how is it performing? A: Wei Ran, GM of Insurance Business, reported that the insurance business generated CNY2.04 billion in first-year premiums, with a year-over-year increase of 20.4%. The company has been expanding its customer base through multiple channels and optimizing customer acquisition efficiency. New product launches, such as inclusive insurance products and maternity insurance, have contributed to the growth in premiums.

Q: Could you provide insights into the performance and strategic direction of the medical crowdfunding segment? A: Tracy Lee, Investor Relations, noted that the medical crowdfunding segment has seen significant milestones, with CNY66.3 billion donated to 3.32 million patients. The company is enhancing transparency and risk control mechanisms in response to new regulations. Waterdrop is also exploring how technology can improve platform operations, employing algorithms to manage high-risk cases effectively.

Q: What are the financial highlights for Q3 2024, and how does the company plan to maintain its financial health? A: Xiaoying Xu, Head of Finance, stated that total revenue for Q3 was CNY704 million, with a net profit attributable to ordinary shareholders of CNY92.8 million. The company maintained a strong operating profit margin in the insurance business and positive operating cash inflow. Waterdrop's cash position as of September 30, 2024, was CNY3.44 billion, supporting flexibility in shareholder returns and strategic deployment.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.