Release Date: September 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Waterdrop Inc (WDH, Financial) achieved a net profit attributable to ordinary shareholders of nearly RMB88.3 million, reflecting a year-over-year increase of over 300%.
- The company's insurance business equity reached RMB1.8 billion with an operating profit margin exceeding 21%.
- Waterdrop Inc (WDH) has maintained stability for 10 consecutive quarters since Q1 of 2022.
- The company has been actively repurchasing shares in the open market for three consecutive years since 2021, with a new share repurchase program approved for up to $50 million within the next 12 months.
- Waterdrop Inc (WDH) plans to distribute dividends at least once a year, with the second special cash dividend based on the first-half 2024 operating results amounting to about $7.5 million.
Negative Points
- Despite overall stability, the company's net operating revenue of RMB676 million was down 4.1% quarter-over-quarter.
- Insurance-related income decreased by RMB5.4 million sequentially.
- Operating costs increased by RMB11.5 million in personnel costs year-over-year.
- Long-term insurance FYP reached RMB530 million, but the YoY and QoQ performance was pressured by high base figures and product changes.
- R&D expenses were RMB53.3 million, down 38.5% year-over-year and 4.8% quarter-over-quarter due to a decrease in personnel costs and share-based compensation expenses.
Q & A Highlights
Q: Can you provide more details on the financial performance for Q2 2024?
A: (Xiaoying Xu, Head of Finance) The company achieved net operating revenue of RMB676 million, stable year-over-year but down 4.1% quarter-over-quarter. Insurance-related income amounted to RMB574 million, down RMB5.4 million sequentially. Funding service fees were RMB69.3 million, up 2.9% quarter-over-quarter, and healthcare-related income was RMB26.4 million, up 4.2% sequentially. Operating costs and expenses were RMB624 million, representing a decrease on both a YoY and quarter-over-quarter basis. Net profit attributable to ordinary shareholders increased by 307% from RMB21.7 million in Q2 2023 to RMB88.3 million in the current period.
Q: What are the key drivers behind the insurance business performance in Q2?
A: (Wei Ran, Director and GM of Insurance Business) The insurance systems generated about RMB1.78 billion in FYP, a QoQ increase of 1.4%. Short-term insurance FYP hit RMB1.25 billion, up 8.2% quarter-over-quarter. New policy premiums surged nearly 20% sequentially. We advanced customer acquisition through platforms like Red Book, TikTok, and WeChat videos, driving the number of new users up by 15.8%. The short-term product range expanded, leading to diversity and a 7.7% increase in average premiums.
Q: How is Waterdrop leveraging AI technology in its operations?
A: (Peng Shen, CEO) We are actively exploring the application of large language models (LLM) in the industry to build the company's core competition for the next stage. Our AI technology has been integrated into various aspects, such as customer acquisition and product recommendations. We have also developed an AI insurance component platform that can replicate human voice and accurately identify customer intentions, setting a new standard in the insurance industry.
Q: Can you elaborate on the company's share repurchase program and dividend policy?
A: (Peng Shen, CEO) The company has been actively repurchasing shares in the open market for three consecutive years since 2021. At the end of August, Waterdrop had cumulatively repurchased 49.3 million EDF for over $100 million. Recently, our Board approved a new share repurchase program, authorizing the company to repurchase up to $50 million within the next 12 months. Additionally, we plan to distribute dividends at least once a year based on strong profitability. The second special cash dividend based on the first-half 2024 operating results amounts to about $7.5 million.
Q: What initiatives have been taken to enhance customer satisfaction in the insurance segment?
A: (Wei Ran, Director and GM of Insurance Business) In April, we initiated a service upgrade year, introducing initiatives like direct claims line, claims within 24 hours, and the restart program to enhance customer satisfaction. We also focus on synergy and efficiency, further increasing premiums from existing customers. Our upgraded membership service offers health management and other exclusive benefits, extending our brand visibility.
Q: How is Waterdrop contributing to social responsibility and sustainable development?
A: (Peng Shen, CEO) We are committed to social responsibility and sustainable development. In June, the company won the annual charity project and annual charity model at the 2024 Charity Gala. By the end of June, Waterdrop Charity platform partnered with 112 public charity organizations and onboarded over 15,500 projects. Our platform supports bilingual fundraising in regions populated by ethnic minorities, aiding in the spread of cases for local communities.
Q: What are the future projections and strategic decisions for Waterdrop?
A: (Peng Shen, CEO) Despite short-term challenges due to new policies, we are confident in the long-term benefits from high-quality development. The company remains committed to its financial guidance, targeting double-digit revenue growth while maintaining robust profitability. We will continue to focus on operational quality, optimizing financial performance, and maintaining healthy business development.
Q: How is the healthcare-related business performing?
A: (Peng Shen, CEO) Healthcare-related income was RMB26.4 million, up 4.2% quarter-over-quarter. We collaborated with 185 pharmaceuticals and CROs, engineering services for 88 new programs during Q2. Our robust patient network and AI technology enrolled over 820 patients, bringing the total to over 8,600. We will continue to maintain our competitive position in the industry, emphasizing the balance between growth and operational efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
