Waterdrop Inc. (WDH) Q2 2025 Earnings Call Transcript
Quarterly Revenue CNY 840 million, up 23.9% year-on-year. The increase was driven by the integration of AI with the insurance and healthcare sectors, which improved operational efficiency.
Operating Profit 85.9% year-on-year increase. This was attributed to significant improvements in operational efficiency powered by AI.
Operating Margin Improved by 3.9 percentage points year-over-year, driven by deeper AI integration.
First Year Premium (FYP) CNY 3.2 billion, up 80.2% year-over-year and 53.1% quarter-over-quarter. Growth was driven by technological innovation and AI-driven customer acquisition.
Insurance-related Revenue CNY 740 million, up 28.7% year-over-year and 12.2% quarter-over-quarter. This was supported by deeper AI integration and increased investment in customer acquisition.
Short-term Products FYP CNY 2.43 billion, up 95% year-over-year and 62.1% quarter-over-quarter. Growth was driven by increased investment in customer acquisition and AI capabilities.
Products for People with Preexisting Conditions Quarterly premium of CNY 300 million, a year-on-year increase of 146.6%. This was due to the introduction of innovative insurance products.
Long-term FYP CNY 770 million, a year-on-year increase of 45.4% and sequential increase of 30.5%. Growth was supported by AI tools improving efficiency for online sales consultants and planners.
Digital Clinical Trial Solutions Revenue RMB 27.7 million, a year-on-year increase of 34.2%. Growth was driven by the rapid scale-up and efficiency gains in the digital clinical trial business.
Total Revenue RMB 838 million, representing a year-on-year increase of 23.9% and a quarter-on-quarter increase of 11.2%. Growth was attributed to AI-driven efficiency improvements in customer acquisition, sales, service, and quality control.
Operating Costs and Expenses RMB 741 million, an 18.7% increase year-over-year. The growth rate of costs and expenses was lower than that of revenue, indicating improved operational efficiency.
Sales and Marketing Expenses RMB 199 million, a 26.3% increase year-over-year. This was primarily due to increased marketing expenses for third-party traffic channels.
General and Administrative Expenses RMB 73.4 million, a decrease of 21.9% year-over-year. This was due to tightened operational control and reduced allowance for credit losses.
R&D Expenses RMB 51.9 million, remaining stable year-over-year. Resources were allocated to AI capabilities building.
Net Profit Attributable to Shareholders RMB 140 million, up 58.7% year-over-year. This was supported by robust operational capability and effective synergy among business segments.
Cash Reserves RMB 3.4 billion as of June 30, 2025, with positive operating cash flow, providing a solid foundation for growth and strategic investment.
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Waterdrop Stock Struggles to Gain Momentum Despite Revenue Growth Resurgence
Strong Revenue Growth: Waterdrop Inc. reported a 38.4% increase in revenue for the third quarter, driven by a significant rise in its technical services segment, which now contributes 23% of total revenue.
Challenges in Core Business: Despite impressive growth, the company's traditional insurance brokerage faces increasing regulatory pressures in China, prompting a shift towards more lucrative technical services and AI integration.
Profitability and Market Response: Waterdrop achieved a 330% increase in operating profit and a 60% rise in net profit year-on-year, yet the stock's response to these results has been muted, reflecting investor concerns about the insurance market.
Future Growth Potential: The company aims to enhance its image as a tech-driven service provider for insurers and drug companies, which could lead to further stock appreciation if successful in shifting market perceptions.
Waterdrop Aims for Sustainable Growth with 38.4% Revenue Increase in Q3 and Faster AI Integration
Financial Performance: Waterdrop Inc. reported Q3 2025 revenue of CNY 975 million, a 38.4% year-on-year increase, with net profit attributable to shareholders rising 60.1% to CNY 158 million, and operating profit reaching CNY 114 million, up 329.8% year-on-year.
AI Integration and Product Development: The company emphasized the significant role of AI in enhancing operational efficiency and customer experience, launching new insurance products and an AI-driven low-code platform to empower employees.
Cash Management and Shareholder Returns: Waterdrop completed its fourth cash dividend distribution since its IPO, totaling approximately $10.9 million, and repurchased around 58.1 million ADS for $113 million by the end of November 2025.
Positive Outlook: Management expressed confidence in exceeding full-year revenue and profit guidance, focusing on leveraging AI technologies for sustainable long-term growth and operational innovation.
