Noah Holdings Ltd. Q3 FY2025 earnings call

• Three trends emerged during the quarter: improved profitability and margins with non-GAAP net income up over 50% YOY, accelerated growth in investment products, and implementation of key initiatives like overseas booking centers and AI projects. - Financially, net revenues for Q3 were RMB 633 million, down slightly YOY but up sequentially. Non-GAAP net income for Q3 was RMB 229 million, up over 50% YOY. - Overseas net revenues were RMB 311 million, contributing 49.1% of total net revenues. Recurring service fees rose 4.7% YOY. - Key initiatives: establishment of 4 overseas booking centers, rollout of AI-related projects, and focus on investment product selection, AI as a growth driver, and global service platform.

During the third quarter, net revenues reached RMB 633 million, down slightly year-on-year but up sequentially. Investment products account for a larger share of new revenue, with Q3 revenues from investment products making up approximately 28% compared to 18% a year ago. Overseas operations: Net revenues for the third quarter were RMB 311 million, contributing 49.1% of total net revenues. Overseas wealth management net revenues were RMB 146 million, down 22.7% year-on-year but up 13% sequentially. Olive (overseas asset management) had net revenues RMB 118 million, up 8.6% sequentially. Glory Family Heritage (overseas insurance) had RMB 47 million, up 19.8% year-on-year. Domestic operations: Net revenues from domestic public securities were RMB 116 million, up 8.7% year-on-year. Domestic asset management (Gopher) had RMB 189 million, up 4.9% year-on-year. Domestic insurance (Glory) had RMB 5 million, down 44.8% year-on-year.

• Confidence in transformation strategy progress with 3 trends showing solid progress. - Continued focus on revenue mix adjustment, with investment products increasing their share. - AI and global operations (like overseas booking centers) as key growth drivers. - Prudent operations to improve shareholder returns by optimizing cost structure and cashflow.

• Recurring income may face near-term pressure. - Domestic exit activities were slower than expected, but not viewed as a structural issue. - Potential risks outlined in public filings with SEC and HKEX may cause actual results to differ from forward-looking statements.

Q: What will be the potential financial impact from strategies like AI and booking centers? And on overseas vs domestic RM headcount trends?

A: AI is expected to innovate the business model, aiding client acquisition and business model upgrade. Booking centers in the U.S. will have necessary infrastructure with manageable operating expense impact. Overseas RM headcount drop is an internal adjustment, with AI RM set to enhance client coverage.

Q: What measures have been taken for investment product sales and focus for Q4?

A: Focus on products fighting inflation, technology-related (including AI), and some crypto-related investments. Strength in overseas investment products, particularly technology-related, and prudent approach to renminbi products.

Q: About investment income and active clients trends?

A: Investment income growth due to previous investments and exits in good market. Active clients increased due to focus on investment products, enhancing client relationships. AI adoption aiding in client acquisition and service efficiency.

Q: How does AI support client acquisition in overseas market and RM headcount?

A: AI provides better solutions and explanations, enhancing efficiency in getting potential clients. Overseas RM headcount drop is an internal adjustment as AI RM is set to cover more clients, with confidence in global service platform and AI-driven growth.