Noah Holdings Ltd. Q1 FY2026 earnings call

Global Expansion Milestones

• Japan office officially commenced operations on May 4, 2026
• U.S. broker-dealer license received final regulatory approval, with core team joining in June 2026, completing the company's four global booking center network (Shanghai, Hong Kong, Singapore, U.S.)

Business Model Transformation: AI-Driven Three Front-Office Engines

• **AI-Enhanced Relationship Managers (RMs): AI augments RMs by automating repetitive process work, expanding client coverage, improving allocation capabilities, and enabling RMs to focus on deep client engagement
• AI Wealth Management Department: A new lightweight front-office team that does not rely on traditional headcount expansion, using AI to drive client operations, content services, allocation support, and global coordination to serve broader client demand. Singapore, the first test market, delivered strong validation of the model
• AI + Ecosystem Expansion: Building a platform to serve independent financial advisors, family offices, and external professional firms with global asset supply chains, AI workbenches, compliance infrastructure, execution capabilities, and brand credibility

Operational Efficiency Improvements

• Total group headcount declined 10.4% year-over-year to 1,726 in Q1 2026, following an 11% total headcount reduction in 2025 (with stable net revenue) and a further 3% quarter-over-quarter reduction in Q1 2026
• AI has been embedded into core processes including client interaction, content generation, client research, allocation recommendation generation, service record keeping, automated reporting, and compliance suitability checks, driving structural productivity gains
• Total operating costs declined 9.2% year-over-year and 18.1% quarter-over-quarter to RMB 389 million, with personnel costs down 12.2% year-over-year, reflecting efficiency gains rather than business contraction

Financial Health

• The company maintains a strong, liquid balance sheet with zero interest-bearing debt; as of Q1 end, cash and cash equivalents totaled RMB 4.3 billion, short-term investments RMB 834 million, and the asset-liability ratio was a low 14.5%
• The board proposed a total 100% payout of 2025 non-GAAP net income (including a special dividend), extending the company's 100% non-GAAP net income payout policy for a third consecutive year
• The company has cumulatively repurchased 3 million ADS for 35 million USD under its share repurchase program, reflecting management confidence in intrinsic value

Strategic Direction

• The company is transitioning from a traditional wealth management institution to an AI-driven global platform serving high-net-worth Chinese families worldwide, with long-term growth no longer dependent on headcount expansion, but on AI capabilities, global compliance, customer data, and scalable platform services

1. Domestic Wealth Management (NOAA Upright): Generated net revenue of RMB 208 million, up 63% year-over-year, accounting for 33.2% of total company net revenue. Total domestic transaction value reached RMB 23.3 billion, up 44.8% year-over-year; RMB-denominated mutual fund transaction volume hit RMB 9.9 billion, up 131% year-over-year; RMB-denominated private secondary products reached RMB 5.3 billion, up 61% year-over-year. Active domestic clients reached 10,742, up 21.8% year-over-year.
2. Overseas Wealth Management: As of March 31, 2026, overseas registered clients hit 20,373, up 11.9% year-over-year; overseas AUA reached 9.6 billion USD, up 5.9% year-over-year; overseas AUM reached 6.2 billion USD, up 5% year-over-year. Overseas high-net-worth (Diamond and Black Card) clients reached 1,781, up 3.8% quarter-over-quarter. U.S. dollar-denominated product transaction value was 1.15 billion USD, flat year-over-year; U.S. dollar-denominated private secondary products hit 293 million USD, up 161% year-over-year. Singapore (AI model test market) saw AUA grow 192% year-over-year, with per-capita revenue generation 8.5x the original baseline.
3. Insurance Business: Revenue decreased 49.9% year-over-year as part of deliberate business mix optimization, contributing a significantly reduced share of total revenue.

• Full-year 2026 operating margin is expected to remain in a healthy range above 30%, with normal quarterly fluctuations due to product mix and expense timing
• No large overall headcount expansion is expected for full-year 2026, though small incremental hires will be made to fulfill key roles in new global markets, while continued AI-driven mid-back office efficiency optimization will continue
• The company will maintain financial discipline while continuing to invest in global expansion and AI capability building, with core priorities including expanding the overseas client base, growing global asset allocation business, optimizing Olive asset management revenue structure, and deepening AI applications across core processes

• Short-term investment sentiment and domestic transaction growth are dependent on capital market performance, which can be volatile
• Cross-border wealth management operates under evolving regulatory requirements across multiple jurisdictions, requiring continuous compliance reviews and adjustments
• The company's current market valuation (trading at ~0.5x book value) does not reflect its intrinsic long-term earnings potential or balance sheet strength
• Business model transformation to AI-driven operations is incremental, with slower adoption expected in the domestic market due to legacy structural constraints

Q: China recently tightened regulations on unauthorized cross-border brokerage business, with several offshore brokers fined. How does this impact NOAA's business, and what is your compliance position?

A: This new rule is a reinforcement of existing regulations that have been in place for years, not a completely new policy. NOAA has always maintained full compliance across all jurisdictions: all client accounts are opened and managed under relevant overseas regulatory requirements (e.g., HKMA rules for Hong Kong-based accounts), all client funds originate from regulated overseas financial institutions with zero domestic mainland funding, our trading platform and systems are hosted entirely overseas, and we have zero domestic employees dedicated to cross-border brokerage operations. Cross-border brokerage contributes less than 1% of NOAA's total revenue, so we expect minimal to no impact on our business model. Management also notes that the tighter regulatory environment may benefit compliant, established players like NOAA.

Q: Domestic product transaction volume picked up strongly in Q1. What is the trend for Q2, and what is your outlook for client demand for domestic and overseas products? What is your full-year cost guidance?

A: Investment sentiment has improved meaningfully over the past 18 months alongside recovering A-share market conditions, but NOAA focuses on promoting multi-dimensional asset allocation rather than chasing market hot spots, which stabilizes business performance. For overseas products, AI-related investments (from infrastructure to listed equities) are a strong current trend, and NOAA's CIO team has positioned client allocations to capture this trend, with AI-driven client risk profiling and product matching improving sales efficiency. For full-year costs, we do not plan intentional frontline team reduction (and may add small numbers of staff in key growth markets) but will continue to pursue AI-driven mid-back office efficiency gains, with no large overall headcount growth expected.

Q: There was a sequential decline in some overseas business metrics, and you have completed license deployment and moved to operational execution. What is the outlook for overseas growth, and how does AI improve RM and client service efficiency?

A: The sequential quarterly decline is normal volatility, and the business still delivers year-over-year growth. NOAA has shifted its overseas strategy to focus on high-value high-net-worth clients, allocating more high-quality product resources to top clients via the new NOBAY client tiering system, which improves resource efficiency. Our new three-engine AI model transforms growth: AI supports existing RMs, the new AI Wealth Management Department can serve clients without adding new RM headcount, and the AI ecosystem partners with independent advisors to scale coverage. In competitive, small Singapore, where hiring experienced RMs is very costly, the AI model delivered 192% AUA growth, proving the model works, and we will roll it out to other overseas markets next.