Waterdrop, Inc. Q2 FY2026 earnings call

• Financial Momentum: Maintained strong growth with 1.45 billion yuan in Q2 revenue and 130 million yuan in net profit attributable to shareholders. Cash reserves stand at 2.653 billion yuan.
• AI Integration as Core Driver: AI is deeply integrated into user acquisition, conversion, and underwriting. AI-driven tools generated nearly 100 million yuan in First-Year Premiums (FYP) and improved long-term sales efficiency by 50% for AI-assisted planners.
• Product Innovation: Launched market-first products including 'Longyi Bao' (long-term heavy-duty line) and 'GoniBot' (critical illness insurance with no health disclosure), targeting users with pre-existing conditions.
• Shareholder Returns: Approved a cash dividend of $0.03 per ADS ($10.8 million total) and a sixth share repurchase program of up to $50 million over the next 12 months. Cumulative buybacks since 2021 total ~$121 million.
• Charity & Social Impact: The Waterdrop Charity Platform has partnered with 119 organizations and launched over 15,600 programs, aiding millions of patients through medical crowdfunding.

Total Revenue: 1.45 billion yuan (up 72.8% year-over-year). Insurance Business: Revenue of 1.33 billion yuan (up 80.5% YoY), contributing approximately 92% to total revenue; Operating Profit of 180 million yuan (up 20% sequentially). Healthcare/Crowdfunding: Cumulative funds raised reached 74.7 billion yen (note: transcript likely implies RMB given context, but text says 'billion yen'); served 3.82 million patients. Digital Clinical Trials: Enrolled over 1,500 patients (up 54% YoY); contributed 63.6 million yuan from crowdfunding services and 35.2 million yuan from clinical trial solutions to net insurance business revenue.

• Full Year 2026 Outlook: Management expects total revenue to increase by more than 40% year-over-year.
• Profitability: Expects operating profit to increase by more than 10% year-over-year.
• Maintenance/Revision: Guidance represents a maintenance of growth expectations despite increased investment in user acquisition and AI infrastructure.

• Regulatory/Tax Uncertainty: Recent media reports on domestic tax enforcement regarding Hong Kong insurance income for mainland residents may impact customer sentiment, though management believes the fundamental value proposition remains intact.
• High Screening Failure Rates: Chronic disease clinical trials involve large patient pools with high screening failure rates, requiring robust matching efficiency and speed.
• Investment ROI Lag: Increased spending on third-party traffic and AI infrastructure (tokens/cloud) is expected to grow naturally; financial impact of new AI initiatives (e.g., smart hardware) is currently limited and unproven at scale.
• Market Competition: Intense competition in the insurance and healthcare sectors requires continuous product innovation and AI capability upgrades to maintain competitive edge.

Q: Amy Chen (Citi) asked about the impact of recent media reports on tax policies regarding Hong Kong insurance income for mainland residents. / A: Yuan Wei clarified that this reflects enforcement of existing rules rather than new policy. While short-term sentiment may be affected, the core drivers—global healthcare access, wealth inheritance, and multi-currency allocation—remain unchanged. Management remains confident in serving diverse customer needs across markets.

Q: Xinhao Chen (CSCC) inquired about the strategy for health insurance targeting customers with pre-existing conditions, noting industry trends. / A: Yuan Wei explained that protecting those with chronic diseases is a clear industry consensus and opportunity. WaterDrop’s strategy involves lowering coverage thresholds via scenario-based product design (e.g., no-health-disclosure plans). AI helps match these specific products to the right customers, making coverage more accessible and sustainable.

Q: Weiyu Wu (Guo Tai Jun International) asked about the commercialization timeline for AI agents, its impact on R&D ratios, and new initiatives. / A: Li Jieru stated AI is not a standalone business but embedded in core operations to drive top/bottom-line growth. AI directly supported ~100M yuan FYP this quarter. R&D costs are stable overall but shifting toward AI talent and token usage; ROI will be monitored closely. New initiative includes a portable AI office assistant hardware product, currently in early global pilot stages.

Q: Kate Liu (UB Key Home) asked which insurance categories have the strongest growth potential. / A: Yuan Wei identified health insurance tailored to aging populations and specific needs (high-end medical, nursing services) as key growth areas. WaterDrop leverages its online platform and AI to identify protection gaps and match tailored products to users who need them most, moving beyond standardized offerings.

Q: Xinyu Wu (Tri-Securities) asked about customer acquisition investment outcomes and cost outlook for H2 2026 and 2027. / A: Li Jieru noted that while Q2 saw increased investment in traffic, it resulted in >30% sequential user growth and improved profitability. The strategy focuses on using AI to align product supply with user profiles for better conversion, rather than just cutting costs. User lifecycle value is expected to realize gradually through renewals and upsells in the medium term.