CCG

Good day, and welcome to the Cheche Group H2 and Full Year 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Crocker Coulson, Investor Relations. Please go ahead.

Thank you, Betsy. Hello, everyone. Thank you for joining us to review Cheche's H2 and full year 2025 results. This morning, Cheche posted both the earnings release and a related updated investor presentation to our website, which you can find at ir.chechegroup.com. Very pleased to say that with us on the call today, we have Lei Zhang, Cheche's Founder and CEO, and also Wenting Ji, Cheche's CFO. After the prepared remarks are concluded, we're gonna open up the call for your questions, and they'll be happy to address them. Before we begin, I'd like to remind you that some statements in this teleconference will be forward-looking within the meaning of the federal securities laws. Although we believe these statements are reasonable, we can provide no assurance that they will prove to be accurate because they're prospective in nature.

Actual results could differ materially from those we discuss today. We encourage you to review the most recent filings with the SEC for risk factors that could materially impact our future results. As I mentioned, the earnings release is available for you at ir.chechegroup.com. Again, we also encourage you to review the reconciliations of certain non-GAAP financial measures contained within that we're gonna discuss on the call today. With that, it's my great pleasure to turn the call over to Lei Zhang, Cheche's Chief Executive Officer. Lei, over to you.

Thank you, Crocker. Greetings, everyone. Thank you for joining us today to review Cheche's second half and full year 2025 results. 2025 was a final year for Cheche Group, one that validated both resilience of our business model and the power of the strategy transformation we have been executing despite ongoing fee rates compression driven by rapid growth of NEV premiums within our revenue mix. We delivered a gross profit growth, dramatically reduced the operating losses, and for the first time, achieved adjusted net profitability on a full year basis. They are not incremental results. They marked an inflection point in our evolution from a transactional insurance platform to an AI-powered intelligent insurance ecosystem. Let me begin with that I believe is the most meaningful headline from this period.

The Cheche Group achieved adjusted operating profitability for the full year 2025 and delivered a positive net income in the second half of 2025. Our adjusted net income reached RMB 11.6 million or $1.7 million for the full year, compared to an adjusted net loss of RMB 24.8 million in the prior year. That is a swing of more than RMB 35 million, achieved while we focused on our newer capabilities and adopt a meaningful structural change on our revenue mix. This reflects disciplined cost management across every line of operating expenses, which we reduced in total by more than 19% year-over-year, even as we grew total written premiums plus by 11% and total policies insured by 3 million.

We demonstrated that scale and efficiency can do and work together at Cheche, and we intend to continue building that foundation in 2026. The profitability story also has a structural dimension. NEV premiums, which carry a lower service fee risk than traditional auto insurance, now represent 23% of our total written premiums for the full year, up from the 13% in the prior year. This shift initially creates revenue headwinds, as we mentioned, but it also drives higher growth margins. As our AI-powered tools allow us to capture higher tech risks in the NEV insurance market and deploy capabilities that command premium pricing, we expected the margin profile to continue improving. I also want to highlight the significant progress we have made in translating our AI strategy into operational capability.

We are actively deploying AI pricing model in the collaboration with several of China's leading insurance companies, as well as through the data partnerships with intelligent connected vehicle manufacturers. Our insurance anti-fraud and risk control model, which was recognized in the prestigious top 100 AI product of the 2024 last year. It's one example that integrates a big data, artificial intelligence and the biometrics enabling insurers to identify fraud earlier, price risk more precisely, and process claims with greater efficiency. This partnership positions us to expand our footprint in the renewal insurance market. Beyond our insurer-facing tools, we are developing and testing AI agent to fundamentally change how we engage with the car owners at the point of renewal. With AI agent, we can standardize, scale, and improve the dialogue with the car owners.

Deploying consistent intelligent real-time outreach that is more effective than traditional method and significantly more cost efficiency. On the R&D side, our team leverage AI tools and LLM to accelerate product development and shorten the development cycles. Their tools are expanding our capability roadmap without proportional increase in the head count and spending. Looking ahead, we intend to extend the operational and analytical capability across the full auto insurance value chain. From pre-policy risk assessment and pricing through in the policy risk monitoring and intervention to claim survey and loss assessment.

Combined with our growing advantage in the driving behavior data from NEV ecosystem, we believe that position us to move the industry from the static pricing towards dynamic risk management and to build a data-driven, competitive moat and strength over time. The quality of our OEM partnership continue to deepen. We currently have the partnership with 16 NEV manufacturers. As our business and relationships mature, our strategy focus on the shifting from aiding new relations to the deepening existing ones. That means expanding the vehicles template and the models we serve within the partnership, entering the dealer channel progressively, and maximizing renewal premiums captured across installed base vehicles we already service. Our work with Volkswagen reflects our ability to partner with both domestic champions and the global automakers operating in China's intelligent, connected vehicles market.

We are building the full lifecycle relationships with these partners, not transactional arrangements. The depth of those relationships is what creates the durable and recurring value for the CCG and our shareholders. Looking ahead, we expect to share additional partnership news in coming months that we believe will further demonstrate the strength of our position within China's most intelligent connected vehicles system. We are also preparing to announce the significant advance in our AI-driven auto pricing capabilities, a development that reflects our capabilities with data science and risk modeling, and that we believe significantly expand our addressable market in the renewable insurance segment. We look forward to sharing more details in the near term. Let's turn to the progress we are making internationally, which represents one of our most important long-term growth vectors.

Chinese automakers now export over 8 million vehicles annually. As they expand globally, the demand for intelligent data-driven insurance and financial services infrastructure follows. Cheche Group is uniquely positioned to meet the demand, bringing the digital insurance capabilities and the financial technology capabilities we have built in China's most demanding market to the automotive ecosystem around the world. We are also advancing our international roadmap across the broader Asia Pacific and Latin American markets, leveraging our Fintech solution for automakers abroad. A toolkit of digital insurance and finance services is infrastructure designed to support Chinese automakers and their global partners as they build out new market operations. To summarize, the 2025 demonstrated that what the Cheche Group is capable of.

We achieved adjusted profitability, deepen our AI capabilities from the landmark partnership with a global automotive leader, and took our first meaningful step into the international markets. We enter 2026 with clear priorities, continue growing renewable insurance penetration through the AI-powered tools, expand our platform relationships with Huawei, Volkswagen, and other NEV partners, and invest selectively in the international expansion where we see the clearest path to profitability. We are confident in the trajectory of the business and grateful for the support of our investors and partners. I will now turn the call over to our CFO, Wenting Ji. Thank you.

Thank you, Lei. I'd like to begin by touching on our second half and full year 2025 operational and financial highlights before taking any questions. First, our operational updates. Our total written premium placed for the second half 2025 increased 16.9% year-over-year to RMB 15.5 billion or $2.2 billion. For the full year 2025, the total written premium increased 11% to RMB 27 billion or $3.9 billion. The total number of policies issued increased from 9.3 million in the prior year period to 12 million in the second half 2025. For the full year, total policies issued grew from 17.3 million to 20.3 million.

On the NEV side, our 16 partnerships generated 1.2 million embedded policies and RMB 3.7 billion in corresponding written premiums in the second half of 2025, representing year-over-year growth of 61.8% and 63.9% respectively. For the full year 2025, NEV-embedded policies reached 2.0 million, and the corresponding premium reached RMB 6.3 million, growing 85.3% and 91.0% respectively. Our NEV premiums represented 24.1% of total written premium placed in the second half of 2025, up from 17.2% in the prior year period, and 23.4% for the full year 2025, up from 13.6% in the prior year. Next is our financial results.

The net revenues for the second half 2025 were RMB 1.7 billion, or $237.5 million, representing a 9.4% year-over-year decrease. As Lei just mentioned, this decline reflects the higher proportion of NEV premiums within our mix, which carry lower service fee rates. We are actively managing this structural transition through AI-enhanced pricing capabilities and a renewal market penetration. For the full year 2025, net revenues were RMB 3.0 billion, or $430.4 million, a decrease of 13.3% year-over-year, driven by the same NEV mix dynamics.

For the second half of 2025, cost of revenues decreased 10% year-over-year to RMB 1.6 billion, or $224.0 million, driven by lower net revenues and continued improvement in our gross margin profile. For the full year 2025, cost of revenues decreased 14% year-over-year to RMB 2.8 billion, or $407.5 million from the prior year. The gross profits in the second half increased 0.5% to RMB 94.6 million, or $13.5 million, despite the lower net revenues, which is a direct result of our improved business structure. This is an important signal, like even as revenue compresses through the fee rate transition, our gross profit is still growing.

Gross margin expanded as the higher margin NEV business represents an increased share of the mix. For the full year, the gross profit increased 1% to CNY 160.4 million, or $22.9 million, with gross margin expanding as the NEV business grew as a proportion of the mix. For second half 2025, the selling and marketing expenses decreased 18.1% to CNY 31.0 million or $4.4 million. General and administrative expenses decreased 16.5 million to CNY 38.5 million or $5.5 million. Research and development expenses decreased 2.5 million to CNY 18.9 million or $2.7 million.

The total operating expenses decreased 14.4% to RMB 88.4 million or $12.6 million, while the adjusted total operating expenses decreased by 22.2% to RMB 77.1 million, which is $11.0 million. The total operating expenses for the full year decreased 19.6% to RMB 181.2 million or $25.9 million, while adjusted total operating expenses decreased 17.0% to RMB 156.9 million or $22.4 million.

Operating income for the second half 2025 was RMB 6.1 million or $0.9 million compared to an operating loss of RMB 9.3 million in the prior year period. Adjusted operating income was RMB 18.5 million or $2.6 million compared to adjusted operating loss of RMB 1.5 million in the prior year period. Operating loss for the full year 2025 narrowed dramatically by 68.6% to RMB 20.9 million or $3.0 million. The full year adjusted operating income was RMB 5.6 million or $0.8 million compared to adjusted operating loss of RMB 28.2 million in the prior year.

Net income for the second half 2025 was RMB 7.8 million or $1.1 million compared to a net loss of RMB 6.4 million in the prior year period. Adjusted net income was RMB 22.2 million or $3.2 million compared to adjusted net loss of RMB 0.3 million in the prior year period. Net loss for full year 2025 was RMB 17.8 million, representing improvement of 71.0% from RMB 61.2 million in the prior year. Adjusted net income was RMB 11.6 million or $1.7 million compared to adjusted net loss of RMB 24.8 million in the prior year.

This marks the first full year adjusted profitability in Cheche's history as a public company. Let's turn to our balance sheet. We reported RMB 160.8 million or $24.4 million in cash equivalents, restricted cash and short-term investments as of December 31, 2025. Looking ahead to the full year of 2026, we are anticipating approximate range of RMB 3.0 billion-RMB 3.2 billion for net revenues, a range of RMB 28.0 billion-RMB 30.0 billion for total written premiums, a range of RMB 10.5 billion-RMB 12.0 billion for NEV written premiums. We also expect adjusted net income to multiply several folds compared to the full year of 2025. I think that concludes our remarks.

Next, we'll be happy to take any of the questions. Thank you.

We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Hello. Operator, please go ahead.

The first question comes from Wenhao Zhao with CITICS. Please go ahead.

Good morning.

It appears we've lost that questioner. The next question comes from Allen Klee with Maxim Group. Please go ahead.

Yes. Hi. Congratulations on your progress and advances with NEVs and moving to profitability. In your guidance, you said that you're projecting 2026 NEV premiums to increase between 66.7% and 90.5% year-over-year. Can you just highlight what in your offerings is gonna result in such strong adoption? Maybe highlighting how you're helping with pricing, risk, and fraud. Thank you.

Okay. Thank you, Allen. This question, first, we think of AI as a key tool for upgrading the company's innovation and operational capabilities. The first, at the R&D level, AI is being integrated across the entire workflow from requirements analysis and development, testing and delivery, significantly improving our overall efficiency and stability of outcomes. The second, at the business application level, our company will continue to promote the coordinated use of multiple AI tools and further leverage our advantage in the driving behavior data within the NEV ecosystem. This will gradually extend AI capabilities across the full insurance value chain from the pre-underwriting risk assessment and pricing to in policy risk monitoring and intervention and intelligent claims inspection and loss assessment.

Through this initiative, we aim to drive transformation of auto insurance from static pricing to the dynamic risk management while continuously strengthening our long-term competitive advantage. Thank you.

Thank you very much. You also said on the call that internationally, there's a large demand, and you said you're gonna advance across Asia and Latin America with fintech solutions. Could you explain what you mean by what your fintech solutions are?

Okay. In terms of global expansion, the company has formed a strategic partnership with several automotive brands that focus on international growth. We have already established a solid presence in markets such as Australia, New Zealand, Latin America, and the Middle East and have successfully launched the business operations in collaboration with partners including Guangzhou Automobile Group and Chery and BYD and Great Wall Motor. By supporting Chinese automakers in their overseas expansion, we leverage our mature digital insurance capabilities and the financial technology capabilities to bring our technology to international markets as a Chinese solution, helping build a global financial and insurance ecosystem in such countries. Thank you.

Thank you. I just can comment. I was talking to somebody from Australia yesterday, and they said the demand for Chinese electric vehicle cars is dramatic. The waiting list, especially with what's going on with oil prices.

Lei, do you wanna tell Alan where you're joining us from?

Yeah. Because the oil price is increased.

Lei is actually in Australia today.

Yeah.

Okay.

Yeah. I traveled to Australia for the Great Wall Motor and Chery in Australia.

That's great. Okay.

Thank you.

I'll pass it along to let other people ask questions. Congratulations. Thank you.

Thank you very much.

The next question comes from Wenzhuo Zhao with CITIC Securities. Please go ahead.

Thanks for taking my question. I'm curious about your ability to leverage AI internally to reduce operating costs. I'd also appreciate an update on how AI solutions are supporting internal operations, and any comments on plans for international expansion. Thank you.

[Non-English Content]

[Non-English Content] Thanks for your answer. Very clear. No more questions [Non-English Content].

Thank you.

This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Well, we'd like to thank everyone for joining us today. If you didn't have a chance to ask your questions, or if you'd like to have a follow-up call with management, please feel free to reach out to me or the Cheche Investor Relations team, and we'll be more than happy to arrange a Zoom call at mutual convenience. Thanks everyone for joining us, and I look forward to coming back to you with the future updates. Thank you, operator.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Cheche Group First Half 2025 Earnings Conference Call. [Operator Instructions]. Please note, today's event is being recorded. I would now like to turn the conference over to Crocker Coulson with Investor Relations for Cheche Group. Please go ahead.

Thanks so much, operator. Good morning, everybody. Good evening to those of you joining us from Asia, and thanks to everyone for joining us on Cheche’s First Half of 2025 Earnings Call. This morning, Cheche posted both the earnings release and related investor presentation to our website, which is at ir.chechergroup.com, and you can find all the materials there. With me on the call today are Lei Zhang, Cheche’s Founder and CEO; as well as Sandra Ji, Cheche’s Chief Financial Officer. After the prepared remarks are concluded, we'll be pleased to open up the call for your questions. But before we begin, I'd like to let you know that some statements in this teleconference will be forward-looking within the meanings of the federal securities law. Although we believe these statements are reasonable, we can provide no assurance that they will prove to be accurate because they are prospective in nature. Actual results could differ materially from those we discuss today. We, therefore, encourage you to review the most recent filings with the SEC for risk factors that could materially impact our results. As I mentioned, you can find our earnings release at ir.chechergroup.com, and we encourage you to review the reconciliations of certain non-GAAP measures that are contained in that release. With those formalities now out of the way, it's my great pleasure to turn the call over to Lei Zhang, Cheche’s CEO. Lei, over to you. [Technical Difficulties] I believe your line may be muted. Lei, Sandra? Are you on mute?

Yes, pardon me. It looks like we're having some issues here. I'm going to place music back on and we will get the situation resolved. Please stand by for just a moment. Thank you for holding, everybody. This is the conference operator. I joined the speaker location back to the call. Please proceed.

Okay. Thank you. Thank you, everyone. Thank you for joining us today to review Cheche’s first half 2025 results. The first half of 2025 was a period of relent, adaptation and forward-looking investment for Cheche Group. In the first half of 2025, the number of NEV insurance policies transacted on our platform exceeded 810,000 representing increase of 135% from the prior year, while total written premiums reached RMB 2.6 billion, up to 150% over the same period. Over the past 3 years, our NEV business maintained a compound annual growth rate of 140%. And as this is one of Cheche’s fastest-growing and most promising core business, we continue to diligently strengthen partnership with NEV makers and expand our insurance operations, expecting to serve 30% to 40% of China's NEV market over the next 3 to 5 years. NEV premiums as a percentage of the total written premiums increased to 22.5% from 9.3% in the prior year and gross margins increased a clear reflection of the effectiveness of our business structure and operational efficiency implemented over the past year. Our adjusted net loss for the first half of 2025 improved 47% to RMB 10 million or USD 1.5 million from RMB 24 million in the prior year, and we remain on track to achieve full year adjusted operating profitability in 2025. Throughout the period, we continued to advance our strategy prioritize. China's NEV market is scaling at an unprecedented path, fuelling demand for innovative insurance solutions. Against this backdrop, we are taking decisive steps to invest and commercialize our innovative AI-driven features. This initiative not only align us with growth trajectory of NEV, but also established the framework for our global expansion road map. In short, while the numbers reflect a period of transition, the strategic process we have made positions future for sustainable long-term growth and leadership in both China and international markets. Looking more broadly at China's automotive industry, the first half of 2025 demonstrated continued momentum for NEV. Global NEV sales reached 9.1 million units, with China contributing 6.9 million units, representing an impressive 75% global share. NEV accounted for 44% of new car sales in China in the first half of 2025 and insurance demand is scaling rapidly. Auto insurance premiums reached RMB 440 billion over the same period, up 4.5% year-over-year, while NEV insurance premiums growing 41% to RMB 66 billion, nearly 10x surpassed overall industry growth. This ongoing expansion of NEV ecosystem validates our strategy focus and provide a strong tailwind for future next phase of growth. Cheche position as the largest auto insurance technology platform by digital auto insurance transaction premiums remains strong, and our growth continues to set the path for the industry. We are building on this leadership position by deepening partnerships with both traditional and NEV automakers with customized system and embedded insurance products, which firmly established Cheche as a critical partner in the automotive ecosystem. These collaborations provide us with rich data, valuable insights and direct customer access, resources that enable us to broaden our reach and continually enhance the solutions we deliver. This morning, alongside our earnings release, we announced the launch of 2 forward-looking global initiative. The AI-driven intelligent insurance tool, a resource that will leverage real-world driving data to enhance liability determination, automated claims processing and improve efficiency for insurances and the fintech solution for automakers abroad. A toolbox of digital solutions that will support automakers as they expand internationally, providing financial and insurance infrastructure to enable success internationally. These initiatives are not only designed to strengthen our leadership in China, but also to position Cheche as a digital backbone connecting automakers, insurers and vehicle owners globally. We are also collaborating with insurance companies and OEMs to jointly develop an anti-fraud claims system tailored for intelligent driving scenarios. By analyzing vehicle driving data, the system will improve careers in the liability determination and streamline claims automation. Over the next 3 to 5 years, China's NEV fleet is expected to reach [8] million to 100 million units. Based on the industry average estimated claim rate of 30%, our claim services will cover around 30 million NEV. This West market opportunity is projected to contribute RMB 300 million to RMB 500 million in AI-driven solutions and services, significantly improving the company's financial and operational structure. Our vision is not limited to China. We are preparing to roll out this next-generation solutions in global markets beginning in the quarter 4, 2025 and expanding overseas business to serve as a key growth engine beginning in 2026. We have already formed the partnerships with several automotive brands with a strong overseas focus. And together, we have developed a comprehensive global road map spanning Asia Pacific, Europe. This expansion expected to validate China's match NEV digital pricing model in global markets, promote alignment in international insurance standards, and enable ecosystem-wide globalization of China's automotive industry. We believe these steps mark a key milestone in Cheche’s global expansion blueprint and reinforce our role as a trusted technology partners in the worldwide transition to intelligent and connected mobility. To summarize, the first half of 2025 reflects a period of transition and strategic position for Cheche Group. We achieved a higher gross margin as a result of business structure improvement, launched plans for 2 transformative initiatives that are expected to extend our leadership beyond China and are preparing for global expansion in partnership with automakers and insurers worldwide. We remain confident that our AI-driven solutions and fintech innovations will not only strengthen Cheche financial outlook, but also help shape the future of insurance in the intelligent mobility era. I will now turn the call over to our CFO, Sandra Ji. Thank you.

Thank you, Lei. I'd like to begin by touching on our first half operational and financial highlights before taking questions. Firstly, operational update. Our total written premiums placed for the first half 2025 increased 4% to RMB 11.5 billion or USD 1.6 billion. The total number of policies issued increased from 8 million in the prior year period to 8.3 million in the first half year of 2025. 810,000 embedded policies and RMB 2.6 billion of corresponding premiums were embedded in NEV deliveries, growing 135.5% and 150.6%, respectively, year-over-year. Next is our financial update. In terms of net revenues, we generated RMB 1,348.7 million or USD 188.3 million in the first half 2025, a decrease of 17.7% year-over-year. The shift was driven by the larger proportion of NEV premiums with lower service fee rates. NEV policies represented 22.5% of total written premiums placed compared to 9.3% in the year ago period. Our cost of revenues in the first half 2025 was RMB 1,282.9 million or USD 179.1 million, down 18.5% from the year ago period due to a decline of net revenues and a higher gross margin driven by the rapid growth of the NEV business. Gross profit increased 1.7% to RMB 65.8 million or USD 9.2 million compared to the prior year period despite lower net revenues as the improved business structure led to higher gross margin. We also reported a decrease of 10.6% in selling and marketing expenses in the period to RMB 37.3 million or USD 5.2 million, primarily due to a decrease in staff costs, amortization of right-of-use assets and share-based compensation expenses. General and administrative expenses were also lower in this period, declining 39.7% to RMB 37.3 million or USD 5.2 million from RMB 61.8 million in the year ago period, largely due to decreased share-based compensation, staff costs and the professional service fees. Research and development expenses decreased slightly to RMB 18.3 million or USD 2.6 million. The total operating expenses decreased by 23.9% to RMB 92.8 million or USD 13 million from RMB 121.9 million in the prior year period, mainly due to the decrease in staff costs and share-based compensation expenses. If we exclude share-based compensation expenses and dispute resolution expenses, the total operating expenses decreased 13.7% from the prior year period. Net loss for this period improved 53.4% to RMB 25.6 million or USD 3.6 million over the first half year of 2024. The adjusted net loss for the period improved to RMB 10.5 million or USD 1.5 million, down 56.9% from the adjusted net loss in the prior year period. While turning to our balance sheet, we reported RMB 167.2 million or USD 23.3 million in cash, cash equivalents and short- term investments in the prior year period. Looking ahead to the full year of 2025, Cheche is revising net revenue guidance to an approximate range of RMB 3 billion to RMB 3.3 billion from the previously announced range of RMB 3.6 billion to RMB 3.8 billion to reflect recent changes in the business structure. We still affirm expectations for the following: one, total second -- total written premiums placed ranging from RMB 25.5 billion to RMB 27 billion, NEV written premiums placed ranging from RMB 7 billion to RMB 8 billion and the adjusted operating results shifting from a loss to a profit. With that, we'll be happy to address your questions. Thank you.

[Operator Instructions]. Today's first question comes from [indiscernible] [Chen] with CICC.

I appreciate the chance to pose a question to the management. And my question is, could you add some color on the recent significant progress or strategic road map for the NEV business. Building on the company's years of technological expertise and industry accumulation, what future innovation opportunities do you foresee?

Thank you, CICC. So I answer this question in Chinese. [Foreign Language]. [Interpreted] The company is centered on its intelligent NEV insurance platform, delivers end-to-end AI-driven digital insurance solutions for OEMs, which address diverse needs such as pricing, risk control, underwriting, claims and others. Compared with prior periods, the NEV insurance policy transacting on our platform in the first half of 2025 exceeded 8 million with policy volume and premiums growing by 135% and 150%, respectively, maintaining a CAGR of around 140% for 3 consecutive years. These results underscore strong NEV market demand and validate the success of our strategy to empower NEV growth through digital insurance technology. In 2025, the company will focus on strategic opportunities in the intelligent and connected NEV, leveraging our partnerships with 15 major NEV manufacturers. We plan to gradually fully serve the NEV risk control management. This NEV segment will create a flywheel effect for the company's revenue and margin over the next 3 to 5 years. Also, the company has plans to expand into international markets in the fourth quarter of this year, and we have formed partnerships with several major auto brands. And together, we have developed a detailed road map covering the Asian Pacific region, Europe and Latin America. It is expected to validate and refine China's mature NEV digital pricing models in global markets, promote alignment in international insurance standards and empower the ecosystem-wide globalization of China's auto industry through multiple models. And the company also expects this overseas business to serve as a key growth engine beginning in the year of 2026. Thank you.

And our next question today comes from Derek Greenberg at Maxim Group.

You guys have mentioned that your goal is to get to a 30% to 40% market share in the NEVs in the 3 to 5 years. I was wondering where you're starting at now, what that market share is scaling from.

Okay. Thank you. I'm Zhang Lei. [Interpreted] So as we just mentioned, our target in the NEV market. Basically, currently, we are taking around 10% of the NEV market. So that -- the number is for the new car delivery. So plusing the current inventory cost in the NEV market, we are confident and also with our more than 100% growth each year to reach this target in 3 to 5 years, we are quite confident to achieve that.

This is Sandra. Let me add something. For the past few years, the CAGR for our NEV business are over 140%. And so we are quite confident that we will keep that high growth momentum for the next 3 to 5 years. The whole industry -- for the whole industry, the NEV insurance growth rate for last year is 40% but we enjoy over -- as I just mentioned, we enjoy a CAGR of 140%, far -- way faster than the industry growth rate, which means we are gaining more and more market share during the growing process. That's why we are quite confident after 3 to 5 years, we can achieve 30% to 40% of the total NEV insurance market.

And then I think earlier in the call, you may have mentioned, I wanted to reaffirm that I think NEVs are 22.5% of mix, which is up from 9.3% prior. First, I just wanted to verify that. And then second, given that scale and market share and the growth you're seeing, what do you see the mix shifting to as you achieve your market share goals?

Yes, we already saw the trend that NEV business accounted for more and more percentage proportion of the overall business picture. Yes, actually, the growing rate is becoming faster and faster. And for the 3 to 5 years, we estimated that the NEV business would account for over 50% or even higher, 50% to 70% of our total business.

And then just real quickly, I was wondering if you could help us understand there's strong performance on the bottom line and it looks like you're reaffirming written premiums. But I wanted to kind of parse out the net revenues and how that's impacted by this business. Is it just a lower policy rate or take rate on the NEV or what explains the variance there in terms of growth in all other segments, but a little bit lighter on revenue. If you can just help us understand.

Yes, yes. For the take rate, yes, that's the fact in China's industry. The take rate for NEV insurance is much lower than the traditional car insurance because since NEV insurance is still in the preliminary stage, most -- actually, nearly all of the insurers are still suffering from the loss in the NEV insurance market. So that's why they can't give a higher take rate for us. But along with the development of the total market with the NEV insurance, we believe that all the insurers will shift from loss to profit in NEV insurance. As a result, they are willing to give more and more take rate to us. That's one -- that's a trend we believe we will realize in the future. And yes, to explain the revenue variance in this period, although the take rate for the NEV insurance is lower, but we have, we enjoy much higher gross margin in the business than traditional car, yes. That's why despite the lower net revenues, we still have stronger, higher gross margin, you can see from the number and -- which means the profitability is improving and the business structure actually has improved compared to previous years. I think the quality of the revenue are higher than all those traditional cars because the margin is higher. Yes, that's the reason.

I'm going to ask one more, and then I'm going to hop back in the queue so others have an opportunity to ask questions. But I wanted to touch on the announcement this morning of the 2 new AI products and the international expansion. I was wondering, if you could just talk a little bit about what the rollout will look like in terms of those products and the go-to-market strategy, maybe what geographies you're targeting first and if there's going to be additional resources and investment in that area.

[Interpreted] Okay. For the 2 products we pronounced this morning. Currently, in China, we are cooperating with a major automaker by using the AI-driven solutions to help them reform their claims processing, which can increase around 50% in accuracy. As for our global strategy, currently, as I mentioned, in Asia Pacific region and also other countries like Thailand and [indiscernible] and Australia, we are cooperating with local partners, and we have signed several agreements. And right now, we are trying to deliver financial insurance tech services to these partners.

[Operator Instructions]. Our next question comes from Mark Long at Prime Impact Capital.

Congratulations on a strong first half of leadership in the NEV insurance sector and positioning the company to become profitable in the second half of 2025; that's very impressive performance. Could you briefly explain Lei, how you're leveraging AI and data analytics to deliver your new claims and fintech solutions?

Okay. Thanks, Mark. [Interpreted] So currently, right now, basically, most of the NEVs are smart and connected NEVs, so they possess huge amount of data. So actually -- so currently, we are using the AI tool to determine that when an accident happens, we're using AI tool to determine -- to help determine the in time -- in real-time accident situations to decide -- to determine who is the main responsibility when the accident happens. On the other hand, utilizing this type of data, we could have to achieve antifraud. So when the accident happens, we could have to increase -- after the accident happened, we could have to increase the accuracy, the efficiency of the claims processing. We will help them to integrate the loss determination and claims and other types of steps into one suite processing and to realize to finish this type of claim service in few minutes. In this way, we could help insurance companies to achieve their operational efficiency.

That sounds very innovative. Can you explain the expected revenue contribution from these new initiatives over the next 3 to 5 years?

Yes. According to the industry statistics, we -- according -- the accident rate is over -- is average at 30% of the total NEV cars. Yes. According to the number, we can cover over 3000 -- sorry, 30 million NEV unit cars, which means according to our estimation, that will bring us RMB 300 million to RMB 500 million revenues to our business since the product is AI-driven product, which has a very high gross margin, so the RMB 300 million to RMB 500 million revenue also means profit to our business.

That’s excellent. And do you expect to make significant investments in operational expenses? Or will you be driving your kind of operating leverage from your existing platform?

Actually, we already have -- we are in a very good position, and we are quite confident we can keep the operating expenses under control. So the total operating expenses and investments won't go up drastically. We will keep it under very good control, so the profitability and the net margin will going up significantly in the foreseeable future.

And our next question today comes from Derek Greenberg at the Maxim Group.

I was wondering with operating expenses and the decline we saw year-over-year, if you could just remind us the reductions across the 3 segments, how you're achieving that?

Yes. Since we for the past 2 or 3 years, we had very good control on our headcount, and we already developed a very good network -- technology network, and that will need us to -- need a significant investment in R&D and in other expenses. So that's why -- and we also have much lower share-based compensation, so that's why the total operating expenses are decreasing significantly compared to last year. And I think for the 3 to 5 years, the operating expenses may keep relatively stable and will not grow very fast.

And then could you just talk a little bit about some of the initiatives you have towards autonomous driving?

[Interpreted] Yes. As for autonomous driving, currently, we are cooperating with Huawei and XPeng to develop protection based on the intelligent autonomous driving scenarios. And in the fourth quarter of this year, actually, we are cooperating with the China Insurance Automotive Research Institute to develop a strategy to solve the standard problem for the NEV insurance.

And then my last question is just, I guess, looking at the macro, is there anything you can point to in terms of how the consumer is holding up or if there's any changes in government regulations and stimulus either recently or in the horizon?

[Interpreted] So in terms of policies, for the NEV insurance, we think not just China, but the other countries also in need of the right, a good and accurate NEV insurance policies because right now in China, the NEV inventory is quite huge, so we have advantages when it comes to the hands-on experiences and pricing models of NEV insurance and currently, we have talked about overseas expansion. We are trying to take these experiences and models globally and have other countries and partners globally. So we think NEV is going to be the key growth engine in the future, and we forecast that probably the total number of NEVs will exceed 15% in the future globally.

This concludes the question-and-answer session. I'd like to turn the conference back over to the company for any closing remarks.

Okay. Thank you. We appreciate you taking the time to join us on the call today. Please reach out to Investor Relations with any questions. Thank you very much.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]