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Good morning, everyone. This is Tracy Lee from Waterdrop Investor Relations. It's my pleasure to welcome everyone to Waterdrop's first quarter 2026 earnings conference call. All participants are in listen-only mode in our English line. As a reminder, today's conference call is being recorded. Please note that discussion today will concern forward-looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. The company does not undertake any obligation to update any forward-looking statements except as required and applicable law. This call includes discussion of certain non-GAAP measures. Please refer to our earnings release for a reconciliation between non-GAAP and GAAP.

Joining us today on the call are Mr. Shen Peng, our Founder, Chairman, and CEO; Mr. Yuan Wei, Director and GM of insurance business; Ms. Xu Xiaoying, Head of Finance Department; and Ms. Li Jieru, Board Secretary. We will take questions in the mentoring line at the end of the conference call. Letting our CEO, Shen Peng, to start.

Dear investors and analysts, thank you for joining Waterdrop's first quarter 2026 earnings conference call. In the first quarter, we continued our last year's growth momentum with total revenue of CNY 1.24 billion, up 64.8% year-over-year, and net profit attributable to ordinary shareholders of more than CNY 98 million. Since the first quarter of 2022, we have maintained GAAP profitability for 17 consecutive quarters. By segment, our insurance business continue its user acquisition strategy with insurance-related income up 74.1% year-over-year.

As these capabilities have been validated, we sharpen our focus on user experience while continuing to optimize our traffic channels and user targeting efficiency. The Crowdfunding business remains stable, having raised medical funds for accumulated 3.75 million patients by the end of the Q1. Our digital clinical trial solution business sustained enrollment growth, with more than 15,500 patients enrolled to date. On technology front, we are accelerating our shift toward an AI-native company. As of March 31st, 2026, we had filed 75 LLM-related patent applications, including nine international ones, and were recently granted two more national invention patents in intelligent semantic understanding and the multimodal recognition. These technologies will be progressively applied to the insurance scenario, such as intelligent customer service and claims, improving service quality and efficiency. On capital returns, we continue to share our growth with our shareholders.

In early May, we completed our fifth cash dividend since our IPO, totaling approximately $10.8 million. Our share repurchase program also continued steadily. By the end of May 2026, we had repurchased approximately 61.8 million ADS in open market for about $120 million. As of the end of May 2026, cumulative cash dividends and share repurchases since IPO had totaled approximately $170 million. Meanwhile, we remain committed to giving back to society. At the end of the Q1, the Waterdrop charity platform had partnered with 119 public charitable organizations and launched over 15,500 charity programs. Looking ahead, we aim to seize industry opportunities and to make growth our top priority this year. Building on our proven user targeting capabilities, we were increasing marketing investments further. For 2026, we are targeting approximately 40% top-line growth, with operating profit scale is expected to remain broadly stable.

We expect this current investment to unlock greater profit potential in the coming years, and the user base expansion will further support the company's long-term development. That covers our overall performance in Q1. Next, I will walk through each of those business segments in detail. Hello, everyone. This is Wei Ran. Let me walk you through the progress of our insurance business. In first quarter, insurance-related income reached CNY 1.15 billion, up 74.1% year-over-year, with operating profits of CNY 150 million. Our operating margin of Q1 is 13.3%. The year-over-year top-line growth mainly reflects the continuation of our last year user acquisition strategy. In the first quarter, we continued to step up public domain user targeting and increase our investment in traffic and AI, driving significant premium growth. On a quarter-over-quarter basis, while the income declined, our insurance operating margin rose by two percentage points.

This was mainly because we proactively cut some lower ROI channels during this quarter. At the same time, we are actively expanding into other high-quality traffic channels while running our mature ones with refined operations, enhancing our traffic infrastructure, and optimizing our model to drive continued improvement in ROI. On the supply side, we are committed to giving users more diverse product offerings, which continue to earn user recognition. During the quarter, FYP from our pre-existing condition products rose 24.3% year-over-year, and the disability insurance products contributed CNY 89 million in FYP. At the product level, we continue to iterate. For example, we upgraded our inclusive cancer worry-free medical insurance business, expanding the coverage for out-of-the-hospital prescriptions and related medical devices, as well as a range of advanced cancer therapies.

We also recently launched the focused cancer-specified disease product with a simpler health disclosure and a lower the bar to lifelong cancer protection. On the service side, we took multiple steps to improve the customer experience. We launched a dedicated customer complaint hotline to make it easier for users to raise concerns, and we also connected payment channels with our customer service system, expanding frontline operations and enabling faster refund processing. For elderly customers, we simplified procedures for their children acting on their behalf and introduced a faster track service channel. Together, these initiatives upgrade our after-sales service capability. We also continue to apply our LLM capabilities and AI tools to streamline the workflows and improve operating efficiency. The user-facing AI applications contributed approximately CNY 87 million in incremental premiums in Q1, up 17.7% sequentially.

Through real-time support on our mini programs, WeChat, phone calls, and WeCom, including our AI Insurance Expert and AI medical insurance experts, WeCom AI and other tools. For our frontline consultants, KEYI.AI had handled more than 10,000 underwriting inquiries to date. In late March, we began internal beta testing of the Claw Copilot on CRM and WeCom, bringing together our product knowledge base, the KEYI.AI, and other two agent tools. Our consultants can get instant answers on products in writing and other common questions with lesser switching between the systems and documents. Claw Copilot also supports the sales lead review, talk track replay and refinement, and performance analytics.

In after-sale service, our AI user service agent, now in regular operation, supports more than 1 million service interactions per month, and the AI Service Quality Copilot continues to deliver efficiency of more than twice the manual-only basis, the baseline. On the AI infrastructure side, our low-code platform, Waterdrop CDAI, now offers more than 30 purpose-built agents, each tailored to a specific scenario for our internal team and external clients in all the user-facing work. That concludes our insurance business update for the first quarter. Thank you, Rhonda. This is Yao Hu, now next I will walk you through our first quarter performance on our crowdfunding and healthcare businesses. As of the end of March 2026, approximately 494 million people had cumulatively donated a total CNY 73.5 billion to 3.785 million patients through the Waterdrop Medical Crowdfunding platform.

This quarter, we pursued two priorities for Waterdrop Medical Crowdfunding: the AI capability building and better service in linguistic diverse regions. For AI reviews, we complete and quarterly upgrade involving towards an AI-assisted model without compromising risk control quality. Our risk model can mature quickly and applies the preset rules for preliminary screening, shorten intake, and the first pass review, free our risk specialists for complex cases. Secondly, we improved the service for patients in linguistically diverse communities, including areas where a minority language are widely spoken. In this quarter, we systematically refined our service workflows and adapted the review standard to their real needs. We added a minority language specialist to work alongside our existing content consultants on upfront consultation and the document guidance and dispute resolution, reducing the communication caused by language barriers.

In addition, we set up a dedicated service team in which the translator and the risk control specialist can track each case end to end and promptly resolve the bottleneck, ensuring a strict risk control compliance while respecting local culture sensitivities. Turning to our healthcare business, we sustained high quality growth this quarter, broaden LLM application across the core business areas. We partnered with 243 pharmaceutical companies and CROs and initiated services for 128 new programs. Our E-Find platform single-quarter patient enrollment rose 16% year-over-year, the newly signed projects in this quarter increased 53%, reflecting the wider partnership coverage and the deeper client engagement. As of the end of the first quarter of 2026, the platform has cumulatively enrolled over 50,500 patients. In January 2026, our intelligent drug patient matching technology secured a national invention patent, which is the first of this kind in China.

This quarter, we focused on building out our upstream data structuring capabilities and connecting it with the matching engine. Across part of our service workflow, the platform has now established a standardized pipeline from the data structuring to intelligent product matching, promptly generating suitability recommendation against the trial protocol. Supported by these AI capabilities, we continue to build our medical case library in complex indications and rare cancers, with a more balanced mix across therapeutic areas, strengthening the foundation for sustainable mid-term to long-term growth. That covers our crowdfunding and the healthcare businesses. Hello everyone, this is Xu Xiaoying. I will now walk you through our financial headlines for the first quarter of 2026.

Before I go into details, please be reminded that all numbers quoted here will be RMB, and please refer to our earnings release for detailed information on our financial performance on both a year-over-year and quarter-over-quarter basis, respectively. In the first quarter of 2026, Waterdrop total revenue reached RMB 1.24 billion, up 64.8% year-over-year, sustaining rapid growth. By segment, the insurance-related income contributed approximately RMB 1.15 billion at 74.1% year-over-year, while the non-insurance business together accounted for about 7.8% of total revenue, with crowdfunding services of approximately RMB 60.73 million and digital clinical trial solution income of approximately RMB 24.2 million. Turning to cost, our total operating costs and expenses for this first quarter were approximately RMB 1.16 billion at about 71.5% year-over-year. Operating costs for this quarter reached RMB 487 million, up 30.1% year-over-year, driven by our business expansion.

Cost of referral and services increased by about RMB 63.9 million, while short message service costs and personnel costs rose by RMB 38.9 million and RMB 7.3 million respectively. Sales and marketing expenses reached RMB 541 million, a significant increase from RMB 172 million in the same period last year, mainly because we progressively scale up traffic investments over the past year and reinforced momentum. Marketing expenses for third quarter traffic channels rose by approximately RMB 361 million year-over-year. General and administrative expenses were RMB 71.7 million, down 4.3% year-over-year, mainly due to the lower professional services this quarter. Research and development expenses were about RMB 62.7 million, an 11.5% year-over-year increase, primarily due to an approximately RMB 6.7 million rise in cloud and technical services. For the first quarter, operating profit was around RMB 79.95 million, a modest year-over-year increase of 5.3%.

Affected by the net operating items in this quarter, the net profit attributable to ordinary shareholders was approximately RMB 98.4 million, down 9.1% year-over-year. As of the end of March 2026, the company maintained an ample cash reserve, with cash and cash equivalents, short-term investments, and other cash positions totaled approximately RMB 2.88 billion. On the capital return since our IPO through May 1st, 2026, we cumulatively repurchased a total of approximately 61.8 million ADS for about $120 million and recently completed a cash dividend of approximately $10.8 million. Overall, the growth momentum of our core business remains strong, and in the first quarter, Waterdrop delivered 64.8% year-over-year revenue growth. By stepping up the investment in traffic and AI, continues to strengthen our long-term competitiveness. Ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining. Have a good time.

Good morning, everyone. This is Tracy Lee from Waterdrop Investor Relations. It's my pleasure to welcome everyone to Waterdrop's Fourth Quarter and Facial Year 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, today's conference call is being recorded. Please note that discussion today will come from forward-looking statements made under the safe harbor provision of the U.S. Private Securities and Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but not limited to those outlined in our public filings with the SEC. The company does not undertake any obligation to update any forward-looking statements, except as required and applicable law. Also, this call includes discussion of certain non-GAAP measures. Please refer to our earnings release for a reconciliation between non-GAAP and GAAP. Joining us today on the call are Mr. [indiscernible], Chairman and CEO; Mr. [indiscernible] GM of Insurance Business; Mr. [indiscernible], Head of Finance Department; and Ms. [indiscernible], Board Secretary. We'll be happy to take some assessments in the [indiscernible] conference call. Now [indiscernible] our CEO, [indiscernible].

Dear investor analyst, thank you for joining Waterdrop's fourth quarter and fiscal year 2025 earnings conference call. Looking back at 2025, we executed firmly on our AI [indiscernible] insurance energy, delivering tangible progress in both AI application and business growth. Our financial performance were robust. We saw significant top line and bottom line expansion, further solidify our core fundamentals. For the fiscal year 2025, our revenue reached CNY 3.98 billion, up 43.5%, net profit attributable to ordinary shareholders reached CNY 570 million, registering a year-on-year growth of 54.8%. Notably, we met our guidance to the market and have now delivered GAAP profitability for 16 consecutive quarters. Our Intertek segment was as announced with revenue surging 51.3% and an operating margin of roughly 18%. Furthermore, our LLM integration significantly category. the value of our medical performance platform, our platform has response for 3.68 million patients which is watched and our digital team in client solutions enrolled over 4,000 patients this year. Reflecting the strong performance in the second half of 2025, our Board approved our safe cash dividend of CNY 0.03 per ADS, totaling $10.8 million, this will be paid in later -- late April to early May to shareholders a record as of April 24, 2026 U.S. ET time. Meanwhile, our share repurchase and remains on track with 60.7 million ADS repurchase for about $118 million for [indiscernible]. On technology plans, we are valuing our shift to become an native company. As of the end of year-end 2025, we filed a 72 LLM related patent applications. including [indiscernible] international ones. Throughout the year, we deployed the [indiscernible] and virtual interactions across all core workflows. From acquisition and conversation [indiscernible] and customer service through quality control and R&D. Every stage is now production-ready delivering [indiscernible] operating gains. This capability is unified from under the [indiscernible] AI, our [indiscernible] platform for the [indiscernible] specific agents now also open to the industry partners. Beyond the [indiscernible], we are pioneering open collaboration infractors what is Guardian AI corporate, which is called Cloud [indiscernible] built on a distributed at design our cloud leader enables a different AI agent to autonomously communicate and collaborate. [indiscernible] demos have already validated its core workflow seamless the multi-round dialog and automate to cover between the AI agents. In terms of ESG, we acquired with 19 organizations to launch over 15,500 products earning global recognition forward policy reduction efforts and upgrading our ESG rating to A+. As we enter our 10th anniversary in 2026, our goal is to move beyond using [indiscernible] to becoming truly AI enabled company. We aim to [indiscernible] reconstruct our entire value chain, embedding AI as a several competitive advantage. We expect me to depend the momentum this year with moderately higher [indiscernible] marketing and AI, targeting double-digit growth in both revenue and profit. Now I will pass to [indiscernible] to introduce the development of insurance business.

Thanks, [indiscernible]. In the fourth quarter, our insurance continued its strong momentum, ensuring related income surged to 125% year-on-year to CNY 1.31 billion, while operating profit grew 42% year-over-year to [indiscernible]. On the traffic side, we have sharpened our real-time user amentization leveraging our sales deployed [indiscernible] we can now capture potential user attributes with nearly second profession in high concurrency traffic. This allows for [indiscernible] update and [indiscernible], which has significantly improved the accuracy of our high-quality traffic for future and made a solid condition for our FYP growth. Regarding product supply, our market first [indiscernible] version 2.0 this quarter new 0 deductible features now colored a long-term medical cost and routing the medial centers. Additionally, our pre-existing condition product gained strong action with FY at 7%. While our disability insurance contributed about $100 million app validating our long-term strategy. And most importantly, AI is now invented in every node of [indiscernible] on the user side, our AI Pro insurance engine on the mini-program drove 33% of sequential increase in premium, while our AI medial insurance experts generated over 50 million [indiscernible] 145% quarter-over-quarter. We have also expanded the facility to standard health products, we can generate incremental most premiums of over 1 million. For human agent empowerment, our large banner copilot has cumulated site in over 370,000 [indiscernible] this quarter end. [indiscernible] perform in our fully operational and having completed the fourth quarter without the core module like local agents, batch testing and proactively past figures. This infrastructure powers our [indiscernible] planner deployers, both the share of facial accounts and many programs to handle the product recommendations, business facilitation and user [indiscernible] agent matching, we have even owned this platform to our current insurers to uplist the industry-wide efficiency. In [indiscernible] our AI customer service agent handled over [indiscernible] and our coloscopilot [indiscernible] efficiency to 2.5 that of the many only business. This concludes the insurance business update for the fourth quarter. Now I will pass to Board of Secretary [indiscernible] to introduce the progress of our metering and health services.

Thank you, [indiscernible]. As of the annual of approximately 490 million people have [indiscernible] a total of $72.3 million to [indiscernible] medical profound platform. In this quarter, while maintaining robust platform governance and user experience with strengthen risk control in 2 key areas: to protect our user privacy, we have fully upgraded our system with large language models total of identifying specific data and applying dynamic [indiscernible] in real time. So critical information, frequently see in their components that either IP members, bank accounts and the medical record IT. We have moved [indiscernible] reduction to automate protection and marketing. And this [indiscernible] leads end-to-end securities for user debt better across our type platform, fundamentally preventing any reason of information staff. Secondly, our simplicity, we deployed a new model combining medical [indiscernible] with a credential validation. This system and cost reference the clinical logic to precisely identify the fabric, ensuring every donation we reached those patients [indiscernible]. On the user service front, we launched a standardized [indiscernible] to our service goal of fee structures and retaining guidelines, these initiatives reinforce our commitment to concurrency and ensure our uses are fully involved. And moving to the Healthcare business, our [indiscernible] platform is in high-quality growth tuner with 224 pharmaceutical companies and [indiscernible] and are enrolled in a record of [indiscernible] patients. initiative 131 new programs. Once again, we set up setting a new quarterly enrollment with record. This quarter, we achieved a major milestone that was proprietary [indiscernible] patient matching technology, the first of this time in China was officially granted a national invention pattern. By combining deep neural networks with major [indiscernible] processing, our technology achieved end-to-end protection matching [indiscernible] and clinical trials [indiscernible] filtering for [indiscernible] results, well analyzing and trusted medical records against that helped criteria to uncover the heating match. The due engine approach [indiscernible] between the weeks of the manually screen workflows down 2 minutes, strongly a [indiscernible] process. And building on this, we significantly expand our accounts. We'll continue to grow our patient base in complex and rare [indiscernible] revenue digital clinical trial revenue related to [indiscernible] 30% this quarter compared to the previous 3 average [indiscernible] ability to pool release and earnings and have made a solid foundation for our sustainable volume growth. And now I will [indiscernible] our Head of Finance to discuss our financial performance in this quarter.

Thanks, [indiscernible]. Hello, everyone. I will now walk you through our financial highlights for the fourth quarter and fiscal year 2025. Before I go into details, please be reminded that all numbers quoted here will be RMB and please refer to our earnings release for detailed information on our financial performance and both the year-on-year and quarter-over-quarter basis, respectively. In the fourth quarter, our performance of [indiscernible] significantly with quarterly revenue more than doubling year-on-year to RMB 1.41 billion, up 105.5% for the full year 2025 revenue reached RMB 3.98 billion, up 43.5% year-on-year, concluding the year on strong note. By second, the insurance business within a stable client with full year insurance really into approximately RMB 3.58 billion, up 51.3% year-on-year. The other segments are [indiscernible] for about 10.1% of the total revenue with medical performing services at RMB 260 million and [indiscernible] income at RMB 118 million. Operating costs for the quarter reached RMB 680 million. up 109.2% year-on-year, driven by RMB 320 million increase in cost and the referral and service fees and RMB 23.8 million is on S&S, driven by rapid business expansion, opening costs and expenses in the fourth quarter rose to RMB 1.33 billion, up 109.4% year-on-year. For full year operating cost and expenses increased 39.1% from 2024. [indiscernible] the pace of revenue growth. Selling marketing expenses was roughly RMB 510 million at 178.4% year-on-year with significant improvement in customer acquisition efficiency. The company proactively scaled up investments, resulting roughly [indiscernible] year-on-year in place and marketing expenses for third-party traffic channels. G&A expenses were RMB 77.1 million, a modest year-on-year increase of 4.6%, mainly due to a [indiscernible] in allowance of [indiscernible], partially off setted by RMB 6.5 million reduction in personnel call. Research and development expenses were approximately RMB 66.2 million, up 21.9% year-on-year, primarily driven by a RMB 6.4 million increase in personnel costs and a RMB 5.8 million in cross services. [indiscernible] improved significantly year-on-year. Net profit attributed to the company's ordinary shareholders for the quarter was RMB 153 million, up 62.7% in the period. For full year, the net profit attributable to the ordinary shareholders reached about RMB 570 million, up 4.8%. The common maintained ample cash position of about [indiscernible] 2025, providing strong support for our fee growth. And this concludes our financial overview for the fourth quarter and fiscal year conference side. Ladies and gentlemen, with that, we will conclude today's conference call. We do thank you for joining. Have a good time.