Waterdrop Inc. Q2 2025 Earnings Call Highlights: AI Integration Drives Revenue and Profit Growth, Challenges Ahead for Operational Costs and Expenses.

Waterdrop Inc's Q2 2025 earnings call highlights a 23.9% YoY revenue growth to CNY840 million, driven by AI integration. Operating profit increased 85.9% YoY, with a 3.9 percentage point improvement in operating margin. However, total operating costs and expenses rose 18.7% YoY, and the company faces challenges in cost management and R&D investments.

Waterdrop Inc (NYSE:WDH) released its Q2 2025 earnings report, highlighting significant growth and advancements in its operations. The company reported a 23.9% year-on-year (YoY) revenue growth, reaching CNY840 million, driven primarily by the integration of artificial intelligence (AI) into various business operations [1].

Operating profit increased by 85.9% YoY, and the operating margin improved by 3.9 percentage points. This significant increase in operational efficiency was attributed to AI applications across customer acquisition, sales, underwriting, customer service, and quality assurance [1].

Despite the robust financial performance, Waterdrop Inc faced challenges in managing operating costs and expenses. Total operating costs and expenses rose by 18.7% YoY, which could impact future profitability. Sales and marketing expenses rose by 26.3% compared to the previous year, primarily due to increased marketing expenses for third-party traffic channels. Additionally, the cost of referral and service fees increased by about 30.5% [1].

Waterdrop Inc's insurance business also reported strong growth. First-year premiums reached CNY3.2 billion, an 80.2% YoY increase. AI played a crucial role in enhancing customer acquisition and conversion rates, with AI-driven models improving conversion by nearly 50% compared to traditional methods. The insurance-related revenue was CNY740 million, a 28.7% YoY increase [1].

The company's healthcare and medical crowdfunding platforms also saw advancements. The medical crowdfunding platform raised CNY70 billion for 3.54 million patients, with AI-driven risk assessment systems upgraded to improve detection accuracy and prevent fraudulent activities [1].

Waterdrop Inc maintained a positive operating cash flow with a cash reserve of CNY3.4 billion as of June 30, 2025. Operating profits reached CNY97 million, demonstrating robust operational capability [1].

The company announced an enhanced tax dividend of $10.9 million, representing a 50% increase over previous dividends, and continued its share repurchase program. This move reflects the company's commitment to rewarding shareholders and maintaining trust [1].

In conclusion, Waterdrop Inc's Q2 2025 earnings report showcases strong revenue growth and operational efficiency driven by AI integration. However, the company faces challenges in managing operating costs and expenses, particularly in the sales and marketing and referral and service fee categories. Future financial performance will depend on the company's ability to effectively manage these costs and continue investing in AI technology.

References:
[1] https://finance.yahoo.com/news/waterdrop-inc-wdh-q2-2025-170034398.html