Huize's Q2 2025 Earnings Call: Contradictions on Sales Momentum, Gross Margins, AI Integration, and Profit Outlook

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 12, 2025

Financials Results

• Revenue: RMB 400M, up 40% YOY (3-year quarterly high)
• Gross Margin: 27%, up from ~26% in Q1 2025 (sequential)

Guidance:

• Participating (savings) products expected to grow sequentially in Q3 and Q4.
• Company expects second-half 2025 profitability with meaningful sequential earnings growth in Q3.
• Gross margin expected to remain stable around current levels (~27%) over the next few quarters.
• Offshore/Hong Kong sales momentum to continue despite regulatory changes, supported by yield differentials.
• Continued investment in growth and AI to drive productivity and conversion.
• Health & protection segment to grow steadily as consumer confidence improves; increased focus and investment.
• International expansion (incl. Singapore MAS license, Vietnam growth) remains on track with prior outlook.

Business Commentary:

* Revenue and Gross Written Premium Growth: - Huize Holding Limited reported total revenue of RMB 400 million for Q2 2025, a 3-year quarterly high, and gross written premiums facilitated on its platform grew by 34% year-over-year to RMB 1.8 billion. - This growth was driven by a high-quality customer base, industry-leading persistency ratios, and a diverse suite of product offerings, including strong demand for participating insurance products.

• AI Integration and Efficiency Improvement:
• Huize implemented AI agents company-wide, contributing to a significant improvement in operational efficiency, with the expense-to-income ratio declining by 16.6 percentage points year-over-year to 23.9%.

• The adoption of AI led to productivity improvements, workflow enhancements, and risk control, enabling the company to unlock new growth curves.

• International Expansion and Southeast Asia Penetration:

• Huize's international arm, Poni Insurtech, achieved strategic milestones with licenses obtained in Singapore and Vietnam, while the Vietnam subsidiary, Global Care, saw a 32% year-over-year increase in both GWP and revenue.

• The international expansion is driven by a focus on leveraging AI capabilities in high-growth markets and partnerships with local players to facilitate embedded and micro-insurance solutions.

• Customer Acquisition and Engagement:

• Huize added approximately 400,000 new customers during the second quarter, bringing the total customer count to over 11.4 million.
• The growth in customer acquisition is attributed to a robust omnichannel distribution network, advanced AI solutions, and effective upselling and cross-selling strategies to unlock lifetime customer value.

Sentiment Analysis:

• Management highlighted: “Total revenue…approximately RMB 400 million, up 40% year-over-year,” and a “return to GAAP and non-GAAP net profit…approximately RMB 11 million and RMB 8 million.” Expense-to-income ratio “improved…by 16.6 percentage points YOY to 23.9%.” Guidance included “continued sequential growth in…Q3 and Q4” for participating products and “expecting a second half profit…meaningful sequential growth in Q3 earnings.”

Q&A:

• Question from [indiscernible] (CICC Research): How did Huize build capabilities and partnerships for participating insurance, and what is the sales outlook for the second half?
  Response: Early training and co-developing customized savings products with leading insurers made Huize a top-3 distributor; management expects sequential growth in participating products in Q3 and Q4.

• Question from [indiscernible] (CICC Research): How will Huize further leverage AI to enhance sales, CRM, and efficiency?
  Response: AI is embedded in the app via DeepSeek for tailored recommendations and deployed in underwriting and CRM to improve risk matching and conversion; broader AI rollout is ongoing.

• Question from Amy Chen (Citi Research): What drove higher international (Hong Kong) sales and how will new broker regulations affect momentum?
  Response: HK demand was boosted by illustrated return changes late in Q2 (likely recognized in Q3), and underlying offshore appeal persists due to yield differentials; sequential momentum is expected to continue.

• Question from Amy Chen (Citi Research): What is the earnings outlook for 2025?
  Response: Management expects second-half profitability, with meaningful sequential earnings growth in Q3 while continuing to invest for growth.

• Question from Amy Chen (Citi Research): What share of Q2 revenue came from international business?
  Response: Management did not quantify and reiterated they remain on track with the previously provided outlook.

• Question from Yong Hui Lim (UOB Kay Hian Research Pte Ltd): Gross margin improved sequentially—how sustainable is it and how are you balancing channel costs with growth?
  Response: Gross margin stabilized at ~27% vs ~26% in Q1; industry changes have been absorbed and margins are expected to remain stable for the next few quarters.

• Question from Yong Hui Lim (UOB Kay Hian Research Pte Ltd): How is demand for health and protection products?
  Response: Health & protection FYP grew 24% sequentially; Huize plans to invest more in this higher-margin category as consumer confidence improves.

• Question from Yong Hui Lim (UOB Kay Hian Research Pte Ltd): What drove the improvement in blended commission rate?
  Response: A higher mix of customized products, which carry higher commission rates.