Noah Holdings' Q2 2025 Earnings Call: Contradictions on Investment Sentiment, Overseas Expansion, and Operating Expenses

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

Date of Call: August 27, 2025

Financials Results

• Revenue: RMB 630 million (Q2), up 2.2% YOY and 2.4% sequentially
• Operating Margin: 25.6% (Q2); first-half operating margin 27.9%, up from 20.2% in prior year

Guidance:

• Maintain a similar operating margin range for 2025 despite international expansion; seasonal OpEx spikes possible.
• Q3-to-date client sentiment and investment-product demand stronger vs Q2; richer product mix via new U.S. product center.
• Expanding into U.S., Canada, and Japan (partner model) to serve global Chinese HNWIs; booking centers in U.S., Hong Kong, and Singapore.
• Launching a compliant stablecoin yield fund with Coinbase; will prudently broaden digital-asset offerings; suggested client allocation 1-5%.
• Continue disciplined capital returns; expect 2025 distributions on a scale similar to prior years.

Business Commentary:

• Revenue Growth and Product Diversification:
• Noah Holdings Limited reported net revenues of RMB 630 million for Q2 2025, with a 20.2% year-over-year increase and a 12% sequential increase.

• The growth was driven by a diversified product portfolio, including VC and PE funds, private credit funds, infrastructure funds, hedge funds, and global mutual funds, which led to improved revenue mix and client engagement.

• Overseas Expansion and Client Base Growth:

• Revenue from overseas operations accounted for 47.1% of total net revenue, reaching RMB 297 million in Q2 2025.

• The company added 627 new qualified investors as clients in the first half of the year, expanding its client base through strategic hiring and enhanced product offerings.

• Asset Management and Investment Product Revenue:

• Investment product revenue, which includes onetime commissions and recurring service fees from investment products, grew by 92% year-over-year and 30.6% sequentially.

• This was attributed to increased client interest in investment products, driven by more optimistic client sentiment and a broader range of quality investment solutions offered by Noah.

• Strategic Partnerships and Digital Assets:

• Noah announced a partnership with Coinbase Asset Management to launch a stablecoin yield fund, marking its first entry into the digital asset space.
• The strategic move is aimed at providing clients with access to innovative investment opportunities while maintaining prudency and compliance in wealth management.

Sentiment Analysis:

• Total net revenue was RMB 630 million, up 2.2% YOY and 2.4% sequential. Non-GAAP net profit reached RMB 189 million, up 78.2% YOY and 12% sequential. Q2 operating margin was 25.6%; first-half operating margin improved to 27.9% from 20.2% last year. Operating costs and expenses for the first half fell 11.2% YOY. Overseas growth strong, with over 85% of newly generated revenue originating offshore in 1H. Cash and short-term investments were RMB 5.4 billion with zero interest-bearing liabilities.

Q&A:

• Question from Heqing Li (UBS): Details on the stablecoin yield/private credit digital yield fund (strategy, fees, client interest) and broader crypto plans; current CIO asset-allocation view and whether offshore product demand and distribution momentum will continue into Q3/Q4.
  Response: Noah is launching a compliant stablecoin yield fund with Coinbase; fees align with other products, they’ll prudently expand digital-asset offerings (suggesting 1–5% allocation), and client appetite for investment products has improved, supporting continued momentum.

• Question from Peter Zhao (JPMorgan): Q3 operating trends and transaction volumes vs Q2; progress and expectations for expansion in the U.S., Canada, and Japan; impact on operating expenses.
  Response: Client interest and product demand are stronger in Q3; expansion continues with booking centers (U.S., HK, SG) and partner-led entry to Canada/Japan; management expects to maintain a similar operating margin range, with possible short-term OpEx spikes as talent is added.

• Question from Xian Chon Zhang (CICC): Reasons for sharp decline in other operating expenses and rise in income from equity affiliates; plans for deploying high cash balance and dividends.
  Response: Equity income rose from markups on successful strategic co-GP investments; management remains committed to sizable shareholder returns and expects 2025 distributions on a scale similar to prior years, subject to board decisions.