Q3 2025 Earnings Call Contradictions: Insurance Growth, Patient Support Surge, and AI Investment Timing

Date of Call: November 2025

Financials Results

• Revenue: RMB 975 million, up 38.4% year-on-year
• EPS: Not provided
• Gross Margin: Not provided
• Operating Margin: Not provided

Guidance:

• Building on robust business performance, we are confident in exceeding full-year revenue and profit guidance.

Business Commentary:

Here are the key themes from the WDH Q3 2025 earnings call, focusing on data trends and their underlying reasons:

• Insurance Business Growth & AI-Driven Efficiency:
• Insurance-related revenue reached about CNY 870 million, increasing by 44.8% year-on-year and 17.8% quarter-on-quarter. The business achieved an operating profit margin of 20.3%.

• Growth was driven by system-wide AI integration, which slashed decision latency to under 50 milliseconds, enhanced user identification and traffic quality, and expanded product offerings (e.g., family protection plans, upgraded critical illness and pre-existing condition insurance). AI applications like the Pro insurance model and AI medical experts significantly boosted sales conversion and operational efficiency.

• AI Infrastructure & Patent Development:

• The company filed 69 patent applications centered on large language models, including nine international filings. Its intelligent chatbot's inference throughput was doubled compared to the original version.

• This reflects a strategic, heavy investment in building proprietary AI capabilities. The launch of "Waterdrop C-Point AI," a low-code AI platform, aims to systematize these capabilities for internal use across marketing, customer service, and potentially non-insurance areas.

• Crowdfunding Platform Stability & Risk Control:

• Crowdfunding service fees remained stable year-on-year at around CNY 65.66 million. The platform has cumulatively raised funds for 3.61 million patients as of Q3 end.

• Stability was maintained through strengthened risk control measures, including advanced algorithms for fraud detection, an automated early warning system, and enhanced transparency features (e.g., real-time review timelines) to build donor trust.

• Digital Clinical Trial Solutions & Healthcare Expansion:

• Digital clinical trial solutions revenue reached CNY 31.85 million, marking a 31.3% year-on-year increase. The business enrolled over 1,000 patients in a single quarter for the first time.

• Growth was fueled by a strong collaboration network (216 pharma/CRO partners), expanded disease focus (e.g., gynecological tumors, rheumatology), and enhanced digital matching algorithms that improved enrollment efficiency and fulfillment quality for complex projects.

• Strong Financial Performance & Profitability:

• Total revenue was CNY 975 million, up 38.4% year-on-year. Operating profit surged 329.8% year-on-year to nearly CNY 114 million. Net profit attributable to ordinary shareholders was CNY 158 million, up 60.1% year-on-year.
• Profitability was boosted by AI-driven operational efficiency gains, strong business growth across segments, and disciplined cost management, with operating cost growth (27.1%) outpacing revenue growth at a lower rate.

Sentiment Analysis:

Overall Tone: Positive

• Management stated: 'The company continued its growth trend with overall revenue reaching over CNY 970 million, up 38.4% year-on-year' and 'we are confident in exceeding full-year revenue and profit guidance.' The tone highlights strong growth, AI-driven efficiency, and profitability.

Q&A:

• Question from Unknown Analyst (Firm not specified): What was the revenue growth for the third quarter?
  Response: Revenue was RMB 975 million, up 38.4% year-on-year.

• Question from Unknown Analyst (Firm not specified): What was the operating profit growth for the third quarter?
  Response: Operating profit was nearly RMB 114 million, marking a substantial year-on-year increase of 329.8%.

• Question from Unknown Analyst (Firm not specified): What was the net profit growth for the third quarter?
  Response: Net profit attributable to ordinary shareholders was RMB 158 million, up 60.1% year-on-year.

Contradiction Point 1

Insurance Business Year-over-Year Growth Rate

A significant and unexplained acceleration in the reported year-over-year growth rate for the Insurance business segment from 24.5% (FYP 2024) to 44.8% (Q3 2025), representing a key change in financial performance.

Can you provide an update on segment performance? - N/A (Internal Presentation)

20251203-2025 Q3: Insurance business operating profit was about CNY 180 million, up 44.8% year-on-year. - Wei Ran (Director and GM of Insurance Business)

Insurance business performance? - N/A (Business Development Update)

2024Q4: In Q4, our insurance business achieved FYP of about RMB1.9 billion representing 24.5% year-over-year growth so showing a 7% quarter-on-quarter decrease. - Wei Ran (Director & General Manager-Insurance Business)

Contradiction Point 2

Cumulative Patients Supported by Crowdfunding Platform

A material, unexplained increase in the cumulative number of patients supported by the platform's core service (from 3.4 million to 3.61 million) within less than a year, impacting perceptions of growth and operational scale.

Can you provide an update on the crowdfunding segment? - N/A (Internal Presentation)

20251203-2025 Q3: Platform raised funds for 3.61 million patients cumulatively (as of Q3 2025). - Jasmine Lee (Corporate Secretary)

How is the crowdfunding business performing? - N/A (Business Development Update)

2024Q4: as of end of 2024, around 470 million people accumulated – they donated... to about 3.4 million patients through our platform. - Jasmine Li (Board Secretary)

Contradiction Point 3

AI Investment Timeline and Technology Output

A potential inconsistency in the narrative surrounding the company's technology investment strategy. The plan to "increase investments in 2025" is followed by a significant patent filing surge in Q3 2025, raising questions about the phasing and lead time of that investment's impact on the technology portfolio.

Can you provide an update on recent AI investments? - N/A (Internal Presentation)

20251203-2025 Q3: Highlighted ongoing investment in AI, with 69 patent applications filed (including 9 international). - Xiaoying Xu (Head of Finance Department)

How is the company planning to balance its investments with maintaining profitability in the upcoming quarter? - N/A (Financial Update)

2024Q4: We have sustained remarkable profitability and double our annual net profit... In fact we plan to increase investments in 2025 to further strengthen our technology edge. - Xu Xiaoying (Head-Finance)