Waterdrop's Q3 2025: Contradictions Emerge on AI Integration, Insurance Growth, Medical Crowdfunding, and Revenue Expectations

Date of Call: None provided

Financials Results

• Revenue: RMB 975 million, up 38.4% year-on-year
• Operating Margin: Operating profit nearly RMB 114 million (~11.7% of revenue); operating profit up 329.8% year-on-year

Guidance:

• Confident in exceeding full-year revenue and profit guidance.
• Continue investing in AI to drive integration, efficiency, and new product development across insurance, crowdfunding, and healthcare.
• Explore AI applications in non-insurance areas to support future growth.

Business Commentary:

• Revenue Growth and AI Integration:
• Waterdrop reported over CNY 970 million in total revenue for Q3 2025, up 38.4% year-on-year.

• This growth was driven by the significant role played by AI in enhancing business quality and efficiency.

• Insurance Business Growth:

• Insurance-related revenue reached about CNY 870 million, increasing by 44.8% year-on-year.
• The growth was attributed to the integration of AI and real-time identification capabilities in public traffic scenarios.

* Digital Clinical Trial Solutions Performance: - Digital clinical trial solutions income in Q3 was RMB 31.85 million, marking a 31.3% year-on-year increase. - The increase was due to successful enrollment of over 1,000 patients in a single quarter and enhanced digital matching accuracy.

• AI Integration and Operational Efficiency:
• AI played a crucial role in various areas, such as customer service, medical insurance experts, and underwriting assistant, leading to improved efficiency and reduced response times.
• The integration of AI enabled Waterdrop to streamline operations and enhance productivity across multiple business scenarios.

Sentiment Analysis:

Overall Tone: Positive

• Company reported revenue +38.4% YOY to RMB 975M, net profit attributable +60.1% YOY to RMB 158M, and operating profit up 329.8% YOY to ~RMB 114M; management stated they are "confident in exceeding full-year revenue and profit guidance" and highlighted share repurchases and dividend.

Contradiction Point 1

AI Integration and Operational Efficiency

It highlights differing perspectives on the impact of AI integration on operational efficiency and margins, which are crucial for understanding the company's strategic direction and financial performance.

How did Waterdrop's AI development contribute to Q3 2025 growth? - Tracy Li (Waterdrop Investor Relations)

20251203-2025 Q3: The hybrid attention mechanism improved the chatbot's understanding and inference throughput. Waterdrop C-Point AI was launched, empowering employees to build and deploy tailored AI solutions. The AI applications significantly enhanced operational efficiency and customer experience across various business segments. - Xiaoying Xu(Head of Finance)

Will Blackwell's Q4 revenue be additive, and what is the expected exit rate for gross margins? - Stacy Rasgon (Bernstein Research)

2025Q2: I would like to emphasize that AI integration continues to enhance our overall operational efficiency and margin improvement. - Peng Shen(CEO)

Contradiction Point 2

Insurance Business Growth

It reveals differing statements on the growth trajectory and financial performance of the insurance business, which affects investor understanding of the company's core business segment.

What were the key developments in the Insurance segment during Q3 2025? - Tracy Li (Waterdrop Investor Relations)

20251203-2025 Q3: Insurance revenue grew by 44.8% year-on-year. The segment achieved an operating profit margin of 20.3%. - Wei Ran(Partner, GM of Insurance Technology Business & Director)

How is your insurance business growing, and what role does AI play in its integration? - Wei Ran (Partner, GM of Insurance Technology Business & Director)

2025Q2: First-year premium increased by 80.2% year-on-year to CNY 3.2 billion. Insurance-related revenue grew by 28.7% year-on-year. - Wei Ran(Partner, GM of Insurance Technology Business & Director)

Contradiction Point 3

Medical Crowdfunding Platform Growth

It shows varying figures and progress regarding the growth of the medical crowdfunding platform, impacting investor understanding of the company's social impact and revenue diversification.

What are the updates for the Medical Crowdfunding Platform and Digital Clinical Trial Solutions in Q3 2025? - Tracy Li (Waterdrop Investor Relations)

20251203-2025 Q3: As of September 30, 2025, approximately 485 million people had cumulatively donated a total of RMB 71.2 billion to 3.61 million patients. - Jasmine Lee(Corporate Secretary)

What is the status of your medical crowdfunding and healthcare business? - Jasmine Lee (Corporate Secretary)

2025Q2: As of June 30, 2025, approximately 430 million people had cumulatively donated a total of CNY 70 billion to 3.54 million patients. - Jasmine Lee(Corporate Secretary)

Contradiction Point 4

Revenue Growth Expectation

It involves changes in financial forecasts regarding revenue growth expectations, which are critical indicators for investors.

What were the key financial and business results for Q3 2025? - Tracy Li(Waterdrop Investor Relations)

20251203-2025 Q3: The company achieved strong financial results with total revenue of RMB 975 million, up 38.4% year-on-year. - Xiaoying Xu(Head of Finance Department)

What is the company's current revenue growth and investment strategy? - Peng Shen(CEO)

2025Q1: The company expects a revenue growth rate of over 20% year-over-year. - Peng Shen(CEO)

Contradiction Point 5

AI Development and Integration

It involves changes in the company's progress and focus on AI development and integration, which are critical for business efficiency and customer experience.

How did Waterdrop's AI development contribute to its Q3 2025 growth? - Tracy Li(Waterdrop Investor Relations)

20251203-2025 Q3: By the end of September, Waterdrop had filed 69 patent applications related to large language models. The hybrid attention mechanism improved the chatbot's understanding and inference throughput. Waterdrop C-Point AI was launched, empowers employees to build and deploy tailored AI solutions. The AI applications significantly enhanced operational efficiency and customer experience across various business segments. - Xiaoying Xu(Head of Finance Department)

Can you provide details on the company's financial performance? - Wei Ran(GM of Insurance Technology Business & Director)

2025Q1: We have been advancing the technological capability in data analysis, AI, and machine learning. - Xiaoying Xu(Head of Finance Department)