Waterdrop's Q3 2025 Earnings Call: Contradictions Emerge on AI Integration, Insurance Growth, Profitability, and Medical Profiling

Business Commentary:

* Revenue Growth and Profitability: - Waterdrop reported total revenue of CNY 975 million for Q3 2025, marking a year-on-year growth of 38.4%. - The company's net profit attributable to ordinary shareholders reached CNY 158 million, up 60.1% year-over-year. - Revenue growth was driven by strong performance in the insurance business and digital clinical trial solutions, while profitability improvements were due to lower growth rates in operating expenses compared to revenue.

• AI Integration and Innovation:
• Waterdrop has filed 69 patent applications centered on large language models, with nine international filings.
• The company launched the Waterdrop C-Point AI platform, enabling employees to build and deploy tailored solutions across various business scenarios.
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• This integration and application of AI technologies have improved operational efficiency, driven innovation, and enhanced service quality, contributing to overall business growth.

• Insurance Business Performance:

• Waterdrop's insurance-related revenue reached 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%, with AI applications boosting efficiency and enhancing user services.

• Growth in the insurance business was supported by product innovation, improved user identification and stratification, and expanded collaboration with partners and suppliers.

• Digital Clinical Trial Solutions:

• Digital clinical trial solution income in Q3 2025 reached RMB 31.85 million, marking a 31.3% year-on-year increase.
• The growth was driven by successful patient enrollment and collaboration with pharmaceutical and contract research organizations, as well as improved digital matching accuracy between patient databases and project libraries.

Contradiction Point 1

AI Integration and Impact on Revenue Growth

It highlights differing perspectives on the role of AI integration in revenue growth, which is crucial for understanding the company's strategic focus and operational efficiency.

N/A - N/A

2025Q3: For the first three quarters of 2025, the company’s total revenue amounted to CNY 2.57 billion, up 23.1% year on year. - Company Spokesperson/Executive, Waterdrop

N/A - N/A

2025Q2: In Q2 2025, Waterdrop achieved significant growth with a 23.9% year-on-year increase in revenue to CNY 840 million. - Shen Peng(Founder, Chairman, and CEO)

Contradiction Point 2

Insurance Business Growth

It directly impacts the company's revenue and profitability expectations, as insurance business growth is a key performance metric.

What was the performance of the insurance business in Q3 2025? - Jiang Wei

2025Q3: In the third quarter, our insurance business maintained significant growth momentum. Insurance-related revenue reached about CNY 870 million, increasing by 44.8% year on year and 17.8% quarter on quarter. - Jiang Wei(CRO)

Is there an update on the insurance business performance? - Wei Ran

2025Q1: Insurance business achieved an FYP of RMB 2.09 billion with a 19.3% YoY growth. Insurance-related revenue reached RMB 660 million, increasing by 8.4% YoY. - Wei Ran(CRO)

Contradiction Point 3

Profitability and Operating Profit Margin

It involves discrepancies in reported profitability and operating profit margins, which are critical financial metrics for investors.

N/A - N/A

2025Q3: Net profit attributable to ordinary shareholders reached about CNY 410 million, rising 51.9% compared to the same period last year. - Company Spokesperson/Executive, Waterdrop

Can you provide an update on the company's progress toward achieving its 2025 strategic goals? - N/A

2025Q2: Net profit attributable to the company's ordinary shareholders rose by 58.7% year-over-year. - Xiaoying Xu(Head of Finance)

Contradiction Point 4

Patient Enrollment and Medical Profiling Growth

It involves changes in the company's performance in the medical and healthcare sector, which is crucial for understanding its growth and expansion strategies.

What were the progress and performance in the profiling and healthcare sectors during Q3 2025? - Li Zhiju

2025Q3: As of September 30, 2025, approximately 485 million people had cumulative registrations, with a total of CNY 71.2 billion invested in 3.61 million patients through Waterdrop Medical Profiling. - Li Zhiju(CPO)

What is the status of Jasmine Lee's medical and health care business update? - Jasmine Lee

2025Q1: As of Q1 2025, 475 million people cumulatively donated RMB 68.8 billion to 3.47 million patients. - Jasmine Lee(CPO)

Contradiction Point 5

Insurance Business Growth and Performance

It involves differing perspectives on the growth and performance of the insurance business, which is a key revenue driver for the company.

What were the results of the insurance business in Q3 2025? - Jiang Wei

2025Q3: In the third quarter, our insurance business maintained significant growth momentum. Insurance-related revenue reached about CNY 870 million, increasing by 44.8% year on year and 17.8% quarter on quarter. - Jiang Wei

What are the key areas of AI application at Waterdrop? - Wei Ran

2024Q4: In Q4, our insurance business achieved FYP of about RMB1.9 billion representing 24.5% year-over-year growth. Insurance-related revenue reached RMB580 million down 1% Y-o-Y and 3% quarter-over-quarter, while operating profit stood at RMB103 million with an 18% operating margin. - Jasmine Li