Financial Data and Key Metrics Changes - The company's net operating revenue decreased by 27.3% year-over-year to RMB604 million from RMB830 million, and decreased by 25.6% on a comparable basis [41] - Operating costs and expenses decreased significantly by 38.6% year-over-year to RMB678 million, with a quarter-over-quarter decrease of 47.5% [42] - The company incurred a net loss of RMB71 million on a GAAP basis, while generating an adjusted net profit of RMB5.9 million, compared to a net loss of RMB404 million and an adjusted net loss of RMB191 million in the same quarter of last year [45] Business Line Data and Key Metrics Changes - The first full quarter of the new business model led to a significant improvement in operating efficiency, with a reported adjusted net profit of RMB5.9 million in Q4 compared to a loss of RMB453 million in Q3 [16][41] - The retention rate increased significantly, driving the take rate of the short-term insurance business to 33% in Q4 [17] - The average productivity of long-term insurance consultants reached RMB66,000 per month, an increase of 66% compared to Q3 [19] Market Data and Key Metrics Changes - The annual growth in gross written premium (GWP) for the health insurance sector was only 3% in 2021, the lowest in the past 10 years, with GWP seeing a decrease of 3% year-over-year for both the third and fourth quarters [14] - The total profit of life and health insurance companies decreased by 47% year-over-year, reflecting the industry's adjustment phase [14] Company Strategy and Development Direction - The company has shifted its strategy from rapid user base growth to pursuing higher quality development, focusing on sustainable growth and profitability [8][9] - Waterdrop plans to continue investing in technology and innovation while optimizing its business model to comply with new regulatory guidelines [12][20] - The company aims to achieve profitability in its established business on a non-GAAP basis for the year 2022 [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of China's health insurance market despite short-term challenges [10][13] - The company views recent regulatory changes as an opportunity for industry consolidation and improvement in the competitive landscape [12][26] - Management emphasized the importance of cost control and operational efficiency to navigate the current market conditions [54] Other Important Information - The company has initiated a share repurchase plan, buying back approximately 1.3 million ADSs since its announcement [11] - Waterdrop's Medical Crowdfunding business has helped raise over RMB48.4 billion, reinforcing its market-leading position [27] Q&A Session Summary Question: Can you discuss the renewal rate and strategy for existing customers? - The premium renewal rate improved to 89% in December 2021 from 62% in September 2021, with strategies including upgraded renewal products and more coverage options [48][49] Question: What drove the improvement in profitability and can we expect this to continue? - The significant reduction in operating costs and marketing expenses contributed to profitability, with expectations for continued improvement in 2022 [51][54] Question: What is the target for first-year premium growth next year? - The company expects revenue growth to stabilize in 2022, focusing on sustainable models rather than aggressive expansion [60]

Financial Data and Key Metrics Changes - In Q3 2021, the first year premium (FYP) reached RMB4,639 million, achieving stable and positive growth despite industry transformation [41] - Net operating revenue decreased by 9.7% year-over-year to RMB779 million, attributed to a softening trend in FYP and a decrease in take rate [42] - Operating costs and expenses increased by 31.5% year-over-year to RMB1,292 million, but decreased by 26.4% quarter-over-quarter, indicating effective cost control measures [42][43] Business Line Data and Key Metrics Changes - The FYPs for the first three quarters increased by 37.5% year-over-year to RMB14.46 billion, exceeding the total FYPs for the entire previous year [12] - Despite a negative growth in the industry during Q3, the company's FYPs remained flat, showing resilience [12] - The monthly take rate of short-term insurance products increased by 5% from July to September, driven by improved retention rates [16] Market Data and Key Metrics Changes - The gross written premium of the health insurance sector increased by only 5% year-over-year in the first three quarters, with a decline of 3% in Q3 [11] - Major listed insurance companies experienced an average net profit decline of about 36% year-over-year during Q3 [11] Company Strategy and Development Direction - The company is focused on transforming its online user acquisition model to comply with new regulatory guidance and industry trends [15] - Waterdrop aims to enhance its fundamental operations and believes in the long-term positive trend in the Chinese healthcare market [7][9] - The company is committed to strengthening cost control and optimizing profitability for sustainable development [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased volatility in capital markets and a softening growth in the insurance industry since the beginning of Q3 [5] - The company is proactively responding to new regulatory guidelines and has pivoted its business model to ensure compliance [8] - Management expressed confidence in the long-term prospects of the company and the healthcare market, despite short-term challenges [7][9] Other Important Information - The company has initiated a one-year share repurchase plan, repurchasing nearly 500,000 ADS since its announcement [6] - The management team has committed to not selling shares for at least 18 months post-IPO lockup, demonstrating confidence in the company's future [7] Q&A Session Summary Question: Inquiry about cost reduction in Q3 and its relation to seasonality or strategy changes - Management indicated that the reduction in costs was primarily due to a strategic change in cost control and also influenced by seasonality, with significant decreases in marketing expenses and total operating costs compared to Q2 [47][48] Question: Inquiry about the advantages of the commission system compared to traditional insurance companies - Management explained that the new offline brokerage model reduces layers in the sales structure, enhancing recruitment competitiveness and operational efficiency through AI-driven systems [51][52]

Financial Data and Key Metrics Changes - First-year premiums grew by 94% to RMB 5,357 million in Q2 2021, indicating strong demand from lower-tier cities [6][29] - Net operating revenue increased by 38% year-over-year to RMB 939 million, with adjusted net operating revenue showing a 44.4% growth [6][30] - The company reported a net loss of RMB 656 million on a GAAP basis and an adjusted net loss of RMB 570 million, with a negative adjusted net margin of 60.7% [33] Business Line Data and Key Metrics Changes - The number of insurance products offered increased from 240 to 275, with new products developed to meet current market demands [17] - The share of short-term critical illness products rose from 14.9% in Q1 to 17.3% in Q2, reflecting diversification in product offerings [19] - Customer base grew to 102 million, with 4.2 million customers purchasing insurance products in Q2, a 53% year-over-year increase [20] Market Data and Key Metrics Changes - The company experienced a temporary decrease in sales force efficiency due to adjustments made post-IPO, impacting long-term insurance product sales [44] - The marketing expenses increased by 270% year-over-year to RMB 1,245 million, driven by heightened competition and user acquisition efforts [32] Company Strategy and Development Direction - The company aims to transition from rapid expansion to enhancing service quality and user value, focusing on sustainable growth [11] - Waterdrop is committed to technological innovation, enhancing the entire business chain through advanced algorithms and data analysis [12][14] - The company plans to leverage government-backed health insurance programs to expand its market reach and improve service offerings [52] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term sustainable development despite short-term challenges and regulatory pressures [7][15] - The company anticipates that regulatory measures will ultimately benefit compliant institutions and improve industry standards [37] Other Important Information - The company announced a share repurchase program of up to $50 million over the next 12 months, reflecting confidence in its long-term value [15][16] - As of the end of Q2, the crowdfunding platform had 372 million users who donated over RMB 42.8 billion to 2.1 million patients [15] Q&A Session Summary Question: Impact of CBIRC document number 87 on future operations - Management indicated that the regulatory measures aim to promote healthy development in the internet insurance sector and have proactively adjusted operations to comply with new regulations [36][37] Question: Growth strategy for healthcare services - The company is expanding its healthcare services, including new consumer healthcare products and partnerships with pharmacies to enhance service offerings [38][39] Question: Breakdown of long-term health product growth rate - Long-term insurance sales growth was slower due to a temporary decrease in the sales force and adjustments made post-IPO, but improvements in service quality are expected to drive future growth [42][44] Question: Reasons for increased acquisition and marketing expenses - The increase in marketing expenses was driven by user acquisition efforts and brand building, with a focus on maintaining a healthy ROI despite rising customer acquisition costs [47][48] Question: Development and strategy regarding Huiminbao - The company is actively participating in government-backed health insurance programs, leveraging its technology and services to enhance efficiency and meet consumer demand [50][52]