Cheche Group Inc. (CCG) Q4 2025 Earnings Call Transcript

Good day, and welcome to the Cheche Group Second Half and Full Year 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Crocker-Colson, Investor Relations. Please go ahead.

Thank you, Betsy. Hello, everyone. Thank you for joining us to review Checha's second half and full year 2025 results. This morning, Checha posted both the earnings release and a related, updated investor presentation to our website, which you can find at iar.chechagroup.com. I'm very pleased to say that with us on the call today, we have Lei Zhang, Checha's founder and CEO, and also Sandra Gee, Checha's CFO. After the prepared remarks are concluded, we're going to open up the call for your questions, and they'll be happy to address them. But before we begin, I'd like to remind you that some statements in this teleconference will be forward-looking within the meaning of the federal securities laws. Although we believe these statements are reasonable, we can provide no assurance that they will prove to be accurate because of their perspective in nature. Actual results could differ materially from those we discussed today, so we encourage you to review the most recent filings with the SEC for risk factors that could materially impact our future results. As I mentioned, the earnings release is available for you at ir.chechugroup.com. And again, we also encourage you to review the reconciliations of certain non-GAAP financial measures contained within that we're going to discuss on the call today. With that, it's my great pleasure to turn the call over to Lei Zhang, Checha's Chief Executive Lei, over to you.

Thank you, Grok. Greetings, everyone. Thank you for joining us today to review Churchill's second half and full year 2025 results. 2025 was a defining year for Churchill Group, one that validated both the resilience of our business model and the power of the strategy transformation we have been executing. despite an ongoing three-rate compression driven by rapid growth of NEV premiums within our revenue mix. We deliver the growth profit growth, dramatically reduced the operating losses, and for the first time achieved a just net profitability on a full-year basis. they are not incremental results they marked a inflection point on our evolution from a transactional insurance platform to a ai-powered intelligent insurance ecosystem let me begin with that i believe is the most meaningful headline from this period the church group achieved adjusted operating profitability for the full year 2025 and delivered a positive net income in the second half of 2025. Our adjusted net income reached RMB 11.6 million of the US dollar 1.7 million for the full year compared to an adjusted net loss of RMB 24.8 million in the prior year. That is a swing of more than RMB 35 million achieved while we focus on newer capabilities and adopt meaningful structural change on our revenue mix. This reflects displaying cost management across every line of operating expenses, which we reduced in total by more than 19 year-over-year. even as we grew total written premiums placed by 11 percent and the total policies ensured by three million we demonstrated that scale and efficiency can do at once together at the church and we intended to continue building that foundation in 2026. The profitability story also has a structural dimension. NEV premiums, which carry a lower service fee than traditional auto insurance, now represent the 23% of our total written premiums for the full year, up from the 13% in the prior This shift initial creates a revenue headwind, as we are mentioning, but it also drives higher growth margins. As our AI-powered tools allow us to capture higher tech rates in the NEV insurance market and deploy capabilities that command premium pricing, we expected the margin profile to continue improving. I also want to highlight the significant progress we have made in translating our AI strategy into operational capability. We are actively deploying AI price model in the collaboration with several of China's leading insurance companies, as well as through the data partnerships with intelligent connected wireless manufacturers. Our insurance anti-fraud and risk control model, which was recognized in the prestigious top 100 AI product over the 2024 last year, is one example that integrates a big data artificial intelligence and the biometrics, enabling insurers to identify fraud earlier, price risk more precisely, and process claims with greater efficiency. This partnership position us to expand our footprint in the renewal insurance market. Beyond our ensure facing tools, we are developing and testing AI agent to the fundamental change out we engage with the car owners and the point of renewal. With AI agent, we can standardize scale and improve the dialogue with the car owners, deploying consistent, intelligent, real-time outreach that is more effective than traditional method and a significant more costly efficiency. On the R&D side, our team leverage AI tools and LLM to accelerate product development and shortly development circles. Their tools are expanding our capability roadmap without proportional increase in the high count and spending. Looking forward ahead, we intend to extend the operational and analytical capability across the full auto insurance wire chain. from pre-policy risk assessment and pricing through in the policy risk monitoring and intervention to claim survey and loose assessment. Combined with our growing advantage in the driven behavior data from the NEV ecosystem, we believe the position us to move the industry from the static pricing towards to dynamic risk management and to build a data-driven competitive mode and strength over time. The quality of our OEM partnership continues to depend. We currently have the partnership with 16 NEV manufacturers and as our business and relationships more true. Our strategy focuses on shifting from aiding new relations to the deepening existing ones. That means expanding the Wilkes temples and the models within the partnership, ending the dealer channel progress, and maximizing renewal premiums capture across installed based workers we already service our work with Volkswagen reflects our ability to partner with both domestic champions and the global automakers operating in China's intelligent connected works market we are building the full lifecycle relations relationships with these partners, not transactional arrangements, and the depth of those relationships is what creates the durable and recurring value for the CCG and our shareholders. Looking ahead, we expect to share additional partnership news in the incoming months that we believe will further demonstrate the strength of our position within China's most intelligent connect-to-work system. We are also preparing to announce the significant advance in our AI-driven auto-pricing capabilities, a development that reflects our capabilities with the data science and risk modeling and that we believe significantly expand our addressable market in the renewable insurance segment we look forward to sharing more details in the near term let's turn to the progress we are making internationally which represents one of our most important long-term growth vectors. Chinese automakers now export over 8 million workers annually and has expanded globally. The demand for intelligent data streaming insurance and financial services infrastructure follows. Churchill Group is uniquely positioned to meet and the demand bringing the digital insurance capabilities and the financial technology capabilities we have built in china's most demanding market to automotive ecosystem around the world we are also advancing our international roadmap across the border asia pacific and Latin American markets, leveraging our fintech solution for automakers abroad. A toolkit of digital insurance and finance services is infrastructure designed to support Chinese automakers and their global partners as they build out new market operations. to summarize the 2025 demonstrated that what the social group is capable of we achieved adjust profitability depend our AI capabilities form the landmark partnership with a global automotive leader and took our first meaningful step into the international markets we enter the 2026 with clear priorities continue growing renewal insurance penetration through the AI power tools expand our platform relationships with Huawei, Volkswagen and other NEV partners and invest selectively in the international expansion where we see the clearest path to probability. We are confident in the trajectory of the business and grateful for the support our investors and partners. I will announce the call over to our CFO, Sandra Ji. Thank you.

Thank you, Lei. I'd like to begin by touching on our second half and the four-year 2025 operational and financial highlights before taking any questions. First is our operational updates. Our total return premium placed for the second half of 2025 increased 16.9% year-over-year to RMB, $15.5 billion, or U.S. dollar, $2.2 billion. For the full year, 2025, the total return premium increased 11% to RMB, 27 billion or US dollar 3.9 billion. The total number of policies issued increased from 9.3 million in the prior year period to 12 million in the second half 2025. For the four year, total policies issued grew from 17.3 million to 20.3 million. On the NEV side, Our 16 partnerships generated 1.2 million in budget policies and R&B 3.7 billion in corresponding written premiums in the second half of 2025, representing year-over-year growth of 61.8% and 63.9% respectively. For the four-year 2025, NEV-embedded policies reached $2.0 million and the corresponding premium reached the $6.3 million, growing 85.3% and 91.0% respectively. Our NEV premiums represented 24.1% of total return premium placed in the second half of 2025, up from 17.2% in the prior year period, and 23.4% for the full year 2025, up from 13.6% in the prior year. Next is our financial results. The net revenues for the second half of 2025 were on the $1.7 billion, or U.S. dollar $237.5 million, representing a 9.4% year-over-year decrease. As Lee just mentioned, this decline reflects the higher proportion of NEV premiums within our mix, which carry lower service fee rates. We are actively managing this structural transition through AI-enhanced pricing capabilities and a renewal market penetration. For the four-year 2025, net revenues were RMB 3.0 billion, or U.S. dollar for $130.4 million, a decrease of 13.3% year-over-year, driven by the same uneven mixed dynamics. For the second half of 2025, cost of revenues decreased 10% year-over-year to RMB $1.6 billion or U.S. dollar to $124.0 million, driven by lower next revenues and continued improvement in our gross margin profile. For the full year 2025, cost of revenues decreased 14% year-over-year to RMB $2.8 billion, or U.S. dollar $407.5 million from the prior year. The gross profit in the second half increased to 0.5% toward the $94.6 million or U.S. dollar $13.5 million, despite the lower next revenues, which is a direct result of our improved business structure. This is an important signal, like even as revenue compresses through the fee rate transition, our growth profit is still growing. Growth margin expanded at the higher margin in EV business represents an increased share of the mix. For the fourth year, the growth profit increased 1% to RMB 160.4 million or US dollar 22.9 million, with gross margin expanding as the NEV business grew as a proportion of the mix. For second half 2025, the selling and marketing expenses decreased 18.1% to RMB $31.0 million, or U.S. dollar $4.4 million. General and administrative expenses decreased $16.5 million to RMB $38.5 million, or U.S. dollar $5.5 million. Research and development expenses decreased $2.5 million to RMB $18.9 million or U.S. dollar $2.7 million. The total operating expenses decreased 14.4 percent to RMB $88.4 million or U.S. dollar $12.6 million, while the adjusted total operating expenses decreased by 22.2% to RMB $77.1 million, which is U.S. dollar $11.0 million. The total operating expenses for the full year decreased 19.6% to RMB $181.2 million or U.S. dollar $25.9 million, While adjusted total operating expenses decreased 17.0% to RMB $156.9 million, or U.S. dollar $22.4 million. Operating income for second half 2025 was RMB $6.1 million, or U.S. dollar $0.9 million, compared to an operating loss of RMB $9.3 million in the prior year period. Adjusted operating income was RMB $18.5 million or U.S. dollar $2.6 million compared to an adjusted operating loss of RMB $1.5 million in the prior year period. Operating loss for the full year 2025 narrowed dramatically by 68.6% to RMB 20.9 million or U.S. dollar 3.0 million. The full year adjusted operating income was RMB 5.6 million or U.S. dollar 0.8 million compared to adjusted operating loss of RMB 28.2 million in the prior year. Net income for second half of 2025 was RMB $7.8 million, or U.S. dollar $1.1 million, compared to a net loss of RMB $6.4 million in the prior year period. Adjusted net income was RMB $22.2 million, or U.S. dollar $3.2 million, compared to adjusted net loss of RMB $0.3 million in the prior year period. Net loss for the full year 2025 was RMB at $17.8 million, representing an improvement of 71.0% from RMB, $61.2 million in the prior year. Adjusted net income was R&B $11.6 million, all U.S. dollar $1.7 million, compared to an adjusted net loss of R&B $24.8 million in a prior year. This marks the first four-year adjusted profitability in Churchill's history as a public company. Let's turn into our balance sheet. We reported RMB 160.8 million, or U.S. dollar, 24.4 million in cash equivalents, restricted cash, and short-term investments as of December 31st, 2025. Looking ahead to the four-year of 2026, we are anticipating an approximate range of RMB 3.0 billion or 2 RMB 3.2 billion for net revenues, a range of RMB 28.0 billion to 30.0 billion for total return premiums, a range of RMB 10.5 billion to 12.0 billion for NEV written premiums and we also expect adjusted and less income to multiply several fold compared to the full year of 2025 I think we that concludes our

remarks next we'll be happy to take any of the questions thank you we will now begin the question and answer session to ask a question you may press star then one on your touchtone phone if you are using a speakerphone please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time we will pause momentarily to assemble our roster.

Hello. Operator, please go ahead.

The first question comes from Wenzu Xiao with Citix. Please go ahead. It appears we've lost that questioner. The next question comes from Alan Klee with Maxim Group. Please go ahead.

Yes. Congratulations on your progress and advances with NABs and moving to profitability. In your guidance, you said that you're projecting 2026 NEV premiums to increase between 66.7% and 90.5% year-over-year. Can you just highlight what in your offerings is going to result in such strong adoption? Maybe highlighting how you're helping with pricing, risk, and fraud. Thank you.

Thank you, Alan. this question the first we think AI as a key tool for the upgrade upgrading the company's innovation and operational capabilities the first at the R&D level AI is being the integrated across the entire workflow from requirements analysis and development testing and delivery significantly improving our overall influencing and stability of outcomes the second at the business application level our company will continue to promote the coordinated use multiple ai tools and further leverage our advantage in the driving behavior uh data within the nev ecosystem this will gradually extend ai capabilities across the full insurance value chain from the pre-underwriting risk assessment and the pricing to in policy risk monitoring and intervention and intelligent claims inspection and loose assessment Through its initial team, we aim to drive a transformation of auto insurance from static pricing to the dynamic risk management, while continuously strengthening our long term competitive advantage. Thank you.

Thank you very much. You also said on the call that internationally there's a large demand and you said you're going to advance across Asia and Latin America with FinTech solutions. Could you explain what you mean by what your FinTech solutions are?

Okay. In terms of global expansion, the company has formed a strategy partnership with several automotive brands that focused on international growth. We have already established a solid presence in markets such as Australia, New Zealand, Latin America, and the Middle East have successfully launched business operations in collaboration with partners, including Guangzhou Auto Company, Cherry, BYD, and Gradual Moto. Also, by supporting Chinese automakers in their overseas expansion, we leverage our metro digital insurance capabilities and the financial technology capabilities to bring our technology to the international markets as a China solution, helping build a global financial, and the insurance ecosystem in such country. Thank you.

Thank you. I just couldn't comment. I was talking to somebody from Australia yesterday, and they said the demand for Chinese electric vehicle cars is dramatic, the waiting list, especially with what's going on with oil prices.

Leigh, do you want to tell Alan where you're joining us from?

Yeah. Because the oil price is increased.

So Leigh's actually in Australia today.

Yeah. I've traveled to Australia for the Great Wall Motor and the Cherry Auto. In Australia.

That's great. Okay, I'll pass it along to let other people ask questions. Congratulations.

Thank you very much.

The next question comes from Wenzo Zhao with Cynix. Please go ahead.

Hello, my name is Chow Dunzo. I'm just sorry to interrupt the conversation. I have a few questions. First, I want to take a look at the company in the inside of the AI to reduce the production of the product. Thanks for taking my question. I'm curious about your ability to leverage AI internally to reduce operating costs. I'd also appreciate an update on how AI solutions are supporting internal operations and any comments on plans for Think International Expansion.

Thank you. 能为 nomad youtube 能够萎名的工具呢快速的实现所以呢是从内部的角度然后从外部的产品和应用暴来说呢因为我们服务的中国的智能网联这种新能源汽车他拥有大量的数据包括駕駛行为车机的数据以及他的各种传感器数据可以有效的帮助我们的保险的风险定价从过去的传统精算师的模式转向了动态的实时的 智能网联这种新能源汽车它拥有大量的数据包括驾驶行为车机的数据以及它的各种传感器数据可以有效的帮助我们的保险的风险定价从过去的传统精算师的模式转向了动态的实时的这种精算定价体系同时呢在发生理赔的时候可以通过车机的物联网和这个 这个传感器快速的在几分钟或者是一分钟之内就可以将事故的所有的这种数据影像进行固定来解决传统理赔偿的这种欺诈减少它的这种赔付率会起到非常明显的效果 这里面都依赖于AI agent的能力 依赖于智能网联汽车海量数据的这种基础 所以AI对于整个保险行业或者金融科技行业都有非常大的一个创新和变革 这是第一个问题 第二个问题就是在出海方面 刚才我们也简单的提到目前我们已经跟随中国车企在主要的全球四个地区拉美包括亚太中东还有部分的这个欧洲地区我们都在和这些主流的车企进行业务的落地

我们以及海外呢 会有三到五个国家 当地的这个汽车制造商 我们叫OEM 和当地的经销商 就是Dealer 会全面的使用我们的解决方案 届时呢 我们也会进行新闻的发布 主要的这个问题就简单回答一下

非常感谢 Thanks for your answer. Very clear. No more questions. Thank you.

那么2026年呢

This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Well, we'd like to thank everyone for joining us today. If you didn't have a chance to ask your questions or if you'd like to have a follow-up call with management, please feel free to reach out to me or the Checha Investor Relations team. and we'll be more than happy to arrange a Zoom call at Mutual Convenience. Thanks, everyone, for joining us, and I look forward to coming back to you with future updates. Thank you, Operator.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.