Good day, and welcome to Noah Holdings Second Quarter and Half Year 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Doreen Chew, Senior IR Director. Please go ahead.

Thank you. Good morning and good afternoon, and welcome to Noah's Second Quarter and Half Year 2025 Earnings Conference Call. Joining me today, we have Ms. Wang Jingbo, the Co-Founder and Chairwoman; Mr. Zander Yin, Co-Founder, Director and CEO; and also Mr. Grant Pan, CFO. Mr. Yin will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financial and operational results. They will all be available to take your questions in the Q&A section that follows. Please note that the discussion today will contain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from those in our forward-looking statements. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the SEC and the Hong Kong Stock Exchange. Noah does not undertake any obligation to update any forward-looking statements, except as required under applicable law. With that, I would now like to pass the call over to Zander. Mr. Yin, please go ahead.

Okay. Good morning to everyone, and thank you for joining Noah's second quarter 2025 earnings conference call. In the second quarter of 2025, global financial markets experienced significant volatility with the Trump administration's tariff policies and geopolitical risks moving from background noise to center stage, leveraging the forward-looking insights from Noah's CIO report for the first half of the year, our clients achieved strong investment returns with over 95% of our black card clients realizing cumulative gains by the end of the quarter. After several years of developing and expanding our overseas business, we have established a comprehensive robust product matrix, including VC and PE funds, private credit funds, infrastructure funds, hedge funds, global mutual funds, Hong Kong and U.S. equity structured products and wealth inheritance solutions such as insurance, trust, and residency planning. These diverse offerings have all been fully integrated, providing clients with one allocation capabilities and investment expertise needed to solidify their asset base and enhance wealth resilience amid uncertainty. We are pleased to report that a strong operational and financial performance during the second quarter. Net revenues reached RMB 630 million, with income from operations increasing by 20.2% year-over-year and non-GAAP net income surged 78.2% year-over-year and 12% sequentially to RMB 189 million. Net revenues for the first half of 2025 were RMB 1.2 billion, generating non-GAAP net income of RMB 358 million. Our revenue mix continues to improve, driven by growing investment product revenue. Specifically, one-time commissions from investment products have reached their highest point in recent years, making up over 30% of one-time commissions revenue. Domestically, our strategy is focused on enhancing incentives for relationship managers, reactivating dormant clients, and acquiring new clients. Overseas, we are expanding our teams of relationship managers and growing our local client base. In the first half, we added 627 new qualified investors as clients. We are making progress in optimizing our internal organization with each business unit creating an end-to-end process from product development to sales. Additionally, we are increasing cross-selling activities through improved client service and boosting overall client activity and engagement. We are committed to investing in our platform and capabilities, utilizing AI to empower relationship managers and clients while increasing client participation. At the same time, we are developing our booking centers and digital platforms to enhance cross-border synergies for client outreach, product integration, digital infrastructure, and risk controls, establishing a strong foundation for sustainable future growth. Now, I will discuss the performance and operations of each business unit. Net revenues from overseas reached RMB 297 million in the second quarter, making up 47.1% of total net revenue, with overseas investment products continuing to show solid growth. Our overseas relationship manager team grew to 152 by the end of the quarter, representing a year-over-year increase of 34.5%. The ongoing enhancement of our capabilities and deepening expertise led to strong investment returns for clients during the quarter, supporting robust growth in both overseas transaction value and net revenues. Net revenues from overseas wealth management were RMB 129 million during the quarter, down 14.1% year-on-year due primarily to our ongoing strategic focus on investment products, which resulted in a decline in revenue contribution from the distribution of insurance products. Overseas AUA grew 6.6% year-over-year to USD 9.1 billion and now accounts for 27.6% of total AUA, primarily driven by the increase in distribution of private equity funds. Transaction value of U.S. dollar-denominated private market products in the first half of the year increased by 70.3% compared to the same period last year, reaching USD 765 million. Within U.S. dollar private secondary products, transaction value of hedge funds and structured products more than doubled year-on-year to USD 424 million. We continue to expand and deepen our relationship with reputable products and investment partners globally and have now become rapidly one of the top 3 distribution channels in Asia for flagship products from leading GPs such as Aris and Hamilton Lane. As for the second quarter, the number of registered overseas clients now exceeds 18,900, a year-on-year increase of 13%, with the number of active clients now over 3,600, a year-on-year increase of 12.5%. Net revenues from overseas asset management during the second quarter were RMB 108 million, up 11.5% year-over-year, driven primarily by growth in AUM and recurring service fees. Overseas AUM was USD 5.8 billion, up 7.4% year-over-year and accounting for 28.5% of total AUM. Net revenues from overseas insurance and comprehensive services during the quarter were RMB 59 million, an increase of 91% year-over-year. The Hong Kong insurance market remains highly competitive. However, our quoted big clients' large policies strategy and cost-effective customized products for major clients is delivering strong results in this environment with average overseas insurance policy size continuing to increase. Additionally, Gopher's team of commission-only brokers and external channels has already generated over RMB 20 million in revenue, injecting such vitality into new client acquisition. Net revenues from Mainland China during the quarter were RMB 333 million, a year-on-year decrease of 1.3%, but a sequential increase of 7.3%. The recovery in the Asia market this year has driven a substantial improvement in the performance of our domestic business. Renminbi-denominated private secondary products continued to gain strong growth momentum in the second quarter, which partially offset a decline in recurring service fees from existing Renminbi private equity products. Notably, the rebound in the Asia market increased investor confidence in the secondary market and is fueling growth in our domestic public securities business. Net revenues from domestic public securities during the quarter were RMB 132 million, a year-over-year increase of 12.8%. Transaction value of Renminbi-denominated secondary products continued their strong momentum with transaction value for private secondary products in the first half of the year, reaching RMB 6.1 billion, a significant year-over-year increase of 185.3%. The rebound in the Asian market provides a favorable environment for Renminbi-denominated secondary products, enabling us to achieve continued breakthroughs in this business. Net revenues from domestic asset management during the quarter were RMB 177 million, down 10.6%. This was due to lower recurring service fees from existing Renminbi-denominated private equity products. In the primary market, Gopher focuses on facilitating exits and distribution of assets managed by the funds where it recorded RMB 800 million in exits related to private equity products. Net revenues from domestic insurance during the quarter were RMB 716 million, a year-over-year decrease of 38.7%. This was a result of our strategic decision to reduce the promotion of domestic insurance products. Looking ahead to the second half of the year, we will focus our efforts on the following three strategic priorities. First, we will concentrate on high net worth clients and actively expand our customer base. We are proactively entering mature financial markets such as the United States, Canada, and Japan to serve global Chinese clients. In these established markets, we will adopt a business partner cooperation model to attract more talent and broaden our client base. Our positioning is clear: to be a wealth management platform dedicated to serving global Chinese high-net-worth investors. Second, we will continue to enrich our global product offerings across various categories to meet the diverse needs of our clients. Our robust product portfolio enables us to provide more competitive investment solutions. In the primary market, we will expand our ecosystem partnership to develop customized investment solutions and exclusive opportunities. In the secondary market, leveraging our global investment research capabilities, we will carefully select high-quality strategies from top-tier managers to enhance our ability to deliver robust asset allocation solutions. We will also actively explore new opportunities in digital assets, pushing the boundaries of wealth and asset management to provide clients with a more comprehensive and cutting-edge investment experience. Today, we are also pleased to announce that we have selected Coinbase Asset Management as a strategic partner to establish our stablecoin yield fund. We shall expand our digital asset-related product lines and collaborate with licensed compliant institutions to capture opportunities in this rapidly growing emerging asset class. This initiative aims to open new growth engines for our clients, global asset allocation strategies with future expansion opportunities in compliance digital asset fund management. Third, we remain committed to enhancing operational efficiency while pursuing growth. We continue to integrate AI across our operations to empower relationship managers, clients, and middle and back office staff. These initiatives have significantly improved the client experience and reduced operational costs. Amid the vast opportunities presented by the global expansion of Chinese enterprises, we aspire to have Noah's Ark present wherever there are Chinese clients around the world. I will now pass over to our CFO, Grant, to go over our financials in more detail. Thank you all.

So warm greetings to everyone joining us today. I'm very excited to announce our financial performance in the second quarter of 2025 that reflects steady progress and resilience across our operations. Supported by revenue growth, disciplined cost management and investment income, we achieved non-GAAP net profit of RMB 189 million. This represented 78.2% year-over-year growth and a 12% sequential increase. For the first half of 2025, non-GAAP net income totaled RMB 358 million, a 33.9% year-over-year increase. More importantly, management is very encouraged by the structural improvements in our operations this quarter. We achieved substantial growth in revenues related to investment products with a 92% year-over-year increase and a 30.6% sequential rise in that category, driven by clients' uplifting investment sentiment, attributed to a wider selection of quality investment solutions that we provided to our clients, both onshore and offshore. In terms of transaction values, RMB-denominated products recorded a 35.0% year-over-year growth and 8.3% sequential increase, while USD-denominated products grew 5.2% year-over-year and 3.8% sequentially. As a result, our total transaction values reached RMB 17 billion, reflecting a 17.7% year-over-year increase and a 5.4% sequential rise. For the first half, commissions from investment products grew by 95.9% year-over-year with transaction values for RMB-denominated private secondary products standing out, growing by 185.3% year-over-year to RMB 6.1 billion. Similarly, U.S. dollar private secondary products, excluding cash management products, grew by an impressive 282.2% year-over-year to USD 424 million despite volatility in U.S. equity markets. So in this context, one-time commissions contributed RMB 155 million in the second quarter, marking a 14% year-over-year increase. Recurring service fees and performance-based income remained steady at RMB 406 million and RMB 23 million, respectively. Total net revenue reached RMB 630 million for the quarter, reflecting a 2.2% year-over-year increase and a 2.4% sequential growth. Breaking revenue down by region, overseas net revenues continue to drive growth, recorded RMB 601 million in the first half of 2025. Not only did it account for 48.3% of total net revenues in the first half of the year, but over 85% of newly generated revenue originated from offshore products. In the meantime, we continue to stay conscious of costs and expenses. Total operating costs and expenses for the first half were RMB 897 million, down 11.2% year-over-year. Key reductions were achieved in managing a more optimal headcount structure while maintaining investments in growth areas. Total OpEx, excluding total compensation and benefits, declined by 9.3% year-over-year. This efficiency enabled us to achieve an operating profit of RMB 347 million for the first half, up 35.8% year-over-year with an operating profit margin of 27.9% compared to 20.2% in the same period last year. For the second quarter, operating profit was RMB 161 million with an operating margin of 25.6%. Net income for the first half was RMB 322 million, representing a 39.4% year-over-year increase despite the booking of about RMB 40 million in withholding taxes related to dividends distributed during this period. As of June 30, 2025, total AUM stood at RMB 145.1 billion, reflecting some pressure from redemptions of RMB-denominated products. However, U.S. dollar-denominated AUM grew by 7.4% year-over-year to USD 5.8 billion, while U.S. dollar-denominated AUA increased by 6.6% year-over-year to USD 9.1 billion, demonstrating our ability to continue to capture share of clients' U.S. dollar investment allocations. At the end of the second quarter, our overseas new client base continued to grow with the number of overseas registered clients increasing by 13% year-over-year and 4.2% sequentially. The total number of overseas Diamond and Black Card clients now exceeds 1,640. Overseas active clients reached 3,650, up 12.5% year-over-year and 7.9% sequentially. Notably, we saw meaningful growth in our new golden clients that is qualified investors or qualified professional investors by definition, increased by 627% within the first 6 months of this year. Although it takes time for brand-new clients to mature into the core client group, namely Black and Diamond clients, we're very confident that with a continuous global expanding mindset, the company is steadily gaining new market share worldwide. Our balance sheet remains sound. As of June 30, 2025, combined cash and short-term investments totaled RMB 5.4 billion, and we continue to carry zero interest-bearing liabilities. Additionally, net investment gains for the quarter exceeded RMB 60 million, reflecting the realization of potentials from our past strategic investments. In closing, the second quarter of 2025 represents a meaningful step forward for our business in the right direction, marking an important milestone of restructuring efforts and confirming the positive impact. Enhancing shareholder returns remains our priority, and I'm pleased to share that we have returned over RMB 1.8 billion cumulatively to shareholders through dividend payments and share buybacks for the past 3 years. The Board and management are committed to disciplined capital distributions to our shareholders in the long run. Moreover, with a book value per ADR of USD 18.35 per share, we believe that the current share price remains undervalued, offering shareholders an attractive opportunity. Looking ahead, we remain focused on enhancing shareholder value, driving sustainable growth, and achieving long-term success. Thank you, shareholders, for your trust and support. We'll now open the floor for questions.

Our first question today will come from Helen Li of UBS.

Let me translate my question. This is Helen from UBS. I've got two questions. The first is, could you please provide more details on the private credit digital yield fund, including the strategic considerations behind this move, the management fee structure, and client interest in such products? Additionally, are there any other plans in the cryptocurrency field besides the stablecoin yield fund? My second question is, what was the CIO house view regarding client asset allocation? How would you describe the current client investment appetite, particularly the demand for offshore products compared to onshore products? Do you anticipate a strong growth momentum in investment product distribution to continue into the third and fourth quarters?

Thank you, Zander. This marks the first collaboration in the market to introduce the stablecoin yield fund. As mentioned in our CIO report, we've been highlighting the significance of helping our clients diversify their assets into stablecoin, a new asset class we've been focusing on for the past two years. We're proud to announce our partnership with Coinbase to launch our inaugural fund. We also stress the importance of prudence in our role as a wealth management company, which is why we chose Coinbase as our partner at this time. Regarding the fee structure, it will be consistent with other investment products that we offer to our clients, with no significant differences among the various types of products. Regarding your questions about the investment products that clients may have high interest in, we have seen in the first two quarters this year, we saw that clients are having more interest in deploying their assets and wealth into investment products. The reason behind that, we believe, is that in the previous years during 2020 to 2022, because of the geopolitical situation and other noises in the market, investors became more cautious. However, they are also learning as well. After a few years of learning and adapting to the current environment, we believe that clients are now more confident and clear about what they should buy and they still need to deploy their assets because, after all, wealth management should be long-term planning instead of just a very defensive investment or very short-term investment. So when client incentives are going upward, domestically, mainly it's driven also by the Asian market. But being a very prudent organization, we have been observing the secondary markets in China if it's overheat at the moment because it has been driven by money flows obviously. However, overseas, we've seen more options. Particularly, we have seen the opportunity among the overseas Chinese because they have wealth in the overseas market but may not receive as good service as they could have in the domestic market. They may lack information in different investment products. So what Noah has been doing is partnering with prominent GPs globally and trying to provide more information to our clients when they are trying to deploy their assets. As we've emphasized in our CIO report, it's always about the balance between growth, return, and risk. We will always follow our principle as outlined in the CIO report, which is the investment triangle that we try to use different assets to balance risk and return. The new theme that we introduced in this round in our CIO report is deflation caused by technology. We believe that's a major reason why we've been advising our clients to invest in AI or Coinbase-related investment products.

So from our Chairwoman, she emphasized that with Coinbase in this world, we must emphasize that risks could still be very high. That's why, being a responsible wealth management company, we've been emphasizing compliance while we are looking at innovation. So this round, we chose a partner that is widely agreed upon for their compliance standard. As mentioned in our CIO report, we have been suggesting our clients invest around 1% to 5% of their total assets in Coinbase-related products. Most importantly, we believe that Noah could be the bridge to provide compliant products in this area. Last but not least, this isn't the only product that we launched. We will continue to study and launch more related products depending on our clients' needs. We believe that, over time, they will learn more about this asset class, and they should have more demand in this area.

Helen, do we answer your question, Helen?

Yes, thank you.

Next question, please.

Our next question today will come from Peter Zhao of JPMorgan.

This is Peter from JPMorgan. I have two questions. First, we wish to understand what's the third quarter operating trend for Noah. We have seen there's a strong pickup in domestic investment sentiment lately. We wish to understand what Noah has observed about the investment sentiment on your platform and the wealth management product transaction volume trend in the third quarter to date and how does this compare to the second quarter? My second question is about the overseas expansion. We noticed that management has mentioned plans to expand into the U.S., Canada, and Japan. We wish to understand how the progress is so far and what to expect in the second half of this year and next year? When do you expect this new market to meaningfully contribute to your client growth and revenues? We also wish to understand how this overseas expansion plan will impact our operating expense trend going forward.

So Peter, regarding your question about the investment sentiment looking forward to the third quarter, we have to say that during different events that we've been organizing when we met with clients, we have seen strong interest from them. Unlike in the previous period, where they would be more prudent and prefer lower-risk return or lower-risk products, we have seen that, because of the Asian market and the U.S. interest rate environment, they are now showing more interest in investing in different types of investment products. When we talk to clients, one reflection we've been collecting is that we've been able to provide diversified products with different GPs. We set up the product center in the U.S. and have been able to connect with more reputable GPs broadly, allowing us to provide a better product matrix to our clients. However, we must emphasize that, as a wealth management company, the core of wealth management should be long-term return. It’s not about any short-term environment changes or client feelings about the market or any sentiment-driven investments.

About our global strategy, as mentioned by the Chairwoman, we have been developing our overseas market over the last three years. What has been achieved must be the product matrix, which is one of the very important criteria we have already accomplished. The next step is more about branding. We serve Chinese globally. Currently, we don't see many other organizations able to serve Chinese across different legal jurisdictions. That we believe is going to be our very committed target going forward. In terms of strategic planning, we have three booking centers in the U.S., Hong Kong, and Singapore. For non-booking centers such as Japan and Canada that we've already mentioned, it’s going to be asset management for clients using the Olive line. We believe that Noah's strength is we have the trust of course with our clients. With this trust, we have seen that some of our clients from domestic markets are already moving to overseas markets, which should be our strong client base when developing our overseas market.

I'll take the third question regarding operating expenses, Peter. We have reached a rather comfortable structure in terms of frontline and mid-back office. After a couple of years of transition, we are pretty comfortable with the mix. We are looking to maintain this structure. However, not excluding some short-term spikes when we bring new talents into new markets or business segments. But overall, the big picture comp and benefits-wise, we are pretty comfortable. Selling and marketing expenses do have seasonality. We are typically a little slower after the Spring Festival than summer vacation. However, we have traditionally busier schedules coming up in the third quarter towards the end of the year. On an annual basis, I'm also comfortable in terms of maintaining a similar range of operating margin. Peter, does that answer your question?

That's very clear.

The next question will come from Xian Chon Zhang of CICC.

I have two questions. The first one is other operating expenses decreased over 80% year-over-year, and income from equity in affiliates increased to over RMB 47 million. Could you please explain the reasons behind and future change? The second question is the cash balance remains high at RMB 3.8 billion. So do you have any dividend plan?

Sure, Ms. Xian. I'll take the question for the two fluctuations. The overall impact, especially the RMB 47 million, actually comes from some of the strategic investment portions that we have as the co-GP investment in the past. Some of the companies became successfully listed. The total market value in the fund had a markup that quarter, contributing to a positive impact. We're optimistic that will maintain a rather strong performance and obviously feed back to our balance sheet and P&L. In terms of dividend scheme, I think the only thing I can say on behalf of management and the Board, as we mentioned in the earnings release, we're committed to returning some operational results to our shareholders. We have cumulatively distributed a rather large amount, likely ranking very high among Chinese ADR companies with RMB 1.8 billion to our shareholders, and another full payout of 2024's net profit. In 2025, while I can't say this prematurely, we're pretty confident that we will probably be returning or distributing our operational results to our shareholders on a similar scale this year.

At this time, we will conclude our question-and-answer session, and I'd like to turn the conference back over to management for any closing remarks.

Zander, anything to add?

Thank you very much, everybody, and hope to hear from you in the subsequent calls. Thanks.

Thanks, everyone. Please feel free to contact the IR team if you have any further questions. We will be conducting NDR in the coming weeks, so feel free to reach out if you wanted to talk to any of us. Thank you very much for today.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines.