Your lead entry number has been confirmed. You will now be joined to the conference. Excuse me. This is a conference operator. May I have your name, please? Hello. This is an operator. We are speaking privately. May I have your name, please? Your line is open. Hello? Would you please respond?

Casey Lee from Waterdrop Investor Relations.

If my player is to welcome everyone to Waterdrop's fourth quarter and official year 2024 Earnings Conference Call. All participants are in listen-only mode in our English line. As a reminder, today's conference call is being recorded. Please note that discussion today will contain forward-looking statements made under the Safe Harbor provision of U.S. Private Securities and the Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties and may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. The company does not undertake any obligation to update any forward-looking statement except as required by law. Also, this call includes discussions of certain non-GAAP measures. Please refer to our earnings release for our reconciliation between non-GAAP and GAAP. Joining us today on the call are Mr. Peng Shen, our Founder, Chairman, and CEO; Mr. Ran Wei, Director and GM of Insurance Business; Mrs. Head of Finance Department; and Mrs. Jasmine Li, our Secretary. We will be happy to take some questions in the main line at the end of the conference call. Hello, everyone. This is Peng Shen. In 2024, Waterdrop delivered solid performance across all business units, driven by our integrated ecosystem and sustainable AI investments. By fully upgrading products and services, we have established new benchmarks. In Q4, our total revenue was about $687 million. The annual revenue reached $2.77 billion, up by 5.4% year-over-year. In terms of profit, the net profit attributable to ordinary shareholders in this quarter was over $99.6 million, and the annual profit results have doubled, achieving our financial guidance to the market. The company has remained profitable for twelve consecutive quarters. I am also pleased to announce that based on our stable operation in the second half of 2024 and a significant year-over-year increase in profits with board approval, the company will soon launch its third cash dividend. The cash dividend will be $0.20 per ordinary share and $0.02 per ADS. The shareholders of ordinary shares and ADS as of the closing date of April 11, 2025, U.S. Standard Time, are entitled to the dividend. Moreover, if our business maintains healthier operations, we plan to distribute dividends semiannually to reward the support of our shareholders and investors. In addition to dividends, the company also continued to actively repurchase from the local market. As of February 2025, the company has cumulatively repurchased about 52.1 million ADS in the open market, costing approximately $104 million. We remain committed to social responsibility and sustainable development. As of the end of 2024, the Waterdrop platform has partnered with 115 public charities and holds over 15,000 charitable projects. Furthermore, we have also won many achievements in Q4, including an AESD rating from United Equator and Ching. As a milestone, Waterdrop Medical Crowdfunding has been officially recognized as a pioneer in China's medical profiling sector, following a change in legislation, and received the platform's security designation from the Ministry of Civil Affairs on December 25, 2024, becoming one of the first batch of state-endorsed online service platforms for individuals seeking financial help. Since China's Spring Festival, our deep state has sparked global attention in AI innovation. We believe the AI-powered industry will redefine productivity. As a tech-driven company, we have launched AI tools and aided by using large language models in 2024, especially in online sales and broker support. With deep sync integration, we are accelerating AITC development. At the end of today's earnings call, we will share our insights and latest breakthroughs in AI. Focused on 2025, we will be targeting business growth of 20% annual revenue growth with quarterly increments. Based on current projections, we expect financial performance in Q1 to maintain stable growth and sustain profitability. Safeguards may see strategic investments aligned with federated revenue growth. That concludes my remarks. Now I will turn it over to Xue Chao Ying for the financial update.

Before I go into details, please be reminded that all numbers quoted here will be in RMB, and please refer to our earnings release for detailed information on our financial performance on both a year-over-year and quarter-over-quarter basis. In Q4, the company delivered a very solid performance with total revenue reaching $687 million, up 4.2% year-over-year. For the full year 2024, our revenue totaled $2.77 billion. In 2024, our non-insurance business accounted for nearly 15% of total revenue. Our corresponding service fees amounted to $267.7 million, while digital clinical trial solution income reached $91.1 million, collectively reflecting a diverse revenue stream. AI-driven efficiency enhancements and refined operational management led to total operating costs and expenses in Q4 amounting to about $634 million, remaining stable compared to the same period last year. For the full year of 2024, overall operating costs and expenses decreased by 1.7% from last year. Breaking this down, in Q4, operating costs increased by 7.2% year-over-year to $323.8 million. This was primarily driven by an increase of $39.1 million in cost of referral and service fees, partially offset by a decrease in personnel costs. Sales and marketing expenses increased by 4.1% year-over-year to RMB182 million this quarter. This resulted from our strategic expansion in customer acquisition, due to an increase of $30.2 million in marketing expenses for third-party traffic channels, and partially offset by a decrease of $22.8 million in personnel costs. General and administrative expenses declined significantly to $73.7 million, down 23.2% year-over-year, mainly attributable to a decrease in allowance for credit loss and professional service fees. R&D expenses stood at about $54.3 million, a 9.3% decrease from the same quarter of last year, primarily reflecting optimized personnel cost. However, our AI investment remains unwinding. In fact, we plan to increase investments in 2025 to further strengthen our technological edge. We have sustained remarkable profitability and doubled our annual net profit attributable to our ordinary shareholders. We continue to generate positive operating cash flow during this quarter. As of December 31, 2024, our cash position was $3.67 billion, providing robust support for future growth initiatives. And this concludes our financial overview. I will now pass the floor to Jasmine Li to update our business development.

Thank you, Xue Chao Ying. In Q4, our insurance business achieved FYP of about RMB1.9 billion, representing 24.5% year-over-year growth, while showing a 7% quarter-on-quarter decrease. Insurance-related revenue reached RMB 580 million, down 1% year-over-year and 3% quarter-on-quarter, while operating profits stood at $103 million with an 18% operating margin. During this quarter, our short-term insurance FIP surged 44.2% year-over-year to $1.43 billion, driven by breakthroughs in public customer acquisition channels leveraging user insights. We introduced more inclusive short-term insurance products in this quarter, including medical plans tailored for individuals with pre-existing conditions. For long-term insurance products, FYP reached $460 million, with a slight sequential decrease impacted by the product suspension of last quarter and the holiday season in this quarter. In Q4, we optimized our team staffing while maintaining high productivity per capita. Furthermore, we sustained our efforts to enhance and diversify our long-term insurance offerings with disability income insurance, achieving an FIP of $59.9 million. The company is also continuing to develop its online planner model, which independently contributed approximately RMB90 million in FYP during the fourth quarter. For our medical crowdfunding business, as of the end of 2024, around 417 million people accumulated donations of $67.5 billion to about 3,400,000 patients through our platform. Our platform processed thousands of campaign applications and over 50,000 image submissions, with risk control remaining a top priority. To enhance efficiency, we implemented a two-model AI framework. On one hand, lightweight models now detect pixel-level image tampering in milliseconds, reducing the false positive rate from 0.3% to an industry-leading 0.1%. On the other hand, summarizing experience from the accumulative cases from the past eight years, we extracted more than 1,700 characteristics to assist medical consultants in making reasonable predictions of diseases, thereby reducing the risk of fraud and misappropriation. Following 2024's regulation update and the government official designation, Waterdrop is recognized as China's largest online service platform for individuals seeking financial help. We will continue setting standards for technology-driven transparency and user-centric operations. During this quarter, our digital clinical trial division income continued its growth, realizing a year-on-year increase of 22.9%. We collaborated with a total of 177 pharmaceuticals and CROs. Moreover, we enrolled 880 patients in initiative service for 79 new programs during the fourth quarter of 2024. In addition, the platform leveraged AI models to enhance doctor-patient service across the neuro-like health management, automatic content creation, and education. Our multiple initiatives have launched both in efficiency and user experience, ensuring compliance. This is key progress across each business line in this quarter. Next, we invite Ran Wei, the GM of the insurance business, to deliver a keynote on Waterdrop's AI-driven insurtech.

Thank you, Jasmine Li. Dear investors and analysts, it is a great honor to present Waterdrop's achievements in AI and other insurtech during the earnings conference. Waterdrop has been deploying AI since 2019, starting with machine learning algorithms, OCR, and NLP technology to optimize insurance product recommendations, risk matching, and risk control, thereby boosting online conversion rates and service efficiency. We established a series of digital infrastructure, including an intelligent marketing system, smart CRM system, and AI risk control system, enhancing user experience while strengthening our insurtech leadership. This journey also cultivated a cross-functional R&D team combining insurance expertise with AI capabilities. This transformative way Waterdrop has developed inherent insurtech competitive barriers for AI application, which can be divided into four core areas. Firstly, we have built a multi-dimensional ecosystem, facilitating text and voice interactions, digital avatars, and other innovations. AI automating calls enables seamless transactions between services while accumulating multidimensional data. Secondly, we have established a fully digitalized service chain, covering demand identification, product matching, underwriting, and claims processing. Unlike the conversational ability of general-purpose LLM, our service chain requires not only massive knowledge bases but also precise control over the entire service workflow to ensure high reliability. Currently, we handle tens of thousands of highly complex insurance inquiries daily. Over eight years, we processed private data assets in the insurance industry at a scale of 100 million, including 112 million operations data, a knowledge base of over 7,000 products, and massive structured service data entries. This real-world data is invaluable for building insurance-specific LLM. Lastly, distinct from general-purpose LLMs, Waterdrop has developed a vertical knowledge graph for insurance scenarios, combining recommendations, insights, and service conversion across hundreds of operational nodes, with specialized tools such as family coverage gap analysis algorithms, customer decision-making psychology models, and a resolution framework for customer objections. For example, our model can generate customized insurance plans in real-time based on user login duration, consultation keywords, family structure, and other features. Integrating scenarios, service, data, and knowledge ensures the rapid implementation of Waterdrop's AI solutions. While general-purpose AI struggles with hallucination, our vertical models can already deliver definite answers to our users. Overall, the combination of multiple scenarios and online data has offered irreplaceable strategic value in insurance LLM. Next, I will demonstrate how our AI has delivered measurable results. Over the past two years, we have actively adopted cutting-edge fundamental technologies while developing AI applications tailored to our business needs. I want to share some examples. Firstly, our insurance AI agent has end-to-end self-decision-making capability. It integrates the ability of professional and precise decision execution, leveraging multi-agent collaboration technology. In the medical insurance scenario, it enables fully automatic decision-making within fifteen-minute conversations. For example, a single call can automatically complete processes like understanding user needs, health risk modeling, and policy interpretation. Our AI agent can support modular agent unit collaboration in real-time and flexible transitions across health insurance, auto insurance, and other scenarios. The system rates over 7,000 products and can respond within two seconds. Our AI agent can dynamically optimize LLM algorithms by learning from the operational feedback and sales outcomes through over 100,000 daily interactions. Additionally, we continue to optimize our model through two main approaches. The first one is knowledge distillation. This method uses technology like FFT and chain-of-thought reasoning, impacting millions of insurance-related knowledge to the model, making it comparable to senior human capital tests. The second is reinforced fine-tuning of the sales strategies. We integrated deep sync and other open-source frameworks with our self-developed GRPO algorithm, increasing model accuracy by 20%. Furthermore, our AI agents can make model interactions with our users, such as real-time coordination of voice, text, and image, minimizing user waiting time. We also upgraded it with an emotion-adaptive system. It can dynamically adjust its speaking speed and modify its prompts based on semantic analysis. For example, our AI agent will slow down by 20% when interacting with elderly users. Over the past two years, our 48 LLM-related patents have been granted, with over 100 patents filed and nearly 100 AI innovations. Waterdrop is one of the first insurtech companies capable of enabling AI agents to independently close deals in complex scenarios. Next, I will show you our CTO AI application results. Following a development path from simple automation to advanced integration, our LLM applications now focus on two directions: Copilot and AI agents directly serving users. For our Copilot application, we have quality control Copilot and sales Copilot. Our quality control Copilot can replace the manual sampling of service recordings and perform text analysis with an 88% accuracy level of human force across voice and text channels, reducing frontline quality control costs by 40%, significantly improving efficiency. Our sales Copilot can enhance sales efficiency by enabling rapid summarization of client intent and tailored product recommendations. This tool automates service quality and conversion rate, empowering our human agents to better meet client needs and achieve sales targets. Regarding our AI agent, we have three different expectations, including AI health insurance agent, AI service assistant, and AI insurance planner. Our AI health insurance agent can directly serve customers via voice conversation, with a single session lasting up to fifteen minutes, outperforming junior agents' efficiency. It currently generates millions of insurance premiums per month, projected to reach tens of millions by year-end. Building on this, our AI auto insurance agent has entered daily training with two PNC insurers, with selected projects already in user beta testing. For our AI service assistant, Xiaohui, embedded in our app, this 24/7 AI assistant handles Q&A about user policies and products of interest. By 2025, we expect AI to reduce case transfer rates by 50% and improve efficiency by 50% compared to human agents. With its long-chain reasoning ability, we are developing an AI insurance planner to provide real-time, high-quality family insurance consultation and planning services, enhancing user experience and growth potential. Talking about future outlooks, in the next three to five years, along with AI technology and application trends I just mentioned, based on our industry know-how, we will further consolidate our leading position in the insurtech industry. Thank you for listening. Ladies and gentlemen, with that, we will conclude today's earnings conference call. We do thank you for joining. Have a good time.