Earnings Call Transcript - WDH Q1 2022

Operator, Operator

Good morning, ladies and gentlemen, and thank you for standing by for Waterdrop Inc.'s First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a Q&A session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Xiaojiao Cui. Please proceed, Ms. Xiaojiao Cui.

Xiaojiao Cui, Host

Thank you, operator. Hello everyone, thank you for joining Waterdrop’s first quarter 2022 earnings conference call. Please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities and the Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that 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 statements, except as required under applicable law. Also, this call includes discussion of certain non-GAAP measures. Please refer to our earnings release for a reconciliation between non-GAAP and GAAP. Joining us today on the call are Mr. Shen Peng, our Founder, Chairman and CEO; Mr. Yang Guang, Co-Founder, Director and General Manager of Insurance Marketplace; Mr. Hu Yao, Co-Founder, Director and General Manager of Medical Crowdfunding and Healthcare; and Mr. Kevin Shi, our CFO. We will be available for a Q&A session after the remarks. Now, I would like to turn the call over to our CEO Mr. Shen Peng. Please go ahead.

Shen Peng, CEO

Hello, everyone. Thank you for joining our first quarter 2022 earnings conference call. Since the beginning of the year, the capital markets have seen further declines amid a volatile geopolitical environment and the resurgence of COVID. The global capital markets and domestic insurance industry have undergone significant changes, prompting us to adjust our pace and promote a strategic realignment for healthier development. We are also recognizing new opportunities. Reviewing our operating results and business trends from the past two quarters, we anticipate a solid overall performance for the year. In addition to consistently building our competitive advantages, we have improved our operational efficiency and profitability, ensuring healthier and more sustainable growth for the company. As we mark our six-year anniversary since inception, I believe we are entering a new phase. We are pleased to announce that after achieving profitability on a non-GAAP basis in Q4 2021, we reached a GAAP net profit of RMB105 million in Q1 2022 for the first time. Despite the industry's downturn, we experienced positive growth with a 7.4% increase in net operating profit quarter-over-quarter. We aim to maintain this positive momentum and are confident in achieving our goal of delivering healthy and sustainable profits for the entire Waterdrop group in 2022. The competitive advantages we have developed in product design, innovation, and synergy across business segments have allowed us to remain resilient and tackle challenges effectively. The resurgence of the pandemic and the rising demand for healthcare protection solutions have also created more opportunities for providers like us, especially in online insurance. In this dynamic environment, we are dedicated to creating value for customers, strengthening our business, and improving our outcomes. To summarize, in Q1, we continued transforming our business strategy and effectively implemented our realigned strategy. Previously, Waterdrop focused on expanding its user base and total revenue while ensuring a reasonable return on investment. This approach has been validated by successes in the tech sectors of both China and the U.S. Following this model, we grew rapidly from 2016 to 2021, accumulating around 400 million users, including over 111 million insurance customers, which is essential for our business transformation. We have proactively changed our business operations, personnel, and organizational structure. Our team has shown strong collaboration and adaptability, allowing us to realign our products and operations swiftly. At the same time, we are significantly enhancing the quality of our business and expanding our insurance product offerings. We are also devoted to corporate governance and view it as a key aspect of our corporate values. We continually strengthen our internal control systems and enhance our self-assessment and compliance efforts. We have rolled out various compliance training programs to promote best practices, increase compliance awareness, and foster a culture of compliance, ensuring we operate within a rigorous corporate governance framework. Looking forward, we will actively and decisively support the industry's healthy development. We have always embraced the fundamental principle of conducting business for good and continuously improving our ESG governance. Thus, we are undertaking corporate social responsibility initiatives, pursuing sustainable development goals, and encouraging all stakeholders to share the responsibility for sustainable development. Earlier this year, we became a member of the China Charity Federation and more recently joined the United Nations Global Compact, collaborating with over 16,000 companies in 161 countries to shape a sustainable future. Earlier this month, I participated in the 2022 Leaders’ Summit of UNGC on behalf of China's insurtech sector, sharing insights on best practices for local enterprises, multinational corporations, and stakeholders as we move toward the 2030 Agenda for Sustainable Development. The ongoing pandemic has posed significant challenges in China, and we are proactively working to ease its impact on our community. As a leading charity platform, Waterdrop Charity has redirected resources and provided assistance in Shanghai and other areas for epidemic control. We also partnered with charities to donate over RMB1 million in supplies to those in financial distress, the elderly living alone, and frontline workers. Our senior management, including myself, has volunteered to help combat the pandemic. Since the pandemic began, we have collaborated with several charities and non-profits to raise over RMB65 million for anti-pandemic initiatives. Receiving appreciation letters from different groups has not only encouraged us but also inspired hope that we can lead by example and motivate others to support society. We remain committed to our mission of using internet technologies to make insurance protection more inclusive and accessible. We continue to leverage our strengths and digital service capabilities to achieve our sustainable development goals and advance the United Nations Sustainable Development Goals. For instance, with respect to no poverty, we are involved in China's multi-level medical insurance system to mitigate the risk of critical illness causing poverty. For promoting good health and well-being, we are exploring government-backed health protection models that aim for inclusive insurance. Regarding industry innovation, we are concentrated on advancing the insurtech sector through technological innovation. We maintain a strong cash position, and my team and I are optimistic about the future. As of March 2022, our cash, cash equivalents, and short-term investments totaled about RMB2.92 billion. We continue our share repurchase plan while simultaneously exploring innovative investment opportunities in the insurance and healthcare sectors. By the end of March, we had repurchased a total of 3.09 million ADSs and will continue to buy back shares judiciously. These repurchased ADSs will be used for our employee incentive plan in the future. In this evolving environment, as a leading player and innovator in China’s insurtech and online healthcare market, we are committed to pursuing higher-quality development and creating value for our customers and shareholders. In terms of innovations, we aim to enhance user value sustainably while maintaining our enthusiasm for technological advancements. We are confident in the long-term prospects of China's healthcare insurance market and our own business. Looking ahead, we are prepared to grow stronger in future economic cycles and collaborate with more technology partners, talent, investors, and associates. Now, I will turn the call over to Yang Guang to discuss the development of the Waterdrop Insurance business for Q1.

Yang Guang, Co-Founder, Director and General Manager of Insurance Marketplace

Thanks, Shen Peng. China’s insurance industry has experienced a period of profound adjustment in Q1 due to various factors, notably the COVID resurgence and the equity market shake-up. Publicly traded insurers suffered setbacks on both their assets and liabilities. In Q1, listed Chinese insurance companies recorded an average decline of 3.2% in new business premiums and an average decrease of 36% in net profit year-over-year. The new business value also reduced by more than 30%. While demand for individual insurance remained sluggish, the growth from insurance agents was also weak, hindering traditional insurance business operations that rely on face-to-face interactions. Consequently, sales of protection products, primarily health insurance, have been especially slow to recover. This can be partially attributed to the high base for comparison from last year triggered by speculative sales of critical illness health insurance. Meanwhile, there is a clear industry trend: insurers adopting the less efficient traditional sales model are facing more challenges, while those capable of pioneering diversified and innovative channels are enjoying a faster recovery. Indeed, the business performance of top-tier players has shown some signals of stabilization following the recent adjustment period. Against this industry backdrop, in Q1 2022, we continued to execute the strategy we set out in the third quarter of last year, focused on reforming our business model and optimizing our operations. This has helped us achieve significant improvements in our operational efficiency and other business metrics. In Q1, we recorded an adjusted net profit of RMB127 million, increasing by over 2,000% quarter-over-quarter. For the first time, we achieved a net GAAP profit of RMB105 million in this quarter on top of a non-GAAP profit in the previous quarter. I will now walk through our insurance business updates in three aspects. Firstly, regarding the ongoing progress with our business model transformation. In Q1, we optimized and upgraded our operating system for cross-platform, multi-product supply, and multi-service models. By revamping transaction processes and enhancing the accuracy of matching customer needs with appropriate insurance products, our operating performance improved in Q1. While keeping the one-year customer lifetime value (LTV) at a relatively high level, our one-year ROI increased by 55% in Q1 compared to Q4 last year. Our long-term insurance business has aligned with the advocates of regulators and switched to an integrated sales model of Internet plus telemarketing, promptly adding products eligible under this model and starting to provide differentiated services to customers sourced from various channels. We also optimized our algorithm models based on user group profiles. As a result, in Q1, the average premium per lead for long-term insurance increased by 4%. The average productivity of long-term insurance from our in-house consultants reached two times the industry average, boosting the net income of our long-term insurance business by 18% in Q1 quarter-over-quarter. We consistently strengthened our user lifetime management by utilizing various scenarios on cross-marketing platforms such as WeChat official accounts, WeChat mini-programs, Enterprise WeChat accounts, and the Waterdrop Apps, achieving breakthroughs in user acquisitions on these platforms. For instance, the number of Enterprise WeChat contact users increased to 6.5 million, and the number of active app users rose by 10% quarter-over-quarter. Short-term insurance premiums originated from these private traffic sources were approximately RMB30 million in Q1, up by 60% quarter-over-quarter. Meanwhile, leveraging innovative operating scenarios, we reactivated many dormant users, which helped improve our user engagement rate, repurchase rate, and policy renewal rate. In Q1, our user repurchase rate for short-term products stood at 73%, up by 16 percentage points, while the short-term insurance renewal rate reached 90.8%, up by 18 percentage points compared to Q4. Our proactive exploration of various customer acquisition models has started to yield fruits in Q1. We consistently refined our insurance content output capability, leveraging all forms of marketing tools, including graphic ads, videos, and live streaming, successfully acquiring many high-quality new insurance customers across social media platforms and providing services to them through our financial planners. During its pilot phase in Q1, this model generated millions in premiums. Going forward, we will continue to expand our insurance content generation and financial planning teams, aiming to achieve more significant business growth. Additionally, leveraging our highly efficient long-term insurance user conversion capability, we collaborated with many external traffic partners to convert leads into long-term insurance sales. Secondly, in terms of promoting product diversification and business innovation, we launched seven cost-effective versions of Million Medical Insurance products, including one tailored for patients with chronic diseases and another specialized for patients with kidney diseases. We also upgraded one of our Million Medical Insurance products to include CAR-T therapies in coverage. For critical illness products, we unveiled a series of multi-level critical illness protection plans for users of varying age groups and price sensitivities. For instance, we developed the Waterdrop CI Policy Mini-Version in collaboration with our insurer partners, lowering the purchasing threshold by focusing on core risk coverage, allowing more users access to an affordable CI policy. Meanwhile, due to the rising popularity of ice and snow sports from the Winter Olympics, we introduced a sports accident insurance policy covering liabilities for accidents in skiing and other high-risk sports. In Q1, the premium contribution from our cost-effective innovative insurance products increased significantly, and the sales conversion rate improved by more than 30%. Looking ahead, we aim to develop more cost-efficient products for different categories. For customers with illnesses, we've launched a customized product against breast cancer recurrence and an inclusive health insurance product named PuHuiBao for individuals with illnesses. Both products have achieved strong initial sales. Furthermore, we have made significant strides in our O2O brokerage business. In Q1, we recruited more workforce and built a sales team of over 400 individuals, including directors and sales personnel, and our product offering has reached approximately 200. This sales team generated total premium income of over RMB10 million in Q1, up by 150% quarter-over-quarter. We have empowered the team with our vast online customer database and technological capabilities, helping them improve customer acquisition and sales performance. Following the launch of our O2O brokerage services, the LTV contribution of our existing online users converted to offline services increased by 50%. Going forward, we will enhance our customer segmentation and user conversion tools to gradually improve our brokerage team’s capabilities and unlock value from our existing customers. Additionally, we are exploring distinct offline brokerage service models in various regions and cities to expand our geographic footprint and user outreach. Thirdly, to talk about strengthening our robot platform capabilities and exploring new models to empower the industry. In Q1, we ramped up our insurance robot platform and achieved key breakthroughs in our intelligent chatbot capabilities. We made significant advancements in upgrading our sales robot for short-term insurance products, particularly in user intention recognition and human voice simulation, improving accuracy in detecting user intentions. This functionality allows the robot to identify potential customers more effectively and transfer inquiries to our insurance consultants, who can then provide more in-depth services to enquirers. Additionally, we launched our proprietary outbound calling robot plus customer service business model in January. This, combined with our online marketing and telemarketing capabilities, resulted in a 60% increase in total insurance premiums in March compared to January. Recently, we unveiled our first digital staff, Bangbang, a human-like virtual employee developed based on our business scenarios and powered by AI technologies. Bangbang is already knowledgeable about more than one hundred Waterdrop insurance products, including product introduction, insurance coverage, renewal processes, and claim settlement processes. Thanks to its semantic understanding feature, Bangbang can recommend solutions for our online insurance consultants in real-time, enabling them to provide feedback to customers with higher accuracy and greater responsiveness. Additionally, Bangbang can assist our online insurance consultants with tedious and repetitive tasks, such as data processing, online user management, and customer services, leading to reduced response times and improved response quality. Our analysis shows that Bangbang processed 86% of the user sessions, achieving a high intention recognition accuracy rate of 97%, which has liberated 37% of customer service manpower. Our next goal is to enable Bangbang to independently complete tasks for more complex and interactive scenarios and play a vital role in sales inquiries, underwriting reviews, risk control, and claims settlement. Currently, we are well-equipped with Robotic Process Automation and Session Initiation Protocol capabilities, which serve as a solid foundation for us to export our technology to the industry. Several companies have confirmed their interest in advancing cooperation with us, and two are now at the stage of technical integration, with go-live expected as early as Q2. These technology export projects are anticipated to generate tens of millions of RMB in premiums this year. Moreover, we are exploring operating agency projects to empower insurance companies in their digital customer management capabilities by providing them with comprehensive, one-stop user operation solutions covering online customer acquisition, existing user management, and user conversion in private domains, as well as offline agent empowerment, thereby promoting the overall digital operational capability of the insurance industry in China. In conclusion, we started Q1 of 2022 with remarkable progress in operation, innovation, and technological capabilities. We are highly confident in the long-term fundamentals of China's insurance industry. We will firmly proceed with our strategies while actively pursuing new business innovations. In this transition period of the insurance industry, we strive to complete our business transformation and achieve an overall improvement in our operational capabilities as soon as possible. That summarizes the insurance business update, and let me hand over to Mr. Hu Yao for updates on our Medical Crowdfunding Business, Healthcare Business, and Technology.

Hu Yao, Co-Founder, Director and General Manager of Medical Crowdfunding and Healthcare

Before we start, let me give you an update on our Medical Crowdfunding business. Despite the resurgence of COVID-19, our Waterdrop Medical Crowdfunding business continued to grow steadily, and we remain committed to serving patients during this challenging time. By the end of Q1, we had a cumulative donor count of 403 million, which helped 2.5 million patients with total funds raised amounting to RMB50.9 billion. Now, let me discuss the progress we made in our patient recruitment business. In Q1, our Yifan platform enrolled over 50 new clinical trial programs by collaborating with leading innovative pharmaceutical manufacturers in China and around the globe, including Chia Tai Tianqing, CSPC, and Innovent. By utilizing our strong project delivery capabilities and our ability to expedite CRO clinical trial processes, we not only maintained a steady inflow of new orders from existing pharma partners but also attracted prominent domestic and international pharmaceutical companies such as Bayer, Fosun Pharma, BeiGene, Junshi, Shanghai Pharma, BIOCAD, and Kelun to start long-term partnerships with us. In Q1, we successfully recruited over 500 patients for clinical trials, showing solid growth compared to the previous quarter. Let me provide two examples of our progress. First, through our strategic partnerships with Chia Tai Tianqing and CSPC, we completed over 20 clinical trial projects, significantly speeding up their R&D efforts. Second, in a collaboration with Henlius, we enrolled over 50 candidates who needed financial assistance and were willing to participate in Henlius’ key clinical trials within just six months, which greatly enhanced its R&D efficiency and trial progress. As we continue to expand our focus on patient recruitment, we have built valuable resources with our partners that support the robust and sustainable development of other business areas. Meanwhile, we intend to maximize our competitive edge in both the crowdfunding and patient recruitment sectors, exploring more CRO services and developing additional high-value offerings for new drug R&D. Now, moving on to technology innovation, we have increased our investment in technology by optimizing the pre-and post-processing algorithms for our speech-to-text software to minimize surrounding noise, thereby enhancing the accuracy of our ASR technology and intention recognition capabilities. Additionally, our R&D team has conducted incremental pre-training on our models through industry data analysis, tailoring them for our specific use cases and improving their effectiveness. Our customer service chatbots can now address over 80% of user inquiries, reaching an intention recognition accuracy rate of over 90%. To improve the transition from chatbot to manual customer service in real-time, we developed a pioneering phone call loss control model based on our manual plus machine coupling system, enhancing salesforce productivity and user experience. Regarding industry development, we have intensified our efforts to share our AI capabilities with traditional insurance partners and other online insurance platforms, assisting them in enhancing customer service and optimizing sales lead use. In terms of patient recruitment for clinical trials, we are utilizing an event extraction algorithm to obtain patient data such as medication and surgical history, and pathological analyses from unstructured documents. This data supplements manual collection and provides medical staff with references to assess whether a patient is in the required window period. So far, the algorithm has effectively extracted the medical histories of patients with liver and gastric cancer, improving operational workflow efficiency by around 30%. We also implemented an underwriting assistant tool for pre-reviews of customer groups with health issues, aiding in screening insurance products for suitable customer qualifications while selecting the most favorable options. To enhance the sales process and user experience, we have applied AI algorithms to automatically extract data from various non-standardized disease questionnaires, standardizing this information to create a structure compatible with our underwriting review platform’s operational logic. This significantly boosted product allocation accuracy and efficiency in recommendations. For claims processing, we have enhanced data extraction accuracy from claim application forms, including names, ID cards, and bank account numbers, to above 95%. The algorithm effectively retrieves relevant structured information from bank cards and electronic invoices. This concludes my update, and now I will hand the call over to Kevin, our CFO, to discuss our financial performance for the first quarter.

Kevin Shi, CFO

Thank you, Hu Yao. Hello, everyone. I will now walk you through our key financial results for the first quarter of 2022. Before I go into details on our financial performance, please be reminded that all the numbers quoted here are in RMB, and please refer to our earnings release for detailed information on our comparative financial performance both year-over-year and quarter-over-quarter. Despite the challenging external environment from the industry slowdown and macro headwinds, our net operating revenue firmed up on a quarter-over-quarter basis, benefiting from our strategic goal to reform business focusing on quality revenue. Our net operating revenue decreased by 26.6% year-over-year to RMB649 million from RMB883 million, mainly due to the decrease in first-year premiums but offset by the improvement of our take rate. Following the strategic realignment in Q3 and Q4 last year, we have observed positive indications for revenue recovery, demonstrated by a quarter-over-quarter increase of 7.4% in Q1. Our take rates have stabilized around the 34% level, driven primarily by quality enhancements in our insurance business. Operating costs and expenses for Q1 decreased by 60.4% year-over-year to RMB532 million. On a quarter-over-quarter basis, operating costs and expenses further decreased by 21.5%, demonstrating that our cost control measures have had a significant effect, laying a solid foundation for our high-quality growth down the road. In Q1, we remained highly disciplined in cost control, including spending reductions, improving traffic acquisition effectiveness and ROI, optimizing our organizational structure, reducing redundant headcount, and enhancing operational efficiency. To break it down, operating costs were RMB155 million, a decrease of 48.5% year-over-year, mainly due to a decrease of RMB39 million in professional and outsourced customer service fees, a decrease of RMB35 million in personnel costs, and a reduction of RMB77 million associated with the cessation of the Waterdrop Mutual Aid business compared to last year. On a quarter-over-quarter basis, operating costs decreased by 21.4%. Sales and marketing expenses decreased by 75.6% year-over-year from RMB837 million to RMB204 million for Q1 2022. The decrease was primarily due to a reduction in marketing expenses to third-party traffic channels by RMB620 million, partially offset by an increase in payroll and related expenses for employees involved in sales and marketing functions. Again, we have realized satisfactory results in controlling our expenses as we promised starting in Q3 last year. On a quarter-over-quarter basis, sales and marketing expenses still decreased by 15.2%. General and administrative (G&A) expenses decreased by 15.9% in Q1 to RMB102 million year-over-year and by 31.4% quarter-over-quarter, mainly due to a decrease in impairment of RMB27 million for receivables and prepayments and a decrease of RMB16 million in personnel costs and share-based compensation expenses compared to the last quarter. R&D expenses decreased by 16.6% to RMB71 million year-over-year and decreased by 22.1% quarter-over-quarter due to the optimization of our organizational structure. In this quarter, we continued to realize non-GAAP profits of RMB127 million based on Q4 2021 and for the first time achieved a U.S. GAAP net profit of RMB105 million, compared with a net loss in the same quarter last year. Thus far, we have reinforced our last year’s financial guideline of achieving a non-GAAP profit. Going forward, we will continue our efforts in restructuring our business, enhancing revenue quality and profitability, as well as persistently instilling a rigid cost discipline. As of March 31, 2022, our cash and cash equivalents and short-term investment balance increased to RMB2,924 million, increasing RMB137 million, or 4.9%, from the end of the last quarter despite implementing share repurchases under compliance frameworks. For detailed financial data, please refer to our press release on our IR website. This concludes my part. Thank you. And now, let’s turn to the Q&A session.

Xiaojiao Cui, Host

Hi, operator. We can follow with…

Operator, Operator

Thank you. We will now begin the question-and-answer session. Our first question will come from Michael Li with Bank of America. Please go ahead.

Michael Li, Analyst

Thank you, management, for the opportunity to ask questions. My name is Michael Li from Bank of America Securities. I have two questions. First, I would like to know about the impact of COVID on our business in the first and second quarters. We observed that Shanghai and some other cities in China experienced lockdowns from March through May, which likely affected many offline insurance companies. How has this impacted our business model, and can we expect to benefit from these lockdowns? My second question is regarding the SEC's list. I've noticed that Waterdrop and over 100 other Chinese ADRs are now on the SEC's list of issuances identified under the HFCAA. This indicates that if we fail to meet PCAOB or SEC requirements within the next three years, we may have to de-list from the U.S. market. Could you share your thoughts on this and any steps we might take? Thank you.

Yang Guang, Co-Founder, Director and General Manager of Insurance Marketplace

Thank you, Michael, for the question. This is Yang Guang speaking. I'm going to answer your first question. I think the pandemic resurgence caused a temporary impact and held back the operations of our offline businesses, such as our Medical Crowdfunding business, as many patients reduced the frequency of their hospital visits. However, after experiencing the pandemic two years ago in 2020, our Medical Crowdfunding business has shown strong resilience, and it is already in a dominant position through the industry ups and downs. So the pandemic did not have a significant negative impact on our market position or business stability. Also, the COVID-19 resurgence has improved our users' awareness of the advantages of our omni-channel business model. Particularly, it has encouraged user acceptance of our online business, gradually cultivating user habits. The result is that it accelerated the development of our users’ awareness and made traditional insurance companies more inclined to rely on online channels. This will benefit the development of our omni-channel model in the long run. In addition, it provided a valuable opportunity for our O2O business to expand the salesforce and prepare for future growth. While the pandemic slowed down our offline operations, we seized this window of opportunity to recruit outstanding professionals. For instance, we established two new branches in Q1, and more new local branches are on the way. Our sales team attracted over 100 new staff members, expanding it to over 400 people. Many of these are industry veterans. The categories of products sold by this team have reached about 200. These factors directly helped increase average productivity to reach two times the industry average. This team generated total premium income of over RMB10 million in Q1, up by 150% quarter-over-quarter. That's all for the first question, and I'm going to leave the second question to Kevin.

Kevin Shi, CFO

So Michael, that about summarizes your questions. Regarding your second question, on April 28, 2022, Waterdrop filed its annual report on Form 20-F for the fiscal year 2021 with the SEC. On May 5, it was identified by the SEC under the HFCAA. About 80 other Chinese ADRs were identified as well in the same batch. In fact, as you may know, almost all Chinese companies listed in the U.S. faced this issue after filing their annual reports with the SEC. Being identified does not equate to being delisted. According to applicable rules, a company has to be identified by the SEC for three consecutive years due to PCAOB's inability to inspect the registered public accounting firm’s working paper related to the company for its shares or American depositary shares to be prohibited from trading on a U.S. stock exchange. We believe this is a regular administrative measure and a common issue faced by nearly all Chinese companies listed in the U.S. It does not materially affect the company’s operation. We have noticed that the CSRC has issued multiple statements this year signaling progress in negotiations with the SEC. At the same time, we will continue to comply with applicable laws in China and the U.S. and maintain our listing status on the NYSE. We never considered voluntarily delisting from the exchange. As of now, our business and operations are running as usual, and we are actively exploring feasible offers to protect our shareholders’ interests to the best of our ability. Hope this answers your question, Michael. Thank you.

Michael Li, Analyst

Thanks, Yang Guang. Thanks, Kevin.

Operator, Operator

Our next question will come from Qingqing Mao with CICC. Please go ahead.

Qingqing Mao, Analyst

Thanks, operator. This is Qingqing from CICC. Congrats on the impressive results first. I have only one question. Can you elaborate more on the financial guidance and how would the company balance revenue growth with profitability objectives? That's all from me.

Kevin Shi, CFO

It's a good question. Actually, it is challenging to provide a financial outlook for the full year at this point due to external factors, including COVID-19 and macro-economic uncertainties. However, considering various factors such as industry trends, the development stage of our company, and our business strategy adjustments, we will seek a balance between business growth, efficiency improvement, and cost management. We regard Q4 last year and Q1 this year as new starting points for our growth, which will serve as a solid foundation for a healthier, more resilient growth path against external factors. We expect our business to stabilize and recover gradually from this new starting point. Meanwhile, we will actively explore and innovate, pursue further progress in our healthcare business, and develop additional growth momentum in our new initiatives. Regarding profitability, last quarter we announced our goal of achieving non-GAAP operating profit for our established business for the full year of 2022, and we continue to deliver on this promise. In this release, we further provided guidance on overall profitability for our group on a non-GAAP basis for the year, on the premise that we keep investing in our established businesses and new initiatives. We have been observing positive results in cost control since Q3 last year. Although our revenue decreased year-over-year in Q1, there are signs of stabilization in this trend, and we resumed positive growth in revenue quarter-over-quarter. The competitive landscape of the insurance industry is evolving favorably for Waterdrop. Many of our peers have exited the market, improving our external customer acquisition environment. As we transform our business towards higher-quality development, we have noted significant improvements in our retention rates and various operating metrics, alongside ongoing increases in renewal and repurchase rates. All these improvements offer strong support for further sustainable growth. Looking ahead, we believe that as we continue to transform, upgrade our business model, and invest more in managing and servicing our existing users, when the next booming phase arrives, we will emerge stronger with healthier business fundamentals and realize higher-quality growth. As a top player in the industry with a large user base, compliant and robust operations, and a significant competitive advantage, we believe we will benefit more during this transition period. I hope this addresses your question. Thank you.

Operator, Operator

We are now approaching the end of the conference call. Thank you for your participation in today's conference. You may now disconnect. Have a good day.