Yuanbao Inc. Q3 2025 Earnings Call - AI-Driven Growth Propels Record Revenue and Profitability

Speaker 6: Ladies and gentlemen, good day, and welcome to Yuanbao Inc.’s third quarter 2025 earnings conference call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Ms. Stella Li, Investor Relations and Strategy Associate Director. Please go ahead.

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: Thank you, Operator. Please note that today’s discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company’s control and could cause actual results to differ materially from those mentioned in today’s press release and discussion. A general discussion of the risk factors that could affect Yuanbao’s business and financial results is included in certain filings of the company, with the Securities and Exchange Commission. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today’s call, management will also discuss certain non-GAAP financial measures.

For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. Joining us today on the call from Yuanbao’s senior management are Mr. Wei Fang, our Chairman and Chief Executive Officer, and Mr. Rui Wang, our Chief Financial Officer. Mr. Fang will deliver his remarks in Chinese, followed by an English translation. We will conclude the call with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on Yuanbao’s Investor Relations website. I will now turn the call over to our Chairman and CEO. Mr. Fang, please go ahead, sir.

Wei Fang, Chairman and Chief Executive Officer, Yuanbao Inc.: 大家好，欢迎参加元宝2025年第三季度财报电话会。本季度我们继续延续了高质量的增长态势，多项核心指标再创历史新高，总收入同比增长33.6%，达到人民币11.58亿元，净利润同比提高51.3%，至人民币3.7亿元。我们已经连续13个季度保持盈利，截至季度末，公司现金储备达人民币37.5亿元，为我们持续推进技术研发、资本运作及战略拓展提供了有力的财务支撑。这一业绩增长的背后，核心是我们在运营的各个环节精耕细作，持续优化的结果。第三季度新保单量达到800万份，同比增长41.8%，主要得益于我们持续强化的AI与数据能力。基于这些能力，我们不仅提升了对目标客群的触达的精准性，更深化了对客户需求的理解，进而反哺至产品创新与科学定价环节，构建了差异化的竞争优势。

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: Hello everyone, thank you for joining our third quarter 2025 earnings conference call. This quarter, we continued our trajectory of high-quality growth, with several core performance indicators hitting new record highs. In the third quarter, total revenues grew 33.6% year-over-year to RMB 1.16 billion. Net income surged 51.3% year-over-year to RMB 317 million. This marks our 13th consecutive quarter of profitability. As of the end of September, our cash reserves stood at RMB 3.75 billion, providing a solid financial foundation for our continued technological innovation, capital deployment, and strategic expansion. These strong results are a direct testament to our disciplined execution and continuous operational refinement. In the third quarter, we issued eight million new policies, with a 41.8% year-over-year increase. This momentum was powered by our enhanced AI and data capabilities, which have improved the precision of our consumer targeting and deepened our understanding of consumer needs.

These insights feed directly back into our product innovation and scientific pricing processes, helping us build a distinct competitive edge.

Wei Fang, Chairman and Chief Executive Officer, Yuanbao Inc.: 在产品服务方面，我们始终致力于通过科技降低保险服务的门槛。目前，我们已经覆盖医疗险、重疾险、意外险等多维产品的产品矩阵，并持续推出创新型的普惠解决方案，响应用户的多元保障需求。近日，元宝联合保险公司推出了短期重疾险，以普惠价格撬动百万保额的为核心亮点。通过一次给付加多次报销的并行模式，让保障从确诊当下延伸至后期治疗，实现保障闭环。一张保单即可兼顾安心休养加看病无忧，兼顾一次性的经济补偿和多次的医疗费用报销，为重疾险的普惠创新提供了一个全新解法。当前，我们的创新产品通过险种功能融合与分段式报销等模式，有效优化了成本结构，实现了价格下探与保障提升，显著提升了产品的性价比，更好地契合了市场对普惠保障与支付能力平衡的需求。

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: On the product service front, we remain committed to using technology to lower the barriers to insurance access. To date, we have built a multidimensional product matrix spanning medical, critical illness, and accident insurance, while continuously rolling out innovative, inclusive solutions for diverse user protection needs. Recently, we collaborated with our partnered insurance carriers to launch a short-term critical illness insurance product. Its core value proposition is high coverage at an affordable price point by adopting a parallel lump sum payment plus multiple reimbursements model. We extend protection from the moment of diagnosis through ongoing treatment, effectively creating a closed loop of protection. This single policy provides both peace of mind during recovery and worry-free medical care, combining one-time lump sum compensation with multiple reimbursements for medical expenses. It represents a novel approach to inclusive innovation in critical illness insurance.

By integrating insurance features and employing tiered reimbursement, we have optimized our cost structure to lower prices while expanding coverage. This significantly improves value for consumers and aligns with the market demand for balancing accessible coverage with affordability.

Wei Fang, Chairman and Chief Executive Officer, Yuanbao Inc.: 在行业发展方向，商业健康险已成为我国多层次医疗保障体系的重要组成部分。社会医疗保险与商业健康险的关系正迈向协同发展，优势互补的新阶段。普惠健康险对承接人口老龄化与医保压力，激活商业健康险这个巨大的增量市场将起到关键作用。其核心驱动在于满足数以亿计普通家庭未被充分覆盖的健康保障需求。我们认为，释放这一潜力的关键在于构建高性价比、体验优化、运营高效的互联网化服务模式，以此将广阔的市场潜在需求转化为实质性的增长动能。

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: Turning to the industry landscape, commercial health insurance has become the vital component of China’s multi-tiered healthcare protection system. The relationship between social health insurance and commercial health insurance is evolving into a new stage of coordination and complementarity. Inclusive health insurance will play a pivotal role in addressing the challenges posed by an aging population and alleviating the pressure on the public healthcare system, while unlocking a massive incremental market for commercial health insurance. The core driver lies in satisfying the health protection needs of hundreds of millions of underserved families. We believe that the key to unlocking this potential is to establish an internet-enabled service model that delivers cost-effective protection and optimized user experience and operational efficiency. This is how we translate the latent demand of this vast market into tangible growth momentum.

Wei Fang, Chairman and Chief Executive Officer, Yuanbao Inc.: 在智能化建设方面，我们的AI技术与数据体系已深度赋能核心运营流程，将通过自研的大语言模型深度融入风险识别、获客、产品设计、理赔处理等核心环节。我们的系统性地构建了以AI为底座的竞争壁垒，推动运营提效和服务升级。首先，大模型赋能研发部门，实现全流程智能化升级。在研发流程中，通过引入大语言模型及相关工具链，实现了从文档到代码的效能全面提升。在技术文档环节，大模型完成了超过1000篇的文档撰写。在编码阶段，我们通过MCP等工具实现了需求拆分、代码编写、单元测试、生成与智能化检测的一站式辅助。三季度期间，AI生成的代码占比近50%。

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: On the intelligence front, our tech AI technology and data infrastructure are now deeply integrated into our core operational workflows by embedding our proprietary large language model into critical functions, including risk identification, customer acquisition, product design, and claims processing. We have built a systematic AI-driven competitive mode that enhances operational efficiency and elevates the overall service capabilities. First, our LLMs are driving an end-to-end intelligent upgrade in R&D. By integrating LLMs and associated toolchains into the R&D workflow, we have achieved comprehensive efficiency gains across documentation and coding. For technical documentation, the LLM has generated over 1,000 documents. In coding, tools such as Model Context Protocol provide one-stop assistance, from requirement decomposition and code writing to unit test generation and automated validation. As a result, AI-generated code accounted for nearly 50% of new code developed in the third quarter.

Wei Fang, Chairman and Chief Executive Officer, Yuanbao Inc.: 其次，大模型赋能人工客服体系，实现智能摘要、辅助洞察与动态分析。我们在客服场景中探索性集成了大语言模型的能力，重点围绕通话总结与客服辅助的功能展开。该功能目前已嵌入人工客服工作台，可在通话结束后自动生成服务工单摘要，提炼关键信息，并生成客户诉求意图标签，以完成操作和后续处理建议。在动态方面，通过AI技术辅助核验客户身份，通过实时语音记录客户情绪变化，帮助客服人员更快地完成记录与跟进。

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: Second, our LLMs are empowering our customer service system with intelligent summarization, assisted insights, and multimodal analysis. We have integrated LLM capabilities into customer service scenarios, focusing on call summarization and agent assistant functions. Embedded within the customer service workspace, these capabilities automatically generate service ticket summaries, extract key information post-call, and produce consumer intent labels, action logs, and recommended next steps. On the multimodal front, AI technology is employed to assist in consumer identity verification, while real-time voice analysis captures consumer sentiment dynamics, enabling agents to complete documentation and follow-ups more efficiently.

Wei Fang, Chairman and Chief Executive Officer, Yuanbao Inc.: 此外，大模型赋能消费者服务引擎，推动建模与特征挖掘向智能化演进。我们在消费者全周期服务引擎中引入了大语言模型辅助建模与特征自动挖掘技术。该技术能把复杂的特征工程流程自动化和深入化，比如通过大语言模型来理解去标识化或匿名化的客户行为数据、交互内容、交易数据和产品信息，从中提取了出来有价值的特征。这样一来，可以减少人工手动设计特征的工作，利用大模型生成并筛选出有价值的信息，大幅提升建模速度和效率。

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: Furthermore, our LLMs are driving the intelligent evolution of modeling and feature mining within our full consumer service cycle engine. By incorporating LLM-assisted modeling and automated feature extraction technologies into this engine, we have been able to automate and deepen the complex feature engineering process. For instance, by leveraging LLMs to interpret pseudonymized or anonymized consumer behavior data, interaction content, transaction information, and product information, the system extracts valuable features. This approach reduces the reliance on manual feature design, allowing the large model to automatically generate and filter critical information, significantly enhancing both modeling efficiency and performance.

Wei Fang, Chairman and Chief Executive Officer, Yuanbao Inc.: 目前，保险科技与商业健康险行业正迎来政策支持与技术升级的双重机遇。一方面，在国家明确构建多层次医疗保障体系的战略指引下，社会医保与商业健康险的关系已进入协同并重、优势互补的新发展阶段。另一方面，AI技术正在深刻重塑保险行业的运行逻辑。元宝精准把握了普惠健康险市场的增量机遇。在产品端，我们精准补充，持续推出创新普惠保险的产品，降低了保险服务的门槛。在AI技术端，我们对业务全流程进行了前瞻性的布局，将AI深度嵌入产品流程决策系统，使其成为经营管理体系的一部分。推动组织不断升级，同时通过模型的持续迭代及业务数据规模的持续积累，我们能够以更高的效率与精准度去理解和服务海量用户，构建引领行业的智能化服务生态。展望未来，我们将继续以AI为引擎，推动服务模式向个性化和主动关怀方向升级，不断拓展新的增长边界。通过AI的深度化和业务数据的持续积累，我们致力于打造更具韧性的商业模式，巩固长期竞争力，为所有利益相关者创造持久的价值。

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: To summarize, the insurance technology and commercial health insurance sectors are benefiting from the dual tailwinds of policy support and rapid technological advancements. Under the national strategic guidance of building a multi-tiered healthcare protection system, the relationship between social health insurance and commercial health insurance has entered a new stage of synergy and complementary strength. Simultaneously, AI technology is fundamentally reshaping the operational logic of the insurance industry. Yuanbao is capitalizing on the significant growth opportunities in the inclusive health insurance market. On the product side, we are filling market gaps with innovative inclusive insurance offerings that lower the barriers to protection access. On the technology side, we are making forward-looking investments, embedding AI deep into our product design, operational workflows, and decision-making systems. AI has become an integral part of our management framework and a core driver of organizational upgrade.

As our models iterate and business data accumulate, we can serve a massive user base with greater precision and efficiency, building an industry-leading intelligent service ecosystem. Looking ahead, with AI as our driving force, we will continue to upgrade our service model towards greater personalization and proactive care, while exploring new growth opportunities through the deep integration of AI and the ongoing accumulation of business data. We are committed to building a more resilient business model, reinforcing our long-term competitive edge and creating enduring value for all stakeholders.

Wei Fang, Chairman and Chief Executive Officer, Yuanbao Inc.: 下面请我们的 CFO 来为大家介绍一下我们三季度的财务表现，谢谢各位。

Stella Li, Investor Relations and Strategy Associate Director, Yuanbao Inc.: Now I’ll turn the call over to our CFO, Rui Wang, to present our financial results. Thank you, everyone.

Rui Wang, Chief Financial Officer, Yuanbao Inc.: Thank you, Mr. Fang, and thank you, everyone, for joining today’s earnings conference call. I’m pleased to walk you through another quarter’s solid financial results characterized by healthy revenue expansion, optimized operational efficiency, improved profitability, and a strong and growing cash position. Our total revenues for the third quarter reached 1.16 billion RMB, representing a robust 33.6% year-over-year increase. This strong growth has primarily driven by sustained momentum across both our insurance distribution and system service revenue businesses. Turning to our revenue mix, revenue from insurance distribution services reached 373.3 million RMB, marking a year-over-year increase of 27.9%. This robust growth was primarily driven by a higher number of policies purchased on our platform, underpinned by more precise consumer targeting and enhanced marketing capabilities. System services revenues reached 783.5 million RMB, a 36.9% increase compared with the same period last year.

This growth was propelled by ongoing improvements to our AI-integrated full consumer service cycle engine, which further enhanced our marketing solutions and precise analytics services for insurance carriers. In addition, the increase reflected an expanded scope of system service offerings provided to both new and existing insurance carrier partners. Moving to expenses, our total operating expenses increased by 31.2% year-over-year to CNY 803.4 million. Operations support expenses were CNY 45.1 million, remaining broadly stable compared with the same period last year. Selling and marketing expenses rose by 23.9% year-over-year to CNY 569.6 million, as we continue to invest in our marketing capabilities to attract new consumers and retain existing ones. G&A expenses increased by 97.8% year-over-year to CNY 93.1 million, primarily due to higher personnel costs, including salary, bonus, and benefits.

R&D expenses increased by 56.8% year-over-year to 95.6 million RMB, reflecting our intensified R&D efforts and the expansion of our R&D team. These investments are essential in reinforcing our leadership position as a technology-driven online insurance distributor. As a result of our strong top-line growth and continued operating discipline, our profitability improved meaningfully this quarter. Net income increased by 51.3% year-over-year to 370.4 million RMB, with a net income margin expanding to 32% from 28.2% in the same period last year. Non-GAAP adjusted net income rose by 51.7% to 390 million RMB, representing a non-GAAP net income margin of 33.7%, up from 29.7% a year ago. We maintained healthy cash flow generation during the quarter, further solidifying our cash position.

Operating cash flow was CNY 326.1 million, and we ended the quarter with a strong total liquidity balance of CNY 3.75 billion, which increased 82.3% year-over-year to 9.7% since the end of second quarter this year. This robust liquidity provides us with ample financial flexibility to fund the business growth and pursue strategic investments. To conclude, our third quarter results once again validate the strength and scalability of our business model. Looking forward, we will maintain a prudent focus on high-quality growth, operational efficiency, and a solid liquidity position, empowering us to continue investing with conviction and to drive sustainable growth. Thank you, and I would like to open the call to Q&A. Operator, please go ahead.

Speaker 6: Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. For the benefit of all participants on today’s call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. There may be a short pause as attendees register their questions. We will now take our first question from the line of Amy Chen from Citi. Please go ahead, Amy.

Amy Chen, Analyst, Citi: Hi, this is Amy Chen from Citi, and thank you very much for the opportunity for a question. First, I want to congratulate the management on another robust quarter, both on revenue and earnings side. I have two questions. The first one being on selling and marketing expenses. We noted that as a percentage of revenue, actually, the efficiency of selling and marketing expenses has improved both year-over-year and quarter-on-quarter. I’m wondering what was the driver behind this improvement and if this has anything to do with seasonality and is it sustainable going forward. And the second one would be on.

Speaker 6: We have lost Amy’s line there. Maybe we can go on to the next question. We will now take our next question from Yue Xu from CSC. Please go ahead, Yue.

Yue Xu, Analyst, CSC: Hi, management. Congrats on your solid execution for the quarter. So my first question relates to a recent tax regulation change effective in October. So with a new 15% cap on ad spend deduction, have we seen some material impact on the overall bidding intensity across platforms? And how should we think about the future revenue growth going forward? And the second one is we have noticed some peers also expanding into public traffic acquisition. And how should we think about the margin or the customer acquisition cost going forward?

Rui Wang, Chief Financial Officer, Yuanbao Inc.: Thank you, Ruya. This is Rui Wang. I’ll take on the Q&A. My first question regarding ad trends and tax regulation. So far, we haven’t seen any material impact or changes to our ongoing business. We’ve been following it very closely as well. However, if this becomes a market-wide standard, it’ll affect the entire industry, including advertisers as well as platforms, by driving up ad costs for everyone. As advertising costs rise across the industry, we do believe that players with stronger profitability and operational efficiency and cost controls are better positioned to stand out and achieve sustainable earnings, leading to potentially market consolidation or stronger growth. On your second question regarding competition in the public domain, yes, we’ve seen our partners increase investment in external traffic, which validates the success of our business model and technological capabilities, while also underscoring the substantial growth potential of the health insurance market.

Meanwhile, the increase of external traffic by our partners serves as valuable market education, raising consumer awareness for commercial insurance because a large portion of the population still remains uninsured by commercial health plans, indicating that the industry’s ceiling is still far from being reached. Today, commercial health insurance has become an integral component of China’s multi-tier medical security system, as Mr. Fang mentioned, and the relationship between social health insurance and commercial health insurance is entering a new stage of synergy and complementary strength. In our view, the deciding factor in maintaining a competitive edge ultimately comes down to operational efficiency. With our optimized engine, we continue to grow and achieve attractive economics even at our current scale, and we will continuously train and optimize our engine, which is key to driving efficiency and maintaining our competitive edge. Thank you.

Yue Xu, Analyst, CSC: Thank you. That’s helpful.

Speaker 6: We will now take our next question from Amy from Citi. Please go ahead, Amy.

Amy Chen, Analyst, Citi: Hi, this is Amy from Citi, and thank you for the opportunity. My third question is regarding marketing efficiency. We noted that your selling and marketing expenses as a percentage of total revenue actually improved both year-on-year and quarter-on-quarter. I’m wondering, is there any seasonality in this, or what was the core driver behind this improvement? And going forward, is this level of efficiency sustainable? The second question is regarding shareholders’ return. Given our improved top-line growth as well as earnings, what are management’s thoughts on perhaps dividends or share buybacks at this point? Thank you.

Rui Wang, Chief Financial Officer, Yuanbao Inc.: Thank you, Amy. In terms of our market expenses, there is some seasonality depending on our acquisition strategy because sometimes we may want to avoid strong acquisition periods such as 2011, but we also continuously dynamically adjust our strategy based on growth targets and ROI targets. We’ve been adjusting our marketing approach in real time, and different approaches lead to effective outcomes, including potential shifts in age profile, spending power, and consumption habits of our consumer base. What we are seeing here are obviously improvements in our overall efficiency continuously over the last 13 quarters, but going forward, we believe we want to, as mentioned before, have a very balanced growth profile in tandem with our operational efficiency going forward. In your second question regarding shareholder return, we continue to evaluate best strategies in providing the best shareholder returns through various operational and capital markets opportunities.

Like you said, dividends is certainly one of them that we are considering. Thank you.

Speaker 6: Thank you. Thank you. We will now take our next question from Yuan Liao from Citics. Please go ahead.

Yuan Liao, Analyst, Citics: Thanks, management, for taking the questions, and congrats for the strong quarter results. I have two questions. The first question is about AI and with the rapid development of the generative AI and AI agents. So how do you see this impacting your products and business models? And could management share your strategic roadmap regarding future algorithm or product innovation? And the second question is about your target markets. So how do you view the current market penetration rate within Yuanbao’s target demographic, and what potential do you see for the future upside growth? Thank you.

Rui Wang, Chief Financial Officer, Yuanbao Inc.: Thank you, Yuan. So my first question, so we integrate AI capability in various aspects of our operation. As you know, on the front end for traffic acquisition, we have built a very strong engine with thousands of models and labels for each consumer, relying primarily on recommendation algorithms, which are tree-based models or GBMs. As for generative AI, we deploy them across our user acquisition journey, as well as internally, as noted by Mr. Fang, on our LLM capabilities and earnings highlight. The evolution of our AI agents and AI capabilities will play a crucial role here in both helping with generating innovation and potentially new earnings, as well as continued improvements across our business. So on the one hand, it’ll help us continue to elevate consumer experience.

On the other hand, it will allow us to continuously capture data insights, creating a feedback loop in addition to what we have already to further refine our model performance. On your second question regarding industry penetration, so looking at the industry landscape, commercial health insurance has become a vital component of China’s multi-tiered healthcare protection system. The relationship between social health insurance and commercial health insurance is evolving into a new stage of coordination and complementarity, as Mr. Fang mentioned, so we do believe commercial health insurance will play a pivotal role in addressing the challenges posed by aging population and alleviating the pressures on the public healthcare system, so as local economies grow and innovative drug catalogs for commercial health insurance are established, we believe the demand for protection will rise continuously and very naturally.

Yuanbao’s online inclusive model is actually very ideally and perfectly suited to reach these demographics that are underserved by commercial health insurance. In addition, for users who have already purchased short-term policies, they are far from reaching their protection ceiling. We see tremendous headroom for upselling and cross-selling additional products such as critical illness, accident, etc., and there’s huge potential in user purchasing policies for family members. Regarding premiums, we don’t see it alone as a key driver. Instead, our focus is on leveraging AI and big data for very precise risk assessments, as well as understanding the pain points and needs of our consumers. We believe this will enable very defined pricing, leading to a healthy and sustainable ROI.

It’s, I think, a pretty long-winded way of saying that we have a lot of internal models of calculating the current penetration headroom, and we do believe we are very, very far from reaching any level of higher penetration, but additional data analysis we can discuss further. Thank you.

Yuan Liao, Analyst, Citics: Thank you. Very helpful.

Speaker 6: Thank you. We will now take our next question from Jia Liang Yuan from Huafu Securities. Please ask your question, Jia Liang.

Jia Liang Yuan, Analyst, Huafu Securities: Hi, Yue. Thanks for taking my question. Congratulations on the strong results. I have two questions. First, regarding revenue growth, could you break down the quarter growth between new user acquisition and the higher premium per user? And looking forward, what do you see as the key driver for sustainable growth over the next three years? And my third question is about AI. Can you quantify the KPI improvements you are seeing in conventional efficiency? And will exporting these AI capabilities create new revenue streams or pricing power for the company in the future? That’s all from me. Thank you.

Rui Wang, Chief Financial Officer, Yuanbao Inc.: Thank you, Jia Liang. On your first question regarding revenue growth, so our revenue growth is driven by multiple factors. Now, for the next two to three years, we see three key drivers. Number one is market tailwind. As people become more insurance conscious, the penetration rate and growth in the health insurance sector is set to continue to increase. Second is cross-selling and product innovations to tailor to consumer needs because as we understand and analyze more user behavior data, we can recommend and innovate more suitable products. Third is our data advantage. With our growing data scale, we’re constantly refining our models to better understand and to have better efficiency and accuracy. This is how we plan to ensure sustainable and healthy ROI. But in terms of the actual breakdown, it’s a combination of multiple factors that really drives our revenue as well as our profitability.

On your second question regarding AI, so as you know, our business started off by having a very strong AI-based or machine learning team that built out our engine. So AI capabilities and data infrastructure has been very deeply integrated across the entire user acquisition process chain, but now by embedding our large language model capabilities across key functions, including risk identification, customer acquisition, product design, and claim processing, we’ve systematically built an AI-driven competitive moat that will continuously enhance operational efficiency and elevate our service quality. Now, second, through our current engine, we’re able to uncover more consumer needs in real time and week by week, month by month, and co-develop products with insurers that better meet today’s market demand, as Mr. Fang mentioned, a new critical illness product. So together with our insurance carrier partners, we launched a short-term critical illness product.

The core highlight is unlocking millions in coverage at an inclusive price point by adopting a parallel lump sum payment plus multiple reimbursement model. And so in summary, our AI capabilities have enabled us to, number one, on the product front, address coverage gaps through the launch of innovative inclusive insurance products to create and offer more value to our consumers, thereby lowering barriers to insurance services. And number two, on the technology front, establish a proactive deployment across all business processes, embedding AI deeply into product development workflow and decision-making systems to make it an integral part of our operational management framework. Now, whether this is going to create new revenue streams or unlock pricing outside, certainly from existing business model, we do believe that will help us allow us to continue to grow very effectively and efficiently.

But new revenue streams in existing business, we think it will help us expand our potential product offerings. But in terms of diversification, that’s also something that we’re actively looking at. Thank you.

Yuan Liao, Analyst, Citics: Thank you, Yue.

Speaker 6: We will now take our next question from Yingying Xu from Southwest Securities. Please go ahead, Yingying.

Yingying Xu, Chief Financial Analyst, Southwest Securities: Thank you, management, for giving me this opportunity to ask a few questions. My name is Yingying Xu. I am the chief financial analyst at Southwest Securities. First of all, I would like to congratulate Yuanbao on another strong quarter. I have two questions for the management team. My first question is about revenue growth. Looking ahead to 2026, I am curious to know what you see as the main drivers of Yuanbao’s continued revenue growth. Is it crossing marketing spend, or is it improving the efficiency of your AI models? Is it expanding cross-selling, or maybe achieving higher commission rates with shareholders? Also, how do you expect these factors to change over the next three years? My second question is about competition and brand. Compared to ecosystem players like Ping An Good Doctor, or Ant Insurance, Yuanbao is an independent platform.

I would like to know what is your strategy to strengthen Yuanbao’s brand? How will you improve customer loyalty, and how do you plan to increase renewal rates over the next one to three years? Thank you.

Rui Wang, Chief Financial Officer, Yuanbao Inc.: Thank you. Thank you, Yingying. To answer your first question, now, in terms of growth, we conduct a very holistic assessment across multiple dimensions, including traffic acquisition at scale, model efficiency enhancements, cross-selling, and tailored to very specific market conditions. So by continuously mining data and refining our modeling capabilities, we aim to maintain very sustainable profitability even as our business continues to scale. So that’s something that we’ve been very consistent about over the last couple of quarters. Now, regarding model efficiency, we’re very strictly focused on assessing and ensuring that our customer acquisition costs remain stable or trend flat at the minimum as we continue to expand and grow at a very fast scale. Now, looking ahead, we’ll continuously bolster our engine by adding or optimizing models. Our goal is to enhance predictive precision without disrupting our existing infrastructure.

Now, we haven’t provided guidance for 2026, but I guess for the remainder or for year 2025, we do believe that we’ll grow at least 30% on a revenue basis and continue to maintain a very similar and healthy profit level. Now, for your second question regarding existing ecosystem players versus how do we plan to strengthen our brand moat and enhance customer stickiness, now, first, we operate on an AI-driven engine model where insurance distribution is powered by technology. We acquire users across the full spectrum of traffic channels without relying heavily on any one, allowing the potential for a stable and scalable source of new consumers, serving as the foundation of our future consumer base.

Second, as an independent third-party insurance distributor, what sets us apart from ecosystem-based players is our capability for daily collaborative iteration across diverse teams, including big data, AI, business marketing, operation, customer service, etc. Our edge does not derive solely from core model or algorithm. Rather, it stems from a holistic iterative feedback mechanism that requires significant time accumulation to build over the last few years on a day-to-day basis. This involves very much a large part of cross-functional collaboration. So the AI team handles modeling and fine-tuning, while data team manages data governance, feature mining, business team, etc. So this integrated system, polished through daily multi-departmental collaboration, we do believe has brought us to where we are currently over the last few years. And we want to continue that operational know-how and operational excellence going forward to build our capabilities. Thank you.

Speaker 6: We will now take our next question from Xingtao Chen from CICC. Please go ahead, Xingtao.

Jia Liang Yuan, Analyst, Huafu Securities: Thank you, management, for giving me the opportunity to ask questions, and congratulations on the strong performance in the third quarter, and I have two questions for the management. The first is, the efficiency of Yuanbao’s model stands out against peers, so what’s the key drivers behind this? Going forward, is there further room for improvements in net income margin and ROI? And the second one is regarding the competitive landscape, so how does the management view the competitive landscape of the industry over the coming years? Thank you.

Rui Wang, Chief Financial Officer, Yuanbao Inc.: Thank you, Xingtao. So our ROI stems from the full digitization and automation of our insurance full-cycle engine or acquisition process, which leads to a comprehensive efficiency uplift across the entire user lifecycle. Now, this spans every single step of the process from adding pressure and user registration, purchase, cross-selling, after-sale services, and claim assistance. So by leveraging our engine to analyze massive user behavioral data, we continue to optimize conversion efficiency at every step. And that’s what we want to continuously iterate to enhance our engine. Now, going forward, we do see potential for upside in efficiency, but what we have to balance, as mentioned, is we do believe the market has a very large room for additional penetration and growth. So we want to balance growth with profitability such that we are growing at least faster than how fast the market is growing to capture that market share.

On your second question regarding competition, and then so today, we haven’t observed any material changes to the landscape. This is primarily because the ad bidding process is both real-time and impartial, placing us on a level playing field with all the advertisers across platforms, including those in gaming incomes, etc. The platform bidding mechanism is very industry or player neutral. So with our optimized engine, we continue to grow and achieve what we believe is attractive economics as we continue to scale. So we want to make sure that we continuously train and optimize our engine. Furthermore, our competitive edge is not derived from just a few core models or algorithms. Instead, it stems from a comprehensive iterative feedback loop that has been built by us from one single model and one label starting from day one.

So it hinges on a very deep collaboration across multiple specialized teams and being able to be very adaptive to the changing external environment. Now, so given the vast market potential, we’re confident that our sustained iterative capabilities will allow us to maintain our existing position and leadership even as changes in the external environment. Thank you.

Yuan Liao, Analyst, Citics: Thank you for your insight.

Speaker 6: Thank you. We receive an online question here from Thomas Wong of Goldman Sachs. His question is, "Please provide updates on the following topics: sales momentum per policy premium and product mix, and the trend in commission rate and tick rate." Thank you.

Rui Wang, Chief Financial Officer, Yuanbao Inc.: Thank you. So in the third quarter, our total revenue mainly driven by revenue from insurance distribution services growing at 27.9%. Revenue from system services grew a bit faster at 36.9%. Now, in the third quarter, our average premium and short-term policy remained generally consistent with historical levels, so tracking within normal ranges both year over year and quarter on quarter. Now, with the trending commission rate, so as for tick rate, it can be roughly estimated by dividing revenue by premiums. Now, looking at the full-year picture, we expect our tick rate to remain relatively stable to historical levels. Now, to emphasize, while tick rate is a very important metric, it’s just one of several key factors we evaluate in our broader market strategy to optimize really our ROI. So we focus on balancing all of the key drivers, including tick rate.

But this also includes price per policy, cross-selling efficiency, customer acquisition costs, and other operational metrics, not just tick rate alone. Thank you.

Speaker 6: That concludes the question and answer session, and I’d like to turn the conference back to management for any additional or closing comments.

Yingying Xu, Chief Financial Analyst, Southwest Securities: Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly. We’re Piacente Financial Communications. Our contact information for IR in both China and the U.S. can be found in today’s press release. Have a great day.

Speaker 6: For your participation in today’s conference, this does conclude the program. You may now disconnect your line.