Good morning, ladies and gentlemen, and thank you for standing by for WaterDrop, Inc.'s second quarter 2026 Financial Results Earnings Conference Call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to Ms. Tracy Lee. Please proceed, Ms. Lee.

Thank you, Operator, the Ambassador and Analyst.

This is Tracy Li from Waterdrop Investor Relations. 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 separate from risks and incentives that may cause actual results differ mutually from our current expectations. Potential risk and uncertainties include but not limited to those outlined in our public findings with the SEC. The company does not undertake any obligation to update any forward-looking statement except as required under applicable law. Also, this call includes discussion of certain non-GAAP matters. Please refer to our release for reconciliation between non-GAAP and GAAP. Joining us today on the call are Mr. Shen Peng, our founder, chairman, and CEO, Mr. Yuan Wei, director and GM of insurance business, Mrs. Li Jie Ru, finance VP, head of strategy and capital markets. Certain members of our management team will deliver their remarks in Mandarin, followed by an English translation. Moreover, a webcast reply will be available on our investor relations website. I will now turn the call over to our CEO, Shen Peng. Please go ahead.

Hello, everyone in Beijing. Thank you for participating in the second quarter of the water supply company in 2025. In the second quarter, the company's business has maintained a growth trend of 14.5 billion yuan in total, 72.8% growth in total, and 1.3 billion yuan in total. Since the first quarter of 2020,

Thank you for joining WaterDrop's second quarter 20.6 earnings conference call. In this quarter, we maintain growth momentum and achieve a total revenue of 1.45 billion yuan at 72.8% year-over-year, and the net profit attributable to our ordinary shareholders of 130 million yuan Since the first quarter of 2022, we have maintained probability for 18 consecutive quarters.

The number of patients has increased by more than 50%. The growth of these drugs is a deep-rooted development of AI capabilities in the core of the drug industry. This is also constantly strengthening the company's financial status. Since June, the company has established 88 large-scale commercial operations and 10 external operations.

Segment-wise, our insurance business continues to optimize user acquisition and conversion, dropping 80.5% year-on-year revenue growth. Waterdrop Medical Profunding has cumulatively raised medical funds for 3.82 million patients as of the quarter end. Our digital clinical trial solution business performs strongly, with quarterly patient enrollment at over 50% year-over-year. These growth trends were intertwined by a deep integration of AI across our core business scenarios. And at the end of June, the company has filed 80-80 large-language remodel patents, including 10 of them overseas.

Based on the continuous hard work of the company and the sufficient cash reserves, the company has continued to pay back. We are very happy to announce that the company has approved the following two proposals in the near future. On the one hand, the company will launch its sixth new brand in the near future. The project will be launched in November and will end on October 9, 2026. There will be five shares of normal shares and ADS shareholders. Each ADS share will be $0.03. Each normal share share will be $0.003. The total share share will be $10.8 million. On the other hand, the board has approved the sixth recovery plan. In the next year, are all listed with a total of US$50 million and continue to return to the public market. Since the announcement of the initial recovery plan in 2021, as of the end of August, 2026, the company has recovered about 6,290 million U.S. dollars, which is about 120 billion U.S. dollars. The company has continued to develop and return to society. As of June 30, 2026, There are 119 public-private projects on the local industrial platform, and more than 156,000 public projects are on the line.

With strong performance and cash reserves, we continue to prioritize shareholder returns. Our board recently approved two new initiatives. Firstly, the board has approved a cash dividend of $0.03 per ADF, or $0.03 per ordinary share, payable to holders of the record on October 9, 2026. The aggregate dividend payment is approximately $10.8 million, with payments to be made in early November. Second, the board approved the six-share repurchase program of up to $50 million over the next 12 months. Since the initial program launched in 2021, we have repurchased approximately 62.9 million ADFs for $121 million as of August 31, 2006. The company remains committed to sustainable development and to giving back to society in meaningful ways. As of June 30, In 2016, Waterdrop Charity Platform has partnered with 119 public charitable organizations and launched more than 15,600 charity programs. We will continue to focus on the growth and investment of the company.

We expect that the current growth and investment will continue to transform into a solid user base and a future use space. We believe that technology is the core of the company's development. The current AI capacity is deeply integrated into various business platforms, so that we can more accurately grasp the constant growth of market demand in existing businesses, and consolidate and strengthen the economy. At the same time, we are also actively evolving in the face of the global AI-driven new business, and have made preliminary progress in the general market. In the face of the whole year of 2026, we expect revenue to increase by more than 40% and profit to increase by more than 10%. These are the overall performance of the water company. Next, we will introduce the business situation.

What is your performance focus on growth and investment in core businesses? We expect that our current incremental investment income to continue translating to a solid user base in the future product potential. We always regard technology as a core driver of the company's growth. Today, our AI capabilities are significantly abundant across the platform, enabling us to better capture growth opportunities in our existing businesses and further sharpen our competitive edge. At the same time, we are actively piloting new AI-driven initiatives for global markets and have made early progress in select markets. For the full year of 2026, WaterDrop targets more than 40% year-over-year growth in total revenue and over 10% growth in operating profit. This concludes our overview of WaterDrop's business performance. Now we will walk you through each of our business segments in more detail.

Hello everyone, I am Ran Wei. Let me report on the progress of insurance business. In the second quarter, the insurance business's relevant income reached 3.3 billion yuan, which increased by 80.5% per meter, and increased by 16.4% per meter. The business has made a profit of about 1.8 billion yuan, and increased by 20% per meter. As for the AI model, it is continuously polished in user demand survey and conversion, and the conversion efficiency is improved per meter. In the quarter, the growth of new users is 32.3% per meter. In terms of long-term, Hello everyone, this is Zhang Wei. Let me briefly update you on our insurance business.

In the second quarter, insurance-related income reached 1.33 billion yuan at 80.5% year-over-year and 15.4% quarter-over-quarter. Operating profit was 180 million yuan at 20% from the previous quarter. With continued refinement in our AI-driven user insight and conversion capabilities, newly acquired customers rose 32.3% sequentially. The first-year premiums of long-term insurance grew 33.4% sequentially as we capture market demand for installment insurance this quarter.

In the supply chain, improving product efficiency is our main strategy in the product chain. There are many products in this direction this quarter. We have launched the industry's first long-term heavy-duty line product, Longyi Bao, which guarantees long-term heavy-duty line for five years. It covers more than 100 major diseases and can add accident, accident and injury responsibility. On the product side, our core strategy room is improving the accessibility of the insurance products. This quarter, we deliver several new products in line with this direction, including the launch of GoniBot, the market-first long-term critical illness

insurance products requiring no health disclosure and offering five-year guaranteed renewability. We're also expanding our product metrics, which now includes the market for specified disease insurance offering lifetime coverage with no health disclosure. During this quarter, products for users with pre-existing conditions contribute 310 million FIP and disability insurance at 84 million.

In the service section, we have made a difference in the scene operation in different ways. In this season, the low-level interaction scene AI uses the overall support to achieve a billion yuan in insurance. Among them, the AI professional insurance of the small program is effective in collecting natural flow, and the month-to-month movement of millions of insurance fees. In the scene of higher interaction depth, the transfer effect of the AI medical health expert is even more prominent. 15.6% of the total insurance fee in the three-season support period. In the initial service process, AI can directly carry out the strategic execution, transfer the operation intention to the right place, and the system support can achieve a value of more than 10 million yuan.

On the service side, we've adopted differentiated scenario-based operations across customer touchpoints. In this quarter, AI applications across our user-facing interaction scenarios helped generate nearly 100 million yuan in FYP. Among them, AI Pro Insurance generates FYP in millions each month. FYP, facilitated by our AI medical insurance experts, rose by 25.6% sequentially. In the WECOM scenario, AI executed our strategies directly from the demand identification and user profiling to key moment engagement and batch outreach, contributing over 10 million yuan in FIP during this quarter.

In the long-term sales direction, AI's value will eventually end up at the release of the current production capacity, ending at the end of the quarter. Hebao Zhou's suspicious AI has repeatedly answered Hebao's question more than 30,000 times. and Xiaozhu Li, who have been leading the single-channel network since the launch. There are nearly 50% improvement in the number of users in the system, and AI-transformed models with multi-intelligence systems can capture users' preferences from natural language interaction and become cross-interference calls, and actively trigger the service environment of the hot spot of the competition. The above is related to the second-generation insurance technology.

And long-term insurance sales, the value of AI ultimately comes down to expanding what our life planners can do. As of current, our underwriting assistant Koyi.ai has answered more than 13,000 underwriting questions since its launch. Our AI super-presence assistant has constantly outperformed human life planners on annual premiums per lead. and the number of users is third to grow nearly 50% sequentially. Powered by multi-agent collaboration, our AI conversion model captures user preference from natural language interaction, turning them to a doable profile we can draw on over time and proactively surface topics tailored to each user, effectively extending the reach of every life planner we have. That concludes our update on the insurance business for the second quarter.

Next, I will report on the performance of the car and medicine business in the second quarter. As of the end of June 2026, the total number of donations was about 4.99 billion yuan, and the total number of recipients reached 382 million yuan. The total amount of donations was about 7.47 billion yuan. In this quarter, we will continue to focus on the air-conditioning model. The focus is on the progress of the two key modules. The first is the asset hiding and detecting module. In the original method, the control strategy is more in line with the rules of business experience and artificial setting. In this period, we will further expand the ability of AI language understanding to the level of application. In a model-based way, we will conduct joint language analysis of identity, identity information, medical materials, and the content of user life, identity information, medical materials, and the content of user life, identity information, medical materials, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of user life, identity information, and the content of After the upgrade, the control model system is more comprehensive and more accurate, and the efficiency is significantly improved. Second, sensitive identity recognition software. The system uses social media information, documents, materials, comments, and other elements for joint analysis. The system can identify groups with high-profile identities and immediately detect the risk assessment and upgrade. Next, let me briefly update on water drop medical confounding and healthcare businesses.

As of the end of June 2006, WaterDrop Medical Profiling had a cumulative contribution from around 499 million donors, helped 3.82 million patients, and raised a total of 74.7 billion yen. This quarter, we continue to upgrade our AI-driven risk control models, further improving asset consumer detection and sensitive identity detection. By combining semantic analysis of ID information, medical materials, and user-generated content, the upgraded engine can better identify hidden inconsistencies and improve risk control efficiency.

二季度医药业务基因表现全面超预期, 单季度入组患者超1500名, 同比增长54%, 每季服务患者通货17000人。 The growth of this season's core is driven by the improvement of the efficiency of the platform and the ability to communicate. Based on the structural ability of the material and the area of the AI platform model, the platform can deal with more complex entry standards, cover more low-end species characteristics, and further release the capacity of the season. In terms of the structure of the species, the overall direction is the basic plate of the water drop filter, which continues to contribute core body mass. are all in the same group. Although the number of patients is large, the failure rate of the project is generally high, and the performance and speed requirements of the recruitment platform are high. In the second stage, the number of patients in the group increased by 80%, which proved that the platform has a stable exchangeability ability in high-efficiency and failure-free scenarios. At the same time, the reputation of New York, which is a positive trend, has a wider trust in cooperation. In the second stage, 1312's new project reached 167, and the cooperation invitation and CRO Thank you for watching.

In our healthcare businesses, our performance exceeded expectations across several key metrics. We enrolled more than 1,500 patients in this quarter, at 54% year-over-year, and cumulative patients served surpassing 17,000. Growth was driven by the higher matching efficiency and a stronger enrollment capability. Oncology projects remained our core focus, while chronic disease projects have grown in most of the sequential growth this quarter. Although chronic disease studies have a larger patient pool, they typically carry a high screening failure rate and increase greater demand on matching profession and speed. Chronic disease enrollment increased 80% year-over-year in the second quarter, further validating our enrollment ability in high screening failure . Meanwhile, our proven enrollment track record is translating into deeper and broader trust among patient partners. In this quarter, eFund platform signed 167 new projects, and a number of pharmaceutical companies and CROs we partnered with surpassed 255. Going forward, we will continue to optimize the operational efficiency and work with our partners to advance digitalization across the clinical disease profession. This concludes our update on Corfani and healthcare businesses.

Hello everyone, this is Li Jieru. Next, I will walk you through our financial highlights for the second quarter of 2026. Before I go into details, please be reminded that all the numbers quoted here will be in RMB, and please refer to our earnings release for detailed information on our financial performance on both the year-over-year and quarter-over-quarter basis, respectively. In the second quarter of 2026, quarter jobs delivered net operating revenue of 1,448 million yuan, up 72.8% year-over-year, maintaining a strong growth momentum. Our insurance business contributed about 1,333 million yuan in revenue, representing an 80.5% increase year-over-year. Net insurance businesses accounted for around 7.9% of total revenue, including 63.6 million yuan from medical crowdfunding services and 35.2 million yuan from our digital clinical trial solutions. Total operating costs and expenses came in at about 1,337 million yuan in the second quarter, up 80.5% year-over-year. Operating costs were 537 million yuan, increasing 29% year-over-year. The increase was primarily driven by business scale expansion, including an increase of around 63.8 million yuan in cost of referrals and service fees, as well as an increase of 21.4 million yuan in short message service costs and 11.2 million yuan in personnel costs, respectively. Sales and marketing expenses reached nearly 638 million yuan compared with 199 million yuan in the same quarter of 2025. The year-over-year increase mainly reflected our active step-up in public domain traffic investment. with marketing expenses for third-party traffic channels increasing by about 450 million yuan and marketing-related professional technical service fees increasing by around 21.8 million yuan. G&A expenses were 93.4 million yuan, up 27.2% year-over-year, mainly due to an increase of 33.3 million yuan in allowance for credit losses. This was partially offset by decreases of nearly 10.5 million yuan in personnel costs and share-based compensation expenses. R&D expenses were 68.8 million yuan, up 32.4% year-over-year. The increase was mainly driven by cloud server fees, token fees, and other IT support expenses. which rose by about 11.1 million yuan as well as an increase of 6.3 million yuan in personnel costs and share-based compensation expenses. For this quarter, operating profits reached about 111 million yuan at 14.3% year-over-year and 39.2% quarter-over-quarter. However, due to tax-related items and non-recurring gains and losses, Net profit attributable to shareholders was around 126 million yuan, down 10.3% year over year, but up 27.9% quarter over quarter. As of June 30, 2026, cash and cash equivalents, short-term investments, and other cash positions totaled about 2.653 billion yuan. Our cash reserve maintains EMBO and provides solid support for both business investments and shareholder returns. In terms of shareholder returns, since the long-term first share repurchase program, we have cumulatively repurchased and others for approximately 120 million U.S. dollars as of August 31, 2026. And recently, the Board approved the sixth share repurchase program, in which we plan to repurchase up to 50 million dollars over the next 12 months, and also approved the sixth cash dividend of approximately 10.8 million U.S. dollars. Overall, both the quality and scale of growth in our core businesses improved this quarter. The continuous deployment of AI across every scenario in our business is becoming an important driver of efficiency gains. Meanwhile, we are expanding proactively while investing prudently in new initiatives in global markets, which for now have very limited impact on our current period financial results. As these initiatives reach a larger scale, we will keep the capital markets informed in a timely manner In the future, the company will remain committed to disciplined strategic investment and continue creating long-term value for users and shareholders. That concludes the company's financial results for the second quarter of 2026. We will now move on to the Q&A session.

Okay. Thank you, Jieru. Ladies and gentlemen, we will now begin our Q&A session. To ask a question, please press Start 1 on your telephone. To withdraw your question, please press Start 2. In addition, this conference is being webcast live on the C-Enter platform. If you're joining through the platform, you may also submit your question in writing there. Okay, we now proceed to take our first question, and it comes from the line of Amy Chen of Citi. The question is, in terms of the mainland Chinese business in Hong Kong, media have reported that mainland tax authorities made tax policy dividends. Has management seen any change, either in international business or domestic business? Our first question is from Amy Chen from Huachi. Her question is, there has been a lot of discussion about the domestic tax on insurance income of Hong Kong residents recently. I would like to know how you have interpreted the impact on the company's domestic insurance and international exchange business.

Thank you, Amy, for your question. I will answer this question. Regarding the information on the domestic tax on insurance income of residents who are concerned about the recent market, we understand that this is a very complicated issue are not new to Hong Kong insurance. In the short term, the media reports do have a certain impact on some customers' mentality. But Hong Kong insurance products are very accurate in multi-pronged configuration, global medical, wealth inheritance, etc. In terms of satisfying the relevant needs of the customer group, they still have attraction. The underlying support logic of the Hong Kong insurance market has not changed. The growth momentum of the current core of the human resources market is due to the continuous improvement of the business insurance multi-layer policy and the continuous insurance product innovation of the industrial unit, and the structural trend of long-term stable assets under the current low interest rate environment. The multi-market and multi-stakeholder model of multiple customer groups, multi-market and multi-stakeholder models

Regarding recent market attention, we're reading that what we're seeing reflects the important enforcement of tax rules that have long been in place, rather than a new policy specifically targeting Hong Kong insurance. In the new term, the media coverage has some effect on our customers' sentiment, but the depreciating value of Hong Kong insurance products, like the loading currency allocation, access to global healthcare resources, and inheritance planning, are really clear and fundamental drivers of the Hong Kong insurance market has not changed. Turning to the drivers of the mainland China insurance market today, the growth is driven by a rising health protection awareness, policy-telling for commercial health insurance, continued product innovation, and a structural shift of household savings into long-term assets such as insurance in the current low interest rate environment. Waterdrop serves as diversifying customer base across multiple markets and multiple service models, and our business mix remains solid, and we're confident in serving user demand wherever it rises.

We will now take our next question from Xinhao Chen of CSCC.

The question is, We have noticed that several insurers have recently launched health insurance products targeting customers with pre-existing conditions. How does management evaluate this opportunity in this category and what is the product strategy in this area? The next question is that there are a lot of insurance companies in the industry that are launching new products. I would like to ask the management to see if there are any opportunities in this market and how to plan the product strategy. Thank you for your question, Mr. Tao.

In terms of the general trend, as the number of patients is increasing, the number of patients with chronic diseases is also increasing. There are actually very few perfect standards in the field of statistics. And traditional health insurance is better at protecting healthy people. The need to protect a large number of隱病人群,慢病人群 is objectively present. So the industry consensus is relatively clear. It is to protect more healthy people, to protect more people's health. This is both a need and an opportunity. It is also a definite direction to expand the coverage of commercial protection. The most typical deforestation practice is in all parts of the world. Now it has been gradually expanded to commercial medical insurance, intensive care insurance, food safety insurance, and more commercial insurance products. This extension is not simply to reduce the risk of head injury. Basically, it is based on the risk of typhoid disease. Establish a decentralized city insurance and company compensation model to show that the direction is thin and affordable. Xiaobo Zhou, Jieru Li, Xiaoying Xu, Nian Liu, Wei Ran, Xiaojiao Cui, Peng Shen In the long term, as the data on future health insurance and commercial health are gradually being opened up, the health insurance and central health insurance will have the ability to make the service and service models more efficient. In the future, the health insurance will have the opportunity to be closer to the car insurance, which is guaranteed by the public. People can invest, pay, and continue to save. We firmly believe that the health insurance will be more affordable and more sustainable in the future. That's all.

Okay, as checkouts become more common, the chronic illness in living with pre-existing conditions are far more typical. So a clean, standard life is actually quite rare. And traditional healthcare insurance has long focused on healthy life, but millions of people with pre-existing conditions do go unprotected. The industry consensus is clear with shifting our brand and ensuring more healthy people to protecting the health of more people. This is both a real demand-side opportunity and a clear path of commercial insurance expanding its coverage. And the early practice with single-level inclusive health plans, that logic is now moving to more the commercial medical insurance critical illness and others. This is not simply losing any writing. It is segmenting the disease risk and building depreciated in writing and claims. So, the certain risk can actually be written and paid. For water drops, lowering coverage threshold is central to our product strategy. As I said, we break the demand down by scenario, age, and condition, and co-design terms and coverage with our insurer partners. On the acquisition side, we use platform and the AI insights to match the right product to the right customer. So people with pre-existing conditions can actually find something that works for them. Longer term, our view is that A health cover for people with pre-existing conditions can become more like auto insurance. People can actually buy it, claim on it, and renew it. Accessibility and sustainability will have to move together. Okay, we will now take our next two questions from Weiyu Wu of Guo Tai Jun International. The question is, is there a clear timeline for AI agents to start generating commercial value? And how will AI investment impact on R&D census ratio going forward? And what other new initiatives is the company currently exploring? . Please tell us about the value of the commercialization of AI agents in the management layer. What is the impact of AI investment on R&D efficiency? And what new directions does the company have at the moment?

Thank you, Ting. Regarding the investment and commercialization value of our AI, including some of the innovative business that the company is doing, I will answer in general. As we introduced in the previous business release, the AI capabilities of our company are actually involved in our core business, especially in various business segments such as insurance business such as customers and insurance compensation. Therefore, we look at AI commercialization and AI value based on the specific promotion space or increase space of each segment to measure. In general, we hope to integrate AI capabilities and AI tools to improve the overall income and profit-making capabilities of the company. So we believe that AI Agents, including the value of AI applications, will ultimately reflect the overall performance of the company. We will not have a separate AI version, a separate commercial division. As mentioned before, we use different methods of AI in different service scenarios. For example, in the case of the transfer of goods and services, AI can directly participate in the user's information and purchase decision about insurance. In this quarter, the total support for this type of scenario is close to 100 million yuan. In the case of long-term transfer, especially in the case of service consultants, AI tools are mainly can help these consultants improve their processing information and industry efficiency, and can indirectly assist and transform, and also be able to release their production capacity. Here, our AI tools, for example, there is also this one called Hebao Assistant, which can go to AI, including Super Subtractor Assistant. These are all in the business, in the daily operation, in the landing. In terms of the scene of the support of the middle and back stage operation, our AI system and AI customer service applications are already and many more. In terms of our full-scale operation, we are expanding our business scale, which is the growth of the number of services brought by Zhou Xi. Regarding our investment in AI, I also asked about the development cost of the company. In terms of our overall development cost rate, it is still in a relatively stable range overall. But in fact, from the point of view of Chacha, we will still make some proactive adjustments on the cost structure. The main thing is to and many more. In this project, we include the construction of the team of algorithms and models, as well as the cost of tokens needed to support the landing of the AI application. We expect that with the continuous increase in the amount of electricity used by AI, this investment will certainly maintain a natural growth. At the same time, from the perspective of financial management, we will evaluate the effects of the investment and output brought by AI in various scenarios, and maintain the overall research and development efficiency in a reasonable range. This is the landing page of the company's application on AI, including the value measurement and the situation of our investment in R&D. Then there is also a question about our innovation business. In fact, we have always been very concerned about how our own and many more. In addition to AI applications, we have explored and accumulated the capabilities of 2C services and operations to be able to face the wider industry and market and find new opportunities in times of need. What we are currently doing is still relying on AI agency know-how and our own research and development capabilities in the field of free business services. and many others. We are also developing a smart hardware product that can be used as an AI office assistant. It is currently on market in the global market and has received some initial feedback. But overall, this business is still in a relatively early stage and needs to be verified in a week. As previously introduced, our AI is explaining how crowds afford a value chain as the acquisition that results create screening and claims.

and a world series by Sage. We're not commercializing AI as a standalone business and its value will show up in our top-line world and bottom-line growth will deliver. And as I were introduced earlier, in the user targeting and conversion, our AI directly supports user consultation and purchase decisions, driven nearly 100 million AFIPs. and in our long-term insurance advisory tools like our Koyi.ai and our AI Pre-Sales Assistant that help our lab planners work more efficiently and close more cases. Our operation, our AI customer service and quality inspection application have fully absorbed the extra volume as we sell. In our R&D side, the overall R&D ratio is stable, but we actually shifted resources towards AI, both in the talent and in token cost. As usage scales, the spend will grow naturally, but we have a big plan about ROI and their age scenarios, and it will keep the overall ratio to a reasonable range. And then turning to our new initiative, we're incubating a portable AI office assistant, a smart hardware product that will leverage our AI agent know-how, in-house R&D, and China's supply chain strengths. Adding in pilot sales across major global markets with some encouraging early feedback. That said, it's still an early stage, and its financial impact is limited for now. And the experience we're gaining along the way, both for the business and for the company overall, is generally valuable.

And we will now take our next question from Kate Liu of UB Key Home.

Her question is, both product and supply perspective, which insurance category does the medicine view as having strongest growth potential? The next question is from Kate Liu. Her question is, from the point of view of tools and products, which types of tools do you think are more likely to develop? Thank you, Kate.

I'll answer this question. The health insurance is improving the value of the aging population. The health insurance is moving from standardized products to more detailed and close to the actual needs. For example, the health insurance provided by the patient, the high-end medical insurance, and the products that cover health management, nursing services, etc. These are products that we are also looking at in the market in the direction of judgment. We will continue to pay attention to the above opportunities. There are a few more products. At the same time, these products and we The ability to accumulate online channels is more suitable. On the one hand, the basic workability of the Internet security system is standardized, which can break down space and geographical restrictions and improve the reliability of the protection. On the other hand, based on the data and technical advantages accumulated over a long period of time, we can identify the protective gaps in the群 of群 and better match the products suitable for the user. We can also provide information on the general needs of this type of product, We will combine the features of our own platform to make appropriate arrangements in these directions.

There are two forces that we're shaping our health insurance, like the raising health protection awareness and aging population. So the market is shifting from the standardized products to more tailored to actual needs. Demand-driven coverage, including our insurance for previous conditions, leads to high-end medical insurance and products bundled with health management and elderly care services, The demand that traditional products never really served has been a lot. We will keep building in this area. And this category plays right into the strengths we'll build through our online platform. We can reach broadly and target precisely. leveraging our AI capability and spot protection gaps in specific customer groups can match them with the right products and deliver better, faster service at the point of user consultation. So we will keep building on what we are uniquely good at. Okay, we will now take our next question from Xinyu Wu of Tri-Securities. The question is noting seeing the strong growth in Q2, and could you walk us through your recently customer acquisition investment and outcomes, and what we can expect on the call side for the rest of 2026 and into 2027? Our next question is from Zhongxujian. Her question is related to the company's 2-year-old mid-term plan. Huo Keduan's investment and new results, and the cost outlook for the second half of 2020 and the end of 2027. Can you explain more about this?

Thank you for the first question. I will answer this question. The company is indeed in the second quarter. It is still in a period of backward investment. So you can also see that our insurance business income and operating profit have improved on the basis of the first quarter of 2016. In this quarter, our new number of users has also increased by more than 30%. This overall looks like a result of the final presentation of the user's response, and then the comprehensive continuous delivery of the communication transformation and product attack in multiple aspects. From the customer strategy, we will not simply pursue a single-sided cost decline, but rather look at whether we can better match the product attack and user image characteristics with the increase in AI capabilities to improve our We are going to talk about how AI can help us from the beginning to the end of the year We will continue to maintain a positive feedback rhythm to improve the coverage of our target audience, so that more users can understand the value of insurance and insurance configuration. At the same time, we also expect that in the current period of feedback investment, will gradually release the value of the user's life cycle in the course of the entire life cycle of the user. This is our view of the current goods and services rhythm, the subsequent investment of goods and services, and a comprehensive view of the value of users brought by the growth of users in the medium term.

Let's do an investment circle in the user acquisition in Q2. And that speed is already showing up in the numbers, like insurance revenue and operating profit both broke further from the last quarter. And the new users were actually up more than 30% sequentially. This is a combined result of better reach out and the conversion and product supply. and in terms of the user acquisition strategy, we are now, well, actually we are not simply pursuing the cost reduction. What matters most of all is how we leverage AI capability to better align our product supply with our user profile and improving conversion efficiency. So currently, AI has been embedded across the entire process from our customer acquisition to service and is continually improving our efficiency across our core scenarios. For the second half of 2006 and the full year of 2007, our strategy direction remains consistent. We continue to expect to maintain an active user acquisition pace, exceeding outreach to target customer segments, and broadening user education coverage And at the same time, we expect the user value generated by the current peer-read acquisition to be gradually realized through renewals and upsells and profiles over the sequential user life circles. We have received no further questions online, and this concludes our Q&A session for today. Thank you to all the investors and analysts who joined us today. Betsy, operator, back to you.

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.