Ladies and gentlemen, thank you for standing by, and welcome to Huize’s Fourth Quarter and Full-Year 2024 Earnings Conference Call. At this time all participants’ are in a listen-only mode. After the management’s prepared remarks we will have a question-and-answer session. Today’s conference call is being recorded, and a webcast replay will be available on Huize’s IR website at ir.huize.com under the Events and Webcasts section. I’d now like to hand the conference over to your speaker host today, Mr. Kenny Lo, Huize’s Investor Relations Manager. Please go ahead, Kenny.

Thank you, operator. Hello, everyone, and welcome to our fourth quarter and full-year 2024 earnings conference call. Our financial and operational results were released earlier today and are currently available on both our IR website and Global Newswire services. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained in our earnings release and filings with the SEC. Joining us today are our Founder and CEO, Mr. Cunjun Ma; COO, Mr. Li Jiang; Co-CFO, Mr. Minghan Xiao; and Co-CFO, Mr. Ron Tam. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights, followed by Mr. Tam, who will go over our financial results for the fourth quarter and full-year of 2024. Before we open up the call for questions. I will now turn the call over to Mr. Ma.

[Foreign Language] [Interpreted] In 2024, the insurance industry continued to deepen the implementation of unified commissions and fees in reporting and underwriting. The industry entered a 2% era. Further, China's State Council released its 10 measures, which outlined comprehensive regulations for the high quality development of the industry. In response to these policy directions and market trends, we proactively adjusted our strategic focus and expanded our diversified and customized product offerings. As generative AI accelerates the transformation of the industry, we have implemented a forward-looking AI plus strategy transitioning from the application of intelligent tools to a comprehensive restructuring of our surface ecosystem. This strategic shift has enhanced the product matching and surface efficiency, establishing Huize as the benchmark for the intelligent transformation of the industry. Meanwhile, our accelerated international business development has built a strong second growth engine, following high-quality sustainable growth. As a result, in 2024, total revenue increased by 4.5% year-over-year to RMB1.25 billion. And both gross written premiums, GWP, and first year premiums, FYP, facilitated across our platforms, achieved record highs. In 2024, GWP amounted to RMB6.16 billion, up by 6% year-over-year. Full-year FYP reached RMB3.42 billion, up by 31% year-over-year. In terms of our product makes measured by FYP, whole-life premiums contributed RMB1.84 billion, surging by 76% year-over-year. While long-term health insurance contributed RMB520 million, up 2% year-over-year. Influenced by the downward adjustment in assumed interest rate, we registered stable growth in savings insurance products, accounting for 68.6% of total FYP, representing a year-over-year increase of 5.5%. Meanwhile, our short-term insurance business recorded robust double-digit growth, with premiums up 23% year-over-year to approximately RMB515 million, further strengthening the diversity of our product portfolio. Driven by profound customer insights and outstanding service capabilities, we remain committed to delivering a premium service experience to high-grade customers. By…

Thank you, Mr. Ma and Kenny. Good evening, everyone in Hong Kong, Asia, and good morning for those in the Americas. I realize it's been a very long opening remarks, so I'll be brief here on the results highlights. So despite the challenging macroeconomic and regulatory environment overall in 2024, I think we have delivered a very resilient performance with both total GWP and FYP facilitated on a platform reaching record highs of RMB6.2 billion and RMB3.4 billion respectively. Our total revenue has increased 4.5% year-over-year and achieving our second consecutive year of non-GAAP profitability. We have achieved this by leveraging our efficient omni-channel distribution network, which integrates both online and offline channels, focusing on acquiring high-quality customers, offering innovative high quality products, and deploying our proprietary AI solutions throughout the ecosystem. More importantly, we have also made significant progress in our international expansion strategy, which will help act as a key growth driver for our long-term sustainable development going forward. Over the course of 2024, we continue to strategically prioritize long-term insurance products in China, which have accounted for over 90% of our GDP for the past five years. Our omni-channel distribution network and sophisticated AI tools are significantly enhancing our customer acquisition and engagement capabilities. We have acquired approximately 380,000 new customers during the fourth quarter, increasing our total customer base to date of 10.6 million. Repeat purchases for our long-term insurance products have increased by 3.3 percentage points to 40.2% in 2024, which underscores our ability to capitalize on the LTP potential of a high quality customer base through both upselling and cross-selling. Our open platform architecture continues to empower our internal financial advisors and also external independent financial advisors, IFAs, with total FYP from our 2A business increasing by 17% to RMB415 million in 2024. I…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] We will now take our first question from the line of [Qingqing Mao] (ph) from CICC. Please ask your question, Qingqing.

[Foreign Language] I have two questions. My first question is about the commission caps regulation. I think it has been in place for almost one year. Has the one-off impact of this regulation already subsided? And has market computation improved since its implementation? My second question is on AI. Could you please elaborate on the specific ways in which AI technology can improve your operations? And what can we expect in terms of the financial outcome? That's all.

Okay, thank you Qingqing for joining us again and for continued support over the years. So your questions on two sides, the first one on the regulatory commission caps and the effects of that on the brokerage channels. I think the answer is the regulations have been rolled out and officially implemented over the course of the year. And I think that the whole industry has now migrated into the so-called new normal. Ever since September 1 of last year, all the new products that have been launched by the insurance companies have already incorporated the new commission structure. So the short answer is yes, I think the impact has been felt and I think it's already fully reflected in our financial results for the Q4 and also for the rest of the industry and appears that are also listed in the public markets. I think that similar results have been felt through across the industry. In terms of the regulatory impact itself on the focus channels and agencies that's already been felt. We'd like to note that for the regulatory implementation on the tied agency channel, this has not yet been implemented, and we are expecting this to be effective sometime towards the middle to later part of this year. And with that expectation, we do believe that it could be incrementally positive for the brokerage and agencies channels, including ourselves, given that right now the regulatory framework has not been fully implemented across all different channels. So again, the fourth quarter results have fully reflected the new regulatory environment for our business models, and as well as for the rest of the industry. In terms of the competitive landscape, we would like to comment that very likely with the implementation of the commission caps, market share is likely…

All right. Thank you. We will now take a next question from the line of Amy Chen from Citi. Please ask your question, Amy.

[Foreign Language] [Interpreted]

Thank you. Thank you, Amy, again for joining us again and continuing to support us. Maybe I can help you translate your questions. [Foreign Language]

I can translate the question. Yes, so I have two questions. The first one is regarding to the trend of operating expenses in the fourth quarter. We noted that actually both selling expenses and G&A expenses saw significant year-over-year growth in the fourth quarter last year? I wanted to ask what's the main rationale behind this trend? And the second question is regarding to the gross profit margin, as well as net profit guidance for the year of 2025. We noted that actually after the rationalization of commission in the broker channel, the gross profit margin actually was compressed to around 30% in the year of 2024? Wondering if we would likely to see some margin improvement going ahead to the year of 2025 given our investments in AI and the potential improvement in efficiency? Thank you.

Thank you, Amy. So three questions. I think the first one, let me address that first. So there is some sequential growth on some of the expensive accounts. I think that one of the main reasons to do that is we actually implemented some further restructuring in Q4 in terms of our personnel headcount in the fourth quarter. So that has led to some one-time, one-off costs associated with that exercise. And we do have made some further AI investments in Q4, so that has led to some modest increase in the expense items. So I think over the course of 2025, I think one of the key focus for us obviously to further utilize and deploy AI throughout the whole business operations on [offence] (ph) on the front end, on the mid-office and back-office. I think there's a lot of room for us to further drive cost savings and efficiency in the mid to back-office in the tunes of double-digit percentage. So AI definitely would be leveraged and deployed at large in terms of not just customer acquisition and customer service, but also on the normal cost business operations. So I would note that in Q4, those are relatively one-off trends. So in 2025, I think that we are still targeting to drive a year-over-year decrease in the operating expense ratios across the three key line items there. In terms of gross margin trends, I think, yes, you do note that correctly that there has been some depression in gross margins over the course of the last few quarters, but I do know that in Q4 of this year or 2024, our gross margin has actually recovered to around 34.7%. So I think that our outlook for 2025 is definitely to maintain at least that kind of low to mid-30 range growth margins. And ideally, the investments that we're making on the AI front would drive further gross margin improvement and expansion, particularly on the customer acquisition front, because that hopefully would drive more scalable direct-2C customer acquisitions at low cost. So I think hopefully the gross margin line can improve further. And in terms of the guidance for 2025, we do guide towards a profitable full-year of 2025 and we are targeting mid-single-digit, kind of, net profit margin for now. I think that the earnings growth will also be driven by our continued business momentum in the international revenue front. Obviously, I'm referring to the large contribution right now from our Hong Kong business. So and also we would be further, you know, deploying investments into the two new Southeast Asian markets that we mentioned just now in the call and also invest will be made in AI. So overall I think 2025 we're looking at a profitable year and looking at a reasonable single digit type of profit margin -- net profit margin.

That is very clear.

Thank you.

Thank you. We have reached the end of the question-and-answer session. And with that, I'll now turn the conference back to Mr. Kenny Lo for closing commands.

Thank you, operator. In closing, on behalf of the Huize’s management team, we would like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Thank you very much.