Good morning everyone. This is [indiscernible] from Waterdrop Investor Relationships. It's my pleasure to welcome everyone to Waterdrop's Second Quarter 2023 Earnings Conference Call. All participants are in a listen-only mode in our English line. As a reminder, today's conference call is being recorded. Please note that discussion today will contain forward-looking statements made under the safe harbor provision of U.S. Private Securities and the litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties and may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but 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 and applicable law. Also, this call includes a discussion of certain non-GAAP measures. Please refer to our earnings release for reconciliations 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, SVP and GM of International Business; Mr. Zhu Zetao, GM of Crowdfunding and Pharmatech Business; Mr. Chen Richard, Board Secretary. And we will be happy to take some of the questions in the mandarin line at the end of the conference call.

Hello, everyone. This is Shen Peng. Thank you for joining our second quarter 2023 earnings conference call. With the second quarter, in insurance and pharmaceutical industry with the gradual enforcement of regulation, transparency and acceleration have significantly improved, effectively enhancing user experience and satisfaction. This has also led compliance user insurance companies in breaking new growth opportunities. In this setting, the Company's proactively consensus regulatory trends, responds actively to market demand, continually innovates product and optimize service and solidifying a leading edge in these sectors. Regardless of the challenging external environment, the management firmly convinced the adhering to long-term value and maintaining a user-centric approach with secure greater market space. And in the second quarter of 2023, the Company continues to focus on creating value for our users' capability healthy development. The financial performance remains robust with our revenue reached RMB679 million, carrying over an upward trend for the last five quarters, the net profit reached RMB21.7 million, demonstrating the sustainable and high-quality development of the Company's operations. With the same cost of net profit, the Company maintains ample cash reserves as of the end of June. The Company had a total of RMB3.4 billion in cash, cash equivalents and short-term investments. The abundant cash reserves helped the Company to face uncertain environment with more confidence and support long-term trend and layout for the future growth. All of our business models achieved strong performance in the future and consolidating our leading position and influence in the industry. First of all, what is our insurance marketplace in [indiscernible] and enhanced business fatality. While exploring diversified customer acquisition channels, we also take the product innovation, thanks to the efforts what we call both SIP and revenue made sequential growth and it continued to contribute stable net profit to the Company. In terms…

Thank you, Shen Peng. As of June 30, 2023, accumulated total of 439 million people donated more than RMB60 billion to over 2.95 million patients through Waterdrop Medical Crowdfunding platform, both in-house users and crowdfunding continue to grow. This quarter, in the operational transparency committee focused on the authenticity of [indiscernible] in crowdfunding cases. Continuously enhance the governance and transformation of consultant service. In terms of asset authenticity in order to reduce the risk of an inaccurate financial situation of crowdfunding patient families, the committee established a special live achieve a better control which introduced the concept of core family and the net worth of asset and income in the description of patient's family financial situation. We upgraded a more accurate assessment of the reasonable target crowdfunding amount, not only adding application information and more convincing content, but also incorporating AI capability to identify both information with further improvement of its controllability, moreover, this approach allows for better communication between the crowdfunding services and the donors, which shows the platform's commitment to authenticity. The committee also initiated a specialized governance targeting crowdfunding consulting behavior. We kept strengthening non-compliance conduct, such as increasing handling for valuation implementing a nationwide self-inspection in the panel, combining the ability targeting higher risk scenarios. Meanwhile, we introduced consulting service principles such as for principal of service system and in terms of service, the strength and proactive service awareness of consultant and help them better addressing patient needs establishing accordingly service standards throughout the entire process of crowdfunding related services, collaboration followed a good and [indiscernible]. Additionally we introduced a new consulting service evaluation system based on our user satisfaction. In terms of the transformation of offline commitment service we successfully piloted and expanded service-oriented moderated [indiscernible] resulting in a significant increase in Net Promoter Scores…

Thank you, Zetao. Hello, everyone. I will now walk you through our financial highlights for the second quarter. Before going into detail, please be reminded that all numbers given here will be in RMB. And please refer to our earnings release for future information on our financial performance on both the year-over-year and quarter-over-quarter basis, respectively. In the second quarter, all business lines were steadily responding demonstrating strong business resilience. The Company's revenue was RMB679 million, slightly lower compared to RMB711 million in Q2 of 2022, an increase by 12% comparing to RMB606 million for the Q1 of 2023. Among them, insurance-related income was RMB597 million, representing a sequential increase of 11.4%. Crowdfunding service fees were $44.7 million, representing a sequential increase of 6.4%. Digital clinical trial solution income was RMB29.4 million. It has increased by 28.9% sequentially and achieved a significant year-on-year growth of 167%. The Company's overall premium cost and expenses have increased by 32.1% Y-o-Y and decreased by 20.9% Q-o-Q. Operating cost increased by 36.2% year-over-year to RMB333 million for Q2 of 2023, compared with RMB245 million for the Q2 of 2022, which were probably driven by two OpEx. RMB74.2 million increased in capable results experienced fee and RMB8.9 million increase in cost of patient recruitment consulting fees. On a quarter-on-quarter basis, operating costs increased by 34.3% in this quarter, primarily due to RMB60.9 million increased in cost of referral and service fees. S&M expense increased by 41.6% to RMB205 million in this quarter as compared with RMB144 million over Q2 of 2022 and increased by 18% compared with RMB173 million for first quarter of 2023. Both Y-o-Y and Q-o-Q increase were primarily due to the increase in third-party traffic channels. G&A expenses were RMB96 million in this quarter, which remains stable on a quarter-on-quarter basis. R&D expense increased by 23.1% to RMB86.7 million year-over-year and increased by 10.2% on a quarter-on-quarter basis. Both the Q-o-Q and Y-o-Y increase are mainly due to the increase in R&D costs of human resources. In this quarter, the Company introduced segment reporting information for the first time, bringing down our revenue and profitability into three segments: insurance, core funding and others. In summary, the insurance segment had an operating profit of RMB99.8 million, while the core funding segment incurred RMB64.1 million operating loss and the other segment incurred a RMB47.9 million, operating loss. It is worth noticing that the Company's overall profit is only driven by the insurance segment. Adjusted profit attributed to Waterdrop in Q2 was RMB50.3 million, with GAAP net profit was RMB21.7 million, and we have generated GAAP profit over the past six quarters. As of the end of June 2023, the Company had combined cash, cash equivalents and short-term investment of RMB3.4 billion, indicating sufficient cash reserves. Overall, the business performance in Q2 was stable. Looking ahead, we will continue to focus on user value and sustainable high-quality development.