Yuanbao (YB) Q1 2026 Earnings Call Transcript

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DATE

Wednesday, June 10, 2026 at 8 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Rui Fang
• Chief Financial Officer — Huirui Wan
• Director — Stella Liu

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TAKEAWAYS

• Total Revenue -- RMB 1.32 billion, representing a 35.6% year-over-year increase, with broad-based growth across business lines.
• Insurance Distribution Services Revenue -- RMB 411.3 million, up 27.8% year over year, reflecting increased policy volume and targeted marketing initiatives.
• System Service Revenue -- RMB 904.6 million, a 39.8% year-over-year increase, driven by expanded service offerings and partner engagement.
• Net Income -- RMB 387.6 million, increasing 31.4% year over year, with a net income margin of 29.5%.
• Non-GAAP Adjusted Net Income -- RMB 408.8 million, up 31% year over year, yielding a 31.1% non-GAAP adjusted net income margin.
• Operating Expenses -- RMB 878.6 million, rising 29.1% year over year, primarily from selling, marketing, and research and development investments.
• R&D Expenses -- RMB 106.3 million, up 39.7% year over year, reflecting expanded technical capabilities and headcount.
• Cash and Investments -- RMB 4.74 billion as of quarter end, up 71.4% year over year and 17.4% from year-end 2025, supporting continued technology investment.
• Net Cash from Operating Activities -- RMB 721.3 million, highlighting effective cash generation.
• Dividend Declaration -- Annual cash dividend of US$1.26 per ADS (US$0.21 per ordinary share) approved, with record and payment dates provided.
• Share Repurchase Program -- Authorized for up to $15 million in ADS repurchases over 12 months, to be funded from existing cash.
• AI Integration -- Scaled deployment of an AI insurance large language model, enabling improved operational efficiency and user experience in core processes.
• Regulatory Environment -- New marketing policy introduced in April 2026 had "no material impact" on the company's user acquisition model due to established compliance systems.
• Claims Automation -- Proprietary intelligent claims assistance feature now supports automatic verification and calculation for low-value, low-risk claims, reducing insurer response times.
• AI-Powered Service System -- Launched consumer-facing intelligent insurance consultation and planning tool leveraging deep knowledge base and multi-agent architecture for policy interpretation and comparison.

SUMMARY

Yuanbao (NASDAQ:YB) demonstrated accelerated revenue and earnings growth, supported by high-margin operations and continued investment in proprietary AI solutions. The company maintained elevated operating leverage despite robust increases in both R&D and marketing spend, directly supporting expansion in its insurance services platform. Strategic capital returns were reinforced by the board’s approval of both an annual dividend and a $15 million share repurchase, funded through a sharply improved cash position. Management expressly indicated no adverse operational effect from recent regulatory changes affecting online insurance marketing, citing longstanding compliance practices. Initiatives in automation and AI-driven user experiences marked a further strategic shift toward deep technology integration throughout the insurance consultation and claims cycle.

• Wan reported that system service revenues grew 39.8% year over year, outpacing the 27.8% growth in insurance distribution revenues.
• Liu stated, "We incorporate those insights into our product matching capabilities, AI-powered services, and operational system development, reinforcing Yuanbao's leading position in the internet insurance industry."
• Fang confirmed the company’s multi-agent AI consultation platform is "deeply embedded across all decision-making stages," directly enhancing conversion support and consumer trust.
• Fang stated, "Our customer acquisition efficiency has remained robust as our business scale has expanded," attributed to ongoing operating leverage in marketing costs over the past 15 quarters.
• The board's reviews of dividends and repurchases for 2026 were described as ongoing, implying an adaptive capital allocation policy.

INDUSTRY GLOSSARY

• ADS: American Depositary Share—A negotiable U.S. certificate representing shares in a foreign company, traded on U.S. exchanges.
• DRG/DIP payment systems: Diagnostic-Related Group/Diagnosis-Intervention Packet payment models—Reimbursement structures in China's healthcare system emphasizing value and efficiency in medical treatment payment.
• AI insurance large language model: A domain-specific artificial intelligence platform for natural language understanding, tailored to insurance product matching, consultation, and policy processing.
• Multi-agent collaboration: A system architecture in which multiple autonomous AI agents perform specialized tasks to deliver coordinated insurance service outcomes.

Full Conference Call Transcript

Rui Fang[Non-English content]: Hello, everyone. Thank you for joining us today for our first quarter 2026 earnings conference call. Please note that all figures will be in RMB unless otherwise noted. In the first quarter of 2026, we extended the solid growth trajectory we established last year while maintaining a healthy balance between business expansion and profitability quality. We generated total first-quarter revenues of RMB 1.32 billion, representing a year-over-year increase of 35.6%. Net income reached RMB 388 million, up 31.4% year-over-year, with net income margin at 29.5%. This performance underscores our comprehensive strength in collaborating with insurers to drive product innovation, personalized recommendations, refined operations, claim service, and advanced AI integration.

As of the end of the first quarter, our cash reserves totaled RMB 4.74 billion, providing a strong financial foundation for continued investment in technology, deeper application of AI and big data, and capturing structural opportunities within the industry.Meanwhile, we continue to strengthen our data and modeling capabilities. As of quarter end, our model matrix comprised more than 5,000 models capable of analyzing over 5,800 labels, playing a critical role in end-to-end service optimization across demand identification, product recommendations, and claims service.

In addition, supported by our robust cash position and sustained robust operating cash flow, we are pleased to announce that our board of directors has approved an annual cash dividend of US$1.26 per ADS, together with a $15 million share repurchase program. We believe these actions underscore the strength of our financial foundation and reflect our ongoing commitment to enhancing shareholder returns as we steadily grow the long-term value of our company.The insurance industry is entering a new phase of high-quality development characterized by structural optimization, value-driven efficiency enhancement, and ecosystem integration. At the same time, the demand side is undergoing a fundamental shift. Consumers' awareness of risk protection continues to strengthen, and insurance purchasing behavior is becoming increasingly proactive.

Meanwhile, the accelerated development of China's multi-tier healthcare protection system is expanding the role of commercial health insurance across healthcare services, innovative drug payment solutions, and family risk management. The overall industry environment continues to improve, expanding the industry's long-term growth potential and creating more favorable external conditions for the commercial health insurance market, on which Yuanbao is focused. The supply side of the industry is also keeping pace with market dynamics, accelerating iteration and upgrades to better meet evolving consumer demand.

For example, in the health insurance sector, the nationwide rollout of DRG/DIP payment systems has significantly increased demand for coverage related to innovative medical treatments and drugs, driving continued expansion and upgrading of medical insurance product coverage and broader protection for advanced medical treatments. In addition, the insurance plus services ecosystem model is becoming an increasingly mainstream industry trend. Insurance products are now being more deeply integrated with wider ecosystems such as health management, rehabilitation, and convalescence services. As a result, industry competition is evolving from pure product supply capabilities to a broader context of ecosystem integration. Against this backdrop, we have consistently placed products and services at the center of our long-term development strategy.

On the product side, we continue to work closely with insurance carriers to enhance and iterate our inclusive insurance offerings, with a focus on addressing the needs of specialized customer segments, including individuals with pre-existing conditions and new urban residents. We acted swiftly to fully integrate the Commercial Insurance Innovative Drug Catalog into our product offerings, keeping pace with emerging policy trends and broadening public access to advanced therapies and high-quality medications. On the service side, we have integrated our technological capabilities throughout the claims process with the launch of our intelligent claims assistance feature, which assists partnered insurers in conducting preliminary reviews of low-value, low-risk claims.

Our proprietary claims review system automatically verifies claims documents and calculates claims amounts, improving insurers' claims processing efficiency, enhancing the overall user claims experience, and significantly shortening response times for small-value claims. Amid this industry evolution, the role of internet insurance has undergone a fundamental transformation. It is no longer merely an online extension of traditional insurance distribution channels. Instead, it has evolved into industry infrastructure by leveraging data and technology to connect user demand, insurance product supply, and service capabilities. It has become a pivotal force driving business model upgrades and reshaping industry efficiency.

This shift is particularly evident in the health insurance and inclusive protection segments, where product offerings have grown increasingly diverse, while policy terms, coverage benefits, underwriting rules, and claims processes have become more specialized and comprehensive. Consumers increasingly prefer to obtain information and compare solutions online, leveraging AI-powered tools to better understand and select insurance products. As a result, the industry's competitive focus is gradually shifting away from pure traffic acquisition and product sales towards the comprehensive development of AI capabilities, professional service expertise, and long-term user trust. Against this backdrop, Yuanbao has prioritized the development of integrated AI capabilities as a core strategic initiative for organizational upgrading.

Our AI insurance large language model has now been deployed at scale and is deeply integrated into our core business operations, delivering meaningful improvements in both operational efficiency and user experience. In terms of AI applications, we have developed an AI-powered service system based on multi-agent collaboration and launched an intelligent insurance consultation and planning tool for consumers. The system focuses on key stages of the insurance decision-making process, offering functions such as interpretation of product coverage and benefits, underwriting eligibility assessment for users with pre-existing medical conditions, insurance planning suggestions, and policy explanation and comparison. Through multi-turn conversations, the system continuously refines user profiles to deliver personalized insurance consultation and planning services.

From a tech standpoint, we have built a structured knowledge system centered on an insurance expertise knowledge base and domain-specific modeling capabilities, covering product clauses, underwriting rules, and service workflows. The knowledge base currently encompasses thousands of insurance products and their policy details, with millions of accumulated professional knowledge data encompassing insurance, healthcare, and service processes. Through model training and optimization tailored to insurance scenarios, the system consistently enhances its own understanding of complex semantics, health condition descriptions and policy rules. Architecturally, a multi-agent collaborative mechanism enables modular execution of tasks such as requirement comprehension, information completion, knowledge retrieval, and solution generation, improving response quality and stability across complex consultation scenarios.

In terms of business outcomes, these capabilities have measurably enhanced users' understanding of insurance products, improved their decision-making efficiency, and strengthened the professionalism and trustworthiness of the consultation process. At the same time, by productizing professional knowledge and service capabilities, we continue to improve the level of standardization, professionalism, and intelligence in consumer-facing insurance consultation services. We have adopted integrated AI capability development as our core strategic organizational upgrade strategy, driving the large-scale deployment and deep integration of AI agents across all functions and processes, and accelerating the paradigm shift from tool-based AI to organization-wide AI. Our three-tier architecture of platform plus skills plus scenarios enables rapid composition and reliable operation of AI agents across complex business scenarios.

Stella Liu: Before I conclude, I want to touch on industry influence and thought leadership. In May this year, Yuanbao, together with the China Center for Insurance and Pension Finance Research at Tsinghua University PBC School of Finance, released the 2025 China Internet Insurance Consumer Insights Report for the fifth consecutive year. The report continues to track evolving consumer behavior and changing demand trends in China's internet insurance market. It serves as a valuable reference point for the industry while allowing us to develop deeper insights into the ongoing shifts toward digitalization, intelligent services, and increasingly rational consumer decision-making.

We incorporate those insights into our product matching capabilities, AI-powered services, and operational system development, reinforcing Yuanbao's leading position in the internet insurance industry.

Rui Fang: Looking ahead, against the backdrop of the launch of the 15th Five-Year Plan and the ongoing implementation of the Healthy China strategy, public awareness of health protection is rising, and demand for more professional, personalized, and full-lifecycle insurance services is growing with it. The industry's accelerating transition from scale-driven expansion to high-quality development aligns closely with Yuanbao's long-standing strategic focus on technology-driven development, user-centricity, and commitment to inclusive protection. Going forward, we remain focused on building integrated AI capabilities, deploying AI agent deployment across the full insurance process. We will continue to enhance our ability to identify user needs, match users with suitable products, and deliver advisory services, thereby upgrading both operational efficiency and user experience.

These efforts will lay a solid foundation for establishing a full-lifecycle health and protection ecosystem.

Stella Liu: Supported by our solid financial foundation, sustained profitability, extensive data assets, and large model capabilities, as well as long-term insights into users' real needs, we are confident we can capture the industry's structural opportunities. We will continue to provide users with more professional, convenient, and trustworthy insurance services, generating long-term sustainable value for consumers, partners, and shareholders, while helping to strengthen China's multi-tiered medical protection system and safeguarding public well-being. Now I'll turn the call over to our CFO, Huirui Wan, to present our financial results for the first quarter of 2026. Thank you, everyone.

Huirui Wan: Thank you, Mr. Rui Fang. Thank you, everyone, for joining today's earnings conference call. I'm pleased to walk you through our first quarter 2026 financial results. We started the year with a strong all-round performance, marked by healthy double-digit top-line growth, solid profitability, and a strengthened cash position. We also continued to make meaningful progress on integrating AI more deeply across our organization. Total revenues for the first quarter came in at RMB 1.32 billion, a 35.6% year-over-year increase. This growth was broad-based, with meaningful contributions from both insurance distribution system services. Looking at our revenue mix, insurance distribution services contributed RMB 411.3 million, a 27.8% year-over-year increase.

This reflected a higher volume of policies purchased through our platform, supported in part by our targeted marketing initiatives. System service revenues totaled RMB 904.6 million, up 39.8% year-over-year. Growth here was led by continued refinements to our full consumer service cycle engine, which enabled us to deliver more effective marketing and customer-related services to our partnered insurance carriers. Deepened engagement with both existing partners and newly onboarded carriers also contributed to the increase. Turning to expenses. Total operating expense costs for the quarter rose 29.1% year-over-year to RMB 878.6 million. Operation and support expenses came in at RMB 47.5 million, up a modest 6% year-over-year.

Selling and marketing expenses increased 29.4% year-over-year to RMB 638.2 million, reflecting our continued investment in consumer acquisition engagement. General admin expenses were RMB 86.6 million, up 30% year-over-year, primarily driven by higher salaries. Research and development expenses rose 39.7% year-over-year to RMB 106.3 million, as we continue to grow our R&D headcount and broaden our technical capabilities, which remain core to differentiating our online insurance distribution platform. Before the operating line, income tax expense for the quarter was RMB 69.4 million, compared with RMB 6.7 million a year ago, primarily driven by a higher effective tax rate during the quarter.

Net income for the quarter was RMB 387.6 million, a 31.4% year-over-year increase, with a net income margin of 29.5%. Non-GAAP adjusted net income reached RMB 408.8 million, up 31% year-over-year, with a non-GAAP adjusted net income margin of 31.1%. Our cash position grew during the quarter. As of March 31st, 2026, our cash and cash equivalents, time deposits, restricted cash, short-term investments, and long-term bank deposits total RMB 4.74 billion, an increase of 71.4% year-over-year and 17.4% from year-end 2025. Net cash provided by operating activities in the quarter was RMB 721.3 million, reflecting the underlying cash generation power of our business.

This balance sheet strength provides us with ample flexibility to continue investing in our strategic priorities, including the build-out of our integrated AI capabilities. Our financial performance enabled us to invest in growth while also delivering on our commitment to long-term shareholder value. Let me now turn to how we are returning value to our shareholders. First, regarding the dividend. The board has approved an annual cash dividend of US$1.26 per ADS or US$0.21 per ordinary share. The record date is set for a close of business on July 2nd, 2026. We expect to pay ordinary shareholders on or around July 21st, 2026, and ADS holders on or around July 28, 2026.

Please note that precise timing of receipts may vary based on the processing efficiency of the respective brokerages. Future dividends remain subject to the approval of our board of directors. Second, regarding the share repurchase program. The board has authorized us to repurchase up to US$15 million of our ordinary shares in the form of ADS over a 12-month period. As Mr. Fang mentioned, this reflects our board's confidence in our long-term growth prospects. We plan to fund these repurchases entirely from our existing cash balance. The board will review this program periodically and may adjust, suspend, or discontinue it based on market conditions.

To close, our first quarter results reinforce both the durability of our growth model and our ability to expand while maintaining financial discipline and strong profitability. This financial strength also supports both a cash dividend and a share repurchase program, underscoring our commitment to capital discipline and direct shareholder returns. Looking ahead, we will remain focused on driving high-quality revenue growth, unlocking further operating leverage, and delivering lasting value for our shareholders. Thank you. I would now like to open the call to Q&A. Operator, please go ahead.

Operator: Thank you. We will now begin the question and answer session. To ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one 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. We will now proceed to take our first question. Our first question comes from the line of Amy Chen of Citi. Please ask your question. Amy, your line is open.

Amy Chen: This is Amy from Citi Research. I would first like to congratulate management on a quarter of very robust results. My question is on marketing efficiency. Year to date in 2026, have you seen continuous improvement in marketing efficiency? I would like to learn more about how AI deployment has enabled this and in particular, in which phase, say customer acquisition or conversion or post-sale services, where AI help the most.

Rui Fang: Our customer acquisition efficiency has remained robust as our business scale has expanded as reflected in our sustained operating leverage in selling and marketing expenses. Our customer acquisition usually based on core engine, but we don't have any changes now. While rising acquisition costs typically accompany business growth in this industry, our tech-driven engine and continuous improvements help offset this trend. Over the past 15 quarters, we have successfully controlled cost growth and stabilized margins amid intense competition. From an AI perspective, our model has consistently been AI-driven with no major changes.

Operator: Thank you. We will now take our next question from the line of Yue Xu from China Security Company. Please ask your question, Yue, your line is open.

Yue XuOkay: Congratulations on another strong quarter. My question regards on the marketing policy. We see some new rules from April 2026 banning using personal accounts to market financial products, including insurance products. Just wondering how much will this impact our customer acquisition model?

Rui Fang: To date, the release of this regulation hasn't had any material impact on our user acquisition model. First, prioritizing compliance, we have long established marketing management systems and mandatory compliance reviews. Furthermore, our core business model is built on deep collaboration with licensed issuers. All of our product terms are either filled with or approved by the regulators, ensuring ongoing compliance across our operations. We are also committed to maintaining long-term proactive communication with regulatory authorities to ensure our corporate strategy remains aligned with the latest policy direction.

Operator: Thank you. We will now proceed to take our next question. The question comes from Thomas Wong of Goldman Sachs. Please go ahead, Thomas. Your line is open.

Thomas Wong: This is Thomas from Goldman Sachs. My question is on shareholder return. It's good to see that we got positive retained profit and the dividend and the buyback. Can you just give us a little bit color on your thinking and how you think about shareholder return in the future? Thank you.

Rui Fang: As disclosed in today's first quarter results, our board has approved two core initiatives: an annual cash dividend of US$1.26 per ADS, and a share repurchase program of up to $15 million, which is aligned with what we communicated with the market before. These actions fully demonstrated our long-term confidence in our business outlook and our firm commitment to enhancing long-term corporate value. As our chairman, Mr. Fang, emphasized, this reflects both our healthy financial fundamentals and a key component of our capital allocation strategy. Through shareholder return strategies, we aim to steadily create sustainable value for our shareholders, while securing the company's future growth. For 2026, we will review our shareholder return policies again.

Operator: Thank you. We will now take our next question from Xingtao Chen of CICC. Please go ahead, Xingtao, your line is open.

Xingtao: ChenHi management, this is Chen Xingtao from CICC Research. Thank you very much for the opportunity to ask a question. Congratulations on the excellent result in the first quarter. We noticed that the company recently co-published the 2025 China Internet Insurance Consumer Insights Report with Tsinghua University, which highlights the electrification of online insurance distribution and point to AI as a key driver in consumers purchase decisions. Could management add some color on whether the company plan more strategies or scenarios around AI-empowered consumer decision making to enhance consumer outreach and drive higher conversion? Thank you.

Rui Fang: Yes, absolutely. For example, this quarter we developed an AI-powered service system based on multi-agent collaboration, and launched an intelligent insurance consultation and planning application for consumers. This system has been deeply embedded across all decision-making stages, providing full process support such as policy interpretation, preexisting condition assessment, and personalized plan comparison. Through multi-turn conversations that progressively enrich user profiles, we have addressed the pain point of complex policy terms, significantly lowered the barriers to user decision making, and enhanced both professionalism and trust.

On the technical side, our core is a structured knowledge system spanning thousands of products and millions of data points, coupled with a domain-specific model optimized for insurance scenarios to precisely understand complex health conditions and underwriting rules. By modularizing user intent comprehension, knowledge retrieval and plan generation through multi-agent collaboration, we ensure high service quality and consistency. This system has successfully standardized and prototyped our service capabilities. Moving forward, we will continue to leverage our proprietary tech to deepen AI application in precision, reach, and decision support, consolidating our leadership in intelligent insurance services.

Operator: Thank you. We will now take our next question from Yuan, CITIC. Please go ahead. Yuan, your line is open.

Yuan Liao: Thanks management for taking my questions. Congrats for the strong quarter results. My question is about the AI agent influence on our business model and the competition landscape. How should we think about the impact of the agent era on our business model and competition? Thank you.

Rui Fang: Regarding whether new entry points like AI agents can become mainstream channels for insurance sales, we believe the viability of this scenario remains to be seen. There are two methods of selling today. One is online through info systems, and the other is through traditional human agents. The key is to understand how agentic AI will reshape the sales dynamics of content consumption platforms, and whether it will transform SEO or GEO discovery methods. We believe that major Internet platforms where we currently distribute our products will continue to command a significant share of user time spent in the foreseeable future.

That said, we do believe that products requiring more user mindshare for decision making, such as higher premium products, which are typically sold through search or e-commerce discovery channels, will potentially be affected by the advent of agentic AI capabilities. More importantly, the widespread use of AI for information discovery and search will better educate consumers about insurance products. This in turn will help raise awareness, build trust, and drive the overall adoption of commercial insurance.

Operator: Thank you. We will now proceed to take our next question from the line of Yingying Xu from Zheshang Securities. Please go ahead, Yingying, your line is open.

Yingying Xu: Thank you for taking my question and congratulations on the results. My question is about customer retention and renewal rates. Aside from continual traffic acquisition, could management share what customer engagement and retention initiatives Yuanbao is currently focusing on to better balance conversion efficiency and user experience, and further improve policy renewal rates. Thank you.

Rui Fang: Customer acquisition through online channels remains very important to us because we believe that China's commercial health insurance market remains significantly under-penetrated. We continue to invest in new products and services for our consumers to improve user experience. In terms of product innovation, we collaborated with insurers to deeply customize high perceived value products such as zero-deductible medical insurance and multi-claim critical illness plans, building user stickiness from the start. Additionally, we are continuously rolling out value-added services, particularly the deep integration of our technology capabilities throughout the entire claims process. By leveraging AI, we have enabled our partner insurers to achieve significantly more efficient and faster reaction times when handling user claims.

This not only provides us with tangible positive user experience stories to share with the market, but more importantly, it fundamentally strengthens user trust, which is the cornerstone for improving long-term policy renewal rates. We believe that our efforts to continually collaborate with insurers to innovate and increase the awareness of the value of short-term commercial insurance policies will lead to improved metrics.

Operator: Thank you. We will now take our next question from the line of Sun Liqi of Shenwan Hongyuan Securities. Please ask your question, Liqi, your line is open.

Sun Liqi: This is Sun Liqi from Shenwan Hongyuan Securities. Congratulations on the impressive result of the first quarter of 2026. As previously mentioned, on top of Yuanbao's core business, the company is planning to explore some innovative initiatives. Could you please share more details on the specific areas and strategic direction of these explorations? When should we expect to see meaningful progress or tangible results from these efforts? Thank you.

Rui Fang: We are always exploring and evaluating innovative and new business while remaining anchored in our core business. However, our current explorations are not yet at a disclosable stage; therefore, we have no specific details to disclose at this time.

Operator: Thank you. That concludes the question and answer session. I'd like to turn the conference back to the management for any additional or closing comments.

Stella Liu: Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly or 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.

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

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