Huize (HUIZ) Q1 2025 Earnings Call Transcript

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DATE

• Friday, June 6, 2025 at 8 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Cunjun Ma
• Chief Financial Officer — Ron Tam
• Co-Chief Financial Officer — Kenny Lo

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TAKEAWAYS

• Operating Revenue: RMB 284 million for the first quarter of 2025.
• Gross Written Premiums (GWP): Reached RMB 1.4 billion in the first quarter of 2025, up 37.83% sequentially from Q4 2024.
• First-Year Premiums Facilitated (FYP): RMB 730 million, increasing 37.83% sequentially, though management acknowledged a YOY decline due to a high base effect in the prior year.
• Renewal Premiums: Approximately RMB 710 million for the first quarter of 2025, up 64.6% sequentially from Q4 2024.
• Total Operating Expenses: Decreased by 29% compared to Q4 2024, enabled by AI integration and workflow automation.
• Expense-to-Income Ratio: Improved by 11.5 percentage points quarter over quarter to 29% for the first quarter of 2025.
• Cash and Equivalent Liquidity: Stood at RMB 202 million (U.S. $28 million) at the end of Q1 2025.
• Customer Growth: Added 90,000 new customers in the first quarter of 2025, bringing the total customer base to 11 million as of Q1 2025.
• Long-Term Insurance Product Mix: Maintained focus, with over 90% of total GWP attributed to long-term products in Q1 2025.
• Repeat Purchase Ratio: 38% for long-term products in the first quarter, indicating successful customer lifecycle monetization.
• AI-Powered Platform Enhancements: AI agents now automate policy inquiries, product matching, and claims processing; Xiaoma Claim facilitated RMB 190 million across 46,000 cases during Q1 2025.
• Vietnam Operations (Global Care): Increased total policy count by 29% compared to the first quarter of 2024 and GWP and revenue rose 35.34% year over year compared to the first quarter of 2024, supported by expanded product offerings and new partnerships.
• International Revenue Contribution Target: On track for overseas markets to reach 3% of total revenue by 2026.

SUMMARY

Huize (NASDAQ:HUIZ) achieved a sequential rise in premium volume for Q1 2025, marked by cost discipline, customer base expansion, and further integration of AI across business processes. Management reported international operations as a significant growth lever, outlining concrete advances in Vietnam and pending entry into Singapore. The company signaled a positive outlook for Q2 and Q3, citing an anticipated regulatory leveling of agency commissions that could benefit independent platforms, with increased agent migration and further product breadth aiding scalability. Investment in proprietary AI models and digital claim handling is enhancing efficiency and user experience, while the product suite is recalibrated to meet rising demand for participating and savings-linked offerings amid muted legacy return environments.

• CFO Tam said, "the international business, in terms of gross margins, is relatively lower than the domestic business. And therefore, I think that will be reflected in what you noted in terms of the gross margin decline in the first quarter of 2025."
• Tam stated, "If such a measure would be implemented in the second half of this year, we do expect that the so-called impact on our business will be positive because what that means is that the playing field is leveled among the different channels, among bankers, brokers, and agencies, tied agencies."
• The omnichannel model and third-party distribution are increasingly favored, with China compared to 30%-50% in mature Asian markets.
• Company digital transformation, including AI-powered marketing avatars and end-to-end automation, is now reducing production time and cost for content and claims workflow, directly impacting expense trends.
• Pony Insurtech, the international arm, is slated for operational launch in Singapore by Q3 2025, with Philippines market entry set for the second half as a secondary priority.

INDUSTRY GLOSSARY

• Gross Written Premiums (GWP): The total premium (pre-reinsurance and cancellations) booked within the reporting period for all insurance contracts sold through the platform.
• First-Year Premiums (FYP): Premiums on newly underwritten policies recorded during the first year of coverage, typically used as a measure of new policy sales volume.
• Participating Insurance Products: Insurance policies that provide policyholders with a share of the insurer’s surplus or profits, usually in the form of dividends, subject to investment performance.
• Expense-to-Income Ratio: A measure of efficiency, calculated as total operating expenses divided by total operating revenue, expressed as a percentage.

Full Conference Call Transcript

Cunjun Ma: Hello, everyone, and thank you for joining Huize Holding Limited's first quarter 2025 earnings conference call. In 2025, against the backdrop of ongoing macroeconomic and geopolitical volatility, Huize Holding Limited upholds its customer-centric approach. Leveraging years of insights into customers' needs, we stay ahead of market trends and are now working alongside leading insurers, continually expanding and refining our product offerings. At the same time, we are accelerating the integration of AI across our operations, driving remarkable productivity improvements, and further optimizing our cost to lay the solid foundation for long-term value creation.

In the first quarter, operating revenue exceeded RMB 280 million with gross written premiums and first-year premiums facilitated on our platform increasing 38.31% sequentially, reaching RMB 1.4 billion and RMB 730 million, respectively. Renewal premiums also grew 64.6% sequentially to approximately RMB 710 million. Huize Holding Limited remains committed to providing full life cycle insurance solutions for its high-value customers. By quarter-end, our cumulative number of users surpassed 11 million with 90,000 new clients added during the quarter. The average age of long-term insurance customers was 35, with over 65% residing in high-tier cities, where we have consistently achieved this advantage over the past few quarters.

In terms of FYP, the average ticket size for long-term products rose 58% to over RMB 5,400, underscoring the effectiveness of our successful sustainable customer strategy. As of March, we had strong partnerships with 43 insurance companies, continuing to develop and launch differentiated customized products with insurer partners. With declining yields on traditional bank deposits and wealth management products, demand for wealth protection solutions has intensified. In response, we partnered with Neutrolife to launch Please Note Free, the savings products driving to achieve sustainable returns for customers. Additionally, we expanded our portfolio of customized participating products, building on the full and the series co-launched with Afibacopco.

We partnered with Cathay Ludiadre Life Insurance on Tmall, New June Number Six, participating in incremental whole life insurance products. This was followed by the launch of Xinhai Huishuan, a participating annuity product we developed with Primerica Fossil Life Insurance. These customized products were designed to cater to the industry-wide demand shift from fixed returns to floating returns, further solidifying our leadership in China's participating insurance segment. In view of our global expansion strategy, we introduced Xiaotao T Global, a children's critical illness product co-developed with Cigna and CMB Life Insurance that leverages their overseas resources to offer global client settlement and overseas medical support. The rapid advancement of generative AI and AI agents is transforming traditional enterprise workflows.

Under our AI plus strategy, we continue to enhance both the user experience and operational efficiency. We have deployed the Huize AI agent development platform internally with the goal of developing independent AI productivity. Leveraging open-source AI models, we have implemented private domain deployment of large language models to ensure data security and regulatory compliance. At the same time, we are actively promoting the development of local AI agents to accelerate AI agent creation using visualization tools. This is driving the company-wide productivity revolution with AI agents acting as a new generation of digital employees. In the quarter, we have further optimized our cost structure and reduced operating expenses, with total operating expenses falling by 29% sequentially.

Our customer-centric approach leverages innovative technologies to deliver personalized insurance service experiences. During the quarter, we launched an AI-powered smart portal on Huize's app offering 24/7 insurance agent support. Our AI services cover key customer life cycle touchpoints, including policy inquiries and product matching, serving an average of over 15,000 users daily. We are also revolutionizing after-sales claims processing through Xiaoma Claims AI agents, achieving end-to-end automation of claims recording, review, and payout. With AI now capable of handling all claims reporting, we are now working to extend this innovative feature to our apps and mini-programs. This innovation is expected to reduce processing time on Xiaoma Flash Claim from one day to one hour upon full rollout.

During the quarter, Xiaoma Claim facilitated RMB 190 million in claims across 46,000 cases, providing customers with efficient and reliable insurance claim services. Our international brand, Pony and Utech, continue to deliver strong growth momentum, underscoring the vast potential of Southeast Asia. Vietnamese operation Global Care maintained solid traction and grew total policy count by 29% compared to the first quarter in 2024, with gross written premiums and revenue increasing by 35.34% year over year, respectively. We recently partnered with Vitol Post, a leading logistics service provider in the region, to expand our distribution network further, growing our team of independent financial advisers and enhancing the reach and conversion capabilities of the G Cell platform.

On the product side, GlobalCare launched five-year and ten-year critical illness insurance products in collaboration with PBI Insurance, enriching our product portfolio to better meet customers' diverse protection needs. Cognition tech continues to drive the transformation of the Vietnamese insurance market through innovation and marks a crucial milestone of our international expansion. We are making steady progress in expanding into Singapore and other overseas markets and are on track to achieve our goal of reaching 3% of total revenue contribution from international markets by 2026. Global macro and geopolitical conditions remain volatile, yet insurance demand in China and across Asia stays resilient with digital adoption accelerating.

Drawing on deep customer insights and AI-driven product innovation, and strong momentum in Vietnam and other Southeast Asian markets, Huize Holding Limited delivered another quarter of solid growth and operating agility. Looking ahead, we will widen our range of savings and health products for high-value clients, embedding our self-hosted large language model platform across the service chain to lift efficiency and experience. Internationally, Pony Insurtech will tap into Singapore and other priority markets, keeping us on track for overseas revenue targets. Grounded in product innovation, customer experience, and AI, we will continue to create win-win value for insurers and customers while delivering sustainable long-term returns for shareholders. This concludes my prepared remarks for today.

I will now turn the call to our CFO, Mr. Ron Tam, who will provide an overview of our key financial highlights for the first quarter.

Ron Tam: Thank you, Mr. Ma and Kenny. Good evening, everyone in Asia, and good morning to those in the US. Despite a challenging macroeconomic and geopolitical environment, we have delivered yet another quarter of resilient performance. During the first quarter, both total gross written premiums (GWP) and first-year premiums facilitated on our platform increased 37.83% sequentially, reaching RMB 1.4 billion and RMB 730 million, respectively. Total operating revenue remained at RMB 284 million. Our financial position remains very robust with a combined balance of cash liquidity of around RMB 202 million or US dollar equivalent $28 million as of the end of March.

This resilient performance was driven by our efficient omnichannel distribution network, our focused efforts to continue to acquire high-quality customers from the market, and the deployment of advanced proprietary AI solutions. Crucially, we have made significant progress in executing on our international expansion strategy, which is a key growth driver for long-term sustainable growth for the company. Our strategic focus has remained on long-term insurance products, which continue to account for over 90% of total GWP facilitated on the platform. Leveraging our robust omnichannel distribution network and advanced AI solutions, we are significantly strengthening customer acquisition engagement, adding approximately 390,000 new customers during the first quarter of 2025.

This brings our total customer base count to 11 million as of the end of the first quarter. In addition, the repeat purchase ratio for our long-term insurance products stood at a very high level of 38%, demonstrating our ability to continue to unlock the lifetime value of a high-quality customer base through effective upselling and cross-selling. We have also seen reasonable reductions in all three kinds of operating expenses, ranging from 15.8% to 48% quarter over quarter, which has improved our expense-to-income ratio by 11.5 percentage points quarter over quarter to 29% in the first quarter of 2025. In addition, total operating expenses have fallen by 29% compared to the fourth quarter in 2024.

This reduction reflects decisive actions in continued workplace optimization and broad deployment of AI-driven automation, which has sharply reduced manual workloads and boosted efficiency throughout the business flow. These results demonstrate the strength of our intelligent cost control framework in delivering real cost savings and productivity gains in the business. A clear illustration of our AI-driven productivity gains is the use of localized AI avatars in marketing. These avatars can replicate a human voice and appearance in under a minute, producing highly engaging insurance content that is virtually indistinguishable from a live presenter. Integrated with our content management platform, the system now automates script generation, video editing, and distribution, creating a seamless end-to-end workflow.

As a result, we are scaling our social media presence with richer, more compelling content, materially reducing production time and cost. Our international growth engine, Pony Insurtech, delivered yet another solid quarter and remains central to our long-term strategy. Building on the success of our proprietary AI toolset in China, we are now looking to deploy these solutions across our overseas operations to streamline workflows and deliver a more personalized customer journey. Vietnam continues to provide a robust proof of concept for our Southeast Asia playbook, and we are making steady progress towards entering Singapore this year. These initiatives will further diversify our revenue mix and establish additional scalable growth drivers for the group.

In closing, we believe that we are well-positioned to capture the opportunities emerging from China's rapidly evolving insurance landscape and the broader Asian market. Domestically, robust demand for long-term protection underpins a healthy sustainable growth trajectory across the value chain. Internationally, Pony Insurtech allows us to replicate and apply a China-proven model and proprietary AI capabilities to high-growth Southeast Asian markets, particularly among the young, rapidly expanding middle class. By combining advanced analytics, end-to-end AI enablement, and disciplined market penetration, we aim to cement Huize Holding Limited's status as Asia's premier Insurtech platform, seamlessly connecting consumers, carriers, and distribution partners, and delivering durable value to all stakeholders. And with that, we now open up the call to questions.

Thank you very much, and over to you, Operator.

Operator: Thank you. We will now begin the question-and-answer session. To ask your questions on the phone, please press 11 and wait for your name to be announced. To cancel your request, please press 11 again. One moment for the first question. The first question comes from Amy Chen from Citi. Please go ahead.

Amy Chen: Hi. This is Amy from Citi. Thank you for the opportunity for me to ask a couple of questions. The first one would be regarding the selling expenses. We noted that the first-year premium facilitated in the first quarter saw around a 15% year-over-year decline. However, selling expenses were up by 7%. What's the gap here? And the second question is on sales momentum in the second quarter and your outlook for the rest of 2025. The industry is expecting another round of pricing rate cuts in the third quarter. Has this somehow boosted customer demand so far? Thank you.

Ron Tam: Thank you, Amy. It's a pleasure to have you again on the call. So I know that you have three questions to address just now. The first one is regarding the year-on-year decline in FYP and versus an increase in selling expenses, I believe. Right? I think to address the question on the FYP decline, I would note that in 2024, in the first quarter, there was actually a pricing cut effective during the quarter, which has also led to rush sales during that quarter. So I think, effectively, we are comparing the first quarter of 2025 versus a relatively high base for the first quarter of last year.

So I think that has to do with a high base effect for 2024. Albeit that in the first quarter of this year, we have further driven our revenue growth from not just domestic but also from international markets. So that has to do with the reasons I just cited on the low base high base effect of last year. And then on the gap between the FYP downturn and the channel cost increase, I would note that the international business, in terms of gross margins, is relatively lower than the domestic business. And therefore, I think that will be reflected in what you noted in terms of the gross margin decline in the first quarter of 2025.

On your second question regarding the outlook for the rest of the year, we do think that Q1 for 2025 is probably the rock bottom for this year. In Q2, we are seeing very decent momentum. Obviously, the international market is still in a high-growth phase. And for the domestic China market, we are also seeing a revival of growth given that the transition to the power products has basically been complete over the last two quarters. And channels have adjusted to the new product regime. So I think that in Q2, we are seeing growth across different products.

And with the expectation for a further pricing rate cut in August 31, which is now widely rumored and expected to be put in place, we do expect that there will be an effect on rush sales in the third quarter, particularly in the months of July and August, where we have seen similar situations in the last year and also in the past few years as well. Although we would note that the pricing rate at this time, because we are speaking versus previous episodes, is relatively muted.

And given that we are already in a sort of 2% handle kind of return level, the incitement for consumers to purchase would probably see a diluted effect versus what we have seen in the past years. So we do expect that Q3 will be strong, with August being the peak for domestic sales of savings products. Hope that answered your question, Amy.

Amy Chen: Yeah. Thank you, Ron.

Operator: Thank you for the questions. One moment for the next question. The question comes from the line of Kenny Lim of UOBKN. Please go ahead.

Kenny Lim: Good evening, Ron. I'm Kenny from UOB. And I have two questions from my end. First one, how do you expect the enforcement of power across the agency channels to affect your 2A business? And how does it change the overall industry competitive landscape? And my second question is about the latest international revenue contribution in the first quarter. So what is the latest progress of your business expansion plan in Singapore and the Philippines? Yeah. That's all.

Ron Tam: Thank you, Kenny. Appreciate your support. Well, two questions. One on Baoxing Khoi, which is the regulatory rule change impacting commissions for various channels. Given that we have lived through this regulatory change in the last 12 months now, and we do hear and expect that similar measures will be implemented and imposed upon the tied agency channel, you have noted in your question. If such a measure would be implemented in the second half of this year, we do expect that the so-called impact on our business will be positive because what that means is that the playing field is leveled among the different channels, among bankers, brokers, and agencies, tied agencies.

And therefore, we do expect that there will be continued so-called exodus of agents from the tied agency model into independent third-party platforms such as ourselves. So we would likely be capturing an additional influx of productive agents if such a measure will be implemented on the agency channel. And on the overall market, I would think that a similar observation will be seen across our competitors as well. And as a whole, then the market would continue to gravitate towards a more independent third-party kind of broker agency distribution model. We do know that right now in China, the third-party intermediaries still account for less than 10%.

I think still 5-6% of overall premium distribution versus what we see in more mature and developed markets such as Japan, Hong Kong, or even Singapore, where we see that the intermediary broker agency distribution is as much as 30 to 50% of the market. So in the long-term secular trend, we do see that the intermediation of premium will continue to be in favor of a platform such as ourselves. And the second point that I would note here is that we do see that independent financial advisers or independent agents are increasingly favoring platforms where they can get access to a wide variety of products from different providers such as ourselves.

We have over a hundred products on our platform that we can facilitate for agents to serve the customers and also especially in the digital age whereby agents would require digital tools to serve the customers and to make sure that customers have a very efficient and digital purchase journey. And for the likes of the incumbents, this may be a difficult solution to be provided. And where we have a very clear advantage in the competition. So overall, we do think that the impact will be positive, and we would wait and see when the measures will be implemented on the agency channel.

And your second question on international market expansion, we are very much on track in terms of our expansion into Singapore. We would likely be able to give a further material update in our next earnings call as to what our Singapore development has materialized into, hopefully, into an operational status by the third quarter. We are working very closely with regulators in the meantime to finalize arrangements and to make sure that our recruitment of necessary personnel for the business is in place. And our target is to be in business on this model by the third quarter of this year.

For the Philippines, we are still progressing, given that we are now prioritizing Singapore as a business development market. We likely will see the Philippines in the second half of this year.

Kenny Lim: Thank you, Kenny.

Operator: Thank you for the questions. With that, I would like to hand the call back to Kenny for closing remarks.

Kenny Lo: Thank you, Operator. In closing, on behalf of Huize Holding Limited's management team, I 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.

Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

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