This article first appeared on GuruFocus .
Release Date: June 16, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Waterdrop Inc ( NYSE:WDH ) reported a significant year-over-year revenue growth of 64.8% in Q1 2026, reaching RMB1.24 billion.
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The insurance business segment saw a substantial increase in income, up 74.1% year over year, driven by effective user acquisition strategies.
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The company is accelerating its shift towards becoming an AI-native company, with 75 LLM-related patent applications filed and new patents granted.
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Waterdrop Inc ( NYSE:WDH ) completed its fifth cash dividend since IPO, distributing approximately $10.8 million to shareholders.
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The company maintained a strong cash reserve, with cash and cash equivalents totaling approximately RMB2.88 billion as of March 2026.
Negative Points
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Despite the revenue growth, the net profit attributable to ordinary shareholders decreased by 9.1% year over year to approximately RMB98.4 million.
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Sales and marketing expenses increased significantly, reaching RMB541 million, primarily due to increased traffic investments.
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Operating profit showed only a modest year-over-year increase of 5.3%, indicating potential challenges in cost management.
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The company faced a decline in quarter-over-quarter income in the insurance segment, despite an increase in operating margin.
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Research and development expenses rose by 11.5% year over year, driven by increased cloud and technical service costs.
Q & A Highlights
Q: Can you elaborate on the growth strategy for the insurance business and how it impacted the first quarter results? A: Ran Wei, Director and GM of Insurance Business, explained that the insurance-related income reached RMB1.15 billion, up 74.1% year over year. The growth was driven by a continued focus on user acquisition and investment in traffic and AI, which led to significant premium growth. The operating margin improved due to cutting lower ROI channels and expanding into high-quality traffic channels.
Q: How is Waterdrop leveraging AI in its operations, particularly in the insurance segment? A: Ran Wei highlighted that AI applications contributed approximately RMB87 million in incremental premiums in Q1. AI tools like AI-pro insurance and AI medical insurance experts are used for real-time support, handling underwriting inquiries, and improving service efficiency. The company is also testing the Claude Copilot for CRM and WeCom to streamline operations.
Q: What advancements have been made in the Waterdrop Medical Crowdfunding platform? A: The platform has seen cumulative donations of TWD73.5 billion to 3.75 million patients. The focus this quarter was on AI capability building and improving services in diverse regions. AI-assisted models were introduced for risk control, and service workflows were refined to cater to linguistically diverse communities.
Q: Can you provide insights into the financial performance and cost management for Q1 2026? A: The unidentified company representative reported that total revenue reached RMB1.24 billion, up 64.8% year-over-year. Operating costs increased by 30.1% due to business expansion, while sales and marketing expenses rose significantly due to increased traffic investments. Despite these costs, the company maintained a strong cash reserve of approximately RMB2.88 billion.
Q: What are the future growth projections and strategic priorities for Waterdrop in 2026? A: CEO Shen Peng stated that the company aims for approximately 40% top-line growth with stable operating profit. The focus will be on increasing marketing investment to expand the user base, which is expected to unlock greater profit potential and support long-term development.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
