Waterdrop Q2 Earnings Call Highlights

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Tue, September 8, 2026 at 5:03 PM GMT+3 6 min read

WDH +7.35%

Key Points

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Strong Q2 growth: Waterdrop's revenue rose 72.8% year over year to RMB 1.45 billion, with the company remaining profitable for its 18th consecutive quarter. Management is targeting more than 40% full-year revenue growth and over 10% operating-profit growth in 2026.
Insurance expansion supported by investment and AI: Insurance revenue increased 80.5% to RMB 1.33 billion, while new customers rose 32.3% sequentially. Waterdrop plans to sustain customer-acquisition spending and use AI to improve product matching, conversion, underwriting and customer service.
Shareholder returns continue: The board approved a $0.03-per-ADS dividend and a new share-repurchase program of up to $50 million over 12 months. The company held RMB 2.65 billion in cash and related investments at the end of June.

Waterdrop (NYSE:WDH) reported second-quarter 2026 revenue of RMB 1.45 billion, up 72.8% from a year earlier, while management said the company remained profitable for its 18th consecutive quarter. Net profit attributable to ordinary shareholders was cited at approximately RMB 130 million in opening remarks, while Finance VP and Head of Strategy and Capital Markets Jieru Li later described attributable net profit as about RMB 126 million.

Founder, Chairman and CEO Peng Shen said the company expects its current investment in growth to build a larger user base and support future profit potential. For full-year 2026, Waterdrop is targeting total revenue growth of more than 40% year over year and operating-profit growth of more than 10%.

Insurance Growth and Customer Acquisition Investment

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Waterdrop's insurance business generated RMB 1.33 billion in second-quarter revenue, up 80.5% year over year and 15.4% sequentially, according to Director and General Manager of Insurance Business Ran Wei. Segment operating profit was RMB 180 million, up 20% from the first quarter.

New insurance customers increased 32.3% sequentially as the company continued investing in customer acquisition and conversion. First-year premiums for long-term insurance rose 33.4% sequentially, which management attributed to demand for endowment insurance products during the quarter.

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Shen said Waterdrop does not intend to pursue lower acquisition costs alone. Instead, the company is using AI to better align product supply with customer profiles and improve conversion. Management expects to maintain an active acquisition pace through the second half of 2026 and into 2027, with the aim of capturing value over customer lifecycles through renewals, upselling, cross-selling and family insurance purchases.

Waterdrop also highlighted insurance products for people with preexisting conditions. Such products contributed RMB 310 million in first-year premiums during the quarter, while disability insurance generated RMB 84 million in first-year premiums. The company introduced Rongyi Bao, which it described as a long-term critical-illness insurance product with no health disclosure requirement and five-year guaranteed renewability.

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Wei said the broader health-insurance market is moving toward more specialized products as health awareness rises and China's population ages. Management identified coverage for people with preexisting conditions, mid- to high-end medical insurance, and products incorporating health management and elderly-care services as areas with growth potential.

AI Deployment Across Operations

Management emphasized AI as a central component of Waterdrop's operating strategy rather than a standalone business segment. Shen said the company measures AI's value through the efficiency and growth it produces across customer acquisition, risk screening, claims and service operations.

AI applications in customer-facing insurance scenarios facilitated nearly RMB 100 million in first-year premiums during the quarter, the company said. Waterdrop's AI medical-insurance expert tools facilitated a 25.6% sequential increase in first-year premiums, while its WeCom operating scenario contributed more than RMB 10 million in such premiums.

The company said its underwriting assistant, KEYI.AI, had answered more than 13,000 underwriting questions since launch. Its AI sales assistant has outperformed human life planners in annual premium per lead, according to management. Waterdrop had filed 88 large-language-model patents as of the end of June, including 10 outside China.

Li said research and development expense rose 32.4% year over year to RMB 68.8 million, driven in part by cloud-server, token and other information-technology support costs, as well as personnel expenses. Shen said the overall R&D expense ratio remains in a relatively stable range, though the company is shifting resources toward AI talent, algorithms, models and token costs.

Waterdrop is also piloting a portable AI office assistant, a smart hardware product being tested in major global markets. Shen said initial feedback has been encouraging, but the initiative remains at an early stage and currently has limited financial impact.

Crowdfunding and Healthcare Updates

As of June 30, Waterdrop Medical Crowdfunding had received contributions from about 499 million donors, helped 3.82 million patients and raised approximately RMB 74.7 billion cumulatively. The company said it has upgraded AI-driven risk controls to identify potential asset concealment and sensitive identities by analyzing identification information, medical materials, user-generated content and other data.

In its healthcare business, Waterdrop enrolled more than 1,500 patients during the quarter, up 54% year over year, and had served more than 17,000 patients cumulatively. Management said improved document structuring and AI matching models enabled the platform to process more complex enrollment criteria.

Chronic-disease enrollment increased 80% year over year, while oncology remained the business's core area. The company's E-Find platform added 167 projects during the quarter, and its pharmaceutical company and contract research organization partner count exceeded 255.

Profitability, Capital Returns and Outlook

Waterdrop reported operating profit of about RMB 111 million, up 14.3% year over year and 39.2% sequentially. Total operating costs and expenses increased 80.5% year over year to approximately RMB 1.34 billion. Sales and marketing expense rose to nearly RMB 638 million from RMB 199 million a year earlier, primarily reflecting increased investment in third-party traffic channels.

As of June 30, the company held RMB 2.65 billion in cash, cash equivalents, short-term investments and other cash positions. The board approved a cash dividend of $0.03 per American depositary share, or $0.003 per ordinary share, totaling about $10.8 million. The dividend is payable in early November to holders of record as of Oct. 9.

The board also approved a new share-repurchase program authorizing up to $50 million in repurchases over the next 12 months. Waterdrop said it had repurchased approximately 62.9 million ADS for about $121 million as of Aug. 31 under programs launched since 2021.

About Waterdrop (NYSE:WDH)

Waterdrop Inc (NYSE: WDH) is a China-based insurtech and health protection platform that leverages digital technology to connect consumers with insurance and healthcare services. Through its mobile app and online marketplace, Waterdrop offers a range of microinsurance and critical illness products designed to provide affordable coverage for everyday risks. The platform also features crowdfunding channels that enable users to contribute to medical expense relief for individuals facing serious health challenges.

Since its founding in 2016 and headquartered in Shanghai, Waterdrop has grown its partner network to include leading insurance carriers and medical institutions across mainland China.

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The article "Waterdrop Q2 Earnings Call Highlights" was originally published by MarketBeat.

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