Huize Holding Ltd - ADR Aktie

Ladies and gentlemen, thank you for standing by, and welcome to the Huize's Second Half and Full Year 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded, and the webcast replay will be available on Huize's IR website at ir.huize.com under the Events and Webcasts section. I'd now like to hand the conference over to your speaker host today, Mr. Kenny Lo, Huize's Investor Relations Director. Please go ahead, Kenny.

Thank you, operator. Hello, everyone, and welcome to our second half and full year 2025 earnings conference call. Our financial and operational results were released earlier today and are currently now available on both our IR website and Globe Newswire services. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements.

Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained in our earnings release and filings with the SEC. Joining us today are our Founder and CEO, Mr. Cunjun Ma; Co-CFO, Mr. Minghan Xiao; and Co-CFO, Mr. Ron Tam. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights, followed by Mr. Tam, who will go over our financial results for the year 2025. Then we'll open the call for questions.

I will now turn the call over to Mr. Ma.

[Interpreted] Welcome to Huize's Second Half and Full Year of 2025 Earnings Conference Call. In 2025, China's insurance industry underwent profound structural changes. As bank deposit rates continued to decline, household wealth allocation shifted fundamentally, with capital accelerating to long-term stable assets such as [ insurance, participating ] products that offer both protection and wealth accumulation emerged as a core growth engine for the industry. Furthermore, the generative AI and AI agent capabilities is deeply shaping the industry ecosystem and operating models, driving sector towards greater efficiency and intelligence.

Internationally, Southeast Asia insurance markets are expecting accelerating digital penetration -- and a growing middle class, creating compelling structural opportunities. Our proactive forward-looking strategy ideally positioned us to capitalize on these dynamics and deliver a strong performance in 2025. Both GWP and FYP facilitated on our platform in 2025 reached record highs of RMB 7.4 billion and RMB 4.6 billion, surging 21% and 35% year-over-year, respectively. Total revenue for the year came in at RMB 1.6 billion, growing approximately 27% from last year, driven by strong top line -- cost efficiency improvement from the strategic deployment of AI solutions across our organization. We delivered non-GAAP net profit of RMB 22.6 million.

This marks the third consecutive year of non-GAAP profitability, a testament to our resilient execution in a dynamic market and the long-term sustainability of our business model. We remain deeply committed to our customer-centric strategy, serving our high-quality customer base across the full insurance life cycle. In 2025, we added approximately 1.7 million new customers, bringing the total to over 12 million by year-end. The average age of long-term insurance policyholders was 35.3 years with 65.8% residing in Tier 2 cities or above, reflecting our focus on high-quality customer demographic segments. The average FYP ticket size for long-term insurance was approximately [ RMB 7,900 ] in 2025, a [ 38% ] increase year-over-year.

As of year-end, each of our 13th and 25th month persistency ratios for long-term insurance products remained at industry-leading levels of over 95%, highlighting our strong retention capabilities and fully validating the quality of our service and the competitiveness of our product offerings. By year-end, our partner ecosystem grew to 158 insurer partners, allowing us to continue expanding the differentiated customized products we offer. To address the growing demand for wealth management and financial planning solutions in an aging society, we launched Dajia Hui Xuan 2.0, a participating annuity product designed to provide premium diversified retirement planning solutions.

We also launched 2 customized million [indiscernible] medical insurance products, Xing Xiang Shou 2.0 and Chang Xiang An 3.0, each offering differentiated features, including 20-year guaranteed renewal and simplified health underwriting that cater to the diverse health protection needs of different customer segments. Together, these launches reinforce our core competitiveness in the medical insurance segment and lay a solid foundation for our long-term sustainable growth. We began fostering an AI native culture across the organization during the year, deploying AI solutions across the insurance service value chain.

This significantly improved our expense to revenue ratio, which fell 5.9 percentage points year-over-year to 26.3% and was a key contributor to our return to full year profitability. We also deployed our AI solutions across the entire customer journey, covering intent recognition, product recommendations and underwriting claims. This meaningfully enhanced the user experience and supported a 50% year-over-year increase in AI-driven self-service policy purchases among new users in 2025.

Our AI systems are now capable of independently completing sales conversion. The launch of our AI financial plan highlights this evolution into a full life cycle financial planning partner for our customers. AI can now directly generate personalized family insurance plans directly from individual users' profiles. More recently, we launched our AI claims service with our AI agent fully embedded across core claims system. The first AI reviewed claims were settled in just 23 minutes and marks the first fully end-to-end AI agent-driven claim settlement in China's insurance intermediary sector and the completion of our intelligent closed-loop service capability.

Looking ahead, we will collaborate with insurance carriers to build -- connected ecosystem spanning users, insurers and agents embedding AI across every stage of insurance services and financial planning to fully realize our vision of an AI-driven insurance platform. Our international business continued to deliver a strong performance. In Singapore, headquarters of [ Huize ], we obtained a financial adviser and exempt insurance license from the Monetary Authority of Singapore, formally establishing our local operational footprint.

Simultaneously, we are actively expanding our proprietary AI solutions to Singapore to offer an innovative and differentiated insurance experience. Demand for our insurance products in Hong Kong remained robust in 2025 with revenue increasing more than twofold year-over-year, driven by their differentiated product features. In Vietnam, Global Care generated a 106% year-over-year increase in full year GWP and an 84% increase in revenue growth. Notably, the [ GSL ] business line has a standout performance with platform users quadrupling during the year and premiums growing more than threefold year-over-year, strongly validating the scalability of our digital distribution model in Southeast Asia.

Looking ahead, we will continue to focus on 3 strategic priorities to drive high-quality growth. First, we will continue to deploy AI across our business to deepen service quality and improve user experience. By using AI to streamline workflows, we will redeploy freed up resources towards further improving service quality and expanding AI application scenarios, facilitating technology and creating real value for our customers. Second, we will deepen product innovation in our core growth areas, developing differentiated and innovative products tailored to specific customer segments. Our focus will remain on participating products in long-term health insurance to address demand for comprehensive coverage across both health care and wealth management.

Third, we will accelerate and deepen our international expansion through Poni Insurtech, growing the proportion of overseas revenue contribution and delivering sustainable long-term value for our 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.

Thank you, Mr. Ma and Kenny. Good evening, everyone. First of all, we closed out the year very strongly with another solid performance despite a volatile macroeconomic and geopolitical landscape. On a full year basis, both gross written premiums and first year premiums facilitated on our platform has reached record highs of RMB 7.4 billion and RMB 4.6 billion, respectively, representing year-over-year increases of 21% and 35%, while total revenue grew 27% year-over-year to RMB 1.6 billion. Notably, we regained profitability with net profit of RMB 4 million and non-GAAP net profit of RMB 23 million.

Our financial position remains solid with cash and cash equivalents of RMB 251 million as of the year-end. This exceptional performance was driven by our omnichannel distribution network, expanding high-quality customer base and efficiency gains from the strategic deployment of our advanced proprietary AI solutions, underpinned by continued progress in the execution of our international expansion strategy. Looking at our core business, long-term insurance products continue to be our strategic focus, which accounts for over 90% of our total GWP in 2025. FYP from our long-term savings products surged 48% year-over-year to RMB 3.5 billion in 2025. Notably, FYP for annuity products more than doubled year-over-year to RMB 1 billion, which is driven by robust demand for wealth management and financial planning solutions in a lowering interest rate environment in China.

We have capitalized on the national strategic guidance to build a multi-tiered health care protection system and the release of national commercial insurance innovative drug catalog with -- medical insurance products to address the long-term comprehensive health protection needs of mid- to high-income families. By leveraging our well-established omnichannel distribution network and advanced AI solutions, we have significantly enhanced customer acquisition and engagement. Our total customer base has reached 12.3 million as of December 31, 2025, reflecting an increase of approximately 1.7 million customers over the full year. The repurchase ratio for our long-term insurance products remained solid at 36%, highlighting our ability to grow customer lifetime value through effective upselling and cross-selling.

I would like to highlight several key operational achievements for the year that further demonstrate this progress. The FYP from our IFA business has increased by 44% sequentially to RMB 215 million in the second half of 2025, reflecting the impact our AI solutions are having in enhancing the productivity of both our internal and independent financial advisers. FYP from our short-term health and accident insurance grew 12% year-over-year to RMB 613 million, demonstrating our ability to innovate and deliver an increasingly diverse range of product offerings. As of December 31, 2025, our 13th and 25th month persistency ratios for long-term life and health insurance has remained at industry-leading levels of over 95%, underscoring the strong customer loyalty we attract with these diverse product offerings and the effectiveness of our post-sales servicing.

The average ticket size of our long-term savings products rose 37% year-over-year to RMB 103,000 in 2025, driven in part by the increased sales of premium products internationally. In 2025, we have implemented our systematic 3-pillar AI strategy to enhance internal operational efficiency to improve customer experience and to drive platform transformation. Internally, we are fostering an AI-native culture across the organization, deploying AI solutions tailored to various business units that automate routine tasks and optimize workflows. On the customer front, we have upgraded our AI app with multi-agent architecture that facilitates integrated end-to-end user journeys with product recommendations, insurance underwriting and policy servicing.

Additionally, we also unlocked new revenue opportunities through AI-driven product and service innovations. For instance, our AI financial planner is capable of designing tailored family insurance solutions based on client-specific information. Collectively, these AI solutions have delivered meaningful cost savings and productivity gains. Our total operating expenses increased at a slower pace than revenue, rising by just 3.4% year-over-year to RMB 415 million. And consequently, our expense-to-income ratio improved significantly by 5.9 percentage points year-over-year to 26.3% for the full year of 2025. Furthermore, our AI-driven self-directed policy purchases grew by 50% year-over-year in 2025, underscoring the effectiveness of our AI agents.

Holding Insurtech, our international arm, delivered another strong performance and remains a key pillar of our long-term growth strategy. In Vietnam, our majority-owned subsidiary, Global Care, achieved impressive growth with the number of insurance policies issued increasing by 31% year-over-year, driving a surge of 106% and 84% year-over-year growth in GWP and revenue, respectively. Our IFA business in Vietnam had a particularly standout year with a number of active platform users quadrupling and policies issued growing by 2.3-fold year-over-year in 2025, while GWP and revenue from this channel also grew significantly over 3.8x and 2.5x, respectively. Global Care also onboarded new merchant partners and launched Vietnam's first insurance influencer platform in July, a proven distribution model that's pioneered by Huize in China, further extending our digital reach in the local market.

In Singapore, we obtained approval from the MAS to operate as a financial advisory and exempt insurance broker, marking a significant milestone in our regional expansion. This license reinforces our dual regional hub strategy across Singapore and Hong Kong, positioning us to attract cross-border assets and deliver premier protection and wealth management solutions to consumers across Asia. Collectively, the continued expansion of Poni Insurtech will diversify our revenue streams and create new growth drivers, enhancing long-term shareholder value for [ Fraser. ] In conclusion, we are confident in our ability to capitalize on the opportunities arising from China's evolving industry landscape and the broader Asian market. Domestically, prevailing low time deposit rates are expected to continue to encourage retail depositors to reallocate the wealth towards higher-yield savings and participating insurance products.

In parallel, aligned with the national strategic directive to establish a multi-tiered protection system, demand for long-term commercial insurance protection for health is expected to grow steadily, underpinning healthy and sustainable development across the entire value chain. Internationally, through Poni Insurtech, we are replicating our proven model in China and proprietary AI solutions to drive our expansion into high-growth Southeast Asian markets with a particular focus on the young and fast-growing middle-class demographic in the region. We remain steadfastly committed to strengthening our positioning as Asia's leading Insurtech platform by harnessing our advanced data analytics, fully integrated AI solutions and a proven market penetration strategy.

Our vision remains focused on building an AI-driven intelligence ecosystem that seamlessly connects consumers, our carrier partners and distribution partners while consistently delivering enduring value to all stakeholders. And with that, we will conclude the opening remarks and open up the call to questions. Thank you very much, and over to you, operator.

[Operator Instructions] And now we're going to take our first question, and it comes from the line of Kenny Lim from UOB Kay Hian.

First of all, congratulations on the strong result. So a few couple of questions from my end. First, OpEx was well contained, but I noticed that the operating costs grew faster than your revenue. So could you give us more color on this? And how are you going to improve this? And second question will be, we know that a few regulatory changes in Hong Kong, like the broker refer fee cap and also the commercial spreading are taking effect this year. So how does -- what is the plan to sustain your growth momentum in Hong Kong? These 2 questions from my end.

Okay. Great. Thank you, Kenny, for your 2 questions. On the first question regarding the -- your observation on the operating costs growing faster than revenue growth. I think in effect, that would mean that there's a depressed gross margin year-over-year. The main reason for this has to do with the makeup of our revenue for the domestic market and also the international markets. The domestic market revenue contribution has declined because of the high growth of our international revenues. And our international revenue segment carries a slightly lower gross margin. And therefore, what that is the observation that you have made that the operating cost has -- the growth of that has surpassed revenue growth, and that has to do with the makeup of the revenue, as I just explained. So that's the first question.

We do expect that the gross margin or operating margin to remain at this level, and we do expect a slight improvement over the course of this year. Your second question on the Hong Kong market with regards to the regulatory cap on the referral fees and also on the commission spreading that has been in effect since of this year -- 1st of January of this year. We do expect and it has been seen in the market that there has been a dampening effect on the growth momentum of the overall brokerage market channel in Hong Kong, specifically coming from the [ MCV ]segment, which obviously, I think most of the China-based brokers are focused on; however, we do note that the underlying growth drivers for customers to seek out offshore product in Hong Kong remains very robust, and the momentum has not decreased year-over-year.

We do see that with the substantive maturity of time deposits in the onshore market, which is to the tune of for various estimates of putting that at around RMB 3 trillion to RMB 5 trillion and a meaningful proportion of this could be allocated to offshore markets, and Hong Kong will definitely be a natural recipient of this outflow. And therefore, the underpinning growth momentum should remain relatively robust for the Hong Kong savings plans, which is the main products that are being distributed by brokers in Hong Kong. So with that, we do believe that we do expect that strong growth momentum would persist for our Hong Kong business in 2026.

So back to you, operator.

And the question comes from the line of [ Mona Wang ] from Greenridge Global.

This is Mona from Greenridge Global. And it's great to see the company delivering several positive development recently. And there are two questions. The one question, there was some gross margin compression in the first half of 2025 as compared to the same period in 2024 when looking at brokerage income against the cost of revenue. So if except the AI, is there opportunity -- another opportunity for the margin expansion? And the second question, you saw strong top line growth and strong back to profitability in 2025, but the stock still trade below cash value. So why do you think the stock is not moving with the fundamentals?

Great. Thank you for the questions, Mona, and thanks for joining us for the first time. I appreciate your attendance. And with respect to your 2 questions, I believe the first question was about the compression of gross margin as it compares across 2025 and 2024 and whether AI could have a positive effect on improving gross margins. So I think 2 fronts here. I think as I explained to Kenny just now in his first question, the gross margin depression in 2025 has to do with the makeup of our revenue and specifically the contribution of our international revenues to the overall revenue pool, which has increased substantially over the course of 2025. And as a result, the gross margin has decreased because the international revenue carries a lower margin as compared to our domestic or Mainland China revenue segment.

So therefore, as a result of the two, the gross margin has been decreased; however, as you know, very accurately, with the deployment of AI solutions and the initial results that we are seeing, obviously, AI deployment has a significant cost savings or efficiency improvement in the business flow in the mid- to back office. As you can see, the expense ratio has improved by almost 6 percentage and that's more to do with the expense or cost savings point of view. But on a gross margin level, I think that what we can potentially envisage over the course of the next few years as AI continues to be deployed in the front line, i.e., in terms of customer acquisition, in terms of lead generation, we do believe that there could be a potential for a significant rerating or upgrade of our gross margin going forward. For example, we have noted in our opening remarks that AI has been driving a 50% year-over-year increase in self-service policy purchases by our customers in 2025.

Our AI systems are capable of independently completing sales conversions, and we have been generating over millions of RMB of premiums already through the AI engines. So this -- obviously, we do have the high hopes and high expectations that AI will continue to drive and scale our revenue-generating capabilities to the tune that we don't need any human interaction or involvement in the entire customer acquisition and conversion process. So I think that's something that we are continuing to work hard towards, and that probably is the holy grail in terms of how AI can scale our profitability over the next foreseeable future. So that's something that we have already proven to the market, and we will continue to invest in AI-driven growth in 2026. With respect to your second question about the fundamentals somehow is not tying with our share price performance.

We do note that the market has been relatively pessimistic, I believe, on the performance of our company. It may have to do with the switch of our reporting schedule. Since the second half of last year, we have migrated to a half yearly announcement schedule. And therefore, the market may have certain concerns on the continued sustainable growth and performance of the company. But as we have shown in this earnings release, we have delivered strong growth, not in terms of just top line and/or premium growth, but also in terms of bottom line profitability. We have demonstrated that we are able to operate a very lean business model. And with the advances in AI and our strong investment in AI-related proprietary products across our business value chain, both in the front end and we do expect that altogether, we are looking at a very much of a robust growth momentum in 2026. So that would hopefully drive a re-rating in our share price.

As you have noted that our share price right now is trading even below our net asset value. And therefore, there's a significant room for us to re-rate our share price to the more of an intrinsic value.

There are no further questions for today. I would now like to hand the conference over to your speaker, Mr. Kenny Lo, Huize's IR Director, for any closing remarks.

Thank you, operator. In closing, on behalf of Huize's management team, we 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.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live Call.]

Ladies and gentlemen, thank you for standing by, and welcome to Huize's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded, and a webcast replay will be available on Huize's IR website at ir.huize.com under the Events and Webcast section.

I'd now like to hand the conference over to your speaker host today, Mr. Kenny Lo, Huize's Investor Relations Manager. Please go ahead, Kenny.

Thank you, operator. Hello, everyone, and welcome to our second quarter 2025 earnings conference call. Our financial and operational results were released earlier today and are currently available on both our IR website and Globe Newswire services. Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained in our earnings release and filings with the SEC. Joining us today are our Founder and CEO, Mr. Cunjun Ma; COO, Mr. Li Jiang; Co-CFO, Mr. Minghan Xiao; and Co-CFO, Mr. Ron Tam. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights, followed by Mr. Tam, who will go over our financial results for the second quarter 2025. Then we will open the call for questions. I will now turn the call over to Mr. Ma.

[Interpreted] Hello, everyone, and thank you for joining Huize's Second Quarter 2025 Earnings Conference Call. In the second quarter of 2025, we remained steadfast in our customer-centric approach, focusing on evolving customer needs and partnering with industry leaders to broaden our product portfolio. Our strong results were underpinned by a high-quality customer base, industry-leading persistency ratios and a diverse suite of product offerings. During the quarter, Huize delivered a total revenue of RMB 400 million, a 3-year quarterly high with net profit reached RMB 10.9 million. Gross written premiums facilitated on our platform grew 34% year-over-year to RMB 1.8 billion while first year premiums increased by 73% year-over-year to RMB 1.13 billion.

We continue to strengthen our full life cycle service ecosystem while precisely targeting high-quality young customers. As of the end of the second quarter, Huize's cumulative insurance users exceeded 11.4 million with approximately 400,000 new clients added during the quarter. In the second quarter, our long-term insurance customers had an average age of 35.2 with more than 65% residing in first and second-tier cities in China. By focusing on these high-quality customer groups, we have further supported sustainable growth in business value.

In the second quarter, the average first year premium ticket size for long-term products jumped by 87% year-over-year to RMB 7,600, while our retention metrics continued to lead the industry with both the 13th and 25th month persistency ratios remaining above 95% as of the end of May. Beyond long-term products, we remain committed to delivering a diversified suite of insurance solutions. Our short-term insurance business also recorded healthy growth in the quarter with gross written premiums rising 19% year-over-year to approximately RMB 140 million.

As of the end of the second quarter, we have further expanded our partner ecosystem, maintaining strong collaborations with 146 insurance companies and continuing to drive innovation in customized and diversified insurance products. Against the backdrop of preference for steady financial planning and an aging population, our early move in participating products has delivered strong progress. Centered on client wealth management needs, we introduced customized products, Bliss (Golden Edition) annuity, offering superior and sustainable wealth planning solutions. We have also jointly launched Xiao Shen Tong 7.0’ children'’s accident insurance with Ping An Property & Casualty Insurance, and jointly launched ‘Little Scholar 2.0 Pro’ student accident & medical insurance with PICC Property & Casualty, delivering multidimensional and comprehensive protection for children and students.

We drew on years of AI research and investment to launch company-wide adoption of AI agents. This has driven meaningful efficiency improvement, reshaped core operating processes and laid the groundwork for deeper business model transformation. These efforts have helped us unlock new growth curves and reinforce the foundation for long-term value creation. With the continued rollout of AI initiatives, our expense to revenue ratio improved by 16.6 percentage points year-over-year to 23.9%. We accelerated the deployment of AI tools and fostered an AI native culture within our company, delivering measurable productivity improvements. In R&D, we introduced the Vibe Coding model where AI now generates and contributes more than 200,000 accepted lines of code each month, significantly accelerating product iteration and technological innovation.

To support this transformation, we built a comprehensive training system that deploys employees from entry level to advanced AI practice. AI adoption is now company-wide with more than 300 employees able to create and deploy AI agents on our low-code platform. Collectively, we have released over 700 productivity-enhancing AI agents, driving improvements in operational efficiency, workflow improvements and risk control. Drawing on nearly 2 decades of industry experience, we have built one of the most extensive proprietary data access in the insurance sector, encompassing hundreds of millions of customer interaction records and knowledge base of more than 10,000 insurance products. This foundation enables us to deliver highly personalized services tailored to individual customer profile.

We rolled out 24/7 AI customer support, driving the self-service purchase rate among new users up by 50%. The AI customer support also covers product recommendations, claims assistance and policy delivery serving over 20,000 customers each month. These results validated AI's core value in boosting sales and efficiency. We are accelerating deployment across more touch points to build high-quality closed-loop growth engine from customer-rich conversion to automated service. Poni Insurtech, Huize's international arm has secured a financial adviser and [indiscernible] insurance broker license from the Monetary Authority of Singapore through its local operating entity, marking a significant milestone in our Southeast Asia expansion.

In addition, our Vietnam subsidiary, Global Care, recorded a 32% year-over-year increase in both GWP and revenue. We launched Vietnam's first KOL platform for the insurance industry, digitally empowering distribution and leveraging the country's high social media penetration, enhancing product reach and conversion efficiency. In parallel, we strengthened partnerships with leading local players, including GXE, an emerging online logistics platform and MWG, Vietnam's largest retail group, supported by Global Care's technology capabilities. These collaborations are advancing embedded and micro insurance across multiple use cases.

Leveraging the group's international platform, we provided commercial insurance services to China investor enterprises in Vietnam and facilitated the placement of corporate property policies with sum insured of RMB 1 billion. This fully demonstrates the depth of our product offering in the local market and the results of our internationalization strategy. Looking ahead to the second half of the year, China's insurance industry is experiencing strong momentum on both demand and supply sides with rising needs in health, retirement and wealth management driving customers to seek more intelligent services, while regulatory policies guide the market towards high-quality growth, greater standardization and technology adoption.

In this environment, AI is emerging as a core growth engine, enhancing customer experience, reducing operating costs and strengthening risk management. At the same time, Southeast Asia's rapid digital adoption and expanding middle class are pushing insurance penetration into a critical stage of expansion, creating significant structural opportunities and positioning the region as a key platform of further globalization of China's insurtech capabilities. Against this backdrop, Huize will continue to embed AI across the entire value chain, reshaping industry dynamics and unlocking a new growth curve.

Meanwhile, we will further expand our ecosystem across Southeast Asia to capture long-term opportunities from demographic tailwinds and rising insurance penetration and working with local partners to build a broader, smarter digital insurance ecosystem. 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 second quarter.

Thank you, Mr. Ma and Kenny, and good evening, everyone, in the U.S. and -- sorry, in Asia, and good morning, everyone in the U.S. I think that the opening remarks have been quite detailed on the operational highlights. For my section, I'll just give some highlights on the overall financial metrics. Amid the evolving macroeconomic and geopolitical environment, the second quarter is quite remarkable in terms of total gross written premiums and FYP facilitated, which has increased by 34% and 73% year-over-year, respectively, reaching RMB 1.8 billion and approximately RMB 1.1 billion. Total revenue hit a 3-year high for the quarter of approximately RMB 400 million, which is up 40% year-over-year. We also returned to GAAP and non-GAAP net profit for the quarter of approximately RMB 11 million and RMB 8 million, respectively.

Meanwhile, our financial position has continued to remain very robust with a combined balance of cash and cash equivalents of RMB 239 million as of the end of the second quarter. The remarkable operational performance was driven by our efficient omnichannel distribution network, our relentless efforts to acquire high-quality customers and the deployment of advanced proprietary AI solutions throughout. Crucially, we are on track to execute and deliver on our international expansion strategy, which is a core new growth driver for our long-term sustainable development and shareholder value creation. Our strategic focus has remained firmly on long-term insurance products, which continue to account for over 90% of our total GWP facilitated.

FYP from our long-term savings products more than doubled year-over-year to RMB 864 million in the second quarter. Leveraging on our robust omnichannel distribution network and advanced AI solutions, we have significantly strengthened our customer acquisition and engagement capabilities, adding approximately 400,000 new customers during the second quarter, and this brings our total customer count to over 11.4 million as of the end of the second quarter. The repurchase ratio for our long-term insurance products also stood at a very decent level of 37%, underscoring our ability to continue to unlock the lifetime value of our high-quality customer base through effective upselling and cross-selling strategies.

I would also like to highlight a few other key achievements over the quarter. Number one, the FYP for our IFA business increased by 13% year-over-year to FYP of RMB 84 million, reflecting our continued efforts to empower both our internal and external international financial advisers. And number two, as of the end of the May second quarter, our 13th and 25th-month persistency ratios for long-term life and health insurance remained at industry-leading levels of over 95%. And number three, the average ticket size of long-term insurance products distributed has increased 41% sequentially to RMB 7,615, partly reflecting the premium product sales in our international market segment.

We have established a private AI large language model and local application development platform to promote employees as in-house AI agent developers. Over 200 employees in-house have created and deployed AI agents, publishing more than 500 productivity-enhancing tools. Our broad deployment of AI-driven automation has delivered cost savings and productivity gains. As such, our total operating expenses decreased 17% year-over-year to RMB 95 million and our expense-to-income ratio improved significantly by 16.6 percentage points year-over-year to 23.9% in the second quarter.

Poni Insurtech, our expanding international arm delivered another strong quarter and remains central to our long-term strategy. For example, in Vietnam, our majority-owned subsidiary, GlobalCare, achieved impressive business growth with GWP and total revenue both rising 32% year-over-year in the second quarter. Active platform users increased by 52%, while the average ticket size on the B2A2C business line tripled sequentially. Global Care also onboarded new merchant partners, including names like GXE and Mobile World Group, offering embedded and micro insurance products powered by its advanced technological capabilities. In July, Global Care also launched Vietnam's first insurance KOL platform, which is a replica of our China model, a proven distribution model pioneered by Huize in China.

Additionally, we obtained approval from the MAS in Singapore for financial advisory license, further extending our presence in Southeast Asia, these strategic initiatives to diversify our revenue streams and create new growth drivers to enhance long-term shareholder value creation. In conclusion, we are confident in our ability to capitalize on the opportunities arising from China's evolving industry landscape in the broader Asian market. Domestically, continued strong demand for long-term protection should drive healthy and sustainable growth across the entire value chain. Internationally, through Poni Insurtech, we're extending our China proven model and proprietary AI capabilities to high-growth Southeast Asian markets, particularly in the young and fast-growing middle-class demographics.

By leveraging our advanced data analytics, fully integrated AI solutions and disciplined market penetration, we are committed to solidifying our position as Asia's leading insurtech platform for distribution and building an AI-driven intelligent ecosystem connecting consumers, insurance carriers and distribution partners while delivering enduring value to all stakeholders.

And with that comment, we will now open up the call to questions. Thank you very much, and over to you, operator.

[Operator Instructions] We'll now take our first question from the line of [indiscernible] from CICC.

This is [indiscernible] from CICC Research. First of all, congratulations on the remarkable business performance on the second quarter this year. And I have 2 questions for the management. First, Huize has successfully executed its strategy shift towards participating insurance in recent years. So could you please add some color on the approaches the company has taken to enhance the team's professional capabilities in selling participating insurance and what plans are in place for deeper cooperation with insurers on the development of participating products? And what's the company guidance for sales performance in the second half of the year? This is the first question.

And the second question is that Huize is recognized as the first insurance service platform to integrate DeepSeek in the industry. And the company's Xiao Ma claims has significantly improved claims handling efficiency. So please, could you please add some color on how does Huize intend to further leverage AI technology to enhance product sales, long-term customer relationship management and achieve greater efficiency and cost control?

Thank you, for your 2 questions. So your first question was regarding our successes in the power product distribution front. And I think that over the last 2 years, I think we have already been foreseeing the industry transformation or transition to selling power product as the mainstream product with the expectation of a continued declining interest rate environment in China. I think we have been vindicated with this foresight. And starting from 2023, I think the company as a whole internally have been actively promoting the training of our agents and also encouraging our channel partners and the IFAs that are connected to our platform to get up to speed on the product.

I think that the foresight and the training has -- we have reaped the benefits from that, early anticipation. Secondly, I think that with respect to our product supply, I think we have also been quite -- in anticipation of the power product being a mainstream product for this year, we have been actively seeking out cooperation with our upstream insurance carriers, providers to co-develop customized savings products that would be very suitable for the clientele. And I think what we have demonstrated to the market is that we have already been rolling out customized power products with leading brands such as Aviva-COFCO's, which we have repeated for the last 2 quarters. Fu Man Jia product is a top-selling savings product in the power category for the last 2 quarters.

Also, we have been working with the Chinese joint venture between the Chinese SOE and Generali, which again has proven to be a top-selling product on the online, offline channels. We have also been quite innovative in terms of customizing power products in the annuity and in the retirement areas. For example, a recent product that we have launched with Bosun Primerica is an example. So not only do we do endowments, we also do annuities and retirement plans with a power feature. So I think that this is something that we have been quite successful also on the product supply front and which also delivers a competitive moat for Huize compared to the competition. And I think we are very proud to say that according to various sources, we are probably ranked in the top 3 in terms of distribution channels in the broker and agency segment in China for power products currently.

So in terms of guidance for the product, I think that we are continuing to see increased interest in power products from the market, mainly as a result of the continued education of consumers of the product by online and offline channels, such as ourselves and also the traditional insurers and the traditional agencies. So consumers are increasingly aware of the relative attractiveness of the power product, especially in the declining interest rate environment, whereby the product in terms of overall return profile is much superior to other forms of fixed income products, including traditional bank deposits and so forth.

So we do expect that there's continued sequential growth in distribution in the power product in Q3 and also in Q4. So your last question was on the AI front in terms of how we are going to be driving increased productivity gains in addition to just the claims processing area that you have mentioned. I think that we have already been deploying our AI strategy also on the -- in the customer acquisition perspective. Our mobile app has integrated DeepSeek and the DeepSeek powered mobile app that's facing consumers can provide very relevant and customized product recommendations based on customers' feedback and drawing upon on our very robust internal knowledge base and knowledge pool, we are able to provide very much a customized product recommendation experience for our customers.

In another area that we think that is very relevant for AI technology to be deployed and which we are now actively investing into is the underwriting part of the value chain, whereby with AI, we are able to be much more nimble and be much more adept at managing risk for our customers in terms of finding the most suitable products according to the individual risk assessment and risk circumstances. And therefore, that will also likely lead to much improved conversion ratios downstream. That would also be relevant to the long-term customer relationship management, which we just mentioned because the AI tool will be able to memorize all the customer interactions.

And therefore, whenever the customer returns to our mobile app, it will be able to recall the relevant data points on the customers' profile and be able to continue the dialogue in a most appropriate manner. So I think those 3 things are very good examples that we are able to cite in terms of the AI deployment to date. And I think we're just still only in the very much beginning of the AI journey. A lot more investments need to be made, and we do believe that the fruits of the investment will be harvested over the years to come.

We will now take our next question from the line of Amy [Chen] from Citi.

This is Amy from Citi Research. Congratulations on a profitable quarter. I have 2 questions. The first one on your overseas business. You mentioned earlier that average ticket size was higher sequentially, partially due to participating sales in international markets, which I assume would be mainly Hong Kong. I'm not sure if this was partially driven by the change in the regulatory cap on illustrated product return and how has the sales momentum been in the third quarter so far?

And also on the regulatory front, from October 1, there would be a cap on broker channel referral fee and from next year -- from the beginning of next year, there would be this requirement to spread out commissions in the broker channel. How do you think this would impact your business, particularly in Hong Kong? And the second one would be about net profit outlook. We see that after the second quarter -- in the first half, Huize has already delivered a net profit. What is your earnings guidance for the full year of 2025?

Thanks, Amy, on your 2 questions. The first question relating to the Hong Kong business. I think you're right in citing the regulatory changes on the illustrated returns having an impact on [indiscernible] sales in the second quarter. We do see that a lot of the industry participants have witnessed and saw significant demand for Hong Kong products in the last month of the Q2, which due to the revenue recognition would likely be reflected in the Q3 results. So we do see that, that has an impact on the sales of the entire industry as a whole.

And on your comment on the other regulatory developments, we think that the underlying demand for offshore products still have to do with the interest rate differential between the onshore and offshore markets. So we do believe that the underlying situation has not changed albeit I think the U.S. likely will be reducing interest rates in the next few meetings. We're likely seeing another 50 basis points by the end of this year. But still the attractiveness of the offshore products still provide a meaningful pickup in terms of overall yield potential versus onshore. So that has not changed.

So we do continue to expect that the sequential momentum to continue in this area of the business. So I think that would be my response to your first question. And then on your second question regarding net profit outlook, we are very glad that we have delivered profit in Q2. And we do see sequential improvement in terms of our net profit outlook by the quarter -- by the next quarter, although we also continue to invest in business growth. So right now, we are expecting a second half profit for the year. And especially in Q3, we do expect a meaningful sequential growth in the earnings profile.

That's very clear. May I have a quick follow-up. How much of your revenue is contributed by international business in the second quarter?

Right. I think we would like to say that we are on track in delivering our previously given outlook for the year. So I think that will be the answer.

[Operator Instructions] our next question comes from the line of Kenny Lim from UOB Kay Hian.

First of all, congratulations on the solid results. So I have 2 questions from here. So my first question is regarding your margin performance. Apart from improvement in expense to income ratio, I noticed that your gross margin also improved sequentially. Could you give us more color on this and how sustainable it is? How you balance between your channel cost growth as well as your premium growth? And my second question is regarding your product mix. Since you quoted that the demand for the product is quite strong. I would like to ask that how is the performance of your demand for the health and protection products? That's all from my end.

Thank you for your questions, Kenny. I'm very glad to hear from you. So 2 questions on your side. One is the gross margin outlook. Yes, we do see a stabilization of gross margin in the second quarter. I think there's a slight pickup from Q1. Q1 was around 26%. This quarter it's around 27%. We do see that the stabilization gross margin remain at this current level for the next few quarters. I think that the overall negative impact that has been felt by the industry on the China side with respect to the [passing Huize] regulatory implementation, I think that's been fully felt already. And that's -- and thus, it's been reflected in the results here in the second quarter.

The overall business have transitioned to the new regime. So most of the products that we are distributing and channel costs and so forth have now been mostly stabilized at the current level. So we do believe that our gross margin should remain relatively stable for the next few quarters in the foreseeable future. Your second question was regarding the HMP product segment. So we do see a modest improvement in demand in the second quarter over first quarter. So in terms of actual numbers, I can cite for the HMP segment, we're looking at a 24% sequential growth in terms of first year premiums from the first quarter to second quarter.

So overall, I think that the environment have -- in terms of the China macroeconomic environment, we do see that there's a stabilization trend. And with the improving customer confidence and improving consumer confidence outlook, we do see that the HMP segment should continue to grow steadily. So -- and we'll also be investing in this product category, albeit the savings product definitely is not the major driver of performance. But then the health and protection product, as we all know, is typically higher margin. And then therefore, with a reviving macroeconomic and consumer confidence kind of picture, we do see that we should be investing more in this area. So that will be my answer to your questions.

Ron, just a follow-up question. I saw that your commission rate improved year-on-year. May I know what is the main driver?

Sorry, can you repeat that question, sorry?

I noted that your blended commission rate improved sequentially. May I know what is the main driver?

Right. I think they are mainly due to the improved contribution from our customized products, which typically carries a higher commission rate.

I am showing no further questions. And with that, I'll turn the conference back to Mr. Kenny Lo for his closing comments.

Thank you, operator. In closing, on behalf of Huize's management team, we 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.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, thank you for standing by, and welcome to Huize's First Quarter 2025 Earnings Conference Call. [Operator Instructions] This conference call is being recorded, and a webcast replay will be available on Huize's IR website at ir.huize.com under the Events and Webcasts section.

I would like to hand the conference over to your speaker host today, Mr. Kenny Lo, Huize's Investor Relations Manager. Please go ahead, Kenny.

Thank you, operator. Hello, everyone, and welcome to our first quarter 2025 earnings conference call. Our financial and operational results were released earlier today and currently available on both our IR website and global Newswire services.

Before we continue, I would like to refer you to the safe harbor statement in our earnings press release, which also applies to this call as we will be making forward-looking statements. Please also note that we will discuss non-GAAP measures today, which are more thoroughly explained in our earnings release and filings with the SEC.

Joining us today are our Founder and CEO, Mr. Cunjun Ma; COO, Mr. Li Jiang; our CFO, Mr. Minghan Xiao; and Co-CFO, Mr. Ron Tam. Mr. Ma will start the call by providing an overview of the company's performance and operational highlights, followed by Mr. Tam, who will go over our financial results for the first quarter 2025. Then we will open up the call for questions.

I will now turn the call over to Mr. Ma.

[Interpreted] Hello, everyone, and thank you for joining Huize's first quarter 2025 earnings conference call.

In 2025, against the backdrop of ongoing macroeconomic and geopolitical volatility Huize upholds its customer-centric approach. Leveraging years of insights into customers' needs, we stayed ahead of market trends and 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 structure 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% and 31% sequentially, reaching RMB 1.4 billion and RMB 730 million, respectively. Renewal premiums also grew 46% sequentially to approximately RMB 710 million.

Huize 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 390,000 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 percentage 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 sustainable customer strategy. As of the end of February, 13th and 25-month persistency ratios for long-term insurance maintained industry-leading levels of over 95%.

As of the end of March, we had strong partnerships -- as of the end of March, we had strong partnerships with 143 insurance companies and continue 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 been intensified. In response, we partner with New China Life to launch Bliss No. 3, the savings products striving to achieve sustainable returns for customers.

Additionally, we expanded our portfolio of customized participating products. Building on the Fu Man Jia series co-launched with Aviva-COFCO, we partnered with Cathay Lujiazui Life Insurance on Jin Man Yi Zu No.6, a participating incremental whole life insurance product. This was followed by the launch of Xing Hai Hui Xuan, a participating annuity product co-developed with Pramerica Fosun 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 Xiao Tao Qi global, a children's critical illness product co-developed with [ Cigna & CMB ] Life Insurance that leverages the 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 and our AI strategy, we continue to enhance both the user experience and operational efficiency. We have deployed the Huize AI agent development platform in internally with the goal of developing independent AI productivity. Leveraging open source AI models, we have implemented private domain deployment of large language model to ensure data security and regulatory compliance. At the same time, we are actively promoting the development of local agents -- 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 now cover key customer life cycle touch points, including policy inquiries and product matching, serving an average of over 15,000 users daily. We are also revolutionizing aftersales claims processing through Xiao Ma Claim's AI agents, achieving end-to-end automation of claims reporting, review and payout. With AI now capable of handling our claims reporting, we are now working to expand this innovative feature to our app and mini programs. This innovation is expected to reduce processing time on Xiao Ma Flash Claim from 1 day to 1 hour upon full rollout.

During the quarter, Xiao Ma Claim facilitated RMB 190 million in claims across 36,000 cases, providing customers with efficient and reliable insurance claim services.

Our international brands, Poni Insurtech continued to deliver strong growth momentum, underscoring the vast untapped potential of Southeast Asia. Our Vietnamese operation, Global Care, maintained solid traction and grew total policy count by 29% compared to the first quarter in 2024. The gross written premiums and revenue increasing by 35% and 34% year-over-year, respectively. We recently partnered with [indiscernible] 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 [ GC ] platform. On the product side, Global Care launched 5-year and 10-year critical illness insurance products in collaboration with PBI Insurance, enriching our product portfolio to better meet customers' diverse protection needs.

Poni Insurtech 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 30% 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 accelerates. Drawing on deep customer insights and AI-driven product innovation, and strong momentum in Vietnam and other Southeast Asian markets, Huize delivered another quarter of solid growth and operating agility. Looking ahead, we will widen our range of savings and have products for high-value clients, embedding our self-hosted large language model platform across the service chain to lift efficiency and experience. Internationally, Poni Insurtech, further tap into Singapore and other priority markets, keeping us on cross overseas revenue targets. Grounded in product innovation, customer experience and AI enablement, Huize 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 third (sic) [ first ] quarter.

Thank you, Mr. Ma and Kenny, good evening, everyone in Asia, and good morning for those in the U.S. It's Ron here. Despite a challenging macroeconomic and geopolitical environment, we have delivered yet another quarter of resilient performance during which the first quarter for both total gross written premiums, GWP and first-year premiums facilitated on our platform increasing by 37.8% and 30.9% 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 USD equivalent $28 million as of the end of the March quarter. 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 on our robust omnichannel distribution network and advanced AI solutions, we are significantly strengthening customer acquisition and 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, 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've also seen reasonable reductions in all three kinds of operating expenses ranging from 15% 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 has fall by 29% compared to the fourth quarter '24. The reduction reflects decisive actions in continued workplace optimization, broad deployment of AI-driven automation, which has sharply reduced manual workload 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 and 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 while materially reducing production time and costs.

Our international growth engine, Poni Insurtech, delivered yet another solid quarter and remain central to our long-term strategy. Building on the success of a proprietary AI tool set 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, Poni 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 data analytics, end-to-end AI enablement and disciplined market penetration we aim to cement Huize'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 Instructions] Our first question comes from Amy Chen from Citi.

This is Amy from Citi. I have a couple of questions. The first one would be regarding selling expenses. We noted that the first-year premium facilitated in the first quarter saw around 15% year-over-year decline. However, selling expenses was 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 cut in the third quarter. Has this somehow boosted customer demand so far?

Thank you, Amy. It's a pleasure to have you again on the call. So I know that you have three questions to your -- just now. So the first one is regarding the year-on-year decline on FYP and versus an increase in expense -- some expense, I believe, right? So I think to address the question on the FYP decline, I would note that in June '24 in the first quarter, there was -- actually, there was a pricing cut effect 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 that are 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, it's relatively lower than the domestic business. And therefore, I think that has been reflected in what you noted in terms of the gross margin decline in the first quarter of 2025.

So 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 a very decent momentum. Obviously, the international market is still in high growth phase. And for the domestic China market, also, we are seeing a revival of growth given that the transition to the par products has basically been completed over the last 2 quarters and channels have adjusted to the new product regime. So I think that in Q2, we're seeing growth in the -- across different products.

And -- but you know that 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 a, 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 relatively speaking, versus previous episode is relatively muted. And given that we're 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. I hope that answered your question, Amy.

Next question comes from the line of Kenny Lim of UOB Kay Hian.

I'm Kenny from UOB. And I have two questions from my end. The first one, how do we expect the enforcement of [indiscernible] across the agency channels to affect your [ 2A ] business? And how does it change the overall industry competitive escape?

And my second question is about the latest international revenue contribution in first quarter. And so what is the later progress of your business expansion plan in Singapore and Philippines as well.

Thank you, Kenny. [indiscernible] two questions, 1 on [indiscernible], 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 the similar measures will be implemented and imposed upon the tied agency channel, which 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 banker brokers and agencies -- tied agencies.

And therefore, we do expect that there will be continued so-called exodus of agents from the agency model into independent third-party platforms such as ourselves. So we would likely will 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, 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 or in Hong Kong or even Singapore, where we see that 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 distribution will continue to be in favor of platforms 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 100 products on our platform that we can facilitate for agents to serve the customers. And also, especially the digital age whereby agents will require digital tools to serve the customers and to make sure that the consumers 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 and strong advantage on 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're 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. Philippines, we are still progressing, given that we are now prioritizing Singapore as a business development market, we likely will see Philippines in the second half this year. Thank you, Kenny.

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

Thank you, operator. In closing, on behalf of Huize's management team, we 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.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]