Following the release of Waterdrop Inc.'s (WDH.US) Q3 2025 results, CSC Financial issued a research report reiterating its Buy rating on the company. The report's analysis suggests that Waterdrop's better-than-expected Q3 revenue and net profit attributable to the parent company strongly validate its emergence from a period of adjustment into a phase of high-quality growth. Coupled with the efficiency revolution driven by the implementation of its AI strategy in marketing and risk control, and the certainty of shareholder returns from the company's ongoing share buyback and dividend policies, the firm is optimistic about its future growth potential. Waterdrop Inc. has now achieved profitability for 15 consecutive quarters. In the third quarter of 2025, the company reported net operating revenue of 975 million yuan, a substantial year-on-year increase of 38.4%; net profit attributable to the parent company reached 158 million yuan, up 60.1% year-on-year, while the net profit margin expanded from 14.1% in the same period last year to 16.3%, indicating continuously strengthening profitability. Management emphasized during the earnings call that this growth benefited from upgrades to data infrastructure, which compressed decision-making latency to under 50 milliseconds, enabling millisecond-level precise identification and stratification of traffic. This dynamic ROI strategy based on real-time data not only drove a 32.3% quarter-on-quarter increase in First Year Premium (FYP) but also significantly enhanced customer acquisition efficiency and quality, validating the company's execution capability for "quality growth" in a complex market environment. The research report posits that the dual acceleration of revenue and profit in the third quarter validates the effectiveness of Waterdrop's AI strategy. On the sales front, the premium volume facilitated by the "AI Health Insurance Expert" surged by 82% quarter-on-quarter, demonstrating that AI already possesses direct commercial monetization capabilities. In underwriting, the industry's first AI underwriting assistant, "KEYI.AI," reduced the processing time for complex cases from minutes to seconds (1 second), with an accuracy rate as high as 99.8%, fundamentally restructuring risk control efficiency. Furthermore, the company launched the "Waterdrop Sea. AI" low-code platform, empowering internal employees to rapidly build AI solutions, further reducing marginal R&D and operational costs, and constructing a complete technological moat from underlying models to upper-layer applications. Waterdrop's founder and CEO, Shen Peng, stated, "In the third quarter, AI technology served as the core driver for enhancing business quality and efficiency, propelling the company to achieve double-digit high growth in both revenue and profit. Looking ahead, we will continue to seize opportunities brought by technological evolution, promoting the deep integration and application innovation of AI capabilities across the entire business chain, thereby injecting sustained momentum into the company's high-quality development. On this foundation, we are committed to realizing long-term value that ensures user peace of mind, partner mutual benefit, and shareholder trust!"
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