Cheche Group (CCG) FY 2025 earnings call transcript

Thank you, Betsy. Hello, everyone. Thank you for joining us to review Cheche's second half and full year 2025 results. This morning, Checha posted both the earnings release and a related updated investor presentation to our website, which you can find at ir. chechagroup. com. I'm very pleased to say that with us on the call today, we have Lei Zhang, Checha's founder and CEO, and also Sandra Gee, Checha's CFO. After the prepared remarks are concluded, we're going to open up the call for your questions, and they'll be happy to address them. But before we begin, I'd like to remind you that some statements in this teleconference will be forward-looking within the meaning of the federal securities laws.

Although we believe these statements are reasonable, we can provide no assurance that they will prove to be accurate because of their perspective in nature. Actual results could differ materially from those we discussed today. So we encourage you to review the most recent filings with the SEC for risk factors that could materially impact our future results. As I mentioned, the earnings release is available for you at ir. chechegroup. com. And again, we also encourage you to review the reconciliations of certain non-GAAP financial measures contained within that we're going to discuss on the call today.

With that, it's my great pleasure to turn the call over to Lei Zhang, Cheche's chief executive editor. Lei, over to you.

Thank you, Grog. Greetings, everyone. Thank you for joining us today to review Cheche's second half and full year 2025 results. 2025 was a defining year for Cheche Group, one that validated both the resilience of our business model and the power of the strategy transformation we have been executing, despite an ongoing three-rate compression driven by rapid growth of NAV premiums within our revenue mix. We delivered growth profit growth, dramatically reduced operating losses, and for the first time, achieved just net profitability on a full-year basis. They are not incremental results. They marked an inflection point on our evolution from a transactional insurance platform to an AI-powered intelligent insurance ecosystem. Let me begin with that I believe is the most meaningful headline from this period.

The Cheche Group achieved adjust operating profitability for the full year 2025 and delivered a positive net income in the second half of 2025. Our adjusted net income reached RMB 11.6 million, or the US dollar 1.7 million. For the full year, compared to an adjusted net loss of RMB 24.8 million in the prior year, that is a swing of more than RMB 35 million, Achieved while we focused on newer capabilities and absorbed meaningful structural change on our revenue mix.

This reflects displaying cost management across every line of operating expenses, which we reduced in total by more than 19 year-over-year. Even as we grew total return premiums placed by 11% and the total policies insured by 3 million. We demonstrated that scale and efficiency can do at once together at the Cheche, and we intended to continue building that foundation in 2026. The profitability story also has a structural dimension. NEV premiums, which carry a lower service fee, risk than traditional auto insurance, now represent 23% of our total written premiums for the full year, up from 13% in the prior year. This shift initial creates a revenue headwind, as we are mentioning, but it also drives higher growth margins.

As our AI-powered tools allow us to capture higher tech rates in the NAV insurance market and deploy capabilities that command premium pricing, we expected the margin profile to continue improving. I also want to highlight the significant progress we have made in translating our AI strategy into operational capability. We are actively deploying AI pricing model in the collaboration with several of China's leading insurance companies, as well as through data partnerships with intelligent connected wireless manufacturers. Our insurance anti-fraud and risk control model, which was recognized in the prestigious top 100 AI product over the 2024 last year, is one example that integrates a big data, artificial intelligence, and the biometrics, enabling insurers to identify fraud earlier. Price risk more precisely, and process claims with greater efficiency.

This partnership position is to expand our footprint in the renewal insurance market. Beyond our insurer-facing tools, we are developing and testing AI agent to the fundamental change our way engaged with the car owners and the point of renewal. With AI agent, we can standardize scale and improve the dialogue with the car owners, deploying consistent, intelligent, real-time outreach that is more effective than traditional methods and significant more cost efficiency. On the R&D side, our team leverage AI2s and LLM to accelerate product development and shortly development circles. Their tools are expanding our capability roadmap without proportional increase in the high-con and spanning. Looking for ahead we intend to extend the operational and analytical capability across the full auto insurance wire chain From pre risk assessment and pricing through in the policy risk monitoring and intervention to claim survey and the loose assessment Combined with our growing advantage in the driven behavior data from the NEV ecosystem, we believe the position us to move the industry from the static pricing towards to dynamic risk management.

and to build a data-driven competitive mode and strength over time. The quality of our OEM partnership continues to depend. We currently have the partnership with 16 NEV manufacturers. And as our business and relationships are mature, our strategy focuses on shifting from aiding new relations to the deepening existing ones. That means expanding the Wilkes Temples and the models within the partnership, ending the dealer channel progress, and maximizing renewal premiums capture across installed based Wilkes we already service. Our work with Volkswagen reflects our ability to partner with both domestic champions and the global automakers operating in China's intelligent, connected with the market. We are building a full life cycle relationship with these partners, not transactional arrangements, and the depth of those relationships is what creates the durable and recurring value for the Cheche G and our shareholders.

Looking ahead, we expect to share additional partnership news in the incoming months that we believe will further demonstrate the strength of our position within China's most intelligent ConnectWix system. We are also preparing to announce the significant advance in our AI-driven auto pricing capabilities, a development that reflects our capabilities with data science and risk modeling, and that we believe significantly expand our addressable market in the renewable insurance segment. We look forward to sharing more details in the near term.

Let's turn to the progress we are making internationally, which represents one of our most important long-term growth vectors. Chinese automakers now export over 8 million workers annually, and as expound globally, the demand for intelligent data-driven insurance and financial services infrastructure follows. Cheche Group is uniquely positioned to meet and demand, bringing the digital insurance capabilities and the financial technology capabilities we have built in China's most demanding market to automotive ecosystem around the world. We are also advancing our international roadmap across the border, Asia, Pacific, and Latin American markets, leveraging our FinTech solution for automakers abroad, a toolkit of digital insurance and finance services infrastructure designed to support Chinese automakers and their global partners as they build out new market operations.

To summarize, 2025 demonstrated what the Cheche Group is capable of. We achieved adjust profitability, depend our AI capabilities, formed a landmark partnership with a global automotive leader, and took our first meaningful step into the international markets. We enter the 2026 with clear priorities, continue growing renewable insurance, penetration through the AI power tools, expand our platform relationships with Huawei, Volkswagen, and other NEV partners, and invest selectively in the international expansion where we see the clearest path to probability. We are confident in the trajectory of the business and grateful for the support of our investors and partners.

I will now turn the call over to our CFO, Sandra Ji.

Thank you.

Thank you, Lei.

I'd like to begin by touching on our second half and four-year 2025 operational and financial highlights before taking any questions. First is our operational update. Our total return premium placed for the second half of 2025 increased 16.9% year-over-year to RMB, $15.5 billion, or U. S. dollar, $2.2 billion. For the full year, 2075, the total return premium increased 11% to RMB, $27 billion, or U. S. dollar, $3.9 billion. The total number of policies issued increased from 9.3 million in the prior year period to 12 million in the second half, 2025. For the four-year, total policies issued grew from 17.3 million to 20.3 million. On the NEV side, our 16 partnerships generated $1.2 million in budget policies and R&B $3.7 billion in corresponding written premiums in the second half of 2025, representing year-over-year growth of 61.8% and 63.9% respectively.

For the four-year 2025, NEV embedded policies reached $2.0 million, and the corresponding premium reached $6.3 million, growing 85.3% and 91.0% respectively. Our NEV premiums represented 24.1% of total return premium placed in the second half of 2025, up from 17.2% in the prior year period, and 23.4% for the full year 2025, up from 13.6% in the prior year. Next is our financial results. The net revenues for the second half of 2025 were on B$1.7 billion, or U. S. dollar $237.5 million, representing a 9.4% year-over-year decrease. As Leigh just mentioned, this decline reflects the higher proportion of NEV premiums within our mix, which carry lower service fee rates. We are actively managing this structural transition through AI-enhanced pricing capabilities and renewal market penetration.

For the full year 2025, net revenues were on the $3.0 billion, all U. S. dollars for $130.4 million, a decrease of 13.3% year-over-year, driven by the same and even mixed dynamics. For the second half of 2025, cost of revenues decreased 10% year-over-year to RMB $1.6 billion, or U dollar to million driven by lower next revenues and continued improvement in our gross margin profile For the full year 2025 cost of revenues decreased 40 Let see This is an important signal. Even as revenue compresses through the fee rate transition, our gross profit is still growing. Growth margin expanded as the higher margin in the business represents an increased share of the mix. For the fourth year, the gross profit increased 1% to RMB $160.4 million, or U. S. dollar $22.9 million, with gross margin expanding as the NEV business grew as a proportion of the mix.

For second half 2025, the selling and marketing expenses decreased 18.1% to RMB 31.0 million, or US$4.4 million. General and administrative expenses decreased 16.5 million to RMB 38.5 million, or US$5.5 million. Research and development expenses decreased $2.5 million to RMB $18.9 million or U. S. dollar $2.7 million. The total operating expenses decreased 14.4 percent to RMB $88.4 million or U. S. dollar $12.6 million, while the adjusted total operating expenses decreased by 22.2 percent to RMB $77.1 million. which is U. S. dollar $11.0 million. The total operating expenses for the four-year decreased 19.6% to RMB 181.2 million or U. S. dollar $25.9 million, While adjusted total operating expenses decreased 17.0% to RMB 156.9 million, all U. S. dollars 22.4 million.

Operating income for second half 2025 was RMB 6.1 million, all U. S. dollars 0.9 million, compared to operating loss of RMB 9.3 million in the prior year period. Adjusted operating income was RMB 18.5 million or U. S. dollar 2.6 million, compared to adjusted operating loss of RMB 1.5 million in the prior year period. Operating loss for the full year 2025 narrowed dramatically by 68.6% to RMB 20.9 million or U. S. dollar 3.0 million. The full year adjusted operating income was RMB 5.6 million or U. S. dollar 0.8 million compared to adjusted operating loss of RMB 28.2 million in the prior year. Net income for second half of 2025 was RMB 7.8 million, or U. S. dollar 1.1 million, compared to a net loss of RMB 6.4 million in the prior year period.

Adjusted net income was RMB 22.2 million, or U. S. dollar 3.2 million, compared to adjusted net loss of RMB 0.3 million in the prior year period. Net loss for the full year 2025 was RMB at $17.8 million, representing an improvement of 71.0% from RMB $61.2 million in the prior year. Adjusted net income was RMB $11.6 million, all U. S. dollars $1.7 million, Compared to an adjusted net loss of RMB, $24.8 million in a prior year. This marks the first four-year adjusted profitability in Churchill's history as a public company. Let's turn into our balance sheet. We reported RMB 160.8 million or U. S. dollar, 24.4 million cash, cash equivalents, restricted cash, and short-term investments as of December 31st, 2025.

Looking ahead to the fourth year of 2026, we are anticipating an approximate range of RMB 3.0 billion or to RMB 3.2 billion for net revenues, a range of RMB 28.0 billion to 30.0 billion for total return premiums, A range of RMB 10.5 billion to 12.0 billion for NEV return premiums. And we also expect adjusted net income to multiply several-fold compared to the full year of 2025. I think that concludes our remarks.

Next, we'll be happy to take any of the questions. Thank you.

Okay.

This question, the first, we think AI as a key tool for upgrading the company's innovation and operational capabilities. The first, at the R&D level, AI is being integrated across the entire workflow from requirements, analysis, and development testing and delivery, significantly improving overall efficiency and stability of outcomes. The second at the business application level our company will continue to promote the coordinated use of multiple AI tools and further leverage our advantage in the driving behavior data within the NEV ecosystem This view gradually extend AI capabilities across the full insurance value chain, from the pre-underwriting risk assessment and the pricing to in policy risk monitoring and intervention, and intelligent claims inspection and loose assessment. Through its initiative, we aim to drive a transformation of auto insurance from static pricing to the dynamic risk management, while continuously strengthening our long term competitive advantage.

Thank you.

Okay. In terms of global expansion, company has formed a strategy partnership with several automotive brands that focus on international growth. We have already established a solid presence in markets such as Australia, New Zealand, Latin America, and the Middle East have successfully launched business operations in collaboration with partners, including Guangzhou Auto Company and Cherry and BYD and Gradual Moto. By supporting Chinese automakers in their overseas expansion, we leverage our metro digital insurance capabilities and the financial technology capabilities to bring our technology to international markets as a China solution, helping build a global financial and insurance ecosystem in such country.

Thank you.

I just can comment. I was talking to somebody from Australia yesterday, and they said the demand for Chinese electric vehicle cars is dramatic. So the waiting list, especially with what's going on with oil prices.

from?

so that is actually in Australia today so yeah yeah I will travel to Australia for the great war motor and the cherry auto in Australia.

Thank you. Thank you. This is a very clear effect. Gint the knowledge, and it is a key to the technology, and it is a key to the technology, and it is a key to the technology. So AI for the entire insurance industry or the financial industry, has a very big change and change. This is the first question. The second question is, in the air, we just mentioned that we have a very big change in China. We have now with the Chinese Chinese, the most important part of the world in the world of China, and the most important part of the Chinese Chinese. In the year of the year, we will have three to five countries.

The local companies, the companies, the companies and the companies, the dealers will use our solution. We will also publish the news. The main question is to answer your question. Thank you. Thank you. Thank you.

Well, we'd like to thank everyone for joining us today. If you didn't have a chance to ask your questions or if you'd like to have a follow-up call with management, please feel free to reach out to me or the Cheche Investor Relations team, and we'll be more than happy to arrange a Zoom call at mutual convenience. Thanks, everyone, for joining us, and I look forward to coming back to you with future updates. Thank you, operator.