• Huize Holding Limited Reports First Quarter 2022 Unaudited Financial Results

    Source: Nasdaq GlobeNewswire / 24 Jun 2022 05:07:33   America/New_York

    SHENZHEN, China, June 24, 2022 (GLOBE NEWSWIRE) -- Huize Holding Limited, (“Huize”, the “Company” or “we”) (NASDAQ: HUIZ), a leading digital insurance product and service platform for new generation consumers in China, today announced its unaudited financial results for the first quarter ended March 31, 2022.

    First Quarter 2022 Financial and Operational Highlights

    • Resilient business performance: Gross Written Premiums (“GWP”) facilitated on our platform in the first quarter of 2022 slightly decreased by 4.0% to RMB1,338.0 million from RMB1,393.8 million in the first quarter of 2021. Renewal premiums facilitated on our platform in the first quarter of 2022 increased by 113.9% to RMB1,077.8 million from RMB504.0 million in the first quarter of 2021, driven by continued robust persistency ratios of approximately 94%.
    • Effective cost control: Total operating costs and expenses decreased by 59.7% year-over-year to RMB285.2 million, resulting in a US GAAP net profit attributable to common shareholders of RMB10.6 million (US$1.7 million) for the first quarter of 2022.
    • Robust balance sheet and liquidity: As of March 31, 2022, our cash and cash equivalents amounted to RMB376.1 million (US$59.3 million).
    • Cumulative number of insurance clients served increased to approximately 8.0 million, compared to 7.0 million in the first quarter of 2021. We cooperated with 100 insurer partners, including 57 life and health insurance companies and 43 property & casualty insurance companies, as of March 31, 2022.

    Mr. Cunjun Ma, Founder and CEO of Huize commented, “Against the backdrop of industry regulatory changes, challenging macroeconomic headwinds and the ongoing pandemic, we are very pleased to report a set of resilient operating and financial results in the first quarter of 2022, underpinned by our time-tested business model with a focus on serving the emerging middle-class consumers in China for their long-term insurance needs, and our continued focus on improving profitability by executing on our group-wide organizational structure optimization which resulted in significant cost savings during the quarter.

    We continued to work with our insurer partners to co-develop various long-term customized savings and protection products, demonstrating our agile response to the dynamic operating environment and our strengths in product innovation. The GWP contribution of long-term insurance products remained above 90% for the tenth consecutive quarter. Our guidance demonstrates our confidence that with an expected macro recovery and improving operating efficiency, we expect to achieve quarterly profitability in the second half of 2022.

    We have set a strategic roadmap for the next three years to build an omnichannel digital insurance service ecosystem that integrates “Agents, Businesses, Customers (ABC)” by leveraging on our investments in technology and digitalization since our IPO in 2020. To customers, we will leverage our proven online platform with our expanding offline service coverage to deepen engagements with our high-value customers to enhance retention and repeat purchases, and further drive customer lifetime values. To businesses, we will further drive industry digitalization by developing and exporting technology to insurance companies to support digital customer relationship management, underwriting risk management, and insurance claims. To agents, we have established a new business line targeting independent offline insurance agents to empower them with a diversified insurance product matrix, digital business development tools and customer service support through our core Huize platform.”

    First Quarter 2022 Financial Results

    GWP and operating revenue

    GWP facilitated on our platform was RMB1,338.0 million (US$165.7 million) in the first quarter of 2022, a slight decrease of 4.0% from RMB1,393.8 million in the same period of 2021. Of the GWP facilitated in the first quarter of 2022, first year premiums (“FYP”) accounted for RMB260.2 million (or 19.4% of total GWP). Renewal premiums accounted for RMB1,077.8 million (or 80.6% of total GWP), an increase of 113.9% year-over-year.

    Operating revenue was RMB299.5 million (US$47.2 million) in the first quarter of 2022, a decrease of 59.3% from RMB735.0 million in the same period of 2021. The decrease in operating revenue was primarily driven by the decrease in FYP facilitated.

    Operating costs

    Operating costs were RMB149.7 million (US$23.6 million) in the first quarter of 2022, a decrease of 73.2% from RMB557.5 million in the same period of 2021. The decrease was primarily due to lower marketing channel costs.

    Operating expenses

    Selling expenses decreased by 4.0% year-over-year to RMB73.9 million (US$11.7 million) in the first quarter of 2022, compared with RMB77.0 million in the same period of 2021, which was primarily due to a decrease in advertising and marketing expenses. On a quarter-over-quarter basis, selling expenses decreased by 34.2%, primarily due to a decrease of RMB24.2 million in personnel costs.

    General and administrative expenses decreased by 29.2% year-over-year to RMB38.3 million (US$6.0 million) in the first quarter of 2022, compared with RMB54.1 million in the same period of 2021, primarily driven by a decrease in share-based compensation expenses and a decrease in rental and utilities expenses. On a quarter-over-quarter basis, G&A expenses decreased by 31.7%, primarily due to a decrease in personnel costs and professional service expenses.

    Research and development expenses in the first quarter of 2022 were RMB23.3 million (US$3.7 million), an increase of 23.9% from RMB18.8 million in the same period of 2021, primarily due to an increase in personnel costs. On a quarter-over-quarter basis, R&D expenses decreased by 49.3%, primarily due to a decrease in personnel costs.

    Net profit attributable to common shareholders and Non-GAAP net profit attributable to common shareholders for the period

    Net profit attributable to common shareholders in the first quarter of 2022 was RMB10.6 million (US$1.7 million), compared to a net profit attributable to common shareholders of RMB28.5 million in the same period of 2021. Non-GAAP net profit attributable to common shareholders in the first quarter of 2022 was RMB12.3 million (US$1.9 million), compared to a non-GAAP net profit attributable to common shareholders of RMB38.7 million in the same period of 2021.

    Cash and cash equivalents

    As of March 31, 2022, the combined balance of the Company’s cash and cash equivalents amounted to RMB376.1 million (US$59.3 million), compared to RMB381.2 million as of December 31, 2021.

    Share Repurchase Program

    As of April 1, 2022, the Company had purchased an aggregate of 339,336 ADSs for a total amount of approximately US$0.5 million, under its share repurchase program pursuant to which the Company has been authorized to repurchase up to US$5 million ADSs by March 18, 2023, as previously announced on March 18, 2022.

    Business Outlook

    Based on the Company’s preliminary assessment of the current market conditions, the Company currently expects to achieve quarterly profitability in the second half of 2022. This forecast reflects the Company’s current and preliminary views on the market and operational conditions, which are subject to change as a result of various market uncertainties.

    Conference Call

    The Company’s management team will hold a Direct Event conference call on Friday, June 24, 2022, at 8:00 A.M. Eastern Time (or 8:00 P.M. Beijing Time on the same day) to discuss the financial results. Details for the conference call are as follows:

    Event Title:Huize Holding Limited First Quarter 2022 Earnings Conference Call
    Conference ID: #4360707
    Registration Link:http://apac.directeventreg.com/registration/event/4360707

    All participants must use the link provided above to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique access PIN, which can be used to join the conference call.

    A replay of the conference call will be accessible through June 30, 2022, by dialing the following numbers:

    International:+61-2-8199-0299
    Mainland China Toll-Free:400-820-9035
    United States Toll-Free:+1-855-452-5696
    Hong Kong, China Toll Free:800-963-117

    A live and archived webcast of the conference call will also be available at the Company’s investor relations website at ir.huize.com.

    About Huize Holding Limited

    Huize Holding Limited is a leading digital insurance product and service platform for new generation consumers in China. Targeting the younger generation, Huize is dedicated to serving its insurance clients for their life-long insurance needs. Leveraging its online platform, Huize offers a wide variety of insurance products with a focus on long-term life and health insurance products and empowers its insurer partners to reach a large fragmented client base in the insurance retail market efficiently and enhance their insurance sales. Huize provides insurance clients with digitalized insurance experience and services, including suitable product recommendations, consulting service, intelligent underwriting, and assistance in claim application and settlement, which significantly improve transaction experience.

    For more information, please visit http://ir.huize.com.

    Use of Non-GAAP Financial Measure Statement

    In evaluating our business, we consider and use non-GAAP net profit/(loss) attributable to common shareholders as a supplemental measure to review and assess our operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define non-GAAP net profit/(loss) attributable to common shareholders as net profit/(loss) attributable to common shareholders excluding share-based compensation expenses and interest on convertible bond. Such adjustments have no impact on income tax because either the non-GAAP adjustments were recorded at entities located in tax free jurisdictions, such as the Cayman Islands or because the non-GAAP adjustments were recorded at operating entities located in the PRC for which the non-GAAP adjustments were not deductible for tax purposes.

    We present the non-GAAP financial measure because it is used by our management to evaluate our operating performance and formulate business plans. Non-GAAP net profit/(loss) attributable to common shareholders enables our management to assess our operating results without considering the impact of share-based compensation expenses and the interest on convertible bond. We also believe that the use of this non-GAAP financial measure facilitates investors’ assessment of our operating performance.

    This non-GAAP financial measure is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. The non-GAAP financial measure has limitations as an analytical tool. One of the key limitations of using adjusted net profit/(loss) attributable to common shareholders is that it does not reflect all items of income and expense that affect our operations. Further, the non-GAAP financial measure may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore their comparability may be limited.

    The non-GAAP financial measure should not be considered in isolation or construed as an alternative to net profit/(loss) attributable to common shareholders or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical non-GAAP financial measure in light of the most directly comparable GAAP measure, as shown below. The non-GAAP financial measure presented here may not be comparable to similarly titled measure presented by other companies. Other companies may calculate similarly titled measures differently, limiting the usefulness of such measures when analyzing our data comparatively. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

    Exchange Rate Information

    This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB are made at a rate of RMB6.3393 to US$1.00, the exchange rate on March 31, 2022, set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollars amounts referred could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all.

    Safe Harbor Statement

    This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Huize’s beliefs and expectations, are forward-looking statements. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, business outlook and quotations from management in this announcement, contain forward-looking statements. Huize may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Huize’s goal and strategies; Huize’s expansion plans; Huize’s future business development, financial condition and results of operations; Huize’s expectation regarding the demand for, and market acceptance of, its online insurance products; Huize’s expectations regarding its relationship with insurer partners and insurance clients and other parties it collaborates with; general economic and business conditions; and assumptions underlying or related to any of the foregoing.

    Further information regarding these and other risks is included in Huize’s filings with the SEC. All information provided in this press release is as of the date of this press release, and Huize does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    For investor and media inquiries, please contact:

    Investor Relations
    investor@huize.com

    Media Relations
    mediacenter@huize.com

    Christensen

    In China
    Ms. Jasmine Zhu
    Phone: +852 2117 0861
    Email: jasminezhu@christensenir.com

    In U.S.
    Ms. Linda Bergkamp
    Phone: +1-480-614-3004
    Email: lbergkamp@ChristensenIR.com  


    Huize Holding Limited
    Unaudited Consolidated Balance Sheets
    (all amounts in thousands, except for share and per share data)

      As of December 31 As of March 31
      2021 2022
      RMB RMB  USD
    Assets       
    Current assets       
    Cash and cash equivalents 381,158  376,103   59,329 
    Restricted cash 183,408  121,201   19,119 
    Contract Assets -  54,206   8,551 
    Accounts receivables, net of allowance for impairment 777,262  228,331   36,018 
    Insurance premium receivables 1,217  883   139 
    Amounts due from related parties 128  127   20 
    Deferred costs   5,312   838 
    Prepaid expense and other receivables 77,511  96,183   15,172 
    Total current assets 1,420,684  882,346   139,186 
            
    Non-current assets       
    Restricted Cash 44,418  44,316   6,991 
    Contract Assets -  4,593   725 
    Property, plant and equipment, net 48,461  46,638   7,357 
    Intangible assets, net 21,626  58,915   9,294 
    Deferred tax assets 605  605   95 
    Long-term investments 73,001  68,198   10,758 
    Operating lease right-of-use assets 247,819  241,287   38,062 
    Goodwill 461  461   73 
    Other assets 379  47   7 
    Total non-current assets 436,770  465,060   73,362 
    Total assets 1,857,454  1,347,406   212,548 
            
    Liabilities, Mezzanine Equity and Shareholders’ Equity       
    Current liabilities       
    Short-term borrowings 216,710  216,460   34,146 
    Accounts payable 680,369  277,683   43,803 
    Insurance premium payables 124,019  61,500   9,701 
    Contract liabilities 7,236  7,014   1,106 
    Other payables and accrued expenses 71,255  66,134   10,433 
    Payroll and welfare payable 93,451  39,294   6,198 
    Income taxes payable 2,440  2,440   385 
    Operating lease liabilities 14,886  14,535   2,293 
    Amount due to related parties 11,875  6,604   1,042 
    Total current liabilities 1,222,241  691,664   109,107 
             
    Non-current liabilities       
    Long-term borrowings 20,000  20,000   3,155 
    Deferred tax liabilities 4,892  14,226   2,244 
    Operating lease liabilities 249,183  251,374   39,653 
    Payroll and welfare payable 225  143   23 
    Total non-current liabilities 274,300  285,743   45,075 
    Total liabilities 1,496,541  977,407   154,182 
            
    Commitments and contingencies       
    Shareholders’ equity       
    Class A common shares 62  62   10 
    Class B common shares 10  10   2 
    Treasury stock (9,545) (11,910)  (1,879)
    Additional paid-in capital 896,772  898,994   141,813 
    Accumulated other comprehensive income (27,295) (27,957)  (4,410)
    Accumulated deficit (499,940) (489,383)  (77,199)
    Total shareholders’ equity 360,064  369,816   58,337 
    Non-controlling interests 849  183   29 
    Total shareholders’ equity 360,913  369,999   58,366 
    Total liabilities and shareholders’ equity 1,857,454  1,347,406   212,548 


    Huize Holding Limited
    Unaudited Consolidated Statements of Comprehensive Income
    (all amounts in thousands, except for share and per share data)

     For the Three Months Ended March 31,
     20212022
     RMBRMB
    		 USD 
    Operating revenue      
    Brokerage income732,630  291,818  46,033  
    Other income2,351  7,665  1,209  
    Total operating revenue734,981  299,483  47,242  
    Operating costs and expenses      
    Cost of revenue(556,696) (148,260) (23,388) 
    Other cost(771) (1,415) (223) 
    Total operating costs(557,467) (149,675) (23,611) 
    Selling expenses(76,976) (73,918) (11,660) 
    General and administrative expenses(54,061) (38,258) (6,035) 
    Research and development expenses(18,833) (23,343) (3,682) 
    Total operating costs and expenses(707,337) (285,194) (44,988) 
    Operating profit27,644  14,289  2,254  
           
    Other income/(expenses)      
    Interest income/(expenses)(220) (1,255) (198) 
    Unrealized exchange (loss)/income(2) (14) (2) 
    Investment income/(loss)241  (2,139) (337) 
    Others, net2,638  1,451  229  
    Profit before income tax, and share of loss of equity method investee30,301  12,332  1,946  
    Income tax expense(1,529) -  -  
    Share of loss of equity method investee(251) (2,441) (385) 
    Net profit28,521  9,891  1,561  
           
    Net loss attributable to non-controlling interests-  (666) (105) 
    Net profit attributable to common shareholders28,521  10,557  1,666  
           
    Net profit28,521  9,891  1,561  
    Foreign currency translation adjustment, net of tax1,223  (662) (104) 
    Comprehensive income29,744  9,229  1,457  
    Comprehensive loss attributable to non-controlling interests-  (666) (105) 
    Comprehensive income attributable to common shareholders 29,744  9,895  1,562  
              
    Weighted average number of common shares used in computing net profit per share         
    Basic1,022,963,524  1,025,803,080  1,025,803,080  
    Diluted1,036,413,496  1,025,803,080  1,025,803,080  
    Net profit per share attributable to common shareholders         
    Basic0.03  0.01  0.00  
    Diluted0.03  0.01  0.00  


    Huize Holding Limited
    Unaudited Reconciliations of GAAP and Non-GAAP Results
    (all amounts in thousands, except for share and per share data)

     For the Three Months Ended March 31, 
     2021 2022 
     RMB RMB USD 
    Net profit attributable to common shareholders28,521 10,557 1,666 
    Share-based compensation expenses10,227 1,783 281 
    Non-GAAP net profit attributable to common shareholders38,748 12,340 1,947 

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