Shenrancaijing original
Author | Zou Shuai
Edit | Tang Yahua
On November 30, Waterdrop Company announced its financial report for the third quarter of 2021.
In the third quarter, the net revenue of Waterdrop Company was 779.3 million yuan, down 9.7% year-on-year. Net loss attributable to Waterdrop was $477 million, compared to $139 million in the same period last year, with a widening loss year-on-year.
In terms of users, as of September 30, 2021, the cumulative number of insurance customers was 108.7 million, and the cumulative number of paid insurance customers was 27.2 million.
The first year premium results are acceptable. According to the financial report, in the nine months ended September 30, 2021, the first-year premium generated by The Waterdrop Insurance Mall was 14.464 billion yuan, an increase of 37.5% over last year. In the third quarter, the first-year premium per customer was $1,292, an increase of 17.1% year-on-year.
Revenue fluctuates, losses are widening, and stock prices are less optimistic. As of press time, Waterdrop's share price was $1.51 per share, up more than 11% at one point before market hours on November 30, but it was still far from the issue price of $12.
"The insurance industry has gone through a period of transition." This is the explanation of Shen Peng, the founder of Waterdrop Company, in his financial report. Under the transformation, is the water droplet better?
Let's start with revenue.
In the first three quarters of 2021, the revenue of Waterdrop Company was 883.4 million yuan, 939.4 million yuan and 779.3 million yuan respectively, experiencing a slight increase from the first quarter to the second quarter, and the third quarter of Waterdrop Company suffered fluctuations. The financial report explained that the decline in revenue was mainly due to the decrease in insurance-related income.
Cartography / Deep Burning
In the third quarter, insurance-related revenue was 758.6 million yuan, down 9.4% from 837.3 million yuan in the same period last year, mainly due to the decline in insurance brokerage revenue.
Previously, the prospectus showed that the revenue of the water drop company mainly came from four parts: insurance brokerage income, management fee income, technical service income and other income, of which the insurance brokerage income accounted for a high proportion, and the performance of this part was directly related to the total revenue of the water drop company.
Moreover, the management fee income is mainly the membership fee and management fee generated in the mutual aid business, and after the closure of the business, the insurance-related income has borne the pressure of revenue.
Therefore, water droplets have increased their efforts in insurance products. According to the financial report, as of September 30, 2021, Waterdrop has provided a total of 323 insurance products on the platform. More than 90% of the impressive first-year premiums are exclusive bespoke insurance products from Waterdrops. In terms of product type, first-year premiums for critical illness insurance increased by 71% year-on-year in the third quarter of 2021.
It can be seen that as an Internet insurance intermediary platform, the revenue of Waterdrop always depends on the insurance business, after losing the link of mutual aid business, how the insurance business innovates, how to continue market education, and how to obtain customers are related to the survival of the entire company.
The droplet chip business, which has taken on the responsibility of drainage, still maintains zero revenue, and the financial report shows that as of September 30, 2021, about 383 million people have donated to more than 2.2 million patients through water drop fundraising, totaling more than 45.7 billion yuan.
Let's look at the losses.
In the first three quarters of 2021, the net loss of Waterdrop Company was 370 million yuan, 656 million yuan and 477 million yuan, respectively, and the net loss in the third quarter narrowed by 27% month-on-month. Compared with the first two quarters of this year, the net loss of 477 million yuan is not too much. It can be seen that after the turmoil in the second quarter, the water drop company breathed a sigh of relief in the third quarter.
However, year-on-year, the net loss in the third quarter of this year is more than 3 times that of the same period last year, and the changes in the environment and the layoff of the business have obviously caused a lot of blows to the water droplets.
Compared with 2018 to 2020, the loss in the single quarter of 2021 is almost as good as the loss of the whole year in previous years. This is due to the fact that Waterdrop has increased its marketing investment, and exchanged losses for revenue scale growth.
Finally, let's look at the cost.
In the third quarter, the total operating costs and expenses of Waterdrop Company were 1.292 billion yuan, an increase of 31.5% year-on-year. Among them, operating costs were 296 million yuan, an increase of 49.2% year-on-year; sales and marketing expenses were 782 million yuan, an increase of 24.3% year-on-year; general and administrative expenses were 111 million yuan, an increase of 9.4% year-on-year; research and development expenses were 103 million yuan, an increase of 92.9% year-on-year.
First, sales and marketing expenses are still the highest proportion of costs, and second, water droplets have increased investment in research and development.
The financial report explained that the increase in sales and marketing expenses was mainly due to the increase in third-party outsourcing sales and marketing service expenses, salaries and related expenses of employees in the sales and marketing functions, etc. However, sales and marketing expenses in the second quarter of 2021 were 1.2449 billion yuan, a decrease of 37.2% from the performance of the third quarter, indicating that the company has controlled the cost. The financial report also admitted that this is because Waterdrop has reduced its marketing expenses by 460.4 million yuan in third-party traffic channels.
Overall, the water droplets under the shock learn to control the cost. However, the plunge in stock prices is still a major pain point for water droplets. On May 7 this year, Waterdrop was listed on the New York Stock Exchange at an issue price of $12 per share. On the first day of listing, Waterdrop fell below the issue price to close at $9.7 per share, plunging 19%. Half a year later, the $1.51 per share was even less impressive.
With the gradual increase of supervision, the outside world may have more and more doubts about water droplets, and whether it can revitalize stock prices is also a major problem in front of water droplets.
The external environment is not very optimistic, so that the water drop company and even the entire Internet + insurance industry must make adjustments.
Droplet Mutual Aid, which originally belonged to the three businesses of Waterdrop Company, was officially terminated on March 31, 2021. In the past, the logic of the water drop company was very smooth: first use water drops to drain the flow, and then through the basic, small amount of water drop mutual assistance to obtain customers, and finally the formation of platform trust users to the higher unit price, more income of the water drop insurance.
After the transition link of mutual aid is cut, it means that users enter from the water drop chip link in the circle of friends, and after donating love for relatives and friends, they are directly "sold" large amounts of insurance, which inevitably causes users to be vigilant and wary.
However, it is not only the external environment that makes The Water Drop Company anxious, but also the new internal problems are gradually exposed, and in the past November, the Water Drop Company has spread two fines.
First, on November 9, Waterdrop Insurance Brokers Co., Ltd. was fined a total of 1 million yuan by the Banking and Insurance Regulatory Commission. According to the fines issued by the CBRC, the violations occurred in the sales of Anxin Property Insurance and Pacific Property insurance products, and the reason for the penalty was that during the actual sales, Shuidi did not use the insurance terms and insurance rates filed with the CBIRC in accordance with the regulations.
Among the four products involved in Anxin Property & Casualty Insurance, two of them said in the CBIRC's filing that the monthly premiums were the same, but Shui Di charged the first month premium of 0 yuan and 3 yuan in the first month, which was lower than the remaining installment premiums. The other two paragraphs did not say in the CBIRC's filing that the premiums could be paid in installments, while The water drops were charged annual premiums in monthly installments at the time of sale, with a first month premium of 3 yuan, lower than the other installment premiums at the same time.
The situation of Pacific Property & Casualty insurance in the actual sales is roughly the same as that of Anxin Property Insurance, and the CBIRC only has a description of "monthly payment (0 yuan in the first month of insurance, and the rest is paid in 11 installments)" in the filing of the CBIRC, but The water drop collects the first premium according to "3 yuan in the first month".
A few days later, on November 15, the Hubei Banking and Insurance Regulatory Bureau issued a warning and imposed a fine of 10,000 yuan on the Hubei branch of Shuidi Insurance Brokerage Co., Ltd. for failing to register 449 customer service personnel as required.
"First month 0 yuan", "first month 1 yuan" and "first month 3 yuan", many netizens have seen this expression is not strange, and many people have said that they have been induced by this model to consume. On the black cat complaint platform, there are more than 200 complaints about the deduction of water drops, and consumers are mostly "stepping on the pit" through the same logic: first they saw the advertisement of water drop insurance on the Internet, and after clicking into it, they were attracted by the extremely low or even free first month premium, did not notice the subsequent deduction clause, and as a result, they were deducted about 100 yuan of premiums every month without knowing it.
In these complaint cases, many consumers said that the elderly in the family encountered this situation. The elderly are less able to operate mobile phones, and they do not know that there is an automatic deduction, which is often deducted for several months before they realize it.
Previously, a consumer reflected to shen yan that the 60-year-old relatives in the family paid a premium of 1 yuan in July, and found that they were automatically deducted more than 100 yuan by the water drop insurance in August. "The old man can't understand why he was deducted without entering the password in August, and it is difficult to understand the routine of automatic deduction after the first month of payment." He said.
Source / Black Cat Complaint
Shen Peng has publicly stated that The water drop company is misunderstood by the public as a public welfare organization, but in fact, the water drop is essentially a commercial company. Balancing interest revenue and humanistic care is the pressure of the water drop at the beginning.
Recently, the pressure of water droplets lies in the pain of stripping the mutual aid business, and it can also be seen from the financial report that the water droplets that broke "one leg" have been a bit hesitant to walk. In addition, the habit of users who buy insurance through internet platforms will take time to develop. In addition, Internet insurance itself is an industry facing strong supervision, and the future industry environment will be more standardized and strict.
Previously, after the release of the second quarter earnings report, Shen Peng mentioned that the stock price of Waterdrop fell to a far undervalued state. After the release of the financial report, Shen Peng once again stated that more than 30 core management teams, including himself, had promised not to sell or dispose of the company's shares or options for at least 18 months after the end of the lock-up period of the company before the listing.
Management expressed confidence in the company's development, but whether it can reverse the company's performance and stock price decline depends on the company's next performance.
For Waterdrop, it is not only necessary to balance the "two legs", but also to develop a transition plan to replace the mutual aid business. At the same time, for the newly exposed business model problems, The WaterDrop Company may also take a little time.
*The caption image is from Visual China.