Yuanbao (NASDAQ:YB) reported second-quarter 2026 revenue of RMB 1.39 billion, up 30.1% from a year earlier, as growth in insurance distribution and system services supported higher profitability.
Net income rose 35.6% year over year to RMB 413.2 million, representing a net income margin of 29.7%, Chief Financial Officer Huirui Wan said during the company’s earnings call. Non-GAAP adjusted net income increased 32.6% to RMB 431.2 million, with a 31% adjusted net income margin.
Revenue Growth Led by Distribution and System Services
Revenue from insurance distribution services increased 30.4% to RMB 457.4 million. Wan attributed the increase to continued growth in policies purchased through Yuanbao’s platform, supported partly by enhanced targeted marketing.
System services revenue rose 22.8% to RMB 881.9 million. The company said this reflected improvements in its consumer service-cycle engine, which it said strengthened its marketing, analytics and customer-related services for insurance carrier partners. The segment also benefited from expanded services provided to both existing and new insurer partners.
Yuanbao also introduced advertising services during the quarter, generating RMB 52.8 million in revenue. Management described the business as a small share of total quarterly revenue and said it provides insurance carriers with intelligent marketing and traffic-optimization solutions through Yuanbao’s proprietary marketing platform.
Total operating costs and expenses increased 21.9% year over year to RMB 341.3 million, according to Wan. Operations and support expenses rose 139.1% to RMB 97.8 million, primarily due to costs tied to the newly launched advertising services. Selling and marketing expense increased 12.8% to RMB 679.3 million as the company continued to focus on consumer growth and retention.
General and administrative expenses climbed 36.3% to RMB 64.8 million, driven by professional-service fees and personnel costs. Research and development spending increased 21.7% to RMB 99.5 million as Yuanbao added R&D staff and continued investing in technical capabilities. Net cash provided by operating activities totaled RMB 419.1 million for the quarter.
Health Insurance Product Updates
Chairman and Chief Executive Officer Rui Fang said Yuanbao continued to work with insurance carriers on products aimed at expanding access to commercial health insurance. He cited policy support for commercial health insurance, including products for consumers with pre-existing conditions and rare diseases.
In June, Yuanbao upgraded its Super Medical Insurance series, which offers coverage tiers ranging from basic outpatient and emergency care to general and premium medical treatment. The updated products added access to special-needs medical resources at public hospitals, broadened coverage for advanced drugs and medical devices, and introduced inpatient rehabilitation coverage for certain conditions, management said.
Fang said the company maintained its affordable-pricing approach while expanding benefits. Yuanbao also partnered with insurers in May to introduce Complete Guardian Million-RMB Medical Insurance, which does not require health disclosures and covers general pre-existing conditions within the scope of policy benefits. It also launched a no-health-disclosure version of its Guardian Insurance million-RMB critical illness product.
AI Investment and Claims Assistance
Yuanbao said it continued to expand its artificial intelligence infrastructure. As of the end of the second quarter, its model matrix included more than 5,100 models capable of analyzing more than 5,900 labels across processes including customer needs identification, product recommendations and claims assistance.
The company has deployed multimodal AI capabilities in medical insurance claims-assistance scenarios. Its system parses medical records, diagnostic certificates, invoices and examination reports to recognize documents, extract information, organize case facts and support reviews.
Management said the system achieved 95% material-classification accuracy and approximately 94% average accuracy in extracting key fields. Compared with vendor solutions previously tested, Yuanbao said its current approach improved both processing efficiency and accuracy.
According to the company’s first-half 2026 claims report released in July, its AI-assisted claims tools helped partner insurers reduce settlement times by 41% for small claims below RMB 10,000. Fang said the system uses agents focused on case organization, preliminary liability review and conclusion interpretation.
Management added that its AI team represented more than 10% of the company’s workforce at quarter-end. Yuanbao plans to continue investing in AI agents, multimodal models and an insurance-domain knowledge base encompassing policy terms, medical knowledge, service workflows, claims rules and historical cases.
Marketing, Capital Returns and Outlook
During the question-and-answer session, Fang said recent rules governing online marketing of financial products had not materially affected Yuanbao’s customer-acquisition model. He said the company has a marketing-management system and mandatory compliance reviews, while its products are offered in collaboration with licensed insurance carriers and follow regulatory approval or filing requirements.
Management said return on investment from advertising remained relatively stable despite broader competition for traffic. It said demand for short-term insurance products in China remains substantial, with the key being whether insurers and distributors can offer products suited to different customer needs.
Yuanbao said its previously announced $15 million share-repurchase program was progressing. As of Aug. 31, it had repurchased approximately 114,000 American depositary shares for about $1.6 million, according to management. The company said future dividend levels will be evaluated based on profitability and board approval, but it plans to maintain or increase dividends subject to healthy cash flow and profitability.
Looking ahead, Fang said Yuanbao intends to balance investment in its existing operations and potential growth opportunities with liquidity management and shareholder returns. He said the company will continue refining its inclusive health-insurance product portfolio while expanding AI-supported capabilities in customer insights, recommendations, consultations and claims assistance.
About Yuanbao (NASDAQ:YB)
Our mission is to protect health and well-being through technology. We are a leading technology-driven online insurance distributor in China. We take pride in pioneering the seamless integration of insurance with cutting-edge technologies, and have constructed a highly efficient full consumer service cycle engine. Through this engine, we successfully distribute suitable and high-quality insurance products to over ten million insurance consumers. According to Frost & Sullivan, we were the largest independent insurance distributor in China’s personal life and accident & health (A&H) insurance market in terms of first year premiums in 2023.
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