Huize Holding Limited Reports Fourth Quarter and Full Year 2020 Unaudited Financial Results

Huize Holding Limited Reports Fourth Quarter and Full Year 2020 Unaudited Financial Results




Huize Holding Limited Reports Fourth Quarter and Full Year 2020 Unaudited Financial Results

SHENZHEN, China, March 10, 2021 (GLOBE NEWSWIRE) — Huize Holding Limited, (“Huize”, the “Company” or “we”) (NASDAQ: HUIZ), a leading independent online long-term life and health insurance product and service platform for new generation consumers in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter and Full Year 2020 Highlights:

  • Total Gross Written Premiums (“GWP”) facilitated on our platform in the fourth quarter of 2020 increased by 63.0% to a record quarterly high of RMB1,047.0 million, compared to RMB642.5 million in the fourth quarter of 2019. Total GWP facilitated on our platform for the full year of 2020 increased by 49.9% to RMB3,019.9 million from RMB2,014.3 million in 2019.
  • Total operating revenue in the fourth quarter of 2020 increased by 50.3% to a record quarterly high of RMB388.1 million (US$59.5 million), compared to RMB258.3 million in the fourth quarter of 2019. Total operating revenue for the full year of 2020 increased by 22.8% to RMB1,220.2 million from RMB993.3 million in 2019.
  • Cumulative number of insurance clients served increased to approximately 6.8 million, and cumulative number of insured clients was approximately 57.6 million as of December 31, 2020.

Mr. Cunjun Ma, Founder, Chairman and Chief Executive Officer of Huize, commented, “Despite the uncertain macro conditions throughout the year, we delivered robust results due to our years of experience in the insurance industry, the competitive advantages of our online platform business model, our unique focus on long-term insurance products distribution and our industry-leading digital development capabilities.”

“During the year, we constantly enriched our product offerings. For example, we launched the “Darwin 3” critical illness insurance, which was yet another success of our proprietary “Darwin” product line. We also took the lead in the customization of annuity products and launched our first online version of joint-life annuity which was also a unique feature and innovation in China’s online insurance market. Moreover, we launched AI Proposal application and a new version of consultant workstation in order to improve service capabilities and client experience. As the pandemic further accelerated the switch of insurance purchase preference from offline to online, our differentiated services and market reputation enabled us to continue attracting and converting new users.”

“Such achievements are the driving force behind our ongoing development and advancement. Looking ahead, we are confident in the prospects of the online insurance industry in China, and we aim to further establish Huize as the go-to digital insurance product and service platform for the new generation consumers empowered by data and technology.”

“In order to achieve this goal, we will fully embrace digitalization, continuously strengthen our technology research and development as well as talent acquisition, and enhance Huize’s core competencies. At the same time, we will promote a comprehensive strategic upgrade by expanding our offline business in first-tier cities such as Shanghai and Shenzhen by setting up high value client service centers to further optimize the service experience and maximize clients’ lifetime value. Moreover, we will strengthen our collaborations with upstream and downstream partners along the industry value chain and we expect Huize to become a more open platform with a fuller range of products and services in its insurance ecosystem, including medical and healthcare. Additionally, we will take full advantage of the capital markets, actively identify high-quality investment targets, and improve our platform’s value proposition and market positioning through mergers and acquisitions to further realize our development strategy.”

Fourth Quarter 2020 Financial Results

Total operating revenue

Total operating revenue in the fourth quarter of 2020 increased by RMB129.8 million, or 50.3%, to RMB388.1 million (US$59.5 million) from RMB258.3 million in the same period of 2019. The increase in total operating revenue was primarily driven by an increase in brokerage income, which increased by 52.5% year over year to RMB386.8 million (US$59.3 million) in the fourth quarter of 2020. The increase in brokerage income was primarily driven by the 63.0% increase in total GWP facilitated, which amounted to RMB1,047.0 million during the fourth quarter of 2020, of which first year premiums accounted for RMB613.6 million and renewal premiums accounted for RMB433.5 million.

Total operating costs

Cost of revenue in the fourth quarter of 2020 increased by RMB131.3million, or 82.1%, to RMB291.2 million (US$44.6 million) from RMB159.9 million in the same period of 2019, which was primarily attributable to increased service fees paid to user traffic channels.

Total operating costs in the fourth quarter of 2020 increased by RMB131.5 million, or 82.0%, to RMB291.9 million (US$44.7 million) from RMB160.4 million in the same period of 2019, primarily attributable to the increase in cost of revenue.

Operating expenses

Selling expenses in the fourth quarter of 2020 increased by RMB9.7 million, or 15.7%, to RMB71.5 million (US$10.9 million) from RMB61.8 million in the same period of 2019. This increase was primarily attributable to increased advertising and marketing expenses.

General and administrative expenses in the fourth quarter of 2020 increased by RMB2.8 million, or 8.1%, to RMB37.3 million (US$5.7 million) from RMB34.5 million in the same period of 2019. This increase was primarily attributable to the increase in general and administrative salaries and employment benefits and professional service expenses, offset by a decrease in share-based compensation expenses.

Research and development expenses in the fourth quarter of 2020 increased by RMB4.0 million, or 33.9%, to RMB15.8 million (US$2.4 million) from RMB11.8 million in the same period of 2019, primarily attributable to an increase in the number of R&D personnel.

Net profit and Non-GAAP net profit for the period

Net loss in the fourth quarter of 2020 was RMB27.0 million (US$4.1 million), compared to a net loss of RMB7.5 million in the fourth quarter of 2019. Non-GAAP net loss in the fourth quarter of 2020 was RMB22.8 million (US$3.5 million), compared to non-GAAP net profit of RMB6.1 million in the fourth quarter of 2019.

Full Year 2020 Financial Results

Total operating revenue

Total operating revenue for the full year of 2020 increased by RMB226.9 million, or 22.8%, to RMB1,220.2 million (US$187.0 million) from RMB993.3 million in 2019. The increase in total operating revenue was primarily driven by an increase in brokerage income, which increased by 23.8% year over year to RMB1,215.4 million (US$186.3 million) in 2020. The increase in brokerage income was primarily driven by the 49.9% increase in total GWP facilitated, which amounted to RMB3,019.9 million in 2020, of which first year premiums accounted for RMB1,567.9 million and renewal premiums accounted for RMB1,452.0 million.

Total operating costs

Cost of revenue for the full year of 2020 increased by RMB184.0 million, or 29.2%, to RMB813.5 million (US$124.7 million) from RMB629.5 million in 2019, which was primarily attributable to increased service fees paid to user traffic channels.

Total operating costs for the full year of 2020 increased by RMB185.0 million, or 29.3%, to RMB816.4 million (US$125.1 million) from RMB631.4 million in 2019, primarily attributable to the increase in cost of revenue.

Operating expenses

Selling expenses for the full year of 2020 increased by RMB65.7 million, or 39.9%, to RMB230.4 million (US$35.3 million) from RMB164.7 million in the same period of 2019. This increase was primarily attributable to increased salaries and employment benefits as well as an increase in advertising and marketing expenses.

General and administrative expenses for the full year of 2020 decreased by RMB11.6 million, or 7.2%, to RMB150.2 million (US$23.0 million) from RMB161.8 million in the same period of 2019. This decrease was primarily attributable to a decrease in share-based compensation expenses, offset by an increase in general and administrative salaries and employment benefits and professional service expenses.  

Research and development expenses for the full year of 2020 increased by RMB15.3 million, or 45.3%, to RMB49.1 million (US$7.5 million) from RMB33.8 million in the same period of 2019, primarily attributable to an increase in the number of R&D personnel.

Net profit and Non-GAAP net profit for the year

Net loss for the full year of 2020 was RMB18.3 million (US$2.8 million), compared to a net profit of RMB15.0 million in 2019. Non-GAAP net profit for the full year of 2020 was RMB34.0 million (US$5.2 million), compared to non-GAAP net profit of RMB109.9 million in 2019.

Cash and cash equivalents

As of December 31, 2020, the combined balance of the Company’s cash and cash equivalents amounted to RMB404.6 million (US$62.0 million), compared to RMB88.1 million as of December 31, 2019. The increase was primarily due to the cash proceeds raised from the Company’s initial public offering in February 2020.

Business Outlook

Based on the Company’s preliminary assessment of the current market conditions, the Company currently expects total operating revenue for the first quarter of 2021 to be in the range of RMB650 million to RMB700 million. 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, including those related to the continued outbreak of COVID-19 globally.

Share Repurchase Program

As of December 31, 2020, the Company had purchased an aggregate of 44,809 ADSs for a total amount of approximately US$0.3 million, under its share repurchase program pursuant to which the Company has been authorized to repurchase up to US$10 million ADSs by April 15, 2021, as previously announced on April 15, 2020.

Conference Call

The Company’s management team will hold a Direct Event conference call on Wednesday, March 10, 2021, at 7:00 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 Fourth Quarter 2020 Earnings Conference Call
Conference ID: #7894339
Conference ID: http://apac.directeventreg.com/registration/event/7894339

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 March 18, 2021, by dialing the following numbers:

International: +61-2-8199-0299
Mainland China Toll Free: 400-632-2162
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 independent online insurance product and service platform 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) 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) as net profit/(loss) 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) 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) 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) 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 RMB6.5250 to US$1.00, the exchange rate on December 31, 2020 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 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
Harriet Hu
Investor Relations Director
+852 3180 9207
investor@huize.com

Media Relations
mediacenter@huize.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 December 31
    2019    2020 
    RMB   RMB   USD
Assets            
Current assets            
Cash and cash equivalents   88,141     404,618     62,010  
Restricted cash   161,186     324,330     49,706  
Contract Assets       216     33  
Accounts receivable, net of allowance for doubtful accounts   180,393     232,589     35,646  
Insurance premium receivables   2,329     1,974     303  
Amounts due from related parties   280     251     38  
Prepaid expense and other receivables   29,196     44,377     6,801  
Total current assets   461,525     1,008,355     154,537  
             
Non-current assets            
Property, plant and equipment, net   8,006     10,251     1,571  
Intangible assets, net   1,652     2,030     311  
Deferred tax assets   64     605     93  
Long-term investments   23,395     46,084     7,063  
Operating lease right-of-use assets       267,352     40,973  
Goodwill       461     71  
Other assets   14,163     838     128  
Total non-current assets   47,280     327,621     50,210  
Total assets   508,805     1,335,976     204,747  
             
Current liabilities            
Short-term borrowings   36,880     31,540     4,834  
Accounts payable   124,441     227,532     34,871  
Insurance premium payables   125,587     187,219     28,693  
Other payables and accrued expenses   30,211     31,153     4,774  
Payroll and welfare payable   43,993     63,919     9,796  
Income taxes payable   206     2,440     374  
Operating lease liabilities       12,763     1,956  
Amounts due to related parties   465          
Total current liabilities   361,783     556,566     85,298  
             
Non-current liabilities            
Long-term borrowings       53,860     8,254  
Deferred tax liabilities   530     605     93  
Operating lease liabilities       252,106     38,637  
Payroll and welfare payable       4,156     637  
Other non-current liabilities   518          
Total non-current liabilities   1,048     310,727     47,621  
Total liabilities   362,831     867,293     132,919  
             
Mezzanine equity            
Series A redeemable preferred shares   84,072          
Series B redeemable preferred shares   261,272          
Series B+ redeemable preferred shares   81,654          
Series B++ redeemable preferred shares   27,629          
Total mezzanine equity   454,627          
             
Shareholders’ (deficit)/equity            
Common shares   33          
Class A common shares       62     10  
Class B common shares       10     2  
Treasury stock       (2,063 )   (316 )
Additional paid-in capital   64,882     884,920     135,620  
Accumulated other comprehensive income   414     (21,972 )   (3,368 )
Accumulated deficit   (373,982 )   (392,274 )   (60,120 )
Total shareholders’ (deficit)/equity   (308,653 )   468,683     71,828  
Total liabilities, mezzanine equity and shareholders’ equity   508,805     1,335,976     204,747  
                   

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 December 31,   For the Year Ended December 31,
    2019     2020     2019     2020  
    RMB   RMB   USD   RMB   RMB   USD
Operating revenue                        
Brokerage income   253,607     386,795     59,279     982,124     1,215,434     186,273  
Other income   4,656     1,279     196     11,195     4,788     734  
Total operating revenue   258,263     388,074     59,475     993,319     1,220,222     187,007  
Operating costs and expenses                        
Cost of revenue   (159,913 )   (291,204 )   (44,629 )   (629,531 )   (813,507 )   (124,675 )
Other cost   (523 )   (662 )   (101 )   (1,837 )   (2,846 )   (437 )
Total operating costs   (160,436 )   (291,866 )   (44,730 )   (631,368 )   (816,353 )   (125,112 )
Selling expenses   (61,815 )   (71,509 )   (10,959 )   (164,665 )   (230,438 )   (35,316 )
General and administrative expenses   (34,532 )   (37,269 )   (5,712 )   (161,816 )   (150,207 )   (23,020 )
Research and development expenses   (11,825 )   (15,843 )   (2,428 )   (33,831 )   (49,135 )   (7,530 )
Total operating costs and expenses   (268,608 )   (416,487 )   (63,829 )   (991,680 )   (1,246,133 )   (190,978 )
Operating income/(loss)   (10,345 )   (28,413 )   (4,354 )   1,639     (25,911 )   (3,971 )
                         
Other income/(expenses)                        
Interest expenses   75     (345 )   (53 )   (190 )   (1,157 )   (177 )
Unrealized exchange (loss) /income   (3 )   29     4     362     (9 )   (1 )
Investment income   43             718     137     21  
Others, net   2,456     916     140     12,676     10,177     1,559  
Profit before income tax, and share of income/(loss) of equity method investee   (7,774 )   (27,813 )   (4,263 )   15,205     (16,763 )   (2,569 )
Income tax expense   319     845     130     (57 )   (1,768 )   (271 )
Share of income/(loss) of equity method investee   (90 )   7     1     (180 )   239     37  
                         
Net profit/(loss)   (7,545 )   (26,961 )   (4,132 )   14,968     (18,292 )   (2,803 )
                         
Net (loss)/profit attributable to non-controlling interests               66          
Net profit/(loss) attributable to Huize Holding Limited   (7,545 )   (26,961 )   (4,132 )   14,902     (18,292 )   (2,803 )
Redeemable preferred shares redemption value accretion   (9,878 )           (32,854 )   (4,274 )   (655 )
Allocation to redeemable preferred shares   3,726             (7,431 )   1,074     165  
Net loss attributable to common
shareholders
  (13,697 )   (26,961 )   (4,132 )   (25,383 )   (21,492 )   (3,293 )
                         
Net profit/(loss)   (7,545 )   (26,961 )   (4,132 )   14,968     (18,292 )   (2,803 )
Foreign currency translation adjustment, net of tax   24     (12,764 )   (1,956 )   140     (22,386 )   (3,431 )
Comprehensive income/(loss)   (7,521 )   (39,725 )   (6,088 )   15,108     (40,678 )   (6,234 )
                         
Comprehensive (loss)/income attributable to non-controlling interests               87          
Comprehensive income/(loss) attributable to Huize Holding Limited   (7,521 )   (39,725 )   (6,088 )   15,021     (40,678 )   (6,234 )

                         
Weighted average number of common shares used in computing net profit per
share
                       
Basic and diluted   452,445,068     1,022,959,829     1,022,959,829     452,445,068     963,817,614     963,817,614  
Net income/(loss) per share attributable to common shareholders                        
Basic and diluted   (0.04 )   (0.03 )   (0.00 )   (0.06 )   (0.02 )   (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 December 31,   For the Year Ended December 31,
    2019     2020     2019   2020  
    RMB   RMB   USD   RMB   RMB   USD
Net profit/(loss)   (7,545 )   (26,961 )   (4,132 )   14,968   (18,292 )   (2,803 )
Share-based compensation expenses   13,617     4,208     645     94,958   52,253     8,008  
Non-GAAP net profit/(loss)   6,072     (22,753 )   (3,487 )   109,926   33,961     5,205