Good day, and welcome to the Cheche Group H2 and Full Year 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Crocker Coulson, Investor Relations. Please go ahead.
Thank you, Betsy. Hello, everyone. Thank you for joining us to review Cheche's H2 and full year 2025 results. This morning, Cheche posted both the earnings release and a related updated investor presentation to our website, which you can find at ir.chechegroup.com. Very pleased to say that with us on the call today, we have Lei Zhang, Cheche's Founder and CEO, and also Wenting Ji, Cheche's CFO. After the prepared remarks are concluded, we're gonna open up the call for your questions, and they'll be happy to address them. 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 they're prospective in nature.
Actual results could differ materially from those we discuss today. 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. Again, we also encourage you to review the reconciliations of certain non-GAAP financial measures contained within that we're gonna discuss on the call today. With that, it's my great pleasure to turn the call over to Lei Zhang, Cheche's Chief Executive Officer. Lei, over to you.
Thank you, Crocker. Greetings, everyone. Thank you for joining us today to review Cheche's second half and full year 2025 results. 2025 was a final year for Cheche Group, one that validated both resilience of our business model and the power of the strategy transformation we have been executing despite ongoing fee rates compression driven by rapid growth of NEV premiums within our revenue mix. We delivered a gross profit growth, dramatically reduced the operating losses, and for the first time, achieved adjusted net profitability on a full year basis. They are not incremental results. They marked an inflection point in 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 adjusted 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 $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 our newer capabilities and adopt a meaningful structural change on our revenue mix. This reflects disciplined 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 written premiums plus by 11% and total policies insured by 3 million.
We demonstrated that scale and efficiency can do and work together at Cheche, and we intend 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 the 13% in the prior year. This shift initially creates revenue headwinds, as we mentioned, but it also drives higher growth margins. As our AI-powered tools allow us to capture higher tech risks in the NEV 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 the data partnerships with intelligent connected vehicle manufacturers. Our insurance anti-fraud and risk control model, which was recognized in the prestigious top 100 AI product of the 2024 last year. It's 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 positions us to expand our footprint in the renewal insurance market. Beyond our insurer-facing tools, we are developing and testing AI agent to fundamentally change how we engage with the car owners at 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 method and significantly more cost efficiency. On the R&D side, our team leverage AI tools and LLM to accelerate product development and shorten the development cycles. Their tools are expanding our capability roadmap without proportional increase in the head count and spending. Looking ahead, we intend to extend the operational and analytical capability across the full auto insurance value chain. From pre-policy risk assessment and pricing through in the policy risk monitoring and intervention to claim survey and loss assessment.
Combined with our growing advantage in the driving behavior data from NEV ecosystem, we believe that position us to move the industry from the static pricing towards dynamic risk management and to build a data-driven, competitive moat and strength over time. The quality of our OEM partnership continue to deepen. We currently have the partnership with 16 NEV manufacturers. As our business and relationships mature, our strategy focus on the shifting from aiding new relations to the deepening existing ones. That means expanding the vehicles template and the models we serve within the partnership, entering the dealer channel progressively, and maximizing renewal premiums captured across installed base vehicles 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 vehicles market.
We are building the full lifecycle relationships with these partners, not transactional arrangements. The depth of those relationships is what creates the durable and recurring value for the CCG and our shareholders. Looking ahead, we expect to share additional partnership news in coming months that we believe will further demonstrate the strength of our position within China's most intelligent connected vehicles 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 vehicles annually. As they expand globally, the demand for intelligent data-driven insurance and financial services infrastructure follows. Cheche Group is uniquely positioned to meet the demand, bringing the digital insurance capabilities and the financial technology capabilities we have built in China's most demanding market to the automotive ecosystem around the world. We are also advancing our international roadmap across the broader Asia Pacific and Latin American markets, leveraging our Fintech solution for automakers abroad. A toolkit of digital insurance and finance services is infrastructure designed to support Chinese automakers and their global partners as they build out new market operations. To summarize, the 2025 demonstrated that what the Cheche Group is capable of.
We achieved adjusted profitability, deepen our AI capabilities from the landmark partnership with a global automotive leader, and took our first meaningful step into the international markets. We enter 2026 with clear priorities, continue growing renewable insurance penetration through the AI-powered 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 profitability. 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, Wenting Ji. Thank you.
Thank you, Lei. I'd like to begin by touching on our second half and full year 2025 operational and financial highlights before taking any questions. First, our operational updates. Our total written premium placed for the second half 2025 increased 16.9% year-over-year to RMB 15.5 billion or $2.2 billion. For the full year 2025, the total written premium increased 11% to RMB 27 billion or $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 full year, total policies issued grew from 17.3 million to 20.3 million.
On the NEV side, our 16 partnerships generated 1.2 million embedded policies and RMB 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 full year 2025, NEV-embedded policies reached 2.0 million, and the corresponding premium reached RMB 6.3 million, growing 85.3% and 91.0% respectively. Our NEV premiums represented 24.1% of total written 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 2025 were RMB 1.7 billion, or $237.5 million, representing a 9.4% year-over-year decrease. As Lei 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 a renewal market penetration. For the full year 2025, net revenues were RMB 3.0 billion, or $430.4 million, a decrease of 13.3% year-over-year, driven by the same NEV mix dynamics.
For the second half of 2025, cost of revenues decreased 10% year-over-year to RMB 1.6 billion, or $224.0 million, driven by lower net revenues and continued improvement in our gross margin profile. For the full year 2025, cost of revenues decreased 14% year-over-year to RMB 2.8 billion, or $407.5 million from the prior year. The gross profits in the second half increased 0.5% to RMB 94.6 million, or $13.5 million, despite the lower net revenues, which is a direct result of our improved business structure. This is an important signal, like even as revenue compresses through the fee rate transition, our gross profit is still growing.
Gross margin expanded as the higher margin NEV business represents an increased share of the mix. For the full year, the gross profit increased 1% to CNY 160.4 million, or $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 CNY 31.0 million or $4.4 million. General and administrative expenses decreased 16.5 million to CNY 38.5 million or $5.5 million. Research and development expenses decreased 2.5 million to CNY 18.9 million or $2.7 million.
The total operating expenses decreased 14.4% to RMB 88.4 million or $12.6 million, while the adjusted total operating expenses decreased by 22.2% to RMB 77.1 million, which is $11.0 million. The total operating expenses for the full year decreased 19.6% to RMB 181.2 million or $25.9 million, while adjusted total operating expenses decreased 17.0% to RMB 156.9 million or $22.4 million.
Operating income for the second half 2025 was RMB 6.1 million or $0.9 million compared to an operating loss of RMB 9.3 million in the prior year period. Adjusted operating income was RMB 18.5 million or $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 $3.0 million. The full year adjusted operating income was RMB 5.6 million or $0.8 million compared to adjusted operating loss of RMB 28.2 million in the prior year.
Net income for the second half 2025 was RMB 7.8 million or $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 $3.2 million compared to adjusted net loss of RMB 0.3 million in the prior year period. Net loss for full year 2025 was RMB 17.8 million, representing improvement of 71.0% from RMB 61.2 million in the prior year. Adjusted net income was RMB 11.6 million or $1.7 million compared to adjusted net loss of RMB 24.8 million in the prior year.
This marks the first full year adjusted profitability in Cheche's history as a public company. Let's turn to our balance sheet. We reported RMB 160.8 million or $24.4 million in cash equivalents, restricted cash and short-term investments as of December 31, 2025. Looking ahead to the full year of 2026, we are anticipating approximate range of RMB 3.0 billion-RMB 3.2 billion for net revenues, a range of RMB 28.0 billion-RMB 30.0 billion for total written premiums, a range of RMB 10.5 billion-RMB 12.0 billion for NEV written premiums. We also expect adjusted net income to multiply several folds 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.
We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.
Hello. Operator, please go ahead.
The first question comes from Wenhao Zhao with CITICS. Please go ahead.
Good morning.
It appears we've lost that questioner. The next question comes from Allen Klee with Maxim Group. Please go ahead.
Yes. Hi. Congratulations on your progress and advances with NEVs and moving to profitability. In your guidance, you said that you're projecting 2026 NEV premiums to increase between 66.7% and 90.5% year-over-year. Can you just highlight what in your offerings is gonna result in such strong adoption? Maybe highlighting how you're helping with pricing, risk, and fraud. Thank you.
Okay. Thank you, Allen. This question, first, we think of 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 our 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 will gradually extend AI capabilities across the full insurance value chain from the pre-underwriting risk assessment and pricing to in policy risk monitoring and intervention and intelligent claims inspection and loss assessment.
Through this initiative, we aim to drive transformation of auto insurance from static pricing to the dynamic risk management while continuously strengthening our long-term competitive advantage. Thank you.
Thank you very much. You also said on the call that internationally, there's a large demand, and you said you're gonna advance across Asia and Latin America with fintech solutions. Could you explain what you mean by what your fintech solutions are?
Okay. In terms of global expansion, the company has formed a strategic 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 and have successfully launched the business operations in collaboration with partners including Guangzhou Automobile Group and Chery and BYD and Great Wall Motor. By supporting Chinese automakers in their overseas expansion, we leverage our mature digital insurance capabilities and the financial technology capabilities to bring our technology to international markets as a Chinese solution, helping build a global financial and insurance ecosystem in such countries. Thank you.
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. The waiting list, especially with what's going on with oil prices.
Lei, do you wanna tell Alan where you're joining us from?
Yeah. Because the oil price is increased.
Lei is actually in Australia today.
Yeah.
Okay.
Yeah. I traveled to Australia for the Great Wall Motor and Chery in Australia.
That's great. Okay.
Thank you.
I'll pass it along to let other people ask questions. Congratulations. Thank you.
Thank you very much.
The next question comes from Wenzhuo Zhao with CITIC Securities. Please go ahead.
Thanks for taking my question. I'm curious about your ability to leverage AI internally to reduce operating costs. I'd also appreciate an update on how AI solutions are supporting internal operations, and any comments on plans for international expansion. Thank you.
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[Non-English Content] Thanks for your answer. Very clear. No more questions [Non-English Content].
Thank you.
This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.
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 the future updates. Thank you, operator.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.