Good morning, ladies and gentlemen, and thank you for standing by for Waterdrop Inc.'s Q4 and fiscal year 2021 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Miss Xiaojiao Cui. Please go ahead, Ms. Cui.
Thank you, operator. Hello, everyone. Thank you for joining Waterdrop's Q4 and fiscal year 2021 earnings conference call. Please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC. The company does not undertake any obligation to update any forward-looking statement except as required under applicable law. Also, this call includes discussions of certain non-GAAP measures. Please refer to our earnings release for a reconciliation between non-GAAP and GAAP. Joining us today on the call are Mr. Shen Peng, our Founder, Chairman, and CEO.
Mr. Yang Guang, Co-Founder, Director, and General Manager of the Insurance Marketplace. Mr. Hu Yao, Co-Founder, Director, and General Manager of Medical Crowdfunding and Healthcare. Mr. Kevin Shi, our CFO. We will be available for a Q&A session after the remarks. Now I would like to turn the call over to our CEO, Mr. Shen Peng. Please go ahead.
大家好，感谢大家参加水滴公司二零二一年第四季度的财报电话会。二零二一年第三季度以来，资本市场进一步的剧烈震荡，同时保险行业增长有所放缓。但是无论市场变化如何，我们以客户为中心，用科技持续提升保险与医疗产业的经营效率，踏踏实实地耐心做好业务，持续为股东创造长期价值的初心和决心未曾改变。
Hello, everyone. Thank you for joining our Q4 2021 earnings conference call. Since the beginning of the Q3 , the capital market has experienced further volatility, and the growth of the insurance industry has somewhat slowed down. No matter how the market changed, we have been keeping our commitment to developing our business in customer-centric manner, leveraging technology to improve operational efficiency in insurance and healthcare business, solidifying business fundamentals, and creating sustainable long-term value for our shareholders.
首先我要说的是对未来充满信心，对现在更有耐心。虽然最近半年来，整个行业正在面临挑战，然而我认为这正是夯实公司基础的最佳时期。无论大环境的好与坏，我们依然不忘初心，更加积极主动，坚持不懈的努力。
Firstly, we will be confident in the future and be patient in the present. While the insurance industry has had various challenges in the last half year, we see those challenges as good opportunities for us to strengthen the fundamentals of the company. No matter the operating environment, we have stayed true to our commitments and given our utmost efforts more proactively and relentlessly.
水滴作为中国保险科技与互联网医疗领域的第一梯队创业者，选择了如何调整姿态，奋力前行。在2020年第四季度，水滴公司根据大环境的变化，严肃地调整经营策略，并认真地践行。
As a top-tier player in China's InsurTech and online healthcare market, we strive to make our business strategies more responsive and move full steam ahead. In Q4 2021, we seriously adjusted our business strategy and implement it devotedly in response to the changing environment.
在之前，水滴公司是在合理把控ROI的基础上，快速追求用户增长和收入规模的增长。而在二零二一年的下半年以来，全体水滴公司的同事们更务实地追求更有质量的发展。一部分业务持续耐心地投入建积累，一部分业务合理地经营创收并盈利，实现公司健康可持续的发展。
Previously, Waterdrop pursued a fast growth in user base and total revenue while keeping ROI within a reasonable range. Starting in the H2 of 2021, we have more pragmatically pursued a higher quality development. To achieve healthy and sustainable growth, we have continued to invest in strengthening our advantages in some businesses, and meanwhile strive to generate revenues and profits on other businesses.
本次2021年第四季度的财报，水滴公司也给大家初步证明了管理团队的执行力和决心。2020年第四季度，公司已经实现了non-GAAP的盈利。公司依然持续努力中，内部进一步强化了全员持续为用户创造价值的初心和意识，从日常工作中持续关注和建设可健康盈利的能力。力争2022年全年能够实现公司成熟业务健康可持续发展。我们把全年成熟业务可持续发展进一步盈利作为公司2022年的小目标之一。同时我们的业务创新依然不松懈，力争通过创新孵化让公司保持科技创新活力。在已有业务创新方面，水滴的同事们也在努力更耐心地对待难度很高但有用户价值的事情，持续地投入，直到水滴石穿。
Our Q4 results have affirmed the execution ability and the determination of our management team and the company achieved a non-GAAP profit in this quarter. We are still working hard and have also reinforced our ongoing commitment to creating value for our customers. We urge our staff in their daily work to continue focusing on sustainable development in our established business, and strive to realize operating profit in non-GAAP terms as one of our objectives in 2022. Meanwhile, we will continue to innovate through our careful incubation initiatives in selected new areas as well as staying focused on areas difficult but valuable to our customers in existing businesses. The challenges are huge, but we will remain steadfast to achieve breakthroughs in the pursuit of innovation.
新的经营节奏对于整个团队来说也是驾简充丰。把公司经营得更好的情况下，建立更强的组织能力。按照高标准完善领导梯队，夯实组织能力，提升管理者的经营能力。未来三年培养出更多优秀的经营管理者打好基础。这就是我勾画里的四个O之一。
Our new pace of operation also creates an opportunity for our team to further improve our core competencies. It helps us develop stronger organizational capabilities while delivering better business performance. One of my new objectives is to optimize the leadership pipeline with high standards, strengthen organizational capabilities, and enhance management ability to lay the foundation for cultivating more excellent managers at all levels in the next three years.
对未来充满信心，对现在更要耐心。我们坚持中国医疗保障市场长期向好的趋势，我们坚信水滴公司在未来会更好。水滴公司去年第二季度业绩发布时宣布了一项为期一年的回购计划，在这之后，我们在合规框架下已经开始谨慎执行。自开启回购截止2021年12月31日，我们累计回购了约一百三十万股水滴公司ADS。并计划在今年合适的时间段里继续执行。我们计划回购的水滴公司ADS在未来都用于内部优秀同事的激励。此外，基于公司未来发展的信心和对公司长期的投入的决心，我和管理层也将视窗口，合适的情况下，做合规的保证，适当增持水滴公司股票。
We are confident about the future and we will remain patient today. We firmly believe in the long-term growth potential of China's health insurance market and a more prosperous future for Waterdrop. In our earnings release for the Q2 of 2021, we announced a one-year share repurchase plan, and since then, we have carefully begun to implement the plan under the relevant compliance framework. From the launch of the repurchase plan to December 31st, 2021, we have bought back around 1.3 million ADS in total, and this year we will continue to buy back shares. We plan to use these repurchased ADS for our employee incentive plan in the future.
In addition, based on our confidence in the company's future development and our dedication to invest in the company in the long run, our management also plan to use personal funds to purchase Waterdrop's ADS in due course, pursuant and subject to applicable laws and the company's securities trading policy.
第二方面我要说的是，水滴公司已经全面合规经营，激情地迎接2022。在2021年里，新的监管规则和行业政策出台，旨在推动行业规范化健康发展，长期有助于行业整合。水滴作为上市公司，持续响应监管导向，积极与监管保持良好沟通，主动迭代更新业务模式，确保合规稳健经营。针对保险行业相关政策制度，对未来行业发展指引方向。水滴在2021年第四季度里，围绕监管新规进行了模式升级，主动调整产品供给和获客模式，今后将继续积极主动地坚定地推动行业健康发展。
Secondly, we will continue to operate in full compliance and embrace 2022 with passion. In 2021, a few new regulatory guidelines and industry policies aiming to promote healthy development of the industry were released, which will contribute to consolidation of the industry in the long term. As a listed company, Waterdrop has continued to respond to the new regulatory guidance proactively and maintain good communication with the regulators. We also took the initiative to pivot our business model to ensure that we comply with the new rules. The regulatory rules have provided a clearer direction for the future development of the industry. In Q4, Waterdrop conducted business model upgrade, adjusted the product portfolio and customer acquisition model. Looking ahead, we will continue to promote the healthy development of the industry proactively and firmly.
水滴本身独特的定位就是助力普惠保障，契合当前政府倡导的共同富裕方向。同时通过产品能力、科技创新能力和独特的板块协同结构，我们搭建起了强劲的基础设施，能够在行业调整期彰显出足够的经营韧性和稳定性。特别在近期，伴随着疫情反复，相信国民保障的需求会持续提升，并且更倾向于转向线上渠道。对于类似像水滴这样的线上平台也迎来了新的机遇。即便面临短期挑战，我们仍然坚持加强成本管控和盈利能力的优化，确保在高质量发展的正确航道上行稳致远。
With the unique positioning of Waterdrop in helping promote inclusive insurance, we also share the same common prosperity path advocated by the government. We have established a solid business infrastructure through our product development capabilities, technological innovations, and the unique synergies among our business segments. These initiatives helped us demonstrate our resilience and stability as the industry experiences a period of adjustment. With the recent pandemic recurrences, we believe that the demand for insurance protection will continue to rise in the future, and consumers will be more inclined to turn to online channels, which present more opportunities for online insurance platforms like us. Despite the many short-term challenges that we are faced with, we are committed to strengthening our cost control and optimizing profitability, ensuring that we are on the right track to sustainable and quality growth in the years ahead.
接下来由杨光介绍保险业务第四季度发展情况。
Thank you. In 2021, China's insurance industry underwent a period of adjustment with downside pressure. According to the statistics from the CBIRC, the annual growth in gross written premium or GWP for the health insurance sector was only 3% in 2021, and the lowest in the past 10 years. The GWP saw a decrease of 3% year- over- year for both the third and the Q4 . In 2021, the total profit of life and health insurance companies increased by 47% year- over- year, 63 percentage points lower than the growth in 2020. To summarize, in short, transformation will be the keyword that represents the current state of the insurance industry.
Regulatory authorities have ensured a series of new policies that aim at guiding the orderly development of the industry. Currently, many life insurance companies are proactively undergoing business restructuring and accelerating the pace of high-quality transformation. These insurance companies are returning to the mission of providing protection for users instead of simply pursuing market scale. Besides, they are focusing more on the profit contribution of new policies. In such environment, Waterdrop's FYP increased by 13.4% year-over-year to RMB 16.3 billion in 2021.
Against the backdrop of industry slowdown and the new regulatory direction, we have transformed our user acquisition model from the first month discount price products to the first month original price product since the end of the Q3 . In Q4, we focus on adjusting and upgrading our business in many areas. The preliminary results show that the substantial improvement in our operating efficiency has helped us turn operating loss into profit with CNY 4 million adjusted net profit in Q4 compared to 453 million loss in the Q3 . Next, I'm going to summarize the major progress we have made in Q4 from three perspectives.
Firstly, we have achieved preliminary success in our business transformation and have significantly improved our operating efficiency. Q4 is the first full quarter that the first month discount price model for online short-term insurance products was terminated and replaced by the first month original price model. This resulted in a slowdown in our revenue growth, but a significant improvement in our key operating efficiency indicators when compared with Q3. Our retention rate increased significantly, driving the take rate of our short-term insurance business to 33% in Q4. At the same time, the one-year LTV of our new users increased materially.
Since we changed our business model in Q4, the month-end user net promoter score has increased and the user complaint rate has declined. In Q4, we achieved remarkable results in the management of existing users. We established a unified user management platform that can integrate various marketing channels, including WeChat official accounts, WeChat mini programs, apps, and enterprise WeChat accounts. This allowed us to adopt a standardized approach to engaging users of different profiles, life cycles, and from different marketing channels. We have modified our website, our service platform to focus on insurance policy services, customer inquiry services, health services, and member services. We have also increased the user engagement rates and online sales conversion rates for our users.
In Q4, our three-year repurchase rate for short-term products stayed at 59%, up by 14 percentage points compared to Q3. The number of enterprise WeChat contact users reached 5.4 million in Q4, up by 14.6% compared to Q3. This will allow us to interact with our policy holders more frequently and provide real-time services through our chatbot and customer service executives. Those enterprise WeChat contact users contribute the purchase of short-term policies with a total amount of RMB 16.6 million, an increase of 3 x compared to Q3. We also made significant progress in our self-developed AI robot for policy renewal, especially in recognition of our users intention in renewal and human voice simulations.
Our short-term insurance renewable rate exceeded 78% in Q4, which reached the leading position in the industry. We also improved the conversion rate for our short-term insurance users to long-term insurance users. The average productivity of our long-term insurance consultants reached RMB 66,000 per month, an increase of 66% compared to Q3. The contribution of long-term insurance business to LTV reached 27%, up by over 10 percentage points compared to Q3, reflecting an increase in our effectiveness in maximizing the long-term value of our existing users. Meanwhile, along with the new regulatory requirements and the changes in the market conditions, we optimize our key insurance products.
We added 61 new products in the Q4 , providing full range health and life insurance protection for our users. We also brought a faster and more reliable claim settlement experience to our users. The shortest claim settlement period was only 18 seconds, and the highest claim settlement amount in a single case was RMB 1.5 million in Q4. The enhancement of our customer value is our long-term commitment, and it's also one of our core competency. Through the transformation of our business model, the operating efficiency enhancement of our existing user management, and the continued upgrade and innovations of our insurance products, we have made a significant improvement in the quality of our users and various operating metrics.
We believe this will lay a solid foundation for our mature business to achieve profitability in the long run. Secondly, we upgraded our technology capabilities and empowered our digitalization of the industry. In addition to the transformation of our own business model, we strengthened our investment in our AI-powered technologies. In Q4, for our AI-powered matching system, which helps match the most appropriate sales staff for potential long-term insurance buyers, we conducted more than 10 rounds of system iterations and three algorithm architectural upgrades. This helps increase our long-term insurance premiums by more than RMB 40 million. In addition, the self-developed screen sharing interaction system applied on the telemarketing scenarios widely in Q4.
The system now covers more than 2,000 sales staff, with roughly 1.5 hours of daily use per sales staff. The monthly productivity of this sales staff increased by 34%, driving an increase in our monthly premiums by around RMB 20 million. The level of technology used for this system is at an industry-leading standard, and we have currently applied for five patents on the technology. Our investment in technology has helped improve our operating efficiency significantly. In Q4, our best performing sales staff achieved a productivity of RMB 94,000. While our average productivity per sales force was 2.5x that of the industry average. I think the improvement in operating efficiency has given us even more confidence in our technology investment.
We also made a remarkable progress in exporting our technology to the insurance industry in Q4. For example, we have leveraged our SaaS-based CRM system and online customer management capabilities to provide user operation services to insurance companies. In Q4, we entered into a cooperation with three insurance companies to utilize our technology and successfully help them achieve tens of millions RMB in premium income. Our next plan is to integrate our intelligent calling robot system with existing business process, and thereby empowering the industry with stronger technology utilization. Certainly, we continue to pursue new business innovations. In Q4, led by our newly joined and experienced team leaders, our online to offline brokerage business also showed solid progress.
As of December 31, 2021, our brokerage team has set up three branches in Beijing, Guangdong, and Shenzhen and established a sales team of nearly 300 people. This team generated a total premium income of approximately RMB 5 million in Q4. We also empowered our brokerage team with a powerful set of technology-driven tools for business development through our core system, including the digital operating system, the product system, the training system, and the marketing system. On top of our existing brokerage model, we are also actively exploring a more diversified and optimized offline brokerage model. In this year, 2022, we plan to launch an independent agent model for high-end customers. This will enable us to establish the multilayer brokerage business model that can serve different target customer groups.
In addition, we have innovated new insurance products to serve special customer groups. For example, for special groups such as tumor patients, we have launched a medicine plus insurance service model, which enables those customers to get medicines very conveniently at the DTP pharmacies that we cooperate with and enjoy insurance protection in accordance with their medical condition and the protections against medical safety. We have also launched accidental insurance products covering the surgical patients, and we are developing critical illness insurance products and insurance against recurrence risk, as well as tailored meaning medical insurance for those asymptomatic carriers.
In conclusion, at the first full quarter for our business model upgrade, we have made a good start in Q4 2021 by focusing on improving the quality of our users, optimizing the operating efficiency, and strengthening long-term technology capabilities. We have to say that the insurance industry is during the adjustment and transformation period, and our transformation will continue. For the next quarter or two, our insurance business will still be in the process of transformation to the new growth model and the new operating model. As we continue to face the ups and downs in the short term, we are still optimistic about the long-term fundamentals of the insurance industry. We believe that the competitive landscape will improve after further industry consolidation.
This, together with our focus on long-term value creation, through solid user management and a technology core capabilities, should help improve our operating and financial results after adjustment of one quarter or two, including reaching profitability in our mature business line. I think that's all for my part. Next, I'm going to hand it over to Hu Yao for the update on the medical crowdfunding platform.
Next, I will give you an update on the latest development of our Waterdrop Medical Crowdfunding and Healthcare businesses, as well as the progress of our R&D and technological innovations.
缙云医保扶贫项目在浙江省发改委公布的数字社会最佳应用名单中位列第七名。
Firstly, let me update on our medical crowdfunding business. Our Waterdrop Medical Crowdfunding business grew in an orderly manner, further reinforcing its market-leading position. As of the end of Q4, the cumulative number of donors reached 394 million, helping 2.36 million patients and pushing the cumulative funds raised to over RMB 48.4 billion.
To support the Common Prosperity Initiative, we began in-depth cooperation with local government. Our cooperation with the Jinyun County government on Jinyun, a medical insurance poverty relief project, has been working well. In 2021, Waterdrop has assisted Jinyun County in the active identification and management process of more than 15,000 people in need of medical aid. According to our estimates, the platform helped reduce the out-of-pocket expenses of the needy by over RMB 14 million in 2021, or a year-on-year decline in such expenses of about 12%. In 2021, the number of people in poverty caused by diseases reduced by 77% year-over-year. The Jinyun Project was ranked number seven in the list of Best Applications in Digital Society, selected by the Zhejiang Provincial Development and Reform Commission.
此外，本季度我们还和中华社会救助基金会、人民日报健康客户端、中国红十字基金会、河南省慈善总会等相关媒体和慈善公益组织进行了合作，围绕着医疗救助补充体系建设进行探索，推出了水滴大病救助项目，通过多方联动，对大病患者进行个人救助加公益救助的综合救助模式，在为陷入困境的贫困大病患者补充医疗费用缺口方面提供了帮助。截止到2021年12月，已经有两百多家重点医院参与了我们的项目。
In addition, in Q4, we cooperated with media and charity organizations including China Social Assistance Foundation, People's Daily Health App, Chinese Red Cross Foundation, and Henan Charity General Federation to explore the establishment of supplementary medical aid program. We also launched the Waterdrop Critical Illness Charity Aid Project, which operates under the self-aid plus charity aid model to provide supplementary medical aid funds to patients with critical illness and in need of financial assistance. As of December 2021, there have been more than 200 key hospitals participating in the project, which helped reduce the financial burden on healthcare expenses.
那接下来更新一下我们在患者招募业务在四季度的进展。
Next, I will update you on the progress of our patient recruitment business in the Q4 .
首先在规模方面，截止2021年的四季度末，水滴旗下的翼帆平台共承接了三百多个注册性的新药临床试验项目，在肿瘤临床试验受试者招募领域已经成为中国最大的第三方招募平台之一。那么慢病和常见病领域的临床试验的项目，单月入组患者也接近了一百例，并且在快速的增长中。那么每天向水滴求助的患者近万人，也是后续持续加入临床试验的潜在的高意向的患者群体。那在药企合作方面，公司已经和四十多家国内外的新药企CRO机构建立了合作，包括正大天晴、石药、信达、赛景、科文斯等领先企业，受到了合作方的高度认可。
In terms of scale, by the end of Q4, our Yifan platform has undertaken more than 300 clinical trial programs for new drug registration. It has become one of the largest third party patient recruitment platforms for oncology clinical trials in China. The number of patients enrolled in clinical trials for chronic diseases and common diseases has approached 100 in a single month and continue to grow rapidly. Nearly 10,000 patients turn to Waterdrop for help every day, and they are potentially high-value candidates for clinical trials projects going forward. In terms of cooperation with pharmaceutical companies, we have established partnerships with more than 40 innovative pharmaceutical manufacturers and CROs in China and worldwide, including 正大天晴, CSPC, Innovent, Zai Lab and Labcorp Drug Development. We have been highly recognized by our partners.
患者招募在临床研发环节，对于提效、缩短研发周期发挥的杠杆作用是极大的。根据北京大学肿瘤医院机构办主任在2021年临床试验研究研讨会上的分享，受试者入组直接影响试验的成败，85%到95%的试验延期是因为不能按计划招募到合格的受试者，特别是在肿瘤、心血管、感染等领域。而我们的翼帆平台正是提供了快速精准完成项目匹配的招募能力。之所以能在行业中形成显著的竞争优势，主要得益于水滴作为全国最大的大病筹款的平台和大病患者社群，有海量患者数据库和线上线下多渠道多方式触达患者的能力。我们也运作了众多的优质项目，在AI和数字化助力下，能够精准的匹配和高效的服务，在患者人群中也建立了良好的知名度和信任度。
Patient recruitment plays an important role in improving efficiency and shortening the R&D process in clinical development. According to the director of the Institutional Office of Peking University Cancer Hospital at the 2021 Clinical Trial Symposium, patient enrollment directly affects the success of clinical trials. About 85%-95% of trial delays are due to the failure to recruit qualified patients as planned. Especially in the field of oncology, cardiovascular, infection, etc. Our e-pharma platform can quickly and accurately recruit patients that are suitable for the trial products. Our key competitive edge in the industry is built on several factors. First, as the largest community of patients with clinical illnesses in China and the largest medical crowdfunding platform, Waterdrop has a massive patient database and the ability to reach patients through various online and offline channels. Second, we have run a large number of high quality projects.
Powered by our AI technology and the digitalization, we can provide accurate matching and efficient services on clinical trials, earning us a good reputation and trust among patients. Based on our large patient database, we can efficiently target patients with rare diseases. For example, in Q4, we collaborated with a leading multinational pharmaceutical company on a global multicenter phase III clinical trial of a drug for rare disease. The number of qualified patients for this trial was limited. However, we managed to identify hundreds of potential candidates for this trial from our patient pool. Most of these candidates showed a high willingness to participate in this clinical trial after we reach out to them as there is no particularly effective treatment for such disease in China.
We have thus helped enroll the appropriate patients for this clinical trial, and the first patients screened in China for that project was recommended by our platform. As a platform driven by technological innovations, we continue to upgrade and optimize our intelligent patient recruitment system and integrate multiple sources of heterogeneous medical knowledge database. By leveraging our extensive medical knowledge and the leading technologies, including medical knowledge mapping and AI deep learning, we have developed medical OCR solutions and electronic medical record indexing techniques. This enabled automated extraction of key information from different unstructured medical texts, including various disease names like hepatocellular carcinoma and cholangiocarcinoma, as well as treatments like chemotherapy, targeted therapy, and immunotherapy, thereby improving patient recruitment efficiency significantly. Next on technology innovation. We have consistently increased our investment in technology to better serve our customers and the business needs.
In Q4, we have optimized the operations of our chatbot platform to improve user experience and the workforce productivity, and apply for eight invention patents. By applying pre and post-processing algorithms for our automatic speech recognition technology, we have improved the accuracy by reducing surrounding noises. We have also applied industry data to conduct incremental pre-training our models so that they are adapted to our specific scenarios, thereby improving the model performance. We have applied a manual plus machine approach to establish a larger scale language database which further strengthens the semantic analysis and dialogue tactics learning capabilities. We have also built a proprietary TTS engine to customize the voice tone of the chatbot and adopted the manual plus machine approach to synchronize the voice output to make the chatbot voice sound more human-like.
目前不同业务线的水滴机器人平台已经可以支持几十个机器人，包括客服机器人和帮助用户查看保单、提醒用户及时续保的电话机器人。其中客服机器人的用户问题解决率已经超过了65%。为了提升销售效率，水滴还开始建设人机融合系统，在各个场景的机器人均可以实现实时转人工，在提升用户体验的同时，也大大提升了人效。此外，为了促进行业的共同进步，水滴的AI能力也同时输出给行业各保司，帮助保司提升用户的服务能力，也促进保司线索的高效利用。
Today, our chatbot platform supports various business lines, including customer service, insurance policy search, and renewal reminder. Among them, our customer service chatbots can solve more than 65% of questions raised by users. To improve sales force productivity, we started to build a manual plus machine coupling system, which enables us to transfer customer requests from chatbot mode to manual mode on a real time basis under various scenarios, thereby improving user experience and productivity. In addition, to promote the overall progress of the industry, we will export our AI capability to our insurance partners, helping them enhance their customer service capabilities and the utilization of sales leads.
基于AI的精细化运营方面，科技已经成为推动保险业转型的核心力量。在保险数字化智能化转型中，水滴做了非常有益的尝试，并努力构建数字化壁垒。
Our redefining operations through AI technology. Technology has become the core driver in promoting the transformation of insurance businesses. We have made positive progress in terms of our insurance digitalization and intelligent transformation, and are working to establish more digital competitive strengths.
我们研发的外呼服务人员与用户的AI匹配项目，能够通过AI技术分析基于LP的历史服务数据、擅长服务的用户类别，为用户匹配最适合的LP服务人员。相对于传统的网点销服务模式而言，服务人员联络用户很大程度上是随机的。那么针对智能线索匹配系统，水滴持续迭代线索分配的3.0版本。在2.0版本中，根据LP的基础属性及历史拨打数据对用户进行匹配。由于LP每日拨打的数量限制，整体分配系统模型限于局部的最优。那在3.0版本中，通过引入时序的信息，通过对LP预置分配，使得模型跳出局部最优，最大限度地接近全局最优解，达到LP和线索的充分高效匹配，大幅度地提升用户的满意度，也进一步提升线索的价值和系统效率。
Our proprietary AI-powered matching tool between the sales team and the users can match the most appropriate staff to provide services for each user based on LPs' historical service data and the user group they are good at serving. In contrast, under traditional online marketing and telemarketing, service staff essentially reach out to users on a random basis. We have upgraded our smart matching system to version three. In version two, the system was based on LPs' basic attributes and historical outbound calling records to match the most appropriate staff for each user.
Due to the limitation on the number of calls LPs can dial out each day, this allocation module could only achieve a partial optimal solution. In version three, we have introduced timing information and preset allocation mechanisms for LPs, thus leading the allocation module closer to a comprehensive optimal solution. This substantially improves our user satisfaction, further increases the value of our sales leads, and enhances the efficiency of our entire service system.
2021年，水滴的智能线索匹配系统经过了三次算法架构的调整、四十余次的模型优化，构建了数千个特征，沉淀了七篇专利技术，成为了一个稳定高效的线索分配体系，达到了业界领先的水平。在效果上，相比于传统的分发方式，APL相对提升了40%。自项目启动开始，累计贡献的长险保费增量有六千多万，平均每天增量二三十万。水滴外呼服务人员与用户的AI匹配项目形成了水滴在智能保险外呼销售服务系统中的核心技术优势。
Through three adjustments to our algorithms architecture and more than 40 rounds of model optimization, we have created thousands of data features and embedded seven patented technologies in our smart matching system in 2021, making it an industry-leading, stable and highly efficient sales leads allocation system. Compared with the traditional sales leads allocation model, our smart matching system has improved the APL by 40%. Since its launch, the system has helped increase our long-term insurance premiums by more than 60 million RMB, which is equivalent to a daily increase of 200,000 RMB-300,000 RMB per day. The smart matching system has formed a core technological advantage in Waterdrop smart insurance telemarketing service system.
关于附加险的推荐，经过大量数据调研发现，部分用户购买某个保险产品时依然会有对其他类型产品的关注。基于此，水滴在用户购买保险时，也会基于用户的特征，对用户是否对其他保险感兴趣，以及对其他什么类型的保险感兴趣进行预测，并通过页面推荐给用户自主地选择。这一尝试在解决用户挑选保险产品的痛点、满足用户购买需求的同时，也提升了7%的保费收入。
From our extensive data research, we found that some users will also pay attention to other types of products when they purchase a particular insurance product. Hence, in the process of purchasing, we will predict whether the user is interested in other product types based on the user's profile. We will then provide recommendations on additional insurance products in our platform for the user's own choice. This attempt will not only address the user's pain points in choosing a portfolio of insurance products that satisfy their protection needs, but will also help increase our insurance premiums by 7%.
以上是我这部分的介绍。接下来由CFO Kevin来介绍我们的财务表现。
This concludes my part, and then let me turn over the call to Kevin, our CFO, to discuss our Q4 financial performance.
Okay, thank you, Hu Yao. Hello, everyone. I will now walk you through our key financial results for the Q4 of 2021. Before I go into details on the financial performance, please be reminded that all numbers quoted here will be in RMB. Please refer to our earnings release for detailed information on our comparative financial performance on a year-over-year basis. Our net operating revenue decreased by 27.3% year-over-year to RMB 604 million from RMB 830 million, and decreased by 25.6% on a comparable basis, which means without taking into account the management fee income from mutual aid business, which we already ceased in the Q1 of 2021. The decline in revenue was due to the decrease in FYP outweighing the improvement of our take rate year-over-year.
In recent months, we have seen our take rate stabilized and began to pick up resulting from the improvements in our business quality. Operating costs and expenses for Q4 decreased significantly by 38.6% year-over-year to RMB 678 million. On a quarter-over-quarter basis, operating costs and expenses decreased significantly by 47.5% compared to the last quarter, showing our measures on cost control have had a significant effect. In the Q4 , we took a series of measures to reduce operating costs and expenses, including reducing spending and improving the effectiveness and ROI of traffic acquisition, optimizing our organizational structure, reducing the redundant headcount of employees, and improving operating efficiency.
To break it down, the operating costs were RMB 197 million, a decrease of 21.4% year-over-year, mainly due to the decrease of RMB 66 million in professional and outsourced customer service fees, partially offset by an increase of RMB 19 million in personnel costs as our consultants and the insurance agent team expansion compared to the last year. Sales and marketing expenses decreased by 63.8% year-over-year to RMB 441 million for the Q4 of 2021. The decrease was mainly due to the decrease of market expenses to third-party traffic channels by RMB 485 million, partially offset by the increase in payroll and related expenses for employees involved in sales and marketing functions.
As we announced in the last earnings call, we would review such sales and marketing expenses maturely, and we managed to deliver the results this quarter. On a quarter-over-quarter basis, sales and marketing expenses decreased by 69.2% from last quarter. Along with sales model upgrade, we have reduced reliance on third-party traffic through more refined operational management and strict cost control. G&A expenses increased by 25.9% in quarter four to RMB 149 million year-over-year, and by 33.5% quarter-by-quarter, mainly due to an impairment loss of RMB 39 million provided for the prepayments and offset by a decrease of RMB 2.5 million in share-based compensation expenses comparable with last quarter.
R&D expenses increased by 34.4% to RMB 91 million year-over-year, and decreased by 11.6% quarter-by-quarter. We uphold technology-driven innovation and continue to invest in R&D in a disciplined manner. In the Q4 , we incurred a net loss of RMB 71 million, GAAP basis, while generating adjusted net profit of RMB 5.9 million, compared with a net loss of RMB 404 million and adjusted net loss of RMB 191 million in the same quarter of last year.
Heading into 2022, we plan to continuously improve our operating efficiency and control our costs and expenses. We expect to achieve non-GAAP profit for established business, which means existing business as of our IPO date for the year of 2022. Such outlook is based on the current market conditions and reflects our preliminary review and estimates, which are all subject to changes.
As of December 31, 2021, our cash and cash equivalents and short-term investment balance increased to RMB 2,787 million, increasing RMB 176 million, or 6.7% from the end of the Q3 of 2021, as we started to generate positive operating cash flow in the Q4 . For detailed financial data, please refer to our press release on our IR website. This concludes our prepared remarks. I will now hand it over to the operator to open the call for Q&A. Operator, we are ready to take questions now. Thank you.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Please limit yourself to two questions at a time so that others can ask their question. In addition, for those who speak Chinese, would you please ask your questions in Chinese first, followed by the English translation. Again, press star one to ask a question. We will pause for just a moment to allow everyone an opportunity to signal. We will take our first question today from [inaudible] Mao of CICC. Please go ahead. Your Line is open.
Okay, thanks. This is [inaudible] from CICC. Congrats on the results. I have two questions. The first is about the operation of existing customers. Could you talk more about the renewal rate? What's the trend, and what's your strategy to further serve the existing customers? The second question is, what did you do to drive the significant improvement in profitability? Can we expect this operating margin to continue in 2022? That's all for me. Thanks.
Okay. This is Yang Guang speaking. Thank you for the question. I think, you know, in terms of renewal, the premium renewal rate improved to 89% in December 2021 from 62% in September 2021 by 43%. We have achieved a great improvement in our renewal rate. I think our strategy to improve renewal rate focus on three main areas. One is that we improve our renewal rates by upgrading our renewal products. For example, we increase the coverage for users and providing premium discounts for customized policyholders.
Secondly, we provided renewal users with more product coverage options through our differentiated add-on products, a strategy that made our premium renewal rate up by 5%. Thirdly, we support users with diverse terms of payment, such as auto-renewal, monthly payment or annual payment, and we reach the manual renewal users through message and phone calls. In terms of the LTV per user, we continue to convert our users and increase per user LTV mainly through Enterprise WeChat and auto model. The LTV of Q4 was up by 93% compared to Q3. Hope that answers your question. For the next question regarding the operating margin, I'm gonna hand it over to Kevin Shi.
Thank you, Yang Guang. Thank you, [inaudible] . Thank you for your question. As a successful rollout of the cost control plan, we actually have seen two consecutive quarters in effective cost control and profitability enhancement. Compared with Q3 , our total operating costs and expenses further reduced significantly this quarter. The quarter-over-quarter decline of 47.5% in total costs and expenses was mainly due to, first, a decrease of 69.2% saving in marketing expense. Second is 33.5% decrease in operating costs quarter-over-quarter. In terms of our marketing expense, if we look at our earnings release, in previous quarters, we may find that our sales and marketing expenses in Q2 exceeded RMB 1.2 billion, of which about 80% was user acquisition cost. In Q3 , sales and marketing expenses was around RMB 781 million.
Of which around 60%-80% was our traffic acquisition cost. We can see that the various measures of our refined operation have produced certain results in Q3 . With our continuous efforts, we have achieved more remarkable results in the Q1 . Sales and marketing expenses are significantly reduced to RMB 241 million, and only less than one-third of sales and marketing expenses were incurred for traffic acquisition. Regarding measures to control company expenses. In terms of sales and marketing expenses, our measures include, but not limited to, first, further reduction in marketing spending and use stricter criteria to select traffic acquisition platforms. Second, we are also leveraging our AI-empowered platform to conduct more intelligent and targeted marketing.
In terms of operating costs, specific measures include, first, re-reviewing key tasks and our business procedures to identify where and how to optimize. Second, integrating organizational functions with high synergies. Third, strengthening the control over selection of suppliers. Fourth, merging certain offices, or moving to areas with more reasonable rents. We are moving faster on the right track to achieve breakeven, and we have delivered good results towards breakeven objective for the two consecutive quarters. We originally planned to breakeven in 2023, but we have already increased our efforts to control cost and expenses.
Now we're already making profits in non-GAAP terms in Q4 . Marketing expenses, which used to be our largest expense item, have been significantly reduced in the third and the Q4 . We also managed to control over costs and company-wide. Going forward, we're really excited this trend to continue in current year, 2022. Our goal is that our established business will make profits for the full year of 2022 on a non-GAAP basis. Thank you.
Next question from Michael Lee of Bank of America. Please go ahead.
Thank you. Thank you, management. This is Michael Lee calling from Bank of America. My question is about the quality of your earnings and also the volume growth. We see very strong quality improvement in Q4 last year, and also the cost control last year in Q4 led to the first profitable quarter on non-GAAP basis. But we also see the decline, year-on-year decline and quarter-on-quarter decline of your commission income growth.
I know there is kind of seasonality there, and I know that last year, Q2 to Q4 , sector premium growth was weaker than Q1 last year. We still want to know what is the target of your volume growth, let's say first-year premium growth next year, and how are you going to achieve that kind of target? This is my first question. The second question is that I know that you are going to charge on Waterdrop upon delivery. What is the purpose of this kind of change of policies? Thank you.
Thank you for the question. I think, as mentioned earlier, the entire industry is undergoing a cyclical adjustment. I think the key reason is that the old growth model focusing on scale expansion cannot adapt to the current market conditions. The launch of stricter regulatory policies has intensified the industry adjustment. The tightening regulations and cyclical adjustment have made the competitive environment of online insurance services more favorable to our company. For example, a number of peers have exited the market and our external customer acquisition environment has improved. Under this environment, our accumulated user resource, InsurTech capabilities and brand advantages in lower tier cities will enable us to be well-positioned for the future growth.
Moreover, the entire insurance industry is exploring a new growth model, which will benefit companies with stronger innovation DNA just like us. In the meantime, we'll create new growth drivers by developing our open platform to offer more services to empower the industry. I think after five years of exploration, we have accumulated strong technology and capabilities in the InsurTech area. Now we are building our open platform to offer our technology service to the partners in the market. We believe only the companies with larger user group and the ability to tap into the customer value are able to navigate the unfavorable industry cycle to demonstrate their business resilience and adaptability.
I think the winners will be the ones that can transform and upgrade their business as early as possible, make necessary strategic adjustment and actively respond to regulatory calls and licensing in the long run. Simply a pursuit of growth is not the current optimal solution. To answer the question regarding the FYP target, I think we expect our revenue growth will stabilize this year when our commitment of cost control remains unchanged. The effect of profitability improvement will continue to deliver. This means that the slowdown in growth due to this model transformation and the industry adjustment has basically reached an inflection point in the near future, and the company will follow the healthier and most sustainable model for the future development. Hope that answers your question.
We are now approaching the end of the conference call. Thank you for your participation in today's conference.