Noah (NOAH) Q4 2025 Earnings Call Transcript

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Date
Tuesday, March 24, 2026 at 8 p.m. ET
Call participants
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Chairman and CEO — Zhe Yin
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Chief Financial Officer — Qing Pan
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Co-Founder and Director — Jingbo Wang
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President — Dorian Chiu
Full Conference Call Transcript
Zhe Yin: [Interpreted] Good day to everyone, and thank you for joining us today. 2026 marks the 21st year since Noah was established. In a market environment defined by continuous evolution and restructuring, our strategic direction has never been clearer. We remain firmly focused on serving global Chinese high net worth and ultra-high net worth clients operating through licensed local entities to provide compliance, long-term wealth management services across multiple jurisdictions. More importantly, we are completing a critical transformation evolving from a wealth management institution primarily driven by product sales into a comprehensive platform, centered on asset allocation, global structuring and AI systems. In 2025, this transformation began to yield tangible operating results.
This is not a really temporary business adjustment, but the fundamental reconstruction of our operating model. For Noah 2025 represents an important milestone. Looking at our full year results [indiscernible] quality of our profitability is improving at a faster pace than the stabilization of our revenue structure. For the full year, net revenues were RMB 2.6 billion, broadly flat year-over-year. However, operating profit was RMB 777 million, up 22.5% year-over-year with operating margin improving to 29.8% and non-GAAP net income increasing 11.2% year-over-year to RMB 612 million. Excluding the impact of nonoperating items, adjusted non-GAAP net income was approximately RMB 753 million.
What matters most at this stage is not the absolute scale of our profitability but the improving underlying structure. This profit growth was not driven by one-off factors, but by optimized cost structure, enhanced operating efficiency and the ongoing shift in revenue mix toward investment-related businesses. This reflects how our profitability is shifting from cyclical volatility towards structural stability. This is a quantitative change, not simply quantitative growth. From a business perspective, while our domestic and overseas business segments are moving at different paces, they are pulling in the same direction. Investment capabilities are becoming the primary growth engine.
Net revenues from our overseas wealth management business were RMB 550 million in 2025 and down 18.8% year-over-year, mainly due to a decline in insurance product distribution revenue. However, overseas AUA grew to USD 9.5 billion, up 8.6% year-over-year. Notably, transaction value of U.S. dollar-denominated private secondary products tripled year-over-year to USD 950 million. The number of overseas registered clients approached 20,000, up 13.2% year-over-year, of which active clients exceeded 6,200, up 12.4% year-over-year. Net revenues from Olive, the overseas asset management business RMB 550 million for the full year, up 26.3% year-over-year, mainly driven by higher management fees resulting from AUM growth. Overseas AUM reached USD 6.1 billion, up nearly 4% year-over-year, accounting for 30% of total AUM.
Net revenues from Glory Family Heritage, our integrated services business were RMB 180 million for the full year, up 28.8% year-over-year. Despite a highly competitive market environment, we achieved breakthroughs in sales through new channels. Domestically, sustained recovery in the Asia market helped improve our performance. RMB-denominated private secondary products maintained growth momentum from the second quarter onwards, which helped partially offset the impact of declining management fees from maturing RMB-denominated private equity products. Noah Upright, our domestic public securities business recorded net revenues of RMB 570 million in 2025, up 15.9% year-over-year with transaction value for RMB-denominated private secondary products reaching RMB 11.2 billion, up 107.2% year-over-year.
Gopher, our domestic asset management business recorded net revenues of RMB 690 million for the full year down 10.3% year-over-year, mainly due to lower management fees resulting from maturing RMB-denominated private equity products. In the primary market, Gopher completed RMB 5 billion of private equity asset exits and distributions in 2025. Glory, our domestic insurance business recorded net revenues of RMB 19 million for the full year, down 56.5% year-over-year. The decline in revenue was expected and aligned with our plans and ongoing strategic transformation. Overall, our performance clearly shows a business shifting toward investment and asset allocation capabilities. It is this long-term vision that has systematically rebuilt our overall structure over the past few years.
What we have accomplished is not simply business expansion, but a fundamental reconstruction of our operating model. Today, we are building a global wealth management operational system composed of 3 core platforms, all operating under a unified management framework. ARK serves as the client onboarding and execution platform, with licenses in Hong Kong, Singapore and the United States, it operates compliantly within local regulatory framework. ARK is responsible for account management, trade execution, product distribution and AI wealth advisory services, providing clients globally with a consistent, seamless and compliant experience. Olive serves as our investment and asset management platform across Hong Kong, the United States, Singapore, Japan and Canada.
It has the capabilities to source global assets, establish and manage funds across multiple jurisdictions and execute long-term asset allocation strategies. It is a key foundational piece for our long-term value creation and revenue stability. Glory serves as our asset structuring and risk management platform covering major markets, including China, Hong Kong, Singapore and the United States. It offers insurance, trust and identity planning services that deliver risk isolation and asset protection through structuring solutions and supports the long-term transfer of family wealth. Supporting these 3 core platform is our cross-jurisdiction compliance architecture anchored by our 4 major booking centers. Shanghai serves as a domestic client onboarding hub for RMB asset allocation, Noah Upright fund distribution and Gopher asset management.
Hong Kong functions as the cross-border connector for securities and insurance, serving as the bridge between China and global markets. Singapore is our center for overseas asset allocation and family structuring and our primary pilot regions for AI wealth management. The United States serves as a key hub for BPC and capital markets activity. In particular, our investment capabilities in the technology sector are an important contributor to future revenue growth and innovation. I want to emphasize that all booking centers are independently operated by locally licensed entities and conduct business within their respective regulatory framework, cross-regional collaboration is primarily limited to research and information support with no direct cross-jurisdiction business activities.
This strict compliance boundary is the institutional foundation for our steady growth. The [indiscernible] more visible in our operating result. So headcount declined by 11% year-over-year, while revenue remained stable, reflecting improving operational efficiencies. Over the long term, AI brings much more an improved operational efficiency, it is also reconstructing how we operate by embedding AI into key areas such as client engagement, content generation and operational processes, we have established [indiscernible] collaborative operational-driven model in certain regions. This reflects our transition away from headcount expansion to systems that drive both scale and service quality.
Looking ahead to 2026, we will remain prudent, but highly focused on our clear strategic direction, while revenue may still fluctuate due to structural adjustments, the proportion of investment-related income is expected to rise as profit margins remain stable or improving gradually. Furthermore, our AI capabilities will evolve beyond system efficiency gains and scale into broader operational validation. We are still in the midst of our transformation, but the logic behind our long-term operational model is stronger than ever. At its core, this transformation is not about changing product form or expanding services. It's about fundamentally reconstructing what drives our growth. Historically, our industry has relied heavily on the individual capabilities of relationship managers.
Today, we are building a human machine collaborative operational-driven model centered on asset allocation, where AI empowered relationship managers and our global platforms amplifying their capabilities. 2025 marks the starting point of this model, where it will gradually reflect in our operating results. The transformation is ongoing, but our strategic direction is firmly set. We will continue to execute this long-term strategy prudently and compliantly. Thank you. I will now hand the time over to CFO, Pan, to review our financial performance in more detail.
Qing Pan: Thank you, Zander. And good morning, everyone, for the comprehensive strategic overview and good day to everyone, who joined us today. I would like to focus on 2 key financial messages. First 2025 delivered strong operating profit growth and structural margin expansion, driven by a clear shift in our revenue mix. Investment-related income increased significantly during the year, while we deliberately reduced our reliance on insurance-related revenue. This reflects our continued transition toward a more investment-led business model, with improving earnings quality and great margin resilience. Second, the Board has approved our dividend proposal, including a special dividend, bringing total payout to 100% of full year non-GAAP net income for the third consecutive year.
This reinforces the consistency and visibility of our shareholder return policy. Together, these developments underscore our transition towards a more investment-driven, globally diversified and resilient operating model. For the full year 2025, net revenue was RMB 2.6 billion, broadly stable year-over-year. Operating profit increased to RMB 777 million, representing growth of 22.5%. Operating margin expanded to 29.8%, compared with 24.4% in the prior year. Non-GAAP net income reached RMB 612 million, up 11.2% year-over-year. This improvement was primarily driven by structural cost optimization and enhanced operating efficiency rather than short-term factors. In the fourth quarter, revenue was RMB 733 million, up 12.5% year-over-year.
Operating profit reached RMB 258 million, representing a significant increase of 87.3% and operating margin expanded further to 35.2%. This reflects strong operating leverage as performance-based income starting to materialize, supported by a more scalable and disciplined operating structure. During the year, we continued to optimize our revenue structure. Investment products commissions increased by 79.7% year-over-year and performance-based income rose by 78%. At the same time, overseas revenue contribution increased to 49% of total net revenue. This shift towards investment-driven and globally diversified revenue streams has enhanced earnings quality and supported structural margin expansion. To provide a clearer view of our core performances, I would like to address 2 nonoperational items that affected our reported fourth quarter GAAP results.
First, under income from equity in affiliates, we recorded a loss of approximately RMB 120 million. This was primarily driven by mark-to-market accounting adjustments related to share price volatility of a specific listed investment. It's important to emphasize that this represents accounting reflection of market movements and does not impact our core wealth management operations. Second, regarding the legacy Camsing credit fund arrangements, several cases reached procedural milestones this quarter as certain clients opted for arbitration. In line with our prudent financial policy, we recognize contingent expenses of approximately RMB 50 million. Total provisions now stand at RMB 505 million, representing about 63% of the unsettled principal.
Based on current benchmarks and the progress of these cases, we believe the existing provision level is appropriate and covers a substantial portion of the potential exposure. Based on the information currently available, we do not anticipate significant additional provisions. If we exclude these 2 nonoperational items, adjusted full year non-GAAP net income would have been approximately RMB 753 million, which we believe more accurately reflect our underlying operational efficiencies. In terms of balance sheet, as of December 31, 2025, cash and short-term investments totaled RMB 5.0 billion. The asset liability ratio stood at 15% and the company carries 0, no interest-bearing debt. Our current ratio was 4.5x.
This debt-free structure provides strong financial flexibility and reinforces the resilience of balance sheet. From a financial perspective, our AI strategy is centered on productivity enhancement rather than heavy capital expenditure. We are already seeing measurable results in our cost structure. In 2025, total headcount decreased by 11% year-over-year when net revenue remained stable at RMB 2.6 billion. This indicates a meaningful increase in output per capita. AI-driven tools now support a substantial portion of client engagement, automated reporting and routine workflow tasks that previously required a lot of manual intervention. In our view, AI functions as structural efficiency multiplier. It enables us to scale global operations while maintaining disciplined cost control and consistent service quality.
As of year-end, shareholders' equity stood at about RMB 9.9 billion. At our current market capitalization, the company is trading at roughly 0.57x book value with operating return on equity close to 8%. When market valuation may fluctuate, our focus remains on building long-term intrinsic value through disciplined execution and continued global expansion. Our strong cash position and operating cash flow provide both confidence and flexibility to deliver attractive and sustainable shareholder returns across market cycles. Driven by our solid performance and healthy liquidity position, the Board has approved a total dividend of RMB 612 million, equal to 100% of 2025 non-GAAP net income. This consists of 50% regular dividend and a 50% special dividend.
Subject to shareholder approval at the 2026 AGM, this will mark our third consecutive year of full payout. At current market prices, the implied dividend yield is approximately 11%, including RMB 50 million in share repurchas