Noah Q2 Earnings Call Highlights

Profitability improved despite slightly lower revenue: Q2 net revenue fell 1.5% year over year to RMB 620 million, but operating income rose 34% and non-GAAP net income increased 25.9% to RMB 238 million. Lower costs, including a 17% headcount reduction, lifted the operating margin to 34.8%. Carry income offset pressure in legacy businesses: Performance-based income rose sharply to RMB 138 million in Q2, while insurance commissions and recurring management fees declined as Noah continued shifting away from legacy products and channels. AI-driven wealth management showed early traction: Singapore AUM grew from below $100 million to more than $400 million since the model launched, reaching monthly profitability in July. Noah plans to expand the model to Hong Kong and Japan, followed by additional international markets. Noah NYSE: NOAH reported second-quarter 2026 net revenue of RMB 620 million, down 1.5% from a year earlier, while operating income rose 34% to RMB 216 million as the wealth manager reduced costs and expanded its operating margin. Non-GAAP net income attributable to Noah reached RMB 238 million, up 25.9% year over year and 77.8% sequentially. The company’s operating margin was 34.8%, compared with 25.6% in the prior-year quarter. For the first half, operating income increased 30.3% to RMB 452 million, producing a 36.3% operating margin. Chief Financial Officer Grant Pan said the quarter reflected “the quality of our profitability rather than pure growth in revenue,” citing lower compensation, selling expenses and overall headcount. Total operating costs and expenses declined 13.7% year over year during the quarter, while total headcount was reduced by about 17%. Carry Income Offsets Legacy Revenue Pressure The company said its revenue mix continued to shift away from legacy insurance, referral channels and RMB private-equity-related business. Second-quarter one-time commissions fell 44.1% year over year to RMB 87 million, including a 58.2% decline in insurance commissions. Recurring management fees decreased 10.8% to RMB 360 million, which Pan attributed to the runoff of legacy RMB private equity assets. Performance-based income, or carry, was a major contributor to results. Carry totaled RMB 138 million in the second quarter and RMB 238 million in the first half, up 364% from the prior-year first half. Management said it views carry as supported by a portfolio spanning multiple fund vintages, although it cautioned that alternative-investment realizations are cyclical and cannot be expected to be linear from quarter to quarter. Investment income was RMB 42 million in the second quarter, compared with a RMB 14 million loss a year earlier. On a GAAP basis, net income attributable to shareholders was RMB 232 million, up 30% year over year. Pan said Noah maintains its expectation for a full-year operating margin above 30%, while noting that quarterly performance may fluctuate based on product mix and expense timing. AI Model Shows Early Singapore Results Management focused much of the call on its AI-enabled wealth-management model, which combines centralized digital client services, licensed professionals and ecosystem partners. Chief Executive Officer Zander Yin said the company is seeking to reduce its historical dependence on expanding relationship-manager headcount to generate client and asset growth. U.S. dollar-denominated assets under management rose 11.7% year over year to $6.5 billion as of June 30, while overseas relationship-manager headcount declined 36.2%. U.S. dollar-denominated assets under advisement increased 7.5% to $9.78 billion. Singapore was the company’s first full test market for its AI Wealth Management Dep.