Noah's Q1 2025 Earnings Show YoY and Sequential Growth in Profitability and Operating Margin Expansion

Rhea-AI Summary

Noah Holdings reported strong Q1 2025 results with significant profitability improvements despite revenue headwinds. Non-GAAP net income increased 27.4% sequentially to RMB 168.8M, while operating income rose 35.2% to RMB 186.0M. Total revenues declined 5.4% YoY to RMB 614.6M due to weaker insurance distribution and private equity fees. Overseas expansion showed promise with revenues growing 5.0% sequentially to RMB 304.2M, now representing 50% of total revenue. The company's overseas RM team grew 44% YoY to 131 members. Cost controls reduced operating expenses by 18.8% YoY. Noah maintains a strong balance sheet with RMB 4.1B in cash and plans to distribute RMB 550M in dividends, representing an 11% yield. The company continues its US$50M share buyback program and focuses on CAPEX-light overseas expansion strategy.

Positive

• Non-GAAP net income increased 27.4% sequentially to RMB 168.8M
• Operating margin expanded to 30.3% with operating income up 35.2%
• Overseas revenues grew 5.0% sequentially, now accounting for 50% of total revenue
• Operating costs reduced by 18.8% YoY through rigorous cost controls
• Strong balance sheet with RMB 4.1B cash and RMB 1.3B in liquid investments
• Planned RMB 550M dividend distribution representing 11% yield
• USD-denominated AUM grew 14.2% YoY to US$5.9B

Negative

• Total net revenues declined 5.4% YoY and 5.7% QoQ to RMB 614.6M
• Domestic revenues decreased 14.3% QoQ and 9.4% YoY
• Overseas insurance sales declined 22.8% YoY
• Continued headwinds from volatile global macro environment and low interest rates in China
• Weak Chinese HNWI sentiment affecting business growth

Insights

Financial Analyst

Noah's Q1 shows improved profitability despite revenue decline, with successful cost controls and overseas expansion offsetting domestic challenges.

Noah Holdings has delivered mixed Q1 2025 results that reveal a company in transition making significant progress in its restructuring efforts. While total net revenues declined 5.4% year-over-year to RMB 614.6 million, the company achieved impressive growth in profitability metrics. Non-GAAP net income increased 27.4% sequentially to RMB 168.8 million, and income from operations jumped 35.2% to RMB 186.0 million.

The operating margin expansion to 30.3% is particularly noteworthy as it demonstrates Noah's successful execution of its cost reduction initiatives. Operating costs decreased by 16.7% sequentially and 18.8% year-over-year to RMB 428.6 million, driven by significant cuts in compensation (-21.8% YoY) and selling expenses (-18.1%).

Noah's strategic pivot toward international markets is gaining traction, with overseas revenues now comprising nearly 50% of total revenues at RMB 304.2 million (up 5.0% sequentially). The company has expanded its overseas relationship manager team by 44% to 131 professionals, while also building a commission-only insurance agent team of 75 that's already generating revenue. USD-denominated assets under management increased 14.2% YoY to $5.9 billion, and assets under advisory grew 8.7% to $9.1 billion.

The domestic Chinese business continues to face headwinds amid a challenging macroeconomic environment, with domestic revenues falling 14.3% sequentially and 9.4% YoY to RMB 310.4 million. However, transaction value for RMB-denominated private secondary products surged 257.7% YoY, suggesting areas of opportunity within the challenging domestic market.

Noah maintains a fortress balance sheet with RMB 4.1 billion in cash and equivalents plus RMB 1.3 billion in liquid short-term investments. The current ratio of 4.8x and absence of interest-bearing debt provide significant financial flexibility. The planned RMB 550 million dividend distribution (representing an 11% yield) signals management's confidence in cash flow generation despite ongoing investments in restructuring.

This quarter demonstrates that Noah's CAPEX-light strategy is bearing fruit, balancing necessary investments in overseas expansion with prudent cost management to deliver improving profitability even amid topline pressures.

SHANGHAI, May 30, 2025 /PRNewswire/ -- Noah Holdings Limited ("Noah" or the "Company") (NYSE: NOAH and HKEX: 6686), a leading and pioneer wealth management service provider offering comprehensive one-stop advisory services on global investment and asset allocation primarily for global Chinese high-net-worth investors ("HNWIs"), reported unaudited financial results for the first quarter of 2025, highlighting a robust recovery in profitability as its CAPEX-light domestic restructuring and overseas expansion gain momentum. Non-GAAP net income rebounded 27.4% sequentially to RMB 168.8 million (US$23.3 million), while income from operations jumped 35.2% to RMB 186.0 million (US$25.6 million), driving operating margin to 30.3%.

Noah continued to face broader headwinds driven by a volatile global macroeconomic environment and a low-interest rate environment in mainland China, impacting Chinese HNWI sentiment and topline growth. Despite these challenges, Noah continued to make significant progress in building out its sales teams and global infrastructure. Its CAPEX-light strategy ensures its business remains profitable and continues to generate solid cash flow during this restructuring.

Zander Yin, Co-Founder, Director, and CEO of Noah, commented, "We are proud to deliver a strong rebound in profitability and operating margin this quarter, reflecting the success of our operational efficiency initiatives, CAPEX-light strategy, and accelerating overseas expansion. This clearly underscores the resilience of our business model during our ongoing restructuring and sets the stage for sustainable growth going forward. This restructuring still requires upfront investments and will take time to scale. While we are not yet at the finish line, these cost-effective foundational changes are clearly beginning to have an impact on our financials which leave us confident we are headed in the right direction."

Financial Highlights 

Total net revenues for the quarter were RMB 614.6 million (US$84.7 million), down 5.7% from last quarter and down 5.4% year-over-year, primarily due to a decrease in distribution of insurance products and RMB-denominated private equity recurring service fees. However, net revenues from overseas continued to grow sequentially, expanding 5.0% to RMB 304.2 million (US$41.9 million) and now accounting for nearly 50% of total net revenues – showcasing the progress it continues to make in expanding overseas.

Rigorous cost controls reduced operating costs and expenses by 16.7% sequentially and 18.8% year-over-year to RMB428.6 million (US$59.1 million), led by a 21.8% year-over-year cut in compensation and benefits and an 18.1% decline in selling expenses.

Overseas Expansion Making Progress

Noah's overseas expansion continued to gain momentum. Revenue from overseas investment products grew 20.3% year-over-year, offsetting a 22.8% decline in overseas insurance sales. USD-denominated assets under management climbed 14.2% year-over-year to US$5.9 billion, and USD-denominated assets under advisory rose 8.7% to US$9.1 billion.

Noah's team of overseas relationship managers is driving this growth. The team expanded 44% year-over-year to 131, with its newly formed overseas commission-only insurance agent team also growing to 75 and already contributing approximately RMB 10 million in revenue during the quarter. The Company opened a new office in Japan and continues to explore opportunities in the US, Southeast Asia and Canada with large and underserved communities of Chinese HNWIs. 

Domestic Restructuring

Domestic net revenues in the quarter were RMB 310.4 million, down 14.3% from last quarter and 9.4% from the same period last year, reflecting weaker insurance distribution under a low-interest environment and lower recurring service fees from private equity products. However, transaction value for RMB-denominated private secondary products surged 257.7% year-over-year to RMB 3.3 billion, up 34.6% sequentially, with associated revenue contribution rising 9.4% year-over-year.

Noah's branch network has been consolidated to 10 cities in mainland China and has begun deploying online marketing and online services which will further reduce fixed costs and improve operational efficiency going forward.

Driving Shareholder Returns 

Noah continues to prioritize shareholder interests and deliver sustained returns through its US$50 million share buyback program with the repurchase of more than 1.3 million ADSs to date. Subject to approval at its upcoming annual general meeting in June 2025, the Company plans to distribute RMB 550 million in annual and special dividends in July 2025—equal to 100% of 2024's non-GAAP net income attributable to Noah shareholders—delivering a 11% dividend yield at current prices and marking the second consecutive year of a full payout.

As of March 31, 2025, cash and cash equivalents stood at RMB 4.1 billion, supplemented by RMB 1.3 billion in highly liquid short-term investments. The balance sheet remains robust, with US$11.4 per ADS in cash reserves, an improved current ratio of 4.8x, no interest-bearing debt, a price-to-book multiple of 0.5x and a price-to-earnings multiple of 11x, well below the industry average.

Strategic Priorities and Outlook for 2025 

Noah's priority in 2025 will be to build upon the solid progress it has made by carefully balancing the quality and quantity of growth overseas while ensuring full compliance with local regulations. Through its CAPEX-light strategy, the Company will drive its overseas expansion and build its local teams in the US, Japan, Southeast Asia and Canada. Investments in AI and technology will enhance online service capabilities, and the commission-only insurance agent network will scale to support overseas growth. It will also diversify its product suite with trusts, emigration advisory services and cross-border solutions to meet evolving client needs in volatile markets. Supported by streamlined operations, a fortified balance sheet and deepening overseas foothold, Noah is well positioned for sustainable, profitable growth throughout 2025 and beyond.

About Noah Holdings Limited

Noah Holdings Limited (NYSE: NOAH and HKEX: 6686) is a leading and pioneer wealth management service provider offering comprehensive one-stop advisory services on global investment and asset allocation primarily for global Chinese high-net-worth investors. Noah's American depositary shares, or ADSs, are listed on the New York Stock Exchange under the stock ticker "NOAH", and its shares are listed on the main board of the Hong Kong Stock Exchange under the stock code "6686." One ADS represents five ordinary shares, par value $0.00005 per share.

In the first quarter of 2025, Noah distributed RMB 16.1 billion (US$2.2 billion) of investment products. Through Gopher Asset Management and Olive Asset Management, Noah had assets under management of RMB149.3 billion (US$20.6 billion) as of March 31, 2025.

Noah's domestic and overseas wealth management business primarily distributes private equity, public securities and insurance products denominated in RMB and other currencies. Noah's network covers major cities in mainland China, as well as Hong Kong (China), New York, Silicon Valley, Singapore, Los Angeles and Japan. The Company's wealth management business had 463,161 registered clients as of March 31, 2025. Through its domestic and overseas asset management business operated by Gopher Asset Management and Olive Asset Management, Noah manages private equity, public securities, real estate, multi-strategy and other investments denominated in RMB and other currencies. The Company also provides other businesses.

For more information, please visit Noah at ir.noahgroup.com.

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. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Noah may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in announcements, circulars or other publications made on the website of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Noah's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. These statements include, but are not limited to, estimates regarding the sufficiency of Noah's cash and cash equivalents and liquidity risk. A number of factors could cause Noah's actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: its goals and strategies; its future business development, financial condition and results of operations; the expected growth of the wealth management and asset management market in China and internationally; its expectations regarding demand for and market acceptance of the products it distributes; investment risks associated with investment products distributed to Noah's investors, including the risk of default by counterparties or loss of value due to market or business conditions or misconduct by counterparties; its expectations regarding keeping and strengthening its relationships with key clients; relevant government policies and regulations relating to its industries; its ability to attract and retain qualified employees; its ability to stay abreast of market trends and technological advances; its plans to invest in research and development to enhance its product choices and service offerings; competition in its industries in China and internationally; general economic and business conditions in China; and its ability to effectively protect its intellectual property rights and not to infringe on the intellectual property rights of others. Further information regarding these and other risks is included in Noah's filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange. All information provided in this press release and in the attachments is as of the date of this press release, and Noah does not undertake any obligation to update any such information, including forward-looking statements, as a result of new information, future events or otherwise, except as required under the applicable law.

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SOURCE Noah Holdings Limited

FAQ

What were Noah Holdings (NOAH) Q1 2025 earnings highlights?

Noah reported Q1 2025 non-GAAP net income of RMB 168.8M (up 27.4% QoQ), operating income of RMB 186.0M (up 35.2%), and total revenues of RMB 614.6M (down 5.4% YoY). Operating margin expanded to 30.3%.

How much dividend will Noah Holdings (NOAH) pay in 2025?

Noah plans to distribute RMB 550M in annual and special dividends in July 2025, representing an 11% dividend yield at current prices and 100% of 2024's non-GAAP net income.

What is Noah Holdings' (NOAH) overseas expansion progress?

Overseas revenues grew 5.0% to RMB 304.2M, representing 50% of total revenue. The overseas RM team expanded 44% YoY to 131, and USD-denominated AUM grew 14.2% YoY to US$5.9B.

How strong is Noah Holdings' (NOAH) balance sheet in Q1 2025?

Noah maintains RMB 4.1B in cash and cash equivalents, plus RMB 1.3B in liquid investments, with no interest-bearing debt, a 4.8x current ratio, and trades at 0.5x book value.

What is Noah Holdings' (NOAH) cost reduction strategy?

Noah implemented rigorous cost controls, reducing operating costs by 18.8% YoY to RMB 428.6M, including 21.8% reduction in compensation and benefits and 18.1% decline in selling expenses.