OneConnect Announces First Quarter 2024 Unaudited Financial Results
Gross Margin of Continuing Operations[
1]
Improved by 0.3ppt and
First Quarter 2024 Financial Highlights
- Revenue from continuing operations was
RMB723 million as compared toRMB894 million for the same period of the prior year. - Gross margin of continuing operations increased by 0.3ppt year-over-year to 37.7% as compared to 37.4% for the same period of the prior year; non-IFRS gross margin of continuing operations was 40.0% as compared to 40.1% for the same period of the prior year.
- Operating loss from continuing operations narrowed 15.1% to
RMB66 million , as compared toRMB78 million for the same period of the prior year. Operating margin of continuing operations increased to -9.2% from -8.7% for the same period of the prior year. - Net loss from continuing operations attributable to shareholders narrowed by 25.9% to
RMB54 million , as compared toRMB72 million for the same period of the prior year. Net margin of continuing operations to shareholders narrowed by 0.7ppt to -7.4% as compared to -8.1% for the same period of the prior year. - Net loss from continuing operations per ADS, basic and diluted, was
RMB-1.48 as compared toRMB-2.00 for the same period of the prior year.
[1]
As previously reported, the Company completed the disposal of its virtual bank business (the "discontinued operations") to Lufax for a consideration of |
In RMB'000, except percentages |
Three Months Ended |
|
|
|
March 31 |
YoY |
|
|
2024 |
2023 |
|
Continuing operations |
|
|
|
Revenue Revenue from Ping An Group |
421,796 |
536,854 |
-21.4 % |
Revenue from Lufax |
58,256 |
71,357 |
-18.4 % |
Revenue from third-party customers[1] |
243,218 |
285,615 |
-14.8 % |
Total |
723,270 |
893,826 |
-19.1 % |
Gross profit |
272,403 |
334,657 |
|
Gross margin |
37.7 % |
37.4 % |
|
Non-IFRS gross margin |
40.0 % |
40.1 % |
|
Operating loss |
(66,348) |
(78,142) |
|
Operating margin |
-9.2 % |
-8.7 % |
|
Net loss from continuing operations |
(53,696) |
(72,479) |
|
Net margin of continuing operations to shareholders |
-7.4 % |
-8.1 % |
|
Net loss from continuing operations per ADS[2], basic and diluted |
(1.48) |
(2.00)
|
|
[1] Third-party customers refer to each customer with revenue contribution of less than 5% of the Company's total revenue in the relevant period. These customers are a key focus of the Company's diversification strategy. |
[2] In RMB. Each ADS represents 30 ordinary shares. |
Chairman, CEO and CFO Comments
Mr. Chongfeng Shen, Chairman of the Board and Chief Executive Officer, commented, "Since the beginning of 2024, we have been continuously optimizing our product and customer structure and focusing on our core businesses under the strategy of "Unite the Core, Empower the Wings" in order to achieve quality development. We have continued to expand our overseas business and have recorded rapid growth. Our revenue from third-party overseas customers from continuing operations increased by 14.8% on a year-over-year basis in the first quarter of 2024. In the same quarter, we achieved remarkable results in costs reduction and efficiency improvement, and our loss continued to narrow."
Mr. Chongfeng Shen further commented, "We have strengthened our research capabilities and introduced high value and high-end products into the ever-involving financial technology industry. Our spirit of innovation has been well-received and recognized in the industry. In the future, we will continue focusing on digital banking, digital insurance and Gamma platform, and continue to optimize our product and customer structure, upgrade our services and further expand into overseas market. With our unique competence in integrating "technology + business", we endeavor to continue to promote the development of new productivity in the financial industry."
Mr. Yongtao Luo, Chief Financial Officer, commented, "We continued to make steady progress towards its profitability targets in the first quarter of 2024. Gross margin of the Company's continuing operations for the first quarter was 37.7% and increased by 0.3ppt on a year-over-year basis. Benefiting from our success in costs reduction and efficiency improvement, our operating expenses from our continuing operations decreased significantly by 17.7 % on a year-over-year basis. For research and development, we allocated our resources strategically and focused our capital and labor efficiently on high-quality products and projects. As a result, our research and development expenses decreased by 22.8% on a year-over-year basis while we also maximized the value of outputs from these research and development. As a result, our net loss from continuing operations attributable to shareholders decreased by 25.9% on a year-over-year basis. Going forward, we will continue to strictly implement cost control measures and improve operation efficiency. Meanwhile, we will enhance our product competitiveness and endeavor to drive revenue growth, especially third-party revenue growth, from premium-plus customers. These efforts combined will help us reach our profitability targets as early as possible and create more value for our shareholders and customers."
"As previously disclosed, we received notifications from certain subsidiaries and associates of Ping An Insurance (Group) Company of China, Ltd. that they intend to cease to utilize the cloud services we provide under Gamma FinCloud platform. There are uncertainties as to whether any of the other connected customers will continue to utilize our cloud services. We have been actively monitoring the situation and evaluating our business plans and further measures in response to these developments and corresponding financial impact."
Revenue from Continuing Operations Breakdown
|
Three Months Ended |
|
|
In RMB'000, except percentages |
|
|
|
|
2024 |
2023 |
YoY |
|
|
|
|
Implementation |
157,459 |
209,934 |
-25.0 % |
Transaction-based and support revenue Business origination services |
12,835 |
49,046 |
-73.8 % |
Risk management services |
65,483 |
77,743 |
-15.8 % |
Operation support services |
134,062 |
222,545 |
-39.8 % |
Cloud services platform |
318,307 |
292,247 |
8.9 % |
Post-implementation support services |
14,921 |
12,341 |
20.9 % |
Others |
20,203 |
29,970 |
-32.6 % |
Sub-total for transaction-based |
565,811 |
683,892 |
-17.3 % |
Total Revenue from Continuing Operations |
723,270 |
893,826 |
-19.1 % |
Revenue from continuing operations in the first quarter of 2024 declined by 19.1% to
|
Three Months Ended |
|
|
In RMB'000, except percentages |
|
YoY |
|
|
2024 |
2023 |
|
|
|
|
|
Digital Banking segment |
161,553 |
258,738 |
-37.6 % |
Digital Insurance segment |
131,886 |
176,657 |
-25.3 % |
Gamma Platform segment |
429,831 |
458,431 |
-6.2 % |
Total from Continuing Operations |
723,270 |
893,826 |
-19.1 % |
Revenue from Gamma Platform segment, decreased by 6.2% to
First Quarter 2024 Financial Results
Revenue from Continuing Operations
Revenue from continuing operations in the first quarter of 2024 decreased by 19.1% to
Cost of Revenue from Continuing Operations
Cost of revenue from continuing operations in the first quarter of 2024 decreased by 19.4% to
Gross Profit from Continuing Operations
Gross profit from continuing operations decreased to RMB272 million from RMB335 million for the same period in the prior year. Gross margin of continuing operations improved to 37.7%, compared with 37.4% in the prior year, increased by 0.3ppt. Non-IFRS gross margin of continuing operations was 40.0%, compared with 40.1% in the prior year. For a reconciliation of the Company's IFRS and non-IFRS gross margin, please refer to "Reconciliation of IFRS and Non- IFRS Results for continuing operations (Unaudited)".
Operating Loss and Expenses from Continuing Operations
Total operating expenses from continuing operations for the first quarter of 2024 decreased to
-
Research and Development expenses from continuing operations for the first quarter of 2024 decreased to
RMB213 million fromRMB276 million , mainly due to our initiative to invest in research and development at a reasonable pace and selectively invest in profitable projects. As a percentage of revenue, research and development expenses from continuing operations decreased to 29.5%, compared with 30.9% in the prior year. -
Sales and Marketing expenses from continuing operations for the first quarter of 2024 decreased to
RMB49 million , compared withRMB59 million in the prior year, mainly due to enhanced sales capability and efficiency resulting from lowered personnel cost and associated selling costs. As a percentage of revenue, sales and marketing expenses from continuing operations were 6.7%, compared with 6.6% in the prior year. -
General and Administrative expenses from continuing operations for the first quarter of 2024 increased to
RMB81 million fromRMB80 million in the prior year. As a percentage of revenue, general and administrative expenses from continuing operations increased to 11.1% from 9.0%, primarily due to decreased revenue in the first quarter.
Operating loss from continuing operations for the first quarter of 2024 decreased notably to
Net Loss from Discontinued Operations
Net loss from discontinued operations in the first quarter of 2024 increased by 39.1% to
Net Loss from Continuing Operations Attributable to Shareholders
Net loss from continuing operations attributable to OneConnect's shareholders decreased by 25.9% to
Cash Flow
For the first quarter of 2024, net cash used in operating activities was
Conference Call Information
Date/Time Tuesday, May 21, 2024 at 8:00 a.m., U.
Online registration https://www.netroadshow.com/events/login?show=f962eec4&confId=64991
The financial results and an archived transcript will be available at OneConnect's investor relations website at ir.ocft.com.
About OneConnect
The Company has established long-term cooperation relationships with financial institutions to address their needs of digital transformation. The Company has also expanded its services to other participants in the value chain to support the digital transformation of financial services eco- system. In addition, the Company has successfully exported its technology solutions to overseas financial institutions.
For more information, please visit ir.ocft.com.
Safe Harbor Statement
This press release contains forward-looking statements. These statements constitute "forward- looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the
Use of Unaudited Non-IFRS Financial Measures
The unaudited consolidated financial information is prepared in accordance with IFRS Accounting Standards ("IFRS") issued by the
Contacts
Investor Relations:
OCFT IR Team
OCFT_IR@ocft.com
Media Relations:
OCFT PR Team
pub_jryztppxcb@pingan.com.cn
ONECONNECT |
||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
||
(Unaudited) |
||
|
||
|
Three Months Ended |
|
|
2024 RMB'000 |
2023 RMB'000 |
|
|
|
Revenue |
723,270 |
893,826 |
Cost of revenue |
(450,867) |
(559,169) |
Gross profit |
272,403 |
334,657 |
Research and development expenses |
(213,183) |
(276,146) |
Selling and marketing expenses |
(48,500) |
(59,202) |
General and administrative expenses |
(80,520) |
(80,213) |
Net impairment losses on financial and contract assets |
(13,690) |
(24,065) |
Other income, gains or loss-net |
17,142 |
26,827 |
Operating loss |
(66,348) |
(78,142) |
Finance income |
10,340 |
5,790 |
Finance costs |
(4,278) |
(6,141) |
Finance costs – net |
6,062 |
(351) |
Share of gain of associate and joint venture – net |
– |
7,157 |
Impairment charges on associate |
– |
(7,157) |
Loss before income tax |
(60,286) |
(78,493) |
Income tax (expense)/benefit |
(89) |
1,872 |
Loss from continuing operations |
(60,375) |
(76,621) |
Loss from discontinued operations (attributable to equity |
(50,638) |
(36,394) |
Loss for the period |
(111,013) |
(113,015) |
Loss attributable to: – Owners of the Company |
(104,334) |
(108,873) |
– Non-controlling interests |
(6,679) |
(4,142) |
|
(111,013) |
(113,015) |
|
Three Months Ended |
|
|
2024 RMB'000 |
2023 RMB'000 |
Other comprehensive income/(loss), net of tax: Items that may be subsequently reclassified to profit or loss – Foreign currency translation differences |
1,334 |
(3,203) |
– Exchange differences on translation of discontinued operations |
177 |
(11,651) |
– Changes in the fair value of debt instruments measured at |
|
|
fair value through other comprehensive income of discontinued operations |
6,056 |
(3,724) |
Item that will not be reclassified subsequently to profit or loss – Foreign currency translation differences |
1,942 |
(30,655) |
– Changes in the fair value of equity instruments measured at fair value through other comprehensive income |
– |
– |
Total comprehensive loss for the period |
(101,504) |
(162,248) |
Total comprehensive loss attributable to: – Owners of the Company |
(94,825) |
(158,106) |
– Non-controlling interests |
(6,679) |
(4,142) |
|
(101,504) |
(162,248) |
Total comprehensive loss attributable to owners – Continuing operations |
(50,420) |
(106,337) |
– Discontinued operations |
(44,405) |
(51,769) |
|
(94,825) |
(158,106) |
Loss per share for loss from continuing operations |
|
|
– Basic and diluted |
(0.05) |
(0.07) |
|
|
|
Loss per ADS for loss from continuing operations |
|
|
– Basic and diluted |
(1.48) |
(2.00) |
|
|
|
Loss per share for loss attributable to the owners |
|
|
– Basic and diluted |
(0.10) |
(0.10) |
|
|
|
Loss per ADS for loss attributable to the owners |
|
|
– Basic and diluted |
(2.87) |
(3.00) |
|
|
|
|
|
|
ONECONNECT |
||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||
(Unaudited) |
||
|
|
|
|
Three Months Ended |
|
|
2024 RMB'000 |
2023 RMB'000 |
ASSETS Non-current assets Property and equipment |
91,815 |
85,076 |
Intangible assets |
344,356 |
471,371 |
Deferred tax assets |
768,582 |
768,276 |
Financial assets measured at fair value through other comprehensive income |
3,204 |
1,372,685 |
Restricted cash |
5,319 |
5,319 |
Prepayments and other receivables |
6,961 |
6,663 |
Total non-current assets |
1,220,237 |
2,709,390 |
Current assets Trade receivables |
899,489 |
710,669 |
Contract assets |
105,393 |
95,825 |
Prepayments and other receivables |
908,338 |
905,691 |
Financial assets measured at amortized cost from virtual bank |
– |
3,081 |
Financial assets measured at fair value through other comprehensive income |
– |
853,453 |
Financial assets measured at fair value through profit or loss |
629,173 |
925,204 |
Derivative financial assets |
47,778 |
38,008 |
Restricted cash and time deposits with an initial term over three months |
36,827 |
447,564 |
Cash and cash equivalents |
1,252,102 |
1,379,473 |
|
3,879,100 |
5,358,968 |
Assets classified as held for sale |
3,042,329 |
– |
Total current assets |
6,921,429 |
5,358,968 |
Total assets |
8,141,666 |
8,068,358 |
EQUITY AND LIABILITIES Equity Share capital |
78 |
78 |
Shares held for share option scheme |
(149,544) |
(149,544) |
Other reserves |
11,000,514 |
10,989,851 |
Accumulated losses |
(7,977,948) |
(7,873,614) |
Equity attributable to equity owners of the Company |
2,873,100 |
2,966,771 |
Non-controlling interests |
(25,658) |
(18,979) |
Total equity |
2,847,442 |
2,947,792 |
|
Three Months Ended March 31 |
|
|
2024 RMB'000 |
2023 RMB'000 |
|
|
|
Trade and other payables |
39,242 |
28,283 |
Contract liabilities |
16,131 |
17,126 |
Deferred tax liabilities |
1,299 |
2,079 |
Total non-current liabilities |
56,672 |
47,488 |
Trade and other payables |
2,175,142 |
1,981,288 |
Payroll and welfare payables |
284,602 |
385,908 |
Contract liabilities |
156,674 |
138,563 |
Short-term borrowings |
162,068 |
251,732 |
Customer deposits |
– |
2,261,214 |
Other financial liabilities from virtual bank |
– |
54,373 |
|
2,778,486 |
5,073,078 |
Liabilities directly associated with assets classified as held for sale |
2,459,066 |
– |
Total current liabilities |
5,237,552 |
5,073,078 |
Total liabilities |
5,294,224 |
5,120,566 |
Total equity and liabilities |
8,141,666 |
8,068,358 |
ONECONNECT |
||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||
(Unaudited) |
||
|
Three Months Ended March 31 |
|
|
2024 RMB'000 |
2023 RMB'000 |
Net cash used in operating activities |
(115,236) |
(613,264) |
Net cash generated from investing activities |
255,848 |
407,066 |
Net cash used in financing activities |
(100,971) |
(44,421) |
Net increase/(decrease) in cash and cash equivalents |
39,641 |
(250,619) |
Cash and cash equivalents at the beginning of the period |
1,379,473 |
1,907,776 |
Effects of exchange rate changes on cash and cash equivalents |
1,777 |
(10,726) |
Cash and cash equivalents at the end of period |
1,420,891 |
1,646,431 |
ONECONNECT |
||
RECONCILIATION OF IFRS AND NON-IFRS RESULTS |
||
(Unaudited) |
||
|
||
|
Three Months Ended March 31 |
|
|
2024 RMB'000 |
2023 RMB'000 |
|
|
|
Gross profit from continuing operations |
272,403 |
334,657 |
Gross margin of continuing operations |
37.7 % |
37.4 % |
Non-IFRS adjustment |
|
|
Amortization of intangible assets recognized in cost of revenue |
15,542 |
22,209 |
Depreciation of property and equipment recognized in cost of revenue |
1,152 |
1,354 |
Share-based compensation expenses recognized |
228 |
436 |
Non-IFRS gross profit from continuing operations |
289,325 |
358,656 |
Non-IFRS gross margin of continuing operations |
40.0 % |
40.1 % |
|
|
|
|
|
|
View original content:https://www.prnewswire.com/news-releases/oneconnect-announces-first-quarter-2024-unaudited-financial-results-302151289.html
SOURCE