Revenue Growth of 41.1% and Net Margin
Improvement of 34.2ppt YoY
OneConnect Financial Technology Co., Ltd. (“OneConnect” or the
“Company”) (NYSE: OCFT), a leading technology-as-a-service platform
for financial institutions in China, today announced its unaudited
financial results for the first quarter ended March 31, 2021.
First Quarter 2021 Financial Highlights
- Revenue increased 41.1% year over year to RMB820 million from
RMB581 million.
- Gross margin was 34.0%, as compared to 34.8%; non-IFRS gross
margin1 was 43.5%, as compared to 46.0%.
- Operating loss was RMB346 million, as compared to RMB445
million for the same period in the prior year.
- Net loss attributable to shareholders was RMB305 million,
versus RMB415 million for the same period in the prior year.
- Net loss per ADS, basic and diluted, was RMB0.83, versus
RMB1.20.
In RMB’000, except percentages and per ADS
amounts
Three Months Ended March
31
YoY
2021
2020
Revenue
Revenue from Ping An Group
435,851
227,508
91.6%
Revenue from Lufax
75,105
83,399
-9.9%
Revenue from third-party customers2
308,809
269,891
14.4%
Total
819,765
580,799
41.1%
Gross profit
278,555
201,843
38.0%
Gross margin
34.0%
34.8%
Non-IFRS gross margin1
43.5%
46.0%
Operating loss
-346,130
-445,454
Operating margin
-42.2%
-76.7%
Net loss to shareholders
-304,732
-414,727
Net loss per ADS, basic and diluted
-0.83
-1.20
1 For more details on this non-IFRS financial measure, please
see the section entitled “Use of Unaudited Non-IFRS Financial
Measures” and the table captioned “Reconciliations of IFRS and
Non-IFRS Results (Unaudited)” set forth at the end of this press
release. 2 Third-party customers refer to customers with revenue
contribution of less than 5% of total. These customers are a key
focus of the Company’s diversification strategy. 3 Some numbers do
not add up due to rounding.
CEO and CFO Comments
“We are pleased to have had a solid quarter to start the year
2021,” said Ye Wangchun, chairman and CEO of OneConnect. “We built
on the momentum from the rollout of the cloud services platform
last year, more than offsetting the gap from the exit of low-value
products and achieving 41.1% revenue growth year over year. This
period of consolidation is critical to aligning our resources and
positioning the company to better support the digital
transformation of financial institutions.”
“Optimising the portfolio of solutions remains a top priority
this year. The sequential trend provides an indication of the
progress made,” commented CFO Luo Yongtao. “Both gross margin and
revenue contribution from third-party customers demonstrated a
rebound quarter on quarter. Net loss also further narrowed, both
year over year and quarter over quarter.”
Operational Highlights
- Retail loans processed amounted to RMB14.1 billion, as compared
to RMB12.7 billion for the same period in the prior year.
- SME loans processed amounted to RMB7.1 billion, as compared to
RMB5.7 billion for the same period in the prior year.
- Number of fast claims checks amounted to 1.56 million, as
compared to 995 thousand for the same period in the prior
year.
Revenue Breakdown
In RMB’000, except percentages
Three Months Ended March
31
YoY
2021
2020
Implementation revenue
168,567
139,382
20.9%
Transaction-based and support revenue
Business origination services
118,499
180,577
-34.4%
Risk management services
99,290
82,077
21.0%
Operation support services
212,237
164,433
29.1%
Cloud services platform
180,512
-
NA
Post-implementation support services
13,236
4,723
180.2%
Others
27,424
9,607
185.5%
Total
651,198
441,417
47.5%
Total
819,765
580,799
41.1%
Revenue for the first quarter of 2021 rose year over year by
41.1% to RMB820 million from RMB581 million. Of note, the cloud
services platform was the biggest driver for the increase. Launched
last year, it now makes up 22% of total revenue. Another major
contributor was operation support services, where revenue rose
29.1% year over year to RMB212 million from RMB164 million,
reflecting the growth of solutions such as roadside assistance for
auto insurance and AI customer service. Business origination
services, however, posted a drop in revenue, to RMB118 million from
RMB181 million, due to product phase-out.
Retail loan volume processed by the Company’s systems during the
quarter increased to RMB14.1 billion from RMB12.7 billion. SME
loans processed was RMB7.1 billion, compared with RMB5.7 billion.
Total fast claims checks carried out during the quarter amounted to
1.56 million, compared with 995 thousand in the prior year.
First Quarter 2021 Financial Results
Revenue Revenue increased by 41.1%
to RMB820 million from RMB581 million in the prior year, primarily
driven by the cloud services platform and operation supporting
services.
Cost of Revenue Cost of revenue was
RMB541 million, compared with RMB379 million in the prior year, led
by an increase in expenses related to the launch of the cloud
services platform.
Gross Profit Gross profit increased
by 38.0% to RMB279 million from RMB202 million in the prior year.
Gross margin fell to 34.0% from 34.8%, following changes in the mix
of solutions. Non-IFRS gross margin decreased to 43.5% from 46.0%
for the same reason. For a reconciliation of the Company’s non-IFRS
gross margin to IFRS gross margin, its most comparable IFRS
measure, please refer to “Reconciliation of IFRS and Non-IFRS
Results (Unaudited).”
Operating Loss and Expenses Total
operating expenses amounted to RMB636 million, compared with RMB609
million in the prior year. As a percentage of revenue, total
operating expenses decreased to 77.6% from 104.8%.
- Research and Development expenses totaled RMB281 million,
compared with RMB240 million in the prior year, reflecting more
spending to support the development of new solutions such as cloud.
As a percentage of revenue, R&D expenses decreased to 34.3%
from 41.3% in the prior year.
- Selling and Marketing expenses totaled RMB167 million, compared
with RMB156 million in the prior year, primarily due to a step-up
in marketing and advertising. As a percentage of revenue, selling
and marketing expenses was 20.4%, compared with 26.8% for the prior
year.
- General and Administrative expenses amounted to RMB180 million,
compared with RMB193 million in the prior year, primarily due to
lower employee benefit expenses. As a percentage of revenue,
general and administrative expenses was 22.0%, versus 33.2%.
Loss from operations for the first quarter of 2021 decreased to
RMB346 million from RMB445 million. Operating loss margin was
42.2%, compared with 76.7% in the prior year.
Net Loss Net loss attributable to
OneConnect’s shareholders amounted to RMB305 million, compared with
RMB415 million in the prior year. Net loss attributable to
OneConnect’s shareholders per basic and diluted ADS amounted to
RMB0.83, versus RMB1.20 for the prior year period.
For the quarter ended March 31, 2021, the Company’s weighted
average number of shares used in calculating per share net loss was
1,104,667,130. Number of outstanding shares as of March 31, 2021
was 1,169,980,661.
Cash Flow As of March 31, 2021, the
Company had cash and cash equivalents of RMB2,361 million and
financial assets at fair value through profit or loss of RMB1,619
million. For the quarter ended March 31, 2021, net cash used in
operating activities was RMB461 million. Net cash generated from in
investing activities was RMB1,028 million, as the scale of onshore
borrowing using offshore pledges reduced and as a result restricted
cash balance decreased. Net cash used in financing activities was
RMB1,265 million.
Conference Call Information
Date/Time
Tuesday, May 11, 2021 at 9:00 p.m., U.S.
Eastern Time
Wednesday, May 12, 2021 at 9:00 a.m.,
Beijing Time
Online registration
http://www.directeventreg.com/registration/event/8957945
An archived recording and the transcript of the conference call
will be available at OneConnect’s investor relations website at
ir.ocft.com.
About OneConnect
OneConnect is a leading technology-as-a-service platform for
financial institutions in China. The Company’s platform provides
cloud-native technology solutions that integrate extensive
financial services industry expertise with market-leading
technology. The Company’s solutions provide technology applications
and technology-enabled business services to financial institutions.
Together they enable the Company’s customers’ digital
transformations, which help them increase revenue, manage risks,
improve efficiency, enhance service quality and reduce costs.
Our technology-as-a-service platform strategically covers
multiple verticals in the financial services industry, including
banking, insurance and asset management, across the full scope of
their businesses – from sales and marketing and risk management to
customer services, as well as technology infrastructure such as
data management, program development, and cloud services.
For more information, please visit ir.ocft.com.
Safe Harbor Statement
This announcement 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 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. Such statements are based upon management’s
current expectations and current market and operating conditions
and relate to events that involve known or unknown risks,
uncertainties and other factors, all of which are difficult to
predict and many of which are beyond the Company’s control.
Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward-looking
statement, including but not limited to the following: the
Company’s limited operating history in the technology-as-a-service
for financial institutions industry; its ability to achieve or
sustain profitability; the tightening of laws, regulations or
standards in the financial services industry; the Company’s ability
to comply with the evolving regulatory requirements in the PRC and
other jurisdictions where it operates; its ability to maintain and
enlarge the customer base or strengthen customer engagement; its
ability to maintain its relationship with Ping An Group, which is
its strategic partner, most important customer and largest
supplier; its ability to compete effectively to serve China’s
financial institutions; the effectiveness of its technologies, its
ability to maintain and improve technology infrastructure and
security measures; its ability to protect its intellectual property
and proprietary rights; risks of defaults by borrowers under the
loans for which the Company provided credit enhancement under its
legacy credit management business; its ability to maintain or
expand relationship with its business partners and the failure of
its partners to perform in accordance with expectations; its
ability to protect or promote its brand and reputation; its ability
to timely implement and deploy its solutions; its ability to obtain
additional capital when desired; disruptions in the financial
markets and business and economic conditions; the Company’s ability
to pursue and achieve optimal results from acquisition or expansion
opportunities; the duration of the COVID-19 outbreak and its
potential impact on the Company’s business and financial
performance; and assumptions underlying or related to any of the
foregoing. Further information regarding these and other risks is
included in the Company’s filings with the SEC. All information
provided in this press release and in the attachments is as of the
date of this press release, and the Company undertakes no
obligation to update any forward-looking statement, except as
required under applicable law.
Use of Unaudited Non-IFRS Financial Measures
The unaudited consolidated financial information is prepared in
accordance with International Financial Reporting Standards (IFRS).
Non-IFRS measures are used in gross profit and gross margin,
adjusted to exclude non-cash items, which consist of amortization
of intangible assets recognized in cost of revenue, depreciation of
property and equipment recognized in cost of revenue, and
share-based compensation expenses recognized in cost of revenue.
OneConnect’s management regularly review non-IFRS gross profit and
non-IFRS gross margin to assess the performance of our business. By
excluding non-cash items, these financial metrics allow
OneConnect’s management to evaluate the cash conversion of one
dollar revenue on gross profit. OneConnect uses these non-IFRS
financial to evaluate our ongoing operations and for internal
planning and forecasting purposes. OneConnect believes that
non-IFRS financial information, when taken collectively, is helpful
to investors because it provides consistency and comparability with
past financial performance, facilitates period-to-period
comparisons of results of operations, and assists in comparisons
with other companies, many of which use similar financial
information. OneConnect also believes that presentation of the
non-IFRS financial measures provides useful information to its
investors regarding its results of operations because it allows
investors greater transparency to the information used by
OneConnect’s management in its financial and operational decision
making so that investors can see through the eyes of the
OneConnect’s management regarding important financial metrics that
the management uses to run the business as well as allowing
investors to better understand OneConnect’s performance. However,
non-IFRS financial information is presented for supplemental
informational purposes only, and should not be considered a
substitute for financial information presented in accordance with
IFRS, and may be different from similarly-titled non-IFRS measures
used by other companies. In light of the foregoing limitations, you
should not consider non-IFRS financial measure in isolation from or
as an alternative to the financial measure prepared in accordance
with IFRS. Whenever OneConnect uses a non-IFRS financial measure, a
reconciliation is provided to the most closely applicable financial
measure stated in accordance with IFRS. You are encouraged to
review the related IFRS financial measures and the reconciliation
of these non-IFRS financial measures to their most directly
comparable IFRS financial measures. For more information on
non-IFRS financial measures, please see the table captioned
“Reconciliations of IFRS and non-IFRS results (Unaudited)” set
forth at the end of this press release.
ONECONNECT CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (Unaudited)
Three Months Ended March
31
2021
2020
RMB'000
RMB'000
Revenue
819,765
580,799
Cost of revenue
-541,210
-378,956
Gross profit
278,555
201,843
Research and development
expenses
-281,299
-239,602
Selling and marketing
expenses
-167,054
-155,615
General and administrative
expenses
-180,457
-192,959
Net impairment losses on
financial and contract assets
-7,104
-20,722
Other income, gains or
loss-net
11,229
-38,399
Operating loss
-346,130
-445,454
Finance income
18,157
27,607
Finance costs
-26,235
-45,058
Finance costs – net
-8,078
-17,451
Share of losses of associate and
joint venture
4,547
-3,639
Loss before income tax
-349,661
-466,544
Income tax benefit/(expense)
26,871
33,456
Loss for the period
-322,790
-433,088
Loss attributable to:
- Owners of the Company
-304,732
-414,727
- Non-controlling interests
-18,058
-18,361
Other comprehensive income, net
of tax
Items that may be subsequently
reclassified to profit or loss
- Foreign currency translation
differences
50,099
118,560
- Changes in the fair value of
debt instruments at fair value through other comprehensive
income
1
102
Total comprehensive loss for
the period
-272,690
-314,426
Total comprehensive loss
attributable to:
- Owners of the Company
-254,632
-296,065
- Non-controlling interests
-18,058
-18,361
Loss per ADS attributable to
owners of the Company
(expressed in RMB per
share)
- Basic and diluted
-0.83
-1.20
ONECONNECT CONSOLIDATED BALANCE
SHEETS (Unaudited)
March 31
December 31
2021
2020
RMB'000
RMB'000
ASSETS
Non-current assets
Property and equipment
190,627
224,284
Intangible assets
872,352
917,063
Deferred tax assets
591,384
564,562
Financial assets measured at
amortized cost from banking operations
53,033
25,283
Investments accounted for using
the equity method
180,280
175,733
Financial assets at fair value
through other comprehensive income
21,903
21,828
Contract assets
7,698
16,788
Total non-current
assets
1,917,277
1,945,541
Current assets
Trade receivables
911,855
838,690
Contract assets
299,281
257,830
Prepayments and other
receivables
483,996
443,328
Financial assets measured at
amortized cost from banking operations
453,274
576,305
Financial assets at fair value
through profit or loss
1,619,437
1,487,871
Restricted cash
1,109,210
2,280,499
Cash and cash equivalents
2,360,880
3,055,194
Total current assets
7,237,933
8,939,717
Total assets
9,155,210
10,885,258
EQUITY AND LIABILITIES
Equity
Share capital
78
78
Shares held for share option
scheme
-84,478
-87,714
Other reserves
10,697,787
10,639,931
Accumulated losses
-5,661,658
-5,356,926
Equity attributable to equity
owners of the Company
4,951,729
5,195,369
Non-controlling interests
71,856
89,914
Total equity
5,023,585
5,285,283
LIABILITIES
Non-current
liabilities
Trade and other payables
297,199
395,514
Contract liabilities
14,854
17,683
Deferred tax liabilities
16,776
20,080
Total non-current
liabilities
328,829
433,277
Current liabilities
Trade and other payables
1,592,530
1,547,781
Payroll and welfare payables
415,230
625,330
Contract liabilities
141,492
138,547
Short-term borrowings
1,058,313
2,283,307
Customer deposits
427,906
405,853
Derivative financial
liabilities
167,325
165,880
Total current
liabilities
3,802,796
5,166,698
Total liabilities
4,131,625
5,599,975
Total equity and
liabilities
9,155,210
10,885,258
ONECONNECT CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March
31
2021
2020
RMB'000
RMB'000
Net cash generated from /
(used in) operating activities
-460,783
-588,521
Net cash generated from /
(used in) investing activities
1,028,447
1,711,477
Net cash generated from /
(used in) financing activities
-1,264,659
-666,585
Net increase /(decrease) in
cash and cash equivalents
-696,995
456,371
Cash and cash equivalents at the
beginning of the period
3,055,194
1,077,875
Effects of exchange rate changes
on cash and cash equivalents
2,681
28,547
Cash and cash equivalents at
the end of period
2,360,880
1,562,793
ONECONNECT RECONCILIATION OF IFRS AND
NON-IFRS RESULTS (Unaudited)
Three Months Ended March
31
2021
2020
RMB'000
RMB'000
Gross profit
278,555
201,843
Gross margin
34.0%
34.8%
Non-IFRS adjustment
Amortization of intangible assets
recognized in cost of revenue
76,746
63,605
Depreciation of property and
equipment recognized in cost of revenue
600
767
Share-based compensation expenses
recognized in cost of revenue
921
709
Non-IFRS Gross profit
356,822
266,924
Non-IFRS Gross margin
43.5%
46.0%
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version on businesswire.com: https://www.businesswire.com/news/home/20210511005433/en/
Investor Relations: Patricia Cheng patricia.cheng@ocft.com
Media Relations: Amy Ding dingjingmin787@ocft.com
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