On August 16th, OneConnect Financial Technology Co., Ltd. (hereinafter referred to as "OneConnect", NYSE: OCFT, 06638. HK), a fintech company under Ping An Group, announced its second quarter and first half results as of June 30th of this year.
For the first time in history, profitability has been achieved
According to the financial report, in the first half of 2024, the continuous operation business of Financial One Account achieved a revenue of 1.416 billion yuan, a year-on-year decrease of 22.8%; The net loss from continuing operations was 81 million yuan, compared to a net loss of 121 million yuan in the same period last year, and will continue to decrease.
It is worth noting that, thanks to the one-time delivery income from the sale of virtual banking business in the second quarter of this year, in the first half of this year, the "continuous operation and terminated operation business" of Financial One Account achieved profitability, with a net profit attributable to the parent company of 139 million yuan during the period, a year-on-year increase of 173%.
Interface News reporters noticed that this is also the first time that Financial One Account has achieved a positive net profit attributable to the parent company. From 2019 to 2023, the cumulative loss of Financial One Account reached 5.847 billion yuan in five years.
At the performance conference held on the evening of August 16th, Shen Chongfeng, Chairman and CEO of OneConnect, stated that this is the first time in the company's history that it has achieved profitability. Although it includes one-time gains, it is also a significant part of the company's operations.
Revenue faces severe challenges
However, specifically speaking, in terms of business revenue, Financial One Account is still not optimistic and has not been able to reverse the decline in revenue since 2023, with significant declines in revenue from multiple sources.
According to the financial report, in the first half of the year, the continuous operating revenue of Financial One Account fell by 22.8% year-on-year. Among them, the revenue from Ping An Group was 822 million yuan, a year-on-year decrease of 26.4%; The revenue from Lufax was 112 million yuan, a year-on-year decrease of 22%; The revenue from third-party customers was 480 million yuan, a year-on-year decrease of 15.9%.
It is worth noting that in the financial report, CEO Shen Chongfeng also revealed that the company has recently decided to gradually terminate its financial cloud business starting from July 2024. The final decision of this news has once again cast a strong shadow over the revenue situation of Financial One Account. According to the financial report, in the first half of 2024, the revenue of the financial cloud service platform reached 607 million yuan, accounting for 42% of the company's revenue.
On May 7th, Financial One Account also announced that the company had received notification from some affiliated customers that it intended to terminate the use of the group's cloud services due to adjustments in its procurement strategy. More than 99% of cloud service revenue comes from Ping An Group, its subsidiaries, and affiliated companies.
Double digit growth in revenue from overseas markets
However, Shen Chongfeng also revealed in the financial report that in the first half of 2024, despite a year-on-year decline in revenue, it achieved results in overseas markets, with third-party overseas customers who continued to operate their business increasing their revenue by 14.8% year-on-year.
The financial report also shows that in the first half of 2024, the overseas customer revenue contribution of Financial OneConnect increased by 14.8% year-on-year, and its proportion in third-party revenue increased to 21.2% (excluding data from the virtual banking business sector), an increase of 5.6 percentage points year-on-year. As of now, OneConnect's financial services cover 20 countries and regions including South Africa, Singapore, Thailand, Malaysia, Indonesia, the United Arab Emirates, the Philippines, and Vietnam, serving a total of 186 overseas financial institutions, including the top three regional banks in Southeast Asia and two of the top ten insurance companies worldwide.
Shen Chongfeng pointed out that the overseas financial technology market has broad prospects. The growth rate of IT investment of financial institutions in Southeast Asia, Hong Kong, South Africa, the Middle East and other regions has exceeded that of Chinese Mainland. There is huge potential for banking and insurance technology. He believes that the rapid development of overseas business will continue to provide vitality for the company's business growth. Meanwhile, within the country, the three main businesses of digital banking, digital insurance, and the Jiama platform will continue to serve the digital transformation of financial institutions. Currently, financial institutions are facing multiple pressures and still have a pressing need for retail promotion, credit risk control, and digitalization of property and life insurance.
In addition to the business transformation in terms of revenue, CFO Luo Yongtao also stated in the press conference that in the second quarter of 2024, the company has completed the sale of its virtual banking business and confirmed a one-time sales revenue of RMB 260 million. In November 2023, Financial One Account Bank plans to sell its wholly-owned subsidiary Ping An One Account Bank to its sister company Lufax Holdings for HKD 933 million. After the transaction is completed, Financial One Account will no longer hold any equity in Ping An One Account Bank.
CFO Luo Yongtao also stated that in addition to the proceeds from the sale of virtual banking business, the net loss attributable to the company's owners in the first half of this year decreased significantly by 38% year-on-year, mainly due to the company's ROI oriented expense control measures. In the next step, the company will use sufficient cash to support research and development investment, expand domestic and foreign market share, and achieve sustainable profitability.