OneConnect Announces Second Quarter and First Half 2023 Unaudited Financial Results - 16.08.23 - News

SHENZHEN, China, Aug. 16, 2023

SHENZHEN, China, Aug. 16, 2023 /PRNewswire/ -- OneConnect Financial Technology Co., Ltd. ("OneConnect" or the "Company") (NYSE: OCFT and HKEX: 6638), a leading technology-as-a-service provider for financial services industry in China, today announced its unaudited financial results for the second quarter and half year ended June 30, 2023.

Second Quarter 2023 Financial Highlights

Revenue was RMB973 million as compared to RMB1,134 million for the same period of the prior year.
Gross margin remained stable at 36.2%, the same for the same period of the prior year; non-IFRS gross margin decreased slightly to 39.3% as compared to 40.0% for the same period of the prior year.
Operating loss narrowed 71.7% to RMB79 million, as compared to RMB278 million for the same period of the prior year. Operating margin narrowed to 8.1% from 24.5% for the same period of the prior year.
Net loss attributable to shareholders narrowed by 66.7% to RMB82 million, as compared to RMB245 million for the same period of the prior year. Net margin to shareholders improved by 13.2 percentage points to -8.4% as compared to -21.6% for the same period of the prior year.
Net loss per ADS, basic and diluted, was RMB-2.25 as compared to RMB-6.70 for the same period of the prior year.

In RMB'000, except percentages and per
ADS amounts

Three Months Ended June 30

YoY

Six Months Ended June 30

ARIVA.DE Börsen-Geflüster

Kurse

OneConnect Financial Technology Co Ltd

2,26 $

0,00%

OneConnect Financial Technology Co Ltd Chart

YoY

2023

2022

2023

2022

Revenue

Revenue from Ping An Group

580,795

682,600

-14.9 %

1,117,649

1,231,282

-9.2 %

Revenue from Lufax

73,142

107,363

-31.9 %

144,499

236,463

-38.9 %

Revenue from third-party customers^[1]

319,463

343,802

-7.1 %

637,198

684,958

-7.0 %

Total

973,400

1,133,765

-14.1 %

1,899,346

2,152,703

-11.8 %

Gross profit

352,824

410,252

696,233

759,283

Gross margin

36.2 %

36.7 %

35.3 %

Non-IFRS gross margin

39.3 %

40.0 %

39.8 %

39.4 %

Operating loss

(78,528)

(277,618)

(192,939)

(632,513)

Operating margin

-8.1 %

-24.5 %

-10.2 %

-29.4 %

Net loss to shareholders

(81,592)

(244,789)

(190,465)

(562,374)

Net margin to shareholders

-8.4 %

-21.6 %

-10.0 %

-26.1 %

Net loss per ADS^[2], basic and diluted

(2.25)

(6.70)

(5.24)

(15.29)

^[1] Third-party customers refer to each customer with revenue contribution of less than 5% of our total revenue in the relevant period. These customers are a key focus of the
Company's diversification strategy.

^[2] Each ADS represents thirty ordinary shares. In December 2022, the Company effected an ADS ratio change to adjust its ordinary share to ADS ratio from one (1) ADS representing
three (3) ordinary shares to one (1) ADS representing thirty (30) ordinary shares, or the Ratio Change. Except otherwise stated, the Ratio Change has been retrospectively applied for
all periods presented in this press release.

Chairman, CEO and CFO Comments

"I am delighted to announce that we delivered a strong second quarter, showcasing resilience in our operational outcomes." said Mr. Shen Chongfeng, Chairman of the Board and Chief Executive Officer. "We continued to implement our second stage strategy of deepening customer engagement to focus on serving premium-plus customers and product integration in the second quarter of 2023. The era of digitization for financial institutions has come. In February 2023, China has rolled out a plan for the overall layout of the country's digital development. According to a forecast by the China Academy of Information and Communications Technology, financial institutions are increasingly embracing digital transformation in their strategic plans and ramping up investment. China's digital economy is expected to surpass RMB60 trillion (USD8.84 trillion) by 2025. Although we still experienced pressure on revenue in the first half of 2023 due to the lagging effect of businesses' recovery, we believe the macro-economic indicators are showing positive signals, making us cautiously optimistic about our business outlook. We are closely monitoring the macro-economic conditions and we will keep focus on our strategy execution to capture new opportunities by leveraging our strengths.

Mr. Shen Chongfeng further commented, "As we continue to execute our second stage strategy, we are reaping benefits by broadening collaboration with financial institutions through products upgrade. In the first half of 2023, we further optimized our products in algorithm model, architecture structure to maintain competitive advantage in the market. We had further breakthrough in self-controlled technology, where we received 4 accreditations. For example, our digital lending comprehensive financial inclusion solution was awarded "2022 China Best Supplier of Financial Technology" in the 3rd Yangtze River Delta Fintech Innovation & Application Global Competition. Meanwhile, we continued to deepen our cooperation with several large banks through multiple-phases projects. As we move into the third quarter, we will continue our efforts in improving delivery efficiency and products capability to address customers' evolving needs. Our overseas business continued its growth momentum in the first half of 2023, with virtual bank in Hong Kong recording 45.2% year-over-year revenue increase. In May 2023, we further deepened our cooperation with SB Finance, helping SB Finance to enhance product delivery efficiency, and reduce operational costs and downtime. This collaboration marks a significant milestone in establishing a long-term and close strategic partnership between us and SB Finance. In the first half of 2023, we continued to deepen our strategic collaboration with Old Mutual through universal agent solution. This solution helps agents of Old Mutual in South Africa market improve service efficiency and conversion rate of potential customers, which contributed to their success in the market. We will continue capture the growing overseas demand for digital transformation and seize the opportunities that arise."

Mr. Luo Yongtao, Chief Financial Officer, commented, "As we continued our product integration and deepening engagement with premium-plus customers, our gross margin witnessed a steady improvement in the first half of 2023. Gross margin increased year-over-year from 35.3% to 36.7%, and non-IFRS gross margin increased year-over-year from 39.4% to 39.8% in the first half of 2023. Our net margin to shareholders improved by 16.1 percentage points year-over-year from -26.1% to -10.0%. In 2023, we will continue our focus on improving net margin to shareholders for long-term sustainable growth. Our first half results reflect the effects of our disciplined execution of cost control, and improved operational efficiency, marking another milestone in the path to profitability. As we move into the third quarter, third-party revenue and cost structure optimization remain to be our priority. Our consistent management efforts should continue to benefit our profitability in the long run."

Revenue Breakdown

In RMB'000, except percentages

Three Months Ended
June 30

YoY

Six Months Ended
June 30

YoY

2023

2022

2023

2022

Technology Solution Segment^[3]

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