OneConnect Financial Technology Co., Ltd. (“OneConnect” or the “Company”) (NYSE: OCFT), a leading technology-as-a-service provider for financial institutions in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2021.
Fourth Quarter 2021 Financial Highlights
- Revenue increased 19% year-over-year to RMB1,280 million from RMB1,076 million.
- Gross margin expanded year-over-year to 35% from 34%; non-IFRS gross margin1 was 41%, as compared to 43% same period of the prior year.
- Operating loss narrowed year-over-year to RMB380 million from RMB414 million.
- Net loss attributable to shareholders narrowed year-over-year to RMB358 million from RMB365 million.
- Net loss per ADS, basic and diluted, narrowed year-over-year to RMB0.97 from RMB0.99.
Full Year 2021 Financial Highlights
- Revenue increased 25% year-over-year to RMB4,132 million from RMB3,312 million.
- Gross margin was 35%, as compared to 38% in the prior year; non-IFRS gross margin1 was 42%, as compared to 47% in the prior year.
- Operating loss narrowed year-over-year to RMB1,405 million from RMB1,470 million.
- Net loss attributable to shareholders narrowed year-over-year to RMB1,282 million from RMB1,354 million.
- Net loss per ADS, basic and diluted, narrowed year-over-year to RMB3.47 from RMB3.81.
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In RMB’000, except percentages and per ADS amounts |
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Three Months Ended |
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Full Year Ended |
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|
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2021 |
|
2020 |
|
YoY |
|
2021 |
|
2020 |
|
YoY |
|
Revenue |
|
|
|
|
|
|
|
|
||||
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Revenue from Ping An Group |
|
715,416 |
615,966 |
16.1% |
|
2,316,714 |
1,726,807 |
34.2% |
||||
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Revenue from Lufax |
|
150,871 |
76,595 |
97.0% |
|
428,071 |
343,252 |
24.7% |
||||
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Revenue from third-party customers2 |
|
413,978 |
383,165 |
8.0% |
|
1,387,572 |
1,242,231 |
11.7% |
||||
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Total |
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1,280,265 |
1,075,726 |
19.0% |
|
4,132,357 |
3,312,290 |
24.8% |
||||
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Gross profit |
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450,135 |
368,370 |
22.2% |
|
1,436,651 |
1,243,456 |
15.5% |
||||
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Gross margin |
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35.2% |
34.2% |
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34.8% |
37.5% |
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Non-IFRS gross margin1 |
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40.8% |
42.8% |
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42.1% |
46.7% |
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Operating loss |
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-380,173 |
-413,837 |
|
|
-1,404,740 |
-1,470,326 |
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||||
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Operating margin |
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-29.7% |
-38.5% |
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-34.0% |
-44.4% |
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||||
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Net loss to shareholders |
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-358,359 |
-364,922 |
|
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-1,281,699 |
-1,353,608 |
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Net loss ratio |
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-28.0% |
-33.9% |
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-31.0% |
-40.9% |
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Net loss per ADS3, basic and diluted |
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-0.97 |
-0.99 |
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-3.47 |
-3.81 |
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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. |
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2 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. |
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3 Each ADS represents three ordinary shares |
Chairman，CEO and CFO Comments
“I am delighted to announce that, in spite of the difficult year just gone, our revenue increased 25% year-over-year, and the strong momentum of the growth of our premium4 and premium plus5 customers base demonstrated customer acknowledgement and market recognition of our products.” said Mr. Ye Wangchun, Chairman of the Board. “In 2021, we entered into our 2nd Stage strategy, focusing on strengthening products integration, deepening customer engagements, and empowering other participants within our ecosystem. We firmly believe it will fuel the long term growth of our company.”
Mr. Shen Chongfeng, Chief Executive Officer, commented “Efficient implementation of second stage strategy is critical to our success as we face a world with changing dynamics. OneConnect has established a strong foothold in the market, where the potential from digital transformation is immense. We will continue to reinforce our products integration and customer upgrade in 2022, to further solidify our position and fulfill our mission of supporting financial institutions to grow efficiently.”
Mr. Luo Yongtao, Chief Financial Officer, commented, “Our customer upgrades continued to bear fruit, evidenced by both the number of our premium and premium plus customers and their revenue expansion,” commented CFO Luo Yongtao. “Our number of premium customers grew from 594 to 796, almost doubled the growth of that of the prior year, and the number of premium plus customers, where is our key focus, grew from 168 to 212. Benefitting from our 2nd stage strategy on deepening customer engagements, the Net Expansion Rate for premium customers also improved to 96% from 84%. Our revenue increased 25% year-over-year. Our net loss ratio of 2021 further narrowed, from 41% to 31% year over year. This achievement reflects solid revenue increase performance as well as disciplined cost management, marking another milestone in the path to profitability. We are ready to go further this year.”
Revenue Breakdown
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In RMB’000, except percentages |
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Three Months Ended |
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|
|
Full Year Ended |
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|
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2021 |
|
2020 |
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YoY |
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2021 |
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2020 |
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YoY |
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Implementation revenue |
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216,622 |
279,421 |
-22.5% |
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733,648 |
851,856 |
-13.9% |
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Transaction-based and support revenue |
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|
|
|
|
|
|
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Business origination services |
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99,685 |
148,326 |
-32.8% |
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450,597 |
605,733 |
-25.6% |
||||
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Risk management services |
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216,509 |
112,854 |
91.8% |
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534,071 |
362,530 |
47.3% |
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Operation support services |
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330,807 |
294,898 |
12.2% |
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1,097,719 |
1,061,445 |
3.4% |
||||
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Cloud services platform |
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304,683 |
190,519 |
59.9% |
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1,050,179 |
314,338 |
234.1% |
||||
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Post-implementation support services |
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15,818 |
20,606 |
-23.2% |
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49,447 |
55,678 |
-11.2% |
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Others |
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96,141 |
29,102 |
230.3% |
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216,696 |
60,710 |
256.9% |
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Total |
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1,063,643 |
796,305 |
33.6% |
|
3,398,709 |
2,460,434 |
38.1% |
||||
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Total |
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1,280,265 |
1,075,726 |
19.0% |
|
4,132,357 |
3,312,290 |
24.8% |
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Revenue in 2021 rose 25% to RMB4,132 million from RMB3,312 million in 2020. Risk management and cloud services platform were the key drivers. Revenue from cloud services platform surged by 234% year-over-year. Risk management increased 47% year-over-year due to the increase in demand for an end-to-end risk management solutions. Others, which included revenue from insurer ecosystem participants, increased 257%, benefitting from our ecosystem expansion as part of our 2nd stage strategy.
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4 Premium customers refer to our customers that have contributed revenue of at least RMB100,000 since the beginning of the applicable fiscal year, excluding Ping An Group and its subsidiaries, although this category includes certain customers that we have direct contracts with, and provide direct services to, where payments for these services have been made through contractual arrangements that we have with others, including Ping An Group |
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5 Premium plus customers refer to our premium customers that have contributed revenue of at least RMB1 million since the beginning of the applicable fiscal year. |
Full Year 2021 Financial Results
Revenue
Revenue increased by 25% to RMB4,132 million from RMB3,312 million in the prior year, primarily driven by more demand for solutions in risk management and cloud services platform. Revenue generated from business origination and implementation declined since we phased out certain products.
Cost of Revenue
Cost of revenue was RMB2,696 million, compared with RMB2,069 million in the prior year, primarily driven by higher technology service fees and employee benefit expenses caused by expansion of operation and changes in product solution mix.
Gross Profit
Gross profit increased by 16% to RMB1,437 million from RMB1,243 million in the prior year. Gross margin was 34.8%, compared with 37.5% in the prior year, primarily due to changes in product solution mix. Non-IFRS gross margin was 42.1%, compared with 46.7% 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 (Unaudited).”
Operating Loss and Expenses
Total operating expenses for the full year of 2021 amounted to RMB2,855 million, compared with RMB2,772 million in the prior year. As a percentage of revenue, total operating expenses decreased to 69% from 84%.
- Research and Development expenses for the full year of 2021 rose to RMB1,353 million from RMB1,173 million, reflecting investment put into enhancing existing solutions and innovations. As a percentage of revenue, R&D expenses amounted to 33%, compared with 35% in the prior year.
- Sales and Marketing expenses for the full year of 2021 totaled RMB588 million, compared with RMB629 million in the prior year, mainly due to a decrease in marketing and telecommunication expenses. As a percentage of revenue, sales and marketing expenses decreased to 14% from 19%.
- General and Administrative expenses for the full year of 2021 amounted to RMB842 million, compared with RMB835 million in the prior year. As a percentage of revenue, general and administrative expenses decreased to 20% from 25%.
- Net impairment losses on financial and contract assets for the full year of 2021 totaled RMB72 million, compared with RMB135 million for the same period in the prior year, reflecting better management efforts in trade receivables and contract assets. As a percentage of revenue, net impairment losses were 2%, versus 4% in the prior year.
Loss from operations for the full year of 2021 amounted to RMB1,405 million, compared with RMB1,470 million in the prior year. Operating loss margin decreased to 34% from 44% in the prior year.
Net Loss
Net loss attributable to OneConnect’s shareholders totaled RMB1,282 million in 2021, versus RMB1,354 million in the prior year. Net loss attributable to OneConnect’s shareholders per basic and diluted ADS amounted to RMB3.47, versus RMB3.81 in the prior year. Weighted average number of ADSs for the full year was 369,430,420.
Cash Flow
For the full year of 2021, net cash used in operating activities was RMB404 million. Net cash generated from in investing activities was RMB388 million, as scale of onshore borrowing using offshore pledges reduced and as a result restricted cash balance decreased. Net cash generated from financing activities was RMB1,612 million.
Conference Call Information
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Date/Time |
Thursday, February 24, 2021 at 8:00 p.m., U.S. Eastern Time |
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Online registration |
https://www.incommglobalevents.com/registration/q4inc/10120/oneconnect-financial-technology-co-ltd-fy2021-earnings-release/ |
An archived recording and the transcript of the conference call will be available at OneConnect’s investor relations website at ir.ocft.com.
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