Earnings call transcript Q4 2022

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Operator

Hello, everyone, and welcome to the OneConnect Financial Technology Fourth Quarter and Full Year 2022 Earnings Release Call. My name is Bruno, and I will be operating your call today. [Operator Instructions]

I will now hand over to your host, Danielle Gao, Head of Investor Relations. Please go ahead.

Danielle Gao

operator. you, Thank welcome year and XXXX quarter first Hello conference to call. full earnings and everyone, our

Our operating currently available financial and on today and our results were IR website. earlier released are

CEO, too. question-and-answer hear look financials. our available, will will will into opening the Mr. our our and session, And team highlights. remarks Chong be offer Luo you Today, Yongtao, give Chairman and will our Feng, Mr. management from who Afterwards, CFO, in business then, Shen a closer

We Mr. (ph); Digital the Fei. An CTO, have Ms. Chief Banking, Mr. Bank, Ping of our Head Jie; Li of [Ellen Michael and Jia] OneConnect Executive

In today's Mandarin in conference, statements our team make in will or English. management

original Mandarin, For provided. translation any language a be the will will consecutive those prevail. discrepancy, in If in our statement

statement actual a risks number materially. to making start, Safe quickly we as me measures. financial cause be of Please involve IFRS that the may cover could forward-looking results Let which that present before we both statements, we and differ non-IFRS note uncertainties Harbor and will

that, Mr. So, CEO, call our the to pleased please. turn to and now Shen Chong Chairman Feng. Shen I'll Chong, with

Shen Chong Feng

[Foreign Language]

QX to Shen OneConnect Hello, the Thank taking Thank XXXX release. time year full [Interpreted] you everyone. -- for Feng. Chong earnings I'm you. XXXX and join

growth year, losses efficiency of our year-over-year in Economic customers year-over-year also growth Premium operational on margin. representing our have technology results. parts customers XXX. headwinds a by full all in to a from big by [RMBXXX million] still been impact solid in Revenue XXXX improvement (ph) companies. of we Despite nine a X.X%. to increased Significant Plus narrowed challenge achieved our reached businesses, third-party

full OneConnect with in business share QX and will year. XXXX developments I you Next,

II crucial Page slides. You strategy. in X year Stage our of a our can broadening customer go engagement for was XXXX to

please expanding "One focusing to you overseas. initiative, second institutions ecosystem go on financial while we Two In our Body, X? is to execute stage, and could Page Wings" Now, continued that

over we year, upgrade continued Banking, versions. This and in X. Digital Insurance page to new go Digital efforts released and product please Next, XXX and product innovation Platform, Gamma

saw customized As business for configuration we scenarios. as a as result, coverage higher well in of greater efficiency demand

In native solution APIs fully X.X. self-control Insurance, with is project, cloud adapted comes key multi-model our system in technology. our a and agent customer we flows marked Digital with insurer scenarios, based version AI as we latest success XXX which product. machines, Platform, continued and In in multiple and The first insights. global to over with Gamma Banking, the collaborated we have collaboration, top also XX services updated omnichannel this Digital to as analysis human-robot as upgrade functionality, features such breakthroughs in well achieved In technological product dialogue banking

capacity, recognition new momentum demonstrated to acquisitions customer is revenue, customer consistent stickiness. products Thanks and OneConnect's in product In new strong also have our XXXX, innovation improving. customer

Page self-controlled All adapted on segments recent technologies and financial become or products technologies. products for business X. home-developed Next, customers' integrated to institutions in technologies are years. the fully Home-developed accommodate have solutions Ping leveraging three IT. to to meet investment XXX% An's an in in important with customers our our implementation also is help a with plus demands launched experience efforts consulting positioned At to time, technology which plus front. IT, this uniquely same shift business OneConnect their self-controlled home-developed in the we solution,

implemented customers have over far, our and XX products So solutions.

emerging offering. The project. with agent markets omnichannel global a We life key X. insurance international life the in giant in omnichannel solution collaborated this huge which we market, in agent Targeted insurance XXXX. is Next page, at a see insurance in potential solution product safety an on insurer, is top digital the Page also transformation in

the together with foundation integration in to transformation, proven technology, are Asian empowerment plus which, transformation end-to-and leading of Ping Our An success. business solution our offers experience stemming AI from technology our

on standardization a Next in initiative key X. Page Product remains XXXX.

this product X,XXX nearly We fundamental long-term to generates that our delivery convinced standardization are efficiency is over investment, by R&D modules standardized XX%. we this competitiveness. product some Although year, boosting

to reflect remain which in will we standardization we improvement. product will margin believe committed gross efforts, ahead, Looking

X. On Page

noted We in customer results year. also pandemic, with crucial up impact is to Despite II our which a Stage nine of encouraging last Premium from Plus also broadening customers, engagement, by the still managed OneConnect strategy. compared XXX part achieve

of Our Ningbo saw China Insurance, Insurance. year, a Guangfa new this Bank, Bank, Development cooperation National many depth financial the Continent Guoren Bank, institution customers P&C with including China Bank

with demonstrates segments. engagement these progress institutions and Our development in different breakthroughs business in

continue acquire improve and Stage customers. OneConnect from II execute strategy, to to also existing new value customers forward will Looking

this Next Dhabi wing replicated on Digital important province. in successfully Body, also our a "One Wings" Page jointly XX. year. an our growth reported In Abu Global developed rapid Platform we Financing Guangdong SME Overseas of with SME Financing business, Singapore, And Two an Platform strategy, as Market.

CIMB In In income interest its construction products and Philippines. core in addition, the PAOB the Kong, also plus we launched mobile for lending introduced short-term system lending Hong with industry. plus tailored banking platform in doubled XXXX SMEs a

officially XXXX. and Our launch is qualified to to commence credit business agency expected referencing in late

Award, National XX. on product Enterprises few. awarded -- have just High IDC front, End by Page Financial technology we been including name this AI a and institutions many and to Insights Science Next, Technology Enterprise, -- Wenjun year, Innovation renowned In Award, High-tech

despite time of order. challenging XXXX, remains operation recovery, to mild restore economic businesses development into for ahead their and still Moving it fully as signs takes

operation focus to customers losses. and a do of of we strategy we OneConnect, narrowing the the expect Therefore, in result course improving business nature as take and third-party continue XXXX, on from the recovery a in industry. volume while For will prudent

Thank Yong on brief hand you. I'll to you Luo our to over financial it Next, performance.

Luo Yongtao

Good Thank you. everyone. evening, Okay.

pandemic our solid will Just as, XXXX. time and despite spend the recorded I mentioned, the environment In headwinds, Shen year Mr. a more in results. on macro full this presentation, we result

please the details, results For to refer fourth quarter our release.

X.X% on billion, year-over-year a by from My portion improved third-party In reached our XX. revenue Page starts XXXX, basis. RMBX.XX

Benefited on customer was revenue than in billion, top-line upgrade increased was XXXX. continuous II customers efforts Stage in Premium our of which the Our number RMBX.XX to that development, from X% higher XXX. Plus

XX.X corresponding XX%. million margin loss percentage and net by negative improved adjusted reduced profit to RMBXXX to points Our

our revenue type by Revenue our page, mix to billion, grew X.X% XX.X% stable Next total customer RMBX.XX revenue. remained from of in customers third-party representing XXXX. by

products RMBXXX the implementation RMBX.XX pandemic. million reduced to revenue, billion, our are in Platform in and making by that see glad up Lufax of X.X% An caused respectively. and products continued delayed revenue and from X.X% XX.X% by increased and the total to from We by year, XX.X% to Group our Ping from Gamma whole Revenue increased representing of certain along overseas momentum the business shortfalls strong usage

delivery overseas revenue demands accounted and third-party reached were An and XX.X% Despite business increased revenue Implementation from by on mix achieve of to type. pressure XX.X%. insurance to Moving able total life the business. we digital our Group mainly Ping our product by for pandemic-imposed customers, transformation attributable expansion growth ongoing RMBXXX to the of to million

RMBXXX from by of Revenue on from management business origination basis XX.X% a decreased RMBXXX customers' decreased products basis to million. year-over-year and claims are by the million. volume as XX.X% products of two from types insurance these system year-over-year Revenue revenue mostly to as decreases on reduced a pandemic demands. as risk to result less a loan well due banking transaction of The

was increased service sector. for million, products AI benefited mostly from operation increased a year-over-year customer support Revenue from on basis Gamma in X.X% by demands to which RMBX,XXX

to along grew million on worthwhile Ping by same It in It year-over-year also services from benefited Group. was largely cloud revenue third-party million continued Revenue from period the strong from from XX.X% year. momentum RMBX,XXX basis, increased from platform An mention customers year. the a a to last RMBX,XXX was whole demands that

and revenue on a Post-implementation by RMBXXX to was basis other X.X% up year-over-year million.

in revenue XXX% to of million which increased Hong our average in RMBXXX our from strong which to prior a banking performance recorded business strong million from growth by overseas above business. in growth the We year, virtual contribution made XXXX, Kong RMBXX

mix Let's recording Gamma total and the Platform sector, XX.X% sectors. XX.X% our in innovation in growth revenue. a revenue, for by turn our revenue of product strategy, contributed our Stage focus accounting chunk of to II XXXX biggest product

of total and reduced circumstances. of XX.X% sector, a result Digital of for was transaction macro by on a volume by caused loan as pandemic Banking a revenue mainly reduction our in basis, year-over-year accounted which adverse which the XX.X% products

accounted for on of life a XX.X% basis, revenue launched total overseas by from the which X.X% benefited increased sector, market. newly in year-over-year Insurance insurance Digital agent product

reduction transaction from growth in of in system were insurance able volume shortfall the we overall having achieve claim sector. products, Digital While revenue to Insurance

for virtual of X.X% but not accounted Last our I banking have mentioned not revenue. total sector, -- before, least, which our

period page, we percentage profit was in to in the XXXX, next points are achieved last with margin On see the billion reached X.X that which same XX.X%, gross gross RMBX.XX year. our than very higher glad

the in a non-IFRS compared was gross prior margin XX.X% basis, However, year. with XX.X% on

modules Mr. about As helped Such we profit main our it achieve X,XXX of have delivery will XX% us mentioned, margin efforts for mid-term our the and gross profitability. more improved drivers standardization target in of Shen than product OneConnect and have ongoing developed efficiency. one improve XXXX, be and to delivery standardized

profit. our to net expenses and Moving

You on our target. can see that breakeven to mid-term we well are track

First development RMBX.XX billion. came and of RMBX.XX expenses all, our research to from billion

year. compared a in As the amounted with to revenue, XX.X% XX.X% it prior of percentage

We implement II integration. continued on product to Stage our focusing strategy

are products efficiency. product and our improve will mature more upgraded Our further development

will and enhance our our product Looking development competitiveness research to investing competitors. forward, we in against keep

million in compared the decreased XXXX for million expenses prior marketing year. and Sales RMBXXX to RMBXXX with

expenses last caused marketing to X.X% was also in from mainly As XX.X%. and and a on-site travel enhanced expenses revenue, year. XXXX, travel-related percentage compared and improvement marketing from benefited decreased restrictions capability was Meanwhile, efficiency. with sales that of COVID Such which by sales decreased

period in and in RMBXXX Kong we came adjusted which general incurred listing expenses, deducted same Regarding million one-off RMBXXX our it year. from to the million expense our administrative in Hong XXXX, last have

of to XX.X% from percentage a XX.X%. As it revenue, decreased

same margin. by year. Based our we last narrowing profit RMBXXX deliver net all environment double-digit improved these our from very points percentage managed last negative a to negative above, loss a Despite net negative to to adjusted profit negative net the XX.X challenging year, again margin in improved million period RMBX,XXX XX.X% of XX%. business adjusted on million from And

comparison this The in we page, years. our can clear of next profitability. page From loss trajectory ratio of the four path see past very represents a a to

will gross we further reduce improve will We and to our profit (ph) upgrade efficiency boost operating product expenses. margin, further our revenue] to [standardization

by We are breaking about even very confident mid-term.

your for in we reference. margin gross Thank summarized non-IFRS adjustments the you. Lastly,

Danielle Gao

Thank line. ready Yong. Operator, we please are for questions. open Please you, Luo the

Operator

Sachs. is Our now Timothy ahead. question Zhao line [Operator Instructions] your go is Please from from first Goldman open. Timothy,

Timothy Zhao

taking my Thank for Language] have management two questions. [Foreign questions. you I

institutions in about spending the between management, just different recovery customers difference outlook of in recovery terms IT pace different question management Could financial recovery? First the any share the of 'XX. IT or pace spending, and your

your share in revenue last our on into rate is well. growth management rate? third-party And revenue about quarter a I the that pretty growth My third-party could kind growth. third-party expect second was year you. we that Thank 'XX? of saw outlook of the revenue what Could faster fourth products

Danielle Gao

Chong your Shen Timothy. questions. will you, Thank take

Shen Chong Feng

Language] [Foreign

question [Interpreted] I answer first will now. your

the short we Over some expect term, institutions prudent will be with do more their IT spending. financial that

to financial this transformation medium growth. development the XXXX, institutions over up. technologies that bolster to and from However, we the will digital quarter their of spending and expect XXXX in business need of starting half the year, longer IT term, pick Therefore, until second second and

products risk uniquely areas the and in the following positioned demand be as will well summary, as the self-controlled key satisfy front. has from data banks will to demand shift operation, security, where management, areas. have to technologies demand home-developed these is OneConnect banks digital as their technologies OneConnect in transformation digital to satisfy such In

self-controlled quite pick IT. bank up because lot And a home-developed in shift we financial the to of investment of The institution. in technologies the the budgets IT attracted to have to see shift

will to well data higher For they as IT. have home-developed demand medium- as banks, large-sized security for

demand -- their For requirements medium- they improve higher them have banks, satisfy for efficiency. as well and to help as small-sized to regulatory regulatory operational

our question, II are the in the as as of ultimately OneConnect's engagement revenue profit key -- from XXXX in margin. improvement in stems second growth improvement Two customer your strategy. Stage metrics our long-term on our gross well third-party of for Next broadening for

life segment, by we drivers -- the see to segment, growth services products. that and thanks Digital product our banking AI -- do Insurance, we are key all Gamma products our Platform customer see efforts and consistent Risk look investment the innovation, in expected of in management smart we in in for If trends in to product be the at in management our positive do XXXX. in insurance

our push term, overseas cloud Thank business long for our financial as our long-term Over technology the business, as home-developed also will growth our become you. well drivers.

Operator

now is your Our -- [Tiannan next (ph) go question is ahead. line from from open. okay, Zhao] Please Tiannan,

Unidentified Analyst

to like translate] would (ph) [quickly Language] [Foreign myself. Okay. I

The first will on question [indiscernible] opportunities the a what's among it? is, sector, the as you self-controlled very hot strategy topic technology the is tech

the second [indiscernible] guidance? is, XXXX And question what's

what's cash in current to you. position? And question the breakeven? what's at And it your exposure last support is, And the company's is Thank your SVB?

Danielle Gao

Thank you, Tiannan.

Our Luo Yong will your Jie, first question your CTO, second will Li third question. and take and take

Li Jie

[Foreign Language]

are [Interpreted] have in potential, in trends as as core the CBIRC industry, relevant industry level. fully-fledged and the well the see been one the in huge layer, the in Self-development infrastructure is technologies and application in most the the launched financial needed -- home-controlled and adoption in involved testing. overall And -- developing for a self-controlled in technologies market we system of push X,XXX institutions home-developed the has both XXXX

infrastructure as the well fully application self-controlled level. the as at OneConnect technologies level accommodates both

segment in home product banking XXX% well self-controlled as IT. XXX% self-controlled -- level, for -- are in At financial application Gamma -- Our are requirements the to clouds adapted the the for our technologies. as in XXX% Platform, satisfy

the same in also time, our the industry push is model. consulting implementation for technology OneConnect the At involved in through closely banking plus self-controlled

So far, solutions. our XX have we now customers using over

Luo Yongtao

[Foreign do the translation myself. I'll Language] Okay.

-- for II still due and challenging First are and guidance a XXXX uncertain and are of official think I -- are external that the circumstances factors. still transaction, the recovery reasons. Because And period. factors give external factors the internal we the Stage micro in internally, of lot all, the experiencing the won't we guidance to

communicate Having said different will we about by information that, our more regions. profitability

be year, said, breakeven mid-term, we the will all, communicate this China well, our business And more we will on information think this -- with markets company. whole we'll be side. will I of -- for in Mainland first breakeven will We and with we on

we cut points make -- main priority will to making. deduction are growth. of two first -- quality And we of where same revenue our revenue time, in the the structure XXXX. third-party One we the want two again more will are on will there or loss emphasize put And at the improvement is tasks we more

I think, of the mid-term. path we to are well track on in breakeven

By the XXXX, confident position. the to on of is support -- us of operating the have due all narrowing support and the Okay. And deduction the a healthy due XXXX, cash of XXXX, in the operating [Foreign end in activities. RMBX.X loss activities cash we Language] mainly billion. the available the to acceleration us have we until are the that cash making helped we operation to of very And lot mid-term. enough to cash our receivable get breakeven to very a we And --

bank billion, you. the two RMBX.X (ph) are PAOB, Hong million the is another of within we RMBXXX almost And Bank. in units have the Thank deposits other Silicon And business -- OneConnect. And [virtual] billion no in in point Kong. in RMBX.X Valley

Operator

Lydia, Our open. ahead. Instructions] your next now from [Operator Morgan Lin is is Stanley. line Lydia Please question from go

Lydia Lin

[Foreign on Language] So, is my follow-up first a question localization.

just So, the line will or the affect the businesses implementation? localization all

And operating XXXX? the and second in question is allocation expenses about arrangement

Danielle Gao

Lydia. you, Thank

question also first Thank you. will first your the and take Your -- Yong question. Luo question second

Shen Chong Feng

Language] [Foreign

infrastructure the part implementation of as the to application consulting I drive Therefore, is are application the in As core relevant part biggest efforts implementation level, potential the three as mentioned solution tool as And a as it is plus layer. segments main about quite the our the see is in system for technologies. break from us before, and consulting level. mostly implementation Actually, We used self-controlled huge range level technologies. both for into self-controlled to to the we technologies self-controlled banks. the well business infrastructure [Interpreted] for offer, our

Luo Yongtao

Okay. Language] [Foreign

-- normal related do I Well, due the actually to new will we much think hiring some is the already. XXXX, optimization. optimization started hiring process to We products to tailings. pretty in the back

and continue the going three have And we down cost for expenses, all put According ratio you. to forward, more the to we sales looking administrative research Thank resources until and expenses, we to the marketing, on will keep into general a expenses development. and policy. of And control breakeven and very the three mid-term. continue will

Operator

I now ahead. to final no go hand have to questions. like Gao further Please currently would for back We Danielle remarks.

Danielle Gao

contact If any forward free again. speaking IR following you. looking the feel you team. you interest for in us to to today. please questions, appreciate Thank We and your joining Thank everyone call our with

Operator

Ladies today's this and gentlemen, concludes call.

now can You your you. Thank lines. disconnect

OneConnect Financial Technology (OCFT) 13 Mar 232022 Q4 Earnings call transcript