OCFT - Earnings call transcript Q4 2023 | OneConnect Financial Technology Co., Ltd.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to OneConnect's Fourth Quarter and Full Year 2023 Earnings Call. [Operator Instructions]. Please note this event is being recorded.

Now I would like to hand the conference over to your speaker host today, Mr. Rick Chan, the company's Head of Investor Relations. Mr. ahead, go Please Chan.

Rick Chan

Hello, call. welcome operator. Xth our quarter earnings everyone, you, to and XXXX Thank

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

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

Li Mr. Ellen CTO, our and of Head Planning Ms. have We Management, Banking, Digital Jie; Shen. Jia; Corporate of Head and Ms. and Product Jessie

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

in should of our English provided those version, For between prevail. translation in and a in any original the the will statement case language be the Mandarin, contracted discrepancy Mandarin version

harbor Let quickly the me cover before we start. statement safe

which both forward-looking to actual number are present may Please statements, risks we materially. measures. financial cause differ involve As could uncertainties results and IFRS non-IFRS a and we that that making of note

call please. pleased CEO, Mr. Chongfeng. With that, Shen Mr. turn Shen, and Chairman to to our I'm our

Chong Feng Shen

[Interpreted] our Hello, and Xth Shen everyone. results for annual XXXX call. earnings quarter time to Thank taking you your I'm join Chongfeng.

quarter extend behalf you the us from results we've a Firstly, like last me in and with share and It's fourth for year. to this welcome I'd of a analysts on call. media to investors, OneConnect, during warm with to friends or great the pleasure achieved

technology, The high-quality that in lifeblood and of institutions Conference banks Financial unveiled China's be for for sector X the of brands included imperative. strength, national are time, known remains finance importance first in the small- In development inclusion, the financial economy. reaffirming the the financial which first and central XXXX, pension is report time Central developing Work to government finance, at in conference the financial the many conference time. build technology up major and vigorously articles digital At work improved, the green medium-sized work financial innovation out finance, are of proposed finance, same as these as to capacity pointed the also the the

With as platform its and in advantages big X encourage capabilities for plus major in to business, unique to technology of financial and of such continues productive data the cutting-edge OneConnect forces us artificial Insurance product Digital Digital namely quality new industry. business intelligence Gamma and technologies improve the development our Banking, the segments,

medium improving from portfolio, significant previous saw the loss operational adjustments in continuous past with control in resources R&D In shareholders solid CNY milestones efficiency CNY effectively XXX XXXX, key foundation to million we products. in million in a XXX with reduction achieved year to loss the proactive also attributable for allocated net The expense profitability These and efforts improved to provide will product the in term. year.

and export to philosophy of upgrade, development, go Page product please as our this are upgrade self-developed reduction priorities, core technology efficiency as well slides. achieved win-win of X An of we our to significant in improvement. and the namely expansion, we and quality of group X products. At Ping stage, customer Next, progress value, loss accelerating cooperation Committed business

strategy fine-tuned profitable. resources our company and us same high-value the At of aggregating closer which and time, even on put cost to products. to becoming will breaking addition In ROI the also control, project medium-term management the

and of the high progress experience, our customers results control. In achieved products. and product standardization, resources strengthening in product on Ping threshold and and XXXX, on accelerating company satisfactory export focused page. product portfolio Group An we upgrade, aggregating cost The Next products, high-value

them. with the developed into expanded needs revenue cooperation long-term the per established have can of operational structure expectations and the been higher needs, customer customer a strengthened engagement, now meet company of we which improved deeper revenue, also has business better all same OneConnect pipeline, efficiency. ROI At and understanding time, the improved, have capita translates management control expense And product customers. our the

XX%. the net profit loss premium In CNY company number plus margin XXX XXXX, shareholders by customers and XXX of year. over The exceeded was attributable narrowed of was million non-IFRS gross about to

such year-over-year. increased a value year, with Old and Stock the Next by over secured X% Hong lending average page. Life CNY Last of and Well customers customers X such with we value large customers both financial Kong Mutual. abroad, were cooperation contracts XX home Exchange, total a at many contract Link and with SBF, million contract of institutions There as

strengthen customer deepening of strategy to existing the customers. engagement, continue with we on relationships Centered

In terms of HuaXia succeed with customers, cross-selling of Continent financial China help Bank, Postal contracts on them cetera. Insurance, to signed Dajia Bank transformation have we and Savings et including existing implementing new continue China, products digital Insurance, They journey. for their institutions,

Next page.

empowering Mainland company exported expanding While remains to the abroad, serving financial also its a financial technology. with China, market and broader in institutions China's committed successful overseas presence experience actively

products Asia, growth XXXX, continue and East, are market increased revenue the Southeast from overseas contribution Hong In over third-party actively overseas percentage we in South well overseas expand revenue sales by received momentum a and of the increased of our Middle X about institutions. to Africa network. to and explored by revenue strong Kong, OneConnect points proportion customers XX% with customer by year-on-year. part overseas as XX.X%,

strategic the Old a financing developed SME success comprehensive Abu export finance big to platform digital digital proves market. to Market and partnership Dhabi also Mutual African a our South example, jointly with the be development for For inclusive the We've Global in with abroad. of

and Malaysia, global Philippines, regions, South financial institutions, the XXX and regional overseas including XX UAE, Asia Africa covered Vietnam, XX X including So companies. a top bank X in Indonesia Southeast OneConnect far has Singapore, Thailand, and the top business the and of countries insurance

paved goals points. into its achieve strategic top achieve way Our has stage gradual expansion overseas new OneConnect the line for the undoubtedly second market and to growth

engagement. customer that XXXX broadening Next for Stage page. remains is key year a strategy X

empower ecosystem and unite expanding while financial we During focus committed overseas. are the and on stage, where this institutions the we core to wins

family management In for page. Digital XXXX, in segment, trust trust services high system Banking and of net investment realized our expanding closed-loop family for customers private worth inheritance the scenario wealth account allocation banks. for the family establishment, Next

company's We technology intelligent system system in upgraded highly and technology the technical has credit our been base only has system. decision-making successfully for and credit The some accommodated our promote nonbanking implemented support number providing business, portfolio management time, for also far digital through same banking of realizes adoption The company's successfully a This of also management successfully strong XX sustainable so continues comprehensive projects, of have the the not the credit a by users. At smart the technology. and OneConnect recommended of self-developed system unified management analysis. self-controlled support developed in built has development home business. been but to provides scenarios

Next past page. remote the In and with year. in customers Insurance provide services, system experience processing. Digital survey during convenient improvements over advanced have claims technology, user segment, more significant which we we our claims With upgraded core intuitive creates

new panel the effectively reduces back-end efficiency not improves only costs. adjusters, and claims online of survey operating Our claims manpower but also

remote core settlement for combining support system. provides the flexible and time, core added more operation making module Our our platform our claims and core efficient. for SaaS process more new in-house At has a claims settlement, innovative operation efficient same deployment convenient model, engine and

improving further fully management business rate. links management efficiency their sales, and AI service empower customers sales conversion all platform, capabilities we Next page. apply risk in and Gamma to risk both and In in

vivid with For XX risk the example, to customers over interview experience. control capabilities, improve efficiency AI risk our has control and dialogue robot interaction digital easily vision AI empowers and human

robot management conversion managers time, AI management rate. the content improve over At and car we preset recommendation account helping same scripts have launched wealth supports personalized with of wealth also templates provides gradually XX an products,

has Kong, XXXX, helping In company services accelerate gradually page. to its Kong's Hong digital the construction. expanded Next Hong in

for the the In terms capital the time milestone of significantly of Hong another the FINI, launch of IPO of new in to Kong pricing Exchange development shortened T+X regulators, Hong between trading company's has major new shares market. T+X, marking platform Stock supporting from and Kong's clearing

banking insurance OneConnect understanding from As financial Kong. developed demand in-depth customers Hong in and for institutions, serving of has

While other management in accounting management, financial to market to also establish such services implemented we financial solutions institutions a eKYC risk in number of providing management our as have liability and institutions over and plus system XX account certification reputation, asset company's Hong services X The also reference Kong. providing eKYC Kong. agency for plus in note system credit now lines, end-to-end plus with loan business cross-sell Hong opening, CRA report of banks issuing solution

page. Next

to our to We OneConnect's insurance our have provide customers competitiveness in continued and creating reshape team experience and value system flagship Life process. projects. for policy striving and Well XXXX, higher service insurance with EPOS Link provided life product to upgrade insurance overseas overseas insurance their products enhance

overseas in help countries team Asian AI and improve AI module configuration intelligent the decisions Southeast customers innovate informed greatly professional different regions. to upgraded embedded and translation for acceptability the make assistant multilingual customers to of adaptability and Our

Next hard renowned a page. honors In of institutions work outlets. XXXX, has also and our recognitions media number third-party from and won

being the ] For in Innovation the banker example, ESG and FinTech won Global as years Pioneer Award [ XXXX top a in Press ] won and China of and for Enterprise Named [ included the FinTech XXX Excellence has FinTech many Institution IDC [indiscernible] company XXXX Top award. KPMG's row. Chinese

deepen. scientific of industry XXXX, beginning revolution the of to technological new round continue have and a seen and Since we transformation

industries. We accelerating as productive quality focus quality intelligence the believe and that forces. firmly industry intelligence for the the new the New productive is to forces plus has cases a with best lead of core be financial development will for artificial high-quality use strategic artificial

with financial focused and on core empower the demand improvements. industry plus the OneConnect for business continue various institutions product to and will innovation and transformation the of serving technological productivity satisfy of financial premium upgrade improvement customers

and products Thank productive and agent and improve new such develop to institutions. to financial risk solution AI featuring aim for assistant service, for also omni-channel us reduce voice costs quality and efficiency as We you. forces

and you detailed Next, Mr. financials to Luo QX full XXXX. OneConnect's year introduction I over it of will in to give a hand

Yongtao Luo

year results Thank you, Chongfeng. everyone. of I'm for financial Good to pleased XXXX. the present our evening,

performance, aligns in obtaining a midterm marked by accomplished of losses. with profitability. strategic achievement our solid significant have progress objectives reducing We financial This

exhibit is a to decline during that true adapt. months, over opportunity capacity it's few and like to it periods in the challenging encountered resilience our revenue that we have While this the we past

position ourselves to future. in are in renewal processes steadfast our We for growth adjustments exploring the existing necessary to new and the implementing opportunities, commitment evaluating

let's we compared by revenue. to decreased to generated Now to due to year, results. from CNY billion, X.XX our transaction-based in last by decline delivered primarily turn customers a the XX.X% XXXX, RMB revenue support billion. In of and X.XX third-party decreased XX.X% financial Revenue

percentage XX.X%, was improved improved margin Non-IFRS glad by margin was points are gross percentage on gross a as by X.X and XXXX of X.X to well. We XX.X% year-over-year basis. points see

as million the attributable XXX to see million year. improved to to negative thrilled year. compared attributable to X.X%, are shareholders CNY by Net We to loss negative prior to prior points for percentage XX.X% margin the CNY net shareholders XXX was compared for X.X

by Now to In let's our our X.XX was mix of turn XX.X% CNY customer. third-party total revenue. revenue contributing billion, XXXX, revenue

remains Third-party our second a revenue of key stage growth strategy. focus

opportunities of growth align to that with revenue third-party We seek continue our streams. further our fueling will expansion objectives,

Lufax was from Lufax from services. to total to origination our decreased contributed XX.X% operation decline business Revenue X.X% million revenue. management of business XXX risk resulting demand and for Lufax's mainly in it lower our due CNY optimization, The and revenue

such and Group XX% Group's Group operations. services was Ping are have daily volume, and Revenue a to An An to technology from primarily An CNY due which contributed the core been X.XX Ping from embedded in Group support total products. decreased decline as The decline deeply solutions, Ping provided Ping into management billion XX.X% transaction risk Revenue revenue. operational to of

look Ping and Looking cooperations. An Group's support business ahead, to reform we for will continue fully new

services contribution a management year-over-year Implementation of reduced to the XXX actions phasing because XXX Moving as volume by segment. CNY revenue mainly low-value from by our pandemic origination from customers to to banking still in year-over-year of financial takes recovering volumes declined and to business X.X% by primarily transaction mainly to to products services from on proactive due mix solutions due lower CNY from due to in decreased Revenue out the revenue business million Revenue digital CNY banking lower-than-expected by banking the million, XXX loan transaction XX.X% risk million, year-over-year institutions on activities. decreased time. basis type. new revenue decreased XX.X%

insurance increased operation to services million, year-over-year primarily Revenue customers. was was cloud customers CNY year-over-year Revenue by support Kong basis which banking decreased in primarily XX% last compared auto banking business year-over-year The basis post-implementation million by decreased demand XX% a by Revenue on as auto CNY decline to for and XXX to reduced from XXX XX.X% decreased services. PAOB, CNY from million. caused to lower X.X% platform XXX services on Hong by services ecosystem X.XX to due support for CNY to Revenue by other from from billion. a year. and virtual demand

have As in and business you structure. our identifying of diligent enhancing can see, and revenue areas been we focused underperforming improving on

We will to sustainable remain a adopting our mix model. product and stock-based charging committed integrating and stable

revenue transaction innovation by contributed of the CNY to products. product total decline reduced for XXXX by mix The of platform accounted declined caused recent our of revenue revenue. platform sector, focus Let's mainly turn open in to chunk years sectors. our product XX.X% the and to in biggest of X.X% X.XX billion volume Gamma was

year-over-year a caused which phase volume the a lower-than-expected XXX accounted sector, basis of the our of our to which impacts related XX.X% are lower-value origination products million. transaction and and in by CNY risk mainly was management business to to banking banking total Digital reduction revenue, services, initiatives on by reduced activities. from That out XX.X% for

due Digital reduced accounted Insurance sector services. demand to ecosystem for in XX.X% XXXX, million primarily decreased to by total CNY XX.X% revenue of XXX in auto which

sector, those products growth margins, products with the the no features value-added as limited for technological future. we low potential with phased well as in In each out with

believe just same continue use we addition, the as for revenue. for and number Premium of decreased XXX advance accounting expend and I will We plus to customers in In with more banking expect we In customers to further premium last customers sector. year, total products digital our plus banking plus fewer customer compared initiatives, our before, as sector, mentioned of virtual base the as to due XXX period customers. primarily XXXX, premium services. our X%

Now let's the gross take margin. a look at

margin. glad see our gross are to We

integration XXXX. X.X non-IFRS XXXX, whole improve Our standardization. of efforts X.XX margin in delivery in On together points the continued gross quality Gross and billion to XX.X% with continued product execution basis, margin. and by percentage gross gross as our In profit we the reached improved CNY margin XX.X%. profit reached helped our integration product on year growth, efficiency,

and to higher stick will that achieving the of continue margins. We strategy endeavor

shareholders. loss to expenses to net on Moving and attributable

see our can are target. well You to that we breakeven track midterm on

First same million, of and in all, period of our XXX came last year. CNY expenses down XX.X% to billion research the from development CNY X.XX

and continued remains In of capability in percentage unchanged. investment decreased a to it As revenue, XX%. XXXX, our innovation technological organizational

integrated, we further our our improved As upgraded delivery products efficiency. and product were

competitiveness in and ahead, we Looking development will and to keep investing pace our suitable research at measurable product a the market. enhance in more

and decreased Our our expenses activities. million benefited a in continued efforts improvement marketing XXX in The to CNY XXX in CNY and and sales expenses advertising from XXXX. mainly improving marketing with marketing XX% million and sales decrease compared efficiency

XX% the to Our from expenses decreased general million and CNY in administrative XXX million year. XXX CNY prior

control cost. measures XX.X% from cost stringent primarily decreased was As to a administrative reduced The percentage and revenue, in to it XX.X%. expenses decline and due general of labor

loss percentage shareholders negative to X.X This reflects CNY our million mentioning the towards to substantially under its and and X.X%. on business negative journey margin to effectiveness a from XXX last to improved worth to that achievement of health net net our shareholders our profitability. is environment, our CNY challenging commitment negative enhancing year, attributable our actions improved XXX demonstrates again million It financial corresponding points

margin in a you net past page, path trajectory improvements our years. years. of the clear From to this few the trend over the demonstrates see our page next The to profitability of shareholders can

our cost operational Our the improved milestone the marking of the accompanied reflect control, disciplined in to effects whole that of another breakeven. efficiency, to execution path year of results continue by

efficiency to improve operating product We margin. business and our integration will and efforts strive continue

ahead, full about these challenges, streams. the pace uncertainties our prevailing primary revenue Despite recovery. third-party the we acknowledge Looking remains economic bolstering of focus on

control improving commitment Our efficiencies cost we measures enhancing to gross operational towards emphasizing profitability. strive profit as remains and unwavering sustainable margins,

we efforts resolute. surmount With and of to Our shareholders integral map. forthcoming to objectives will strategic The dedication mindset as and the in emerge are remains quarters. components a obstacles efficiency well road leverage and proactive ongoing persist unwavering our our and long-term current to achieving creating the positioned for enduring results, value stronger resources optimize operational our

and XXXX. we margin IFRS Next list of summarized page, results We key non-IFRS reference. financial metrics for gross

again, you. and you, would to Back and Rick. capitalize once will appreciation and support sustainable sincere employees, and their success. trust partners in my extend I vision. shareholders challenges Lastly, invaluable Together, Thank and we our through for on opportunities our growth to navigate drive

Rick Chan

are we Luo. questions. for Mr. you, Operator, Thank open

Operator

Instructions]. [Operator

We have Lydia of a from question Morgan Stanley. Lin

Chenyueya Lin

in [Interpreted] costs the that can and So specific the tackle we like generative very AI for space kinds measures XXXX this see the company the we application of the I is has? progress help have to summarize impressive the company's work And question first how And to cutting further technology? in that in is product of And have the question XXXX. do is the second profile? from company seen us the would management what impact

Unknown Executive

Lydia. Thanks,

Luo The by our Jie. take and be first will CTO, Mr. second Li one, the question taken by

Yongtao Luo

[Interpreted] Thank question. you for your

So from optimization and from have gross improved and costs, profit reduction as metrics and reduced we as efficiency in our in our headcount can our through R&D, expenses such our improvement greatly all financial greatly -- and margin cost financial marketing have this such sales and and metrics. we improved delivery in XXXX, seen be --

and cost R&D, next continue in we For S&M G&A. efficiency well costs improvement control year, as measures will and with reduce as our

of our investment resources. the for Additionally,

to resource fine-tune the will on efficiency one allocation, and year, continue Next management. improve we hand, ROI our

business market. the Cost comes continue our will our hand, quality competitiveness on ensure sustainable demand Thank to business. to you. efficiently. That we means according resources overseas business. other for instance, development control use invest develop products our promising upgrade development more we and in our resources down aggregate products, will Therefore, in the On our may more to lines, we of the and ultimately our

Li Jie

question of year, impact. answer applications Artificial included other time. everyday deep Intelligence life. of which also work about I'll government's development, driving more which our [Interpreted] but China's in and medical intelligence in care, the Plus report OneConnect AI agriculture your changes AI broader a technical significant not transportation, its finance, Plus and as the importance and is integration artificial bought shows and the force increasing the AI first basic only fields. of This for concept, to education, refers manufacturing,

the to transformation So promote industries. as upgrading traditional and of

plus has and strategic focus Intelligence cases committed use force new transformation, been customers for a our institutions The for customer Plus and provide new OneConnect improvement financial productivity the product We will AI financial focused demand improvements. to satisfy such various empower and core the financial agent for serving well as omnichannel industry upgrade business on be to as Artificial of featuring products and best productivity. solution. productivity has industry as force service premium

and costs So improve for and reduce as institutions. efficiency financial to risks service,

OneConnect capacity has in long developed artificial strong intelligence.

third evaluation, models extraction exploration a international We at the time technologies. you. R&D have track free Chinese of see At of when abroad, is of tax related deploying team the assessment competitions Thank home larger semantic machine fifth the such well-known further actively reading championship won our the competition. and and comprehension as AI the also breakthroughs, and

Operator

from Our [indiscernible]. next question comes

Unknown Analyst

Language]. [Foreign

Unknown Executive

CTO, The Li the Mr. by be one first question will second will Shen. our be by Jie taken taken and

Li Jie

financial [Interpreted] capacities in AI. I'll OneConnect address your the utilizing to of AI industry question aims links Firstly, all business. apply about generative

financial fine-tuned customers. experience a to AI scenario offer we So our

as and service, customer sales AI service interviewing. well solution as such customer as Our scenarios marketing covers

we image For management risk digital offers interactions, through dialogue vivid our human efficiency. instance, customers improve and capacities over robot our AI XX to interview help risk

will XX offers wealth scripts. preset robot, management templates be and support tax example our which over Another content

to these improve help conversion will their all So rate. customers solutions our

Unknown Executive

Mr. Shen. Please go ahead,

Chong Feng Shen

to market are Ping An and [Interpreted] Group An changing Bank The both made by Ping trends. cope adjustments with measures

Our group The cooperation important An both our and our important companies is its partner. relationship also Group still associated tech most customer and with and Ping remains unchanged. internal most

it's relationship. you. be and aligns interest us its important the new all but cooperation actually we together happy and many our company group sustainable, involved as in-depth bring cooperation Our in with our business will with Internal and sites opportunities Thank associated projects. are adjustments

Operator

no have further line. the questions We on

hand Rick to closing So for back I'll remarks.

Rick Chan

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

Operator

This you call. concludes today's joining. Thank for

lines. [Portions live by were You spoken your may on an this are disconnect the interpreter [Interpreted] now of that present transcript call.] marked

OneConnect Financial Technology (OCFT) 18 Mar 242023 Q4 Earnings call transcript