OneConnect Financial Technology (6638) Q2 2024 earnings summary

Executive summary

• Achieved first-ever profitability in H1 2024, driven by a one-time gain from the sale of the virtual banking business and improved operational efficiency.

• Net loss from continuing operations narrowed significantly, reflecting disciplined cost control and a focus on higher-margin business.

• Overseas business maintained strong growth, with revenue from overseas customers up 14.8% year-over-year and now over 21% of third-party revenue.

• Strategic focus on product upgrades, customer expansion, and international market penetration.

• Revenue for H1 2024 was RMB 1,416 million, down 22.8% year-over-year, with third-party customer revenue at RMB 480 million, down 15.9% year-over-year.

Financial highlights

• Revenue from continuing operations was RMB 1.416 billion in H1 2024, down 22.8% year-over-year.

• Gross profit margin remained stable at 37.1%, with non-GAAP/non-IFRS gross margin at 39.4%.

• Net profit attributable to shareholders reached RMB 243 million in Q2 2024, including a one-time gain of RMB 260 million from the virtual banking business sale.

• Net loss from continuing operations attributable to shareholders narrowed by 59% year-over-year to RMB 17 million in Q2.

• Third-party revenue contributed 34.2% of total revenue in Q2, up from 30.4% a year ago.

Outlook and guidance

• Focus remains on improving third-party revenue, enhancing gross margin, and expanding overseas markets.

• Gradual phase-out of cloud/FinCloud services from July 2024 expected to impact top-line performance in H2 and full year.

• Confident in achieving double-digit growth in overseas revenue, with continued investment in R&D and innovation.

• Management remains focused on mid-term profitability, cost control, and expanding high-value product offerings.