OneConnect Financial Technology (6638) Q3 2024 earnings summary

Executive summary

• Revenue for Q3 2024 was RMB 470 million, down 48.3% year-over-year due to the strategic phase-out of the cloud service business.

• Net loss from continuing operations attributable to shareholders narrowed by 41.9% year-over-year to RMB 30 million, reflecting effective expense control.

• Overseas third-party customer revenue rose 23.4% year-over-year in the first nine months, with Southeast Asia as a key growth engine.

• The company completed the disposal of its virtual banking business in April 2024, with historical results now reflected as discontinued operations.

Financial highlights

• Gross margin from continuing operations was 32.7% in Q3 2024, down from 36%/36.6% in the prior year; non-IFRS gross margin was 35.6% versus 40.7%.

• Net margin from continuing operations was -7.1% compared to -6.3% last year.

• Net profit for the period to shareholders was RMB 110 million, up from a net loss of RMB 281 million last year.

• R&D expenses dropped to RMB 70 million from RMB 230 million, now 6.7% of revenue versus 28.5% last year.

• Operating loss from continuing operations was RMB 50 million, with an operating margin of -12.1%.

Outlook and guidance

• The company expects continued volatility and uncertainty in the market.

• Discontinuation of the cloud service business will impact top-line performance for 2024.

• Focus remains on product upgrades, cost control, and overseas market expansion to achieve midterm profitability.

• Strategic initiatives include expanding high-value products, increasing product standardization, and optimizing cost structure.