When can I "autopoietic hematopoiesis"? It should be fast.
OneConnect's 2021 first quarter financial report, there is a sentence that is very eye-catching:
Revenue from Ping An Group was RMB436 million, up 91.6% year-on-year from RMB228 million in the same period last year.
As early as the IPO at the end of 2019, OneConnect was controversial because of the "old" Ping An Group, and it has not completely gotten rid of the question of "lack of independent profitability".
Unexpectedly, after nearly a year and a half of listing, the degree of dependence on the parent group did not decrease but rose.
In the year and a half since the successful listing of OneConnect, there have also been drastic personnel changes within the company, involving nearly ten senior executives.
Q1 Report Card: The dependence on the Ping An Department has not decreased but has risen
Yesterday, OneConnect, which is listed on the New York Stock Exchange, announced its unaudited financial results for the first quarter ended 31 March 2021. First, let's draw a financial report focus:
Revenue increased from RMB581 million to RMB820 million, an increase of 41.1% year-on-year.
Operating loss was $346 million, compared to $445 million in the year-ago quarter.
Net loss attributable to shareholders was RMB305 million, compared to RMB415 million in the year-ago quarter, a 26% year-on-year narrowing – a further narrowing of net losses, both year-on-year and quarterly.
Operating loss fell to RMB346 million from RMB445 million. The operating loss ratio was 42.2%, compared to 76.7% in the previous year.
Sources of revenue include the parent group, Lu Jin and third-party customers:
Revenue from Ping An Group was RMB436 million, up 91.6% year-on-year from RMB228 million in the same period last year;
Revenue from Lujin Institute was RMB75.105 million, down 9.9% from RMB83.39 million in the same period last year;
Revenue from third-party customers was $309 million, up 14.4% year-on-year.
What changes have occurred by source of income as a share of total revenue? Luo Yongtao, CFO of OneConnect, pointed out that the gross profit margin and revenue contribution of third-party customers showed a quarter-on-quarter rebound.
However, it is obvious that whether it is the amount or the proportion of revenue, the dependence of OneConnect on Ping An Group has increased significantly compared with the same period last year; the income from "close relatives" Lu Jin has declined.
The market is most concerned about whether OneConnect can rely on the income contributed by third-party customers to further "walk independently". However, judging from the change in the proportion of revenue, the first quarter of this year is one step further away from this goal.
Looking at the previous data, as of Q1 of 2017, 2018, 2019 and 2020, OneConnect's sales revenue from Ping An Group and Lujin accounted for 70.6%, 64%, 57% and 53.5% respectively.
However, in the first quarter of this year, the combined revenue brought by Ping An Group and Lujin accounted for more than 60%, which is somewhat "once back to before liberation".
However, some market views believe that this dependence on the Ping An system can effectively reduce the competitive impact of OneConnect, which is a positive factor for the stability of performance.
Revenue growth was driven primarily by cloud service platforms and operational support services.
Among them, the cloud service platform launched last year now accounts for 22% of total revenue.
CEO Ye Wangchun specifically emphasized the strategic significance of the cloud service platform, saying that it not only made up for the gap caused by the withdrawal of low-value products, but also achieved a revenue growth of more than 40%, saying that "it is crucial to integrate our resources and positioning and better support the digital transformation of financial institutions." ”
However, the launch of the platform has also brought about increased costs. According to the financial report, the cost of revenue was 541 million yuan, compared with 379 million yuan in the previous year, mainly due to the increase in expenses related to the launch of the cloud service platform.
For operational support services, revenue increased 29.1% year-over-year, from RMB164 million to RMB212 million, reflecting growth in solutions such as auto insurance roadside assistance and AI customer service.
However, OneConnect said that due to the phase-out of products, the revenue of business initiation services fell from 181 million yuan to 118 million yuan.
This type of service, which involves intelligent call services and insurance loss assessment services, also saw significant growth last year (from 66 million yuan in 2019Q1 to 164 million yuan in 20201). Last year's growth is believed to be the result of a surge in demand for online and remote work due to the pandemic, which is expected to slowly and sustainably contribute to operational support services in the future.
In addition, the amount of retail loans processed by OneConnect increased from 12.7 billion yuan to 14.1 billion yuan in the quarter, an increase of 11% year-on-year.
In terms of various expenses, the amount of R&D investment and marketing expenses has increased, but the proportion of revenue has declined.
Total operating expenses were RMB636 million, compared to RMB609 million in the previous year. Total operating expenses as a percentage of revenue decreased from 104.8% to 77.6%.
R&D expenses totaled RMB281 million, compared to RMB240 million in the previous year, reflecting increased spending to support the development of new solutions such as cloud computing. R&D expenses as a percentage of revenue fell to 34.3% from 41.3% in the previous year.
Sales and marketing expenses totaled RMB167 million, compared to RMB156 million in the previous year, mainly due to an increase in marketing and advertising expenses. Sales and marketing expenses as a percentage of revenue were 20.4 percent, compared to 26.8 percent in the previous year.
Personnel changes: Involving nearly 10 executives
Is one-account's "nibbling on the old" intentional for performance stability, or is it the helpless status quo under the high-level turmoil? The outside world will more or less associate this protracted personnel change with performance.
AI Financial Review learned that Lu Yifan, general manager of the blockchain business department, has recently left OneConnect. Shortly after the successful listing of OneConnect at the end of 2019, there were executive changes within the company:
In February 2020, Huang Shaoyu, the former CEO of OneConnect Investment, left his post, and was replaced by Yang Xiao, former general manager of the asset allocation division of Ping An Fund.
Huang Shaoyu's new position is the head of technology at Beijing's Pan Peng Tiandi , one of the companies one acquired by OneConnect before its listing.
In March, OneConnect Chief Risk Management Officer Gao Fan and chief strategy officer Dai Ke resigned, and their whereabouts remain unclear. The former has been in Office for less than a year in Ping An.
During the period, Chief Financial Officer Liu Hui also reported the news of his sudden departure. However, OneConnect told the media at the time that Liu Hui did not leave his job, which was a post adjustment and exchange.
In June, Qiu Han, co-general manager and chief innovation officer of OneConnect, resigned. Two months later, Qiu Han joined PayPal as CEO of China.
In July, Huang Yuxiang stepped down as the deputy general manager of OneConnect and will no longer serve as the deputy general manager, chief technology officer and chief operating officer of OneConnect. Subsequently, he took over as the general manager of Ping An Technology.
At the same time, Li Jie, former assistant general manager of OneConnect, will succeed Huang Yuxiang as chief technology officer, and Ou Haiying will take over Li Jie's position.
But even in the face of performance doubts and internal adjustments, OneConnect still has unlimited potential, and has its own pace in the blue ocean of trillions of financial digital transformations.
Morgan Stanley once gave a "buy" rating in the research report, expressing optimism about long-term demand, "and believes that OneConnect is in a favorable position in the industry." OneConnect revenue is expected to grow at a COMPOUND annual growth rate of 40% from 2021 to 2023. ”
As mentioned earlier, the launch of the cloud service platform and the positioning of TaaS (Technology-as-a-Service) have brought opportunities for OneConnect to grow again.
The core of this commercial technology cloud service platform covers the IaaS financial cloud, the BaaS blockchain platform, the DaaS data middle platform and the PaaS fintech ecosystem.
At present, OneConnect's 16 major product lines cover the whole process of customer acquisition, risk management and customer service, as well as the underlying technical services from data management, intelligent operation to cloud platform, providing "whole process, end-to-end" technology empowerment for multiple financial verticals.
It is worth mentioning that in 2020, the total expenditure of OneConnect for R&D investment was pointed out to be 1.370 billion yuan, an increase of 16.8% year-on-year; the total investment in R&D in the past four years exceeded 3.8 billion yuan. By the end of last year, OneConnect's global patent applications had also reached 4,836.
Based on this huge investment in science and technology, as well as the first-mover advantage backed by Ping An Group, OneConnect's understanding of the digital transformation of the financial industry is at the forefront of its peers. The financial report also disclosed that as of the end of December 2020, OneConnect had provided services to 642 banks and 106 insurance institutions.
In the future, it is worth looking forward to whether OneConnect can gain a firm foothold in the financial technology service industry as a TaaS platform and truly complete the goal of "autologous hematopoiesis".
Image source: The movie "Aging Family"