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First Quarter 2020 Results Presentation
2
Disclaimer
The information in this presentation is provided to you by OneConnect Financial Technology Co., Ltd. (the “Company”) solely for informational purpose and does not constitute an offer to buy or sell or solicitation of
an offer to buy or sell, any securities of the Company in any jurisdiction or an inducement to enter into investment activity, nor may it or any part of it form the basis of or be relied on in connection with any contract or
commitment whatsoever in the United States or anywhere else. Specifically, this presentation does not constitute a “prospectus” within the meaning of the U.S. Securities Act of 1933, as amended (the “Securities
Act”). No securities of the Company may be offered or sold in the United States without registration with the U.S. Securities and Exchange Commission (the “SEC”) unless pursuant to an available exemption from
the registration requirement of the Securities Act. This presentation does not contain all relevant information relating to the Company or its securities, particularly with respect to the risks and special considerations
involved with an investment in the securities of the Company.
This presentation does not constitute legal, regulatory, accounting or tax advice to you. This presentation does not constitute and should not be considered as any form of financial opinion or recommendation by the
Company or any other party.
Thus presentation contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act
of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “explore,” “confident” and similar statements.
Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of
which are difficult to predict and many of which are beyond the Company’s control. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ
materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s limited operating history in the technology-as-a-service for financial institutions industry; its
ability to achieve or sustain profitability; the tightening of laws, regulations or standards in the financial services industry; the Company’s ability to comply with the evolving regulatory requirements in the PRC and
other jurisdictions where it operates; its ability to maintain and enlarge the customer base or strengthen customer engagement; its ability to maintain its relationship with Ping An Group, which is its strategic partner,
most important customer and largest supplier; its ability to compete effectively to serve China’s financial institutions; the effectiveness of its technologies, its ability to maintain and improve technology infrastructure
and security measures; its ability to protect its intellectual property and proprietary rights; risks of defaults by borrowers under the loans for which the Company provided credit enhancement under its legacy credit
management business; its ability to maintain or expand relationship with its business partners and the failure of its partners to perform in accordance with expectations; its ability to protect or promote its brand and
reputation; its ability to timely implement and deploy its solutions; its ability to obtain additional capital when desired; disruptions in the financial markets and business and economic conditions; the Company’s ability
to pursue and achieve optimal results from acquisition or expansion opportunities; the duration of the Covid-19 outbreak and its potential impact on the Company’s business and financial performance; and
assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the SEC. The Company, its officers, advisors, or
representatives undertakes no obligation to update or revise these forward‐looking statements for events or circumstances that occur subsequent to the date of this presentation, except as required under law.
The unaudited consolidated financial information is prepared in accordance with International Financial Reporting Standards (IFRS). This presentation contains certain financial measures that are not recognized
under the IFRS. Non-IFRS measures are used in gross profit and gross margin, adjusted to exclude non-cash items, which consist of amortization of intangible assets recognized in cost of revenue, depreciation of
property and equipment recognized in cost of revenue, and share-based compensation expenses recognized in cost of revenue. The Company regularly reviews non-IFRS gross profit and non-IFRS gross profit
margin to assess the performance of its business. By excluding non-cash items, these financial metrics allow the Company to evaluate the cash conversion of one dollar revenue on gross profit. The Company uses
these non-IFRS financial to evaluate its ongoing operations and for internal planning and forecasting purposes. The Company believes that non-IFRS financial information, when taken collectively, is helpful to
investors because it provides consistency and comparability with past financial performance, facilitates period-to-period comparisons of results of operations, and assists in comparisons with other companies, many
of which use similar financial information. The Company also believes that presentation of the non-IFRS financial measures provides useful information to its investors regarding its results of operations because it
allows investors greater transparency to the information used by the Company in its financial and operational decision making so that investors can see through the eyes of the Company’s management regarding
important financial metrics that the management uses to run the business as well as allowing investors to better understand the Company’s performance. However, non-IFRS financial information is presented for
supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with IFRS, and may be different from similarly-titled non-IFRS measures used
by other companies. In light of the foregoing limitations, you should not consider non-IFRS financial measure in isolation from or as an alternative to the financial measure prepared in accordance with IFRS.
Whenever the Company uses a non-IFRS financial measure, a reconciliation is provided to the most closely applicable financial measure stated in accordance with IFRS. You are encouraged to review the related
IFRS financial measures and the reconciliation of these non-IFRS financial measures to their most directly comparable IFRS financial measures. For more information on non-IFRS financial measures, please see
the table captioned “Reconciliations of IFRS and non-IFRS results (Unaudited)” set forth at the end of this presentation.
THE INFORMATION CONTAINED IN THIS DOCUMENT MAY NOT BE FORWARDED, PUBLISHED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON (WHETHER WITHIN OR
OUTSIDE YOUR ORGANIZATION/ FIRM) FOR ANY PURPOSE ANY MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, PUBLICATION, DISTRIBUTION OR
REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED.
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Highlights for the Quarter
Notes:
(1) Third-party customers refer to customers with revenue contribution of less than 5% of total. These customers are a key focus of the Company’s diversification strategy
(2) All numbers rounded
Revenue +30% YoY
Solid Growth Despite
Covid-19 Challenge
More Business Diversification
to Address New Needs
Strong Gain in
Third-party Customers(1)
Narrowing of Operating Loss
Revenue +50% YoY
Operation Support 15% to 28% of
revenue YoY103% to 77% YoY
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Three Months Ended March 31
(RMBm, except percentages and per share figures) 2019 2020 YoY%
Revenue 448 581 29.6%
Gross Profit 128 202 58.1%
Gross Margin 28.5% 34.8%
Non-IFRS Gross Margin (1) 49.4% 46.0%
Operating Loss -460 -445
Operating Margin -102.7% -76.7%
Net Loss to Shareholders -415 -415
Net Loss per Share (RMB) -0.44 -0.40
Key Financial Metrics
Note:
(1) Non-IFRS gross margin adjusted to exclude non-cash items including amortization of intangible assets recognized in the cost of revenue, depreciation of property and equipment recognized in the cost of revenue, and
share-based compensation expenses recognized in the cost of revenue. For more details on this non-IFRS financial measure, please see the table captioned “Reconciliation of IFRS and Non-IFRS Results (Unaudited)”
set forth at the end of this presentation.
5
1Q2019 1Q2020
Revenue Growth Led by Third-party Customers
(RMBm)
Revenue by Customer Type
Note:
(1) Third-party customers refer to customers with revenue contribution of less than 5% of total. These customers are a key focus of the Company’s diversification strategy
+30%
448
581
1Q2019 1Q2020
1Q2019 1Q2020
1Q2019 1Q2020
Total Third-party Customers (1)
Ping An Group
Lufax
+50%
+11%
+30%
179
270
205 228
6483
6
30% 27%
13% 14% 14%
41%37%
43%46%
39%
29%35%
44%40%
46%
2017 2018 2019 1Q2019 1Q2020
Rising Third-party Contribution Testament of Trust of Financial Institutions
Revenue Mix by Customer Type
Note:
(1) Third-party customers refer to customers with revenue contribution of less than 5% of total. These customers are a key focus of the Company’s diversification strategy
Third-party(1) Ping An Group Lufax
7
1Q2019 1Q2020
Strong Increase in Operational Support Solutions
Revenue by Business Type
(RMBm)
+30%
448
581
Total Business Origination
Risk Management
Operation Support
Post-implementation
Support and Others
Implementation
1Q2019 1Q2020
1Q2019 1Q2020
1Q2019 1Q2020
1Q2019 1Q2020
1Q2019 1Q2020
+48%
94
139
-42%2514
+2%177 181
-5%86 82
+148%
66
164
8
A More Diversified Mix to Address Customer Needs in Different Macro Scenarios
Revenue Mix by Business Type
9%
21%25% 21% 24%5%
3%3%
6% 2%
9%
22%
25%
15%
28%
15%
14%
19%
14%78%
39%33%
39%31%
2017 2018 2019 1Q2019 1Q2020
Business origination
Risk management
Operation support
Implementation
Post-implementation support and others
9
Seasonal Dip in First Quarter Made Worse by Coronavirus
(RMBm)
Total Revenue
1Q2018 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020
10
Temporary Slowdown in Some Transaction Activities
(RMB billion) (Thousand)
Retail Loan Served SME Loan ServedAuto Insurance
Fast Claim Usage
(RMB billion)
10.1
12.7
1Q2019 1Q2020
7.9
5.7
1Q2019 1Q2020
989 995
1Q2019 1Q2020
+26%
-28%
+0.7%
11
Continuous Improvement in Margins
(RMBm)
Gross Profit
Gross Margin
25.7%26.9% 27.0%
29.0% 28.5%
29.4%
38.6%
33.6%34.8%
1Q2018 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020
6380
98
148128
154
226
260
202
1Q2018 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020
58% YoY
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Further Strengthening of Operating Leverage
R&D Spending as % of Revenue
S&M Expenses as % of Revenue
G&A Expenses as % of Revenue
Operational Margin
R&D expenses Capitalization
-103%
-77%
1Q2019 1Q2020
25% 27%
1Q2019 1Q2020
31% 33%
1Q2019 1Q2020
60%41%
6%
5%
1Q2019 1Q2020
66%
46%
13
Recap of 2020 Priorities
Boost Premium Relationship Optimize Product Mix
Maintain Cost ControlIncrease Transaction Volume
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Three Months Ended March 31
(RMBm, except percentages) 2019 2020
Gross Profit 128 202
Gross Margin 28.5% 34.8%
Non-IFRS Adjustment (1)
Amortization of Intangible Assets 93 64
Depreciation of Property and Equipment 0 1
Share-based Compensation 1 1
Non-IFRS Gross Profit 221 267
Non-IFRS Gross Margin 49.4% 46.0%
Appendix: Reconciliation of IFRS and Non-IFRS Results (Unaudited)
Note:
(1) Adjustment in cost of revenue
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