OneConnect Announces First Quarter 2025 Unaudited Financial Results

Rhea-AI Summary

OneConnect Financial Technology (NYSE: OCFT, HKEX: 6638) reported its Q1 2025 financial results, showing significant revenue decline and continued losses. Revenue from continuing operations fell 49.2% YoY to RMB368 million, primarily due to a 99.5% decrease in cloud services platform revenue following strategic phasing out. The company's gross margin contracted to 28.5% from 37.7% year-over-year. Loss from continuing operations attributable to shareholders improved to RMB38 million from RMB54 million in Q1 2024, though net margin deteriorated to -10.4% from -7.4%. By segment, Digital Insurance showed 8.1% growth, while Digital Banking and Gamma Platform declined by 35.6% and 71.8% respectively. The company completed the disposal of its virtual bank business to Lufax for HK$933 million in April 2024.

Positive

• Loss from continuing operations improved to RMB38 million from RMB54 million YoY
• Digital Insurance segment revenue grew 8.1% YoY to RMB143 million
• Post-implementation support services revenue increased 33.5% YoY
• Operating expenses as percentage of revenue decreased by 5.0 percentage points to 42.3%
• Research and Development expenses significantly reduced from RMB213 million to RMB62 million

Negative

• Total revenue declined 49.2% YoY to RMB368 million
• Gross margin contracted to 28.5% from 37.7% YoY
• Cloud services platform revenue collapsed by 99.5% to RMB2 million
• Operating margin deteriorated to -15.3% from -9.2%
• Net margin worsened to -10.4% from -7.4%
• Business origination services revenue dropped 59.2%
• Net cash used in operating activities was RMB190 million

Insights

Financial Analyst

OneConnect's Q1 shows alarming 49.2% revenue decline and deteriorating margins despite reduced losses, indicating fundamental business challenges.

OneConnect's Q1 2025 results reveal severe revenue deterioration, with total revenue plummeting 49.2% year-over-year to RMB368 million. This dramatic decline stems primarily from the company's strategic decision to phase out its cloud services platform, which saw revenue collapse by 99.5% to just RMB2 million from RMB318 million in the prior year.

The revenue breakdown exposes concerning trends across business segments. The Gamma Platform segment suffered a 71.8% decline, while Digital Banking fell 35.6%. Only the Digital Insurance segment showed growth at 8.1%, primarily from increased demand for property and casualty insurance solutions.

Profitability metrics reveal a mixed but generally negative picture. While the absolute loss from continuing operations narrowed to RMB38 million from RMB54 million, the net margin deteriorated to -10.4% from -7.4%. Gross margin contracted significantly to 28.5% from 37.7%, indicating reduced economies of scale as revenue declined.

The company's relationship with its largest client appears problematic, with revenue from Ping An Group and Lufax declining 67.2%. Third-party customer revenue, which represents diversification efforts, also fell 13.6%.

While operating expenses decreased substantially from RMB342 million to RMB156 million, with R&D expenses showing the most significant reduction, this likely reflects cost-cutting in response to declining revenue rather than improved efficiency. The cash flow statement indicates net cash outflows across operating (RMB190 million), investing (RMB825 million), and financing activities (RMB6 million), suggesting continued financial pressure.

The company's strategic pivot away from cloud services and the completed disposal of its virtual bank business to Lufax represent significant strategic shifts, but have not yet translated into improved financial performance. The substantial revenue decline across most business lines indicates fundamental challenges in OneConnect's core operations beyond just the planned cloud services reduction.

SHENZHEN, China, May 28, 2025 /PRNewswire/ -- OneConnect Financial Technology Co., Ltd. ("OneConnect" or the "Company") (NYSE: OCFT and HKEX: 6638), a leading technology-as-a-service provider for the financial services industry in China, today announced its unaudited financial results for the first quarter ended March 31, 2025.

First Quarter 2025 Financial Highlights

• Revenue from continuing operations^[1] was RMB368 million, compared to RMB723 million during the same period last year.
• Gross margin of continuing operations was 28.5%, compared to 37.7% during the same period last year.
• Loss from continuing operations attributable to shareholders was RMB38 million, compared to RMB54 million during the same period last year. Net margin of continuing operations to shareholders was -10.4%, compared to -7.4% during the same period last year.
• Loss from continuing operations per basic and diluted ADS was RMB-1.06, compared to RMB-1.48 during the same period last year.

[1]  As previously reported, the Company completed the disposal of its virtual bank business (the "discontinued operations") to Lufax Holding Ltd ("Lufax") for a consideration of HK$933 million in cash on April 2, 2024. As a result of the disposal, the historical financial results of the Virtual Banking Business segment are now reflected as "discontinued operations" in the Company's condensed consolidated financial information and the historical financial results of the remaining business of the Company are now reflected as "continuing operations" in the Company's condensed consolidated financial information for the first quarter ended March 31, 2025, and comparative information has been restated accordingly.

 

In RMB'000, except percentages and per ADS amounts	Three Months Ended March 31
			YoY
	2025	2024
Continuing operations
Revenue
Revenue from Ping An Group and Lufax[1]	157,542	480,052	-67.2 %
Revenue from third-party customers[2]	210,236	243,218	-13.6 %
Total	367,778	723,270	-49.2 %
Gross profit	104,914	272,403
Gross margin[4]	28.5 %	37.7 %
Operating loss	(56,263)	(66,348)
Operating margin[4]	-15.3 %	-9.2 %
Loss from continuing operations attributable to shareholders	(38,362)	(53,696)
Net margin of continuing operations to shareholders[4]	-10.4 %	-7.4 %
Loss from continuing operations per ADS[3], basic and diluted	(1.06)	(1.48)
Loss from continuing and discontinued operations attributable to shareholders	(38,362)	(104,334)
Net margin of continuing and discontinued operations to shareholders[4]	-10.4 %	-14.4 %
Loss from continuing and discontinued operations per ADS, basic and diluted	(1.06)	(2.87)

 

[1]  Reference is made to the announcement made by Ping An Group on October 21, 2024. Lufax became a subsidiary of Ping An Group on July 30, 2024. Therefore, the Company's revenue from Ping An Group shown in this table included revenue from Lufax since July 30, 2024. Revenue from Lufax for the quarter ended March 31, 2024 was approximately RMB58 million. [2] Third-party customers refer to each customer with revenue contribution of less than 5% of the Company's total revenue in the relevant period. These customers are a key focus of the Company's diversification strategy. [3] In RMB. Each ADS represents 30 ordinary shares. [4] Gross margin from is calculated as gross profit divided by total revenue for the period. Operating margin is calculated as operating profit/(loss) divided by total revenue for the period. Net margin to shareholders is calculated as the profit/(loss) attributable to shareholders divided by total revenue for the period.

Revenue from Continuing Operations Breakdown

	Three Months Ended
In RMB'000, except percentages	March 31		YoY
	2025	2024
Implementation	142,952	157,459	-9.2 %
Transaction-based and support revenue
Business origination services	5,237	12,835	-59.2 %
Risk management services	55,105	65,483	-15.8 %
Operation support services	121,708	134,062	-9.2 %
Cloud services platform	1,692	318,307	-99.5 %
Post-implementation support services	19,925	14,921	33.5 %
Others	21,159	20,203	4.7 %
Sub-total for transaction-based and support revenue	224,826	565,811	-60.3 %
Total Revenue from Continuing Operations	367,778	723,270	-49.2 %

Revenue from continuing operations was RMB368 million in the first quarter of 2025, a decrease of 49.2% from RMB723 million during the same period last year, primarily due to a decrease of RMB317 million in revenue from cloud services platform. Implementation revenue was RMB143 million in the first quarter of 2025, a decrease of 9.2% from RMB157 million during the same period last year, mainly due to a decrease in demand for implementation of financial services systems in China. Revenue from business origination services was RMB5 million in the first quarter of 2025, a decrease of 59.2% from RMB13 million during the same period last year, primarily due to a decrease in transaction volumes from loan origination systems under digital credit management solutions. Revenue from risk management services was RMB55 million in the first quarter of 2025, a decrease of 15.8% from RMB65 million during the same period last year, mainly due to a decrease in transaction volumes from banking related risk analytic solutions. Revenue from operation support services was RMB122 million in the first quarter of 2025, a decrease of 9.2% from RMB134 million during the same period last year, primarily due to decreased revenue from AI customer service solution. Revenue from cloud services platform was RMB2 million in the first quarter of 2025, a decrease of 99.5% from RMB318 million during the same period last year, primarily due to the strategic phasing out of the cloud services since July 2024, details of which were previously disclosed in our announcement dated July 11, 2024 regarding an update on our business operations. Revenue from post-implementation support services was RMB20 million in the first quarter of 2025, an increase of 33.5% from RMB15 million during the same period last year, primarily due to increased demand for our post-implementation support services from our overseas customers.

	Three Months Ended
In RMB'000, except percentages	March 31		YoY
	2025	2024
Digital Banking segment	103,973	161,553	-35.6 %
Digital Insurance segment	142,601	131,886	8.1 %
Gamma Platform segment	121,204	429,830	-71.8 %
Total Revenue from Continuing Operations	367,778	723,270	-49.2 %

Revenue from Gamma Platform segment was RMB121 million in the first quarter of 2025, a decrease of 71.8% from RMB430 million during the same period last year, primarily due to the strategic phasing out of cloud services. Revenue from Digital Banking segment was RMB104 million in the first quarter of 2025, a decrease of 35.6% from RMB162 million during the same period last year, mainly due to a decrease in transaction volumes from business origination and risk management services. Revenue from Digital Insurance segment was RMB143 million in the first quarter of 2025, an increase of 8.1% from RMB132 million during the same period last year, mainly due to an increased demand for digital property and casualty insurance solutions.

First Quarter 2025 Financial Results

Revenue from Continuing Operations

Revenue from continuing operations was RMB368 million in the first quarter of 2025, a decrease of 49.2% from RMB723 million during the same period last year, primarily due to a decrease in revenue from cloud services platform.

Cost of Revenue from Continuing Operations

Cost of revenue from continuing operations was RMB263 million in the first quarter of 2025, a decrease of 41.7% from RMB451 million during the same period last year, which was mainly due to revenue decrease.

Gross Profit from Continuing Operations

Gross profit from continuing operations was RMB105 million in the first quarter of 2025, compared to RMB272 million during the same period last year. Gross margin of continuing operations was 28.5%, compared to 37.7% in the prior year. The decrease in gross margin of continuing operations was mainly due to reduction in economies of scale caused by the decrease in revenue.

Operating Loss and Expenses from Continuing Operations

Total operating expenses from continuing operations were RMB156 million in the first quarter of 2025, compared to RMB342 million during the same period last year. As a percentage of revenue, total operating expenses from continuing operations decreased by 5.0ppt to 42.3% from 47.3% during the same period last year.

• Research and Development expenses from continuing operations were RMB62 million in the first quarter of 2025, compared to RMB213 million during the same period last year. The decline was mainly due to the Company's proactive adjustment of its business structure and its return on investment driven approach to manage research and development projects. As a percentage of revenue, research and development expenses from continuing operations decreased to 16.7% from 29.5% in the prior year.
• Sales and Marketing expenses from continuing operations were RMB46 million in the first quarter of 2025, compared to RMB49 million during the same period last year. The decline was mainly due to a decrease in personnel costs and advertising expenses. As a percentage of revenue, sales and marketing expenses from continuing operations increased to 12.6% from 6.7% in the prior year.
• General and Administrative expenses from continuing operations were RMB48 million in the first quarter of 2025, compared to RMB81 million during the same period last year. The decline was mainly due to a decrease in personnel costs. As a percentage of revenue, general and administrative expenses from continuing operations increased to 13.0% from 11.1% during the same period last year.

Operating loss from continuing operations was RMB56 million in the first quarter of 2025, compared to RMB66 million during the same period last year. Operating margin of continuing operations was -15.3%, compared to -9.2% in the prior year.

Loss from Continuing Operations Attributable to Shareholders

Loss from continuing operations attributable to OneConnect's shareholders was RMB38 million in the first quarter of 2025, compared to RMB54 million during the same period last year. Loss from continuing operations attributable to OneConnect's shareholders per basic and diluted ADS was RMB-1.06, compared to RMB-1.48 during the same period last year. Weighted average number of ordinary shares in the first quarter of 2025 was 1,089,842,845.

Cash Flow

For the first quarter of 2025, net cash used in operating activities was RMB190 million, net cash used in investing activities was RMB825 million, and net cash used in financing activities was RMB6 million.

About OneConnect

OneConnect Financial Technology Co., Ltd. is a technology-as-a-service provider for financial services industry. The Company integrates extensive financial services industry expertise with market-leading technology to provide technology applications and technology-enabled business services to financial institutions. The integrated solutions and platform the Company provides include digital banking solution, digital insurance solution and Gamma Platform, which is a technology infrastructural platform for financial institutions. The Company's solutions enable its customers' digital transformations, which help them improve efficiency, enhance service quality, and reduce costs and risks.

The Company has established long-term cooperation relationships with financial institutions to address their needs of digital transformation. The Company has also expanded its services to other participants in the value chain to support the digital transformation of financial services eco-system. In addition, the Company has successfully exported its technology solutions to overseas financial institutions.

For more information, please visit ir.ocft.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "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," "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 comply with existing or future laws and regulations related to data protection or data security; its ability to maintain and enlarge the customer base or strengthen customer engagement; its ability to maintain its relationship and engagement with Ping An Group and its related parties, which are 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; 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; litigation and negative publicity surrounding China-based companies listed in the U.S.; 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; 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 U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and the Company undertakes no obligation to update any forward-looking statement, except as required under applicable law.  

Contacts

Investor Relations:
OCFT IR Team
OCFT_IR@ocft.com 

Media Relations:
OCFT PR Team
pub_jryztppxcb@pingan.com.cn 

 

ONECONNECT CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
	Three Months Ended March 31
	2025	2024
	RMB'000	RMB'000
Continuing operations
Revenue	367,778	723,270
Cost of revenue	(262,864)	(450,867)
Gross profit	104,914	272,403
Research and development expenses	(61,570)	(213,183)
Selling and marketing expenses	(46,485)	(48,500)
General and administrative expenses	(47,685)	(80,520)
Net impairment losses on financial and contract assets	(8,981)	(13,690)
Other income, gains or loss ‑ net	3,544	17,142
Operating loss	(56,263)	(66,348)
Finance income	15,544	10,340
Finance costs	(1,734)	(4,278)
Finance income - net	13,810	6,062
Loss before income tax	(42,453)	(60,286)
Income tax expense	(641)	(89)
Loss for the period from continuing operations	(43,094)	(60,375)
Discontinued operations
Loss from discontinued operations (attributable to owners of the Company)	-	(50,638)
Loss for the period	(43,094)	(111,013)
Loss attributable to:
- Owners of the Company	(38,362)	(104,334)
- Non-controlling interests	(4,732)	(6,679)
	(43,094)	(111,013)
Loss attributable to owners of the Company arises from:
- Continuing operations	(38,362)	(53,696)
- Discontinued operations	-	(50,638)
	(38,362)	(104,334)
Other comprehensive (loss)/income, net of tax:
Items that may be subsequently reclassified to profit or loss
- Foreign currency translation differences of continuing operations	(67)	1,334
- Exchange differences on translation of discontinued operations	-	177
- Changes in the fair value of debt instruments measured at fair value through other comprehensive income of discontinued operations	-	6,056
Item that will not be reclassified subsequently to profit or loss
- Foreign currency translation differences	(2,628)	1,942
Other comprehensive (loss)/income for the period, net of tax	(2,695)	9,509
Total comprehensive loss for the period	(45,789)	(101,504)
Loss per share for loss from continuing operations attributable to owners of the Company
(expressed in RMB per share)
- Basic and diluted	(0.04)	(0.05)
Loss per ADS for loss from continuing operations attributable to owners of the Company
(expressed in RMB per share)
- Basic and diluted	(1.06)	(1.48)
Loss per share for loss attributable to owners of the Company
(expressed in RMB per share)
- Basic and diluted	(0.04)	(0.10)
Loss per ADS for loss attributable to owners of the Company
(expressed in RMB per share)
- Basic and diluted	(1.06)	(2.87)

 

ONECONNECT CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
	March 31 2025	December  31 2024
	RMB'000	RMB'000
ASSETS
Non‑current assets
Property and equipment	52,364	43,895
Intangible assets	189,152	195,636
Deferred tax assets	313,805	313,805
Restricted cash and time deposits over three months	3,932	-
Prepayments and other receivables	7,260	6,506
Trade receivables	10,186	10,106
Total non-current assets	576,699	569,948
Current assets
Trade receivables	504,110	496,429
Contract assets	65,673	63,420
Prepayments and other receivables	268,007	342,221
Financial assets measured at fair value through profit or loss	877,059	455,016
Derivative financial assets	797	40,356
Restricted cash and time deposits over three months	490,428	51,940
Cash and cash equivalents	924,955	1,947,922
Total current assets	3,131,029	3,397,304
Total assets	3,707,728	3,967,252
EQUITY AND LIABILITIES
EQUITY
Share capital	78	78
Shares held for share option scheme	(145,195)	(149,544)
Other reserves	11,029,706	11,041,209
Accumulated losses	(8,371,653)	(8,333,291)
Equity attributable to equity owners of the Company	2,512,936	2,558,452
Non-controlling interests	(59,241)	(54,509)
Total equity	2,453,695	2,503,943
LIABILITIES
Non‑current liabilities
Trade and other payables	17,669	10,670
Contract liabilities	11,254	12,946
Total non‑current liabilities	28,923	23,616
Current liabilities
Trade and other payables	890,467	993,842
Payroll and welfare payables	201,981	311,190
Contract liabilities	110,025	115,501
Short-term borrowings	19,907	19,160
Derivative financial liabilities	2,730	-
Total current liabilities	1,225,110	1,439,693
Total liabilities	1,254,033	1,463,309
Total equity and liabilities	3,707,728	3,967,252

 

ONECONNECT CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Three Months Ended March 31
	2025	2024
	RMB'000	RMB'000
Net cash used in operating activities	(189,795)	(115,236)
Net cash (used in)/generated from investing activities	(824,942)	255,848
Net cash used in financing activities	(5,646)	(100,971)
Net (decrease)/increase in cash and cash equivalents	(1,020,383)	39,641
Cash and cash equivalents at the beginning of the period	1,947,922	1,379,473
Effects of exchange rate changes on cash and cash equivalents	(2,584)	1,777
Cash and cash equivalents at the end of period	924,955	1,420,891

 

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SOURCE OneConnect Financial Technology Co., Ltd.

FAQ

What caused OneConnect's (OCFT) revenue decline in Q1 2025?

The 49.2% revenue decline was primarily due to a 99.5% decrease in cloud services platform revenue following its strategic phasing out since July 2024, along with decreased demand in business origination and banking services.

How did OneConnect's (OCFT) different segments perform in Q1 2025?

Digital Insurance grew 8.1% YoY to RMB143M, while Digital Banking declined 35.6% to RMB104M and Gamma Platform fell 71.8% to RMB121M.

What was OCFT's loss from continuing operations in Q1 2025?

Loss from continuing operations attributable to shareholders was RMB38 million, an improvement from RMB54 million in Q1 2024, with loss per ADS of RMB-1.06.

What happened to OneConnect's virtual banking business?

OneConnect completed the disposal of its virtual bank business to Lufax for HK$933 million in cash on April 2, 2024.

How did OneConnect's gross margin change in Q1 2025?

Gross margin declined to 28.5% from 37.7% YoY, mainly due to reduced economies of scale from decreased revenue.