OneConnect Financial Technology Co. Ltd. (OCFT) is a leading technology-as-a-service provider empowering financial institutions with innovative digital solutions.
Backed by Ping An Group, OneConnect leverages advanced technologies such as artificial intelligence, blockchain, and big data to streamline operations, enhance risk management, and deliver superior customer experiences.
With a strong global presence and a commitment to sustainability, OneConnect is redefining the future of financial services by driving digital transformation across banking, insurance, and capital markets.
As the FinTech industry evolves, OneConnect continues to lead the way, offering scalable, AI-driven solutions that empower institutions worldwide to stay competitive in a rapidly changing landscape.
Q3 2024 Financial Results: Stability and Strategic Realignment
The third quarter of 2024 demonstrated OneConnect’s strategic ability to adapt to a dynamic market environment. Revenue from continuing operations totaled RMB417 million, marking a decrease of 48.3% year-over-year.
This contraction was largely attributed to the strategic phasing out of underperforming cloud services and a decline in domestic implementation demand. Despite this topline decrease, revenue from third-party overseas customers increased by 23.4% during the first three quarters of 2024, reflecting the success of the company’s global expansion initiatives.
Gross profit from continuing operations was RMB137 million, and the gross margin stood at 32.7%. Non-IFRS gross margin was slightly higher at 35.6%, highlighting improved cost efficiencies.
A net loss of RMB30 million for the quarter, reduced from RMB51 million a year earlier, underscores OneConnect’s commitment to financial discipline and its strategic alignment toward profitability. Operating expenses from continuing operations decreased by 47.8% year-over-year, driven by prudent cost management in research and development (R&D) and sales and marketing.’
Strategic Realignment: Enhancing Global Presence
OneConnect’s ongoing diversification into international markets underscores its ambition to mitigate reliance on domestic revenue streams and capitalize on emerging global opportunities.
With revenue from overseas customers showing robust growth, the company has made strides in expanding its footprint in Southeast Asia, the Middle East, and other regions where digital financial infrastructure is in demand.
These efforts align with the company’s five-year “One Body and Two Wings” strategy, which emphasizes international expansion, product standardization, and high-value customer engagement.
This global focus is further supported by strategic adjustments to the company’s product offerings. By phasing out its cloud services platform, OneConnect is reallocating resources to high-value, scalable solutions in digital banking and insurance, areas where demand remains resilient.
The Gamma Platform segment, though seeing a year-over-year revenue decline, remains a vital part of the company’s long-term growth strategy as its new product suite gains traction internationally.
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Optimizing Efficiency: Balancing Innovation and Financial Discipline
OneConnect has successfully restructured its operations to focus on profitability without compromising innovation. R&D expenses in Q3 2024 were reduced to RMB70 million, down significantly from RMB230 million in the prior year, reflecting a more ROI-driven approach to development. Sales and marketing expenses similarly declined, as enhanced sales processes allowed the company to achieve greater efficiency.
Despite these cost reductions, OneConnect continues to invest strategically in key growth areas such as AI-driven solutions for financial institutions. These investments aim to strengthen the company’s position as a global leader in providing seamless, integrated FinTech solutions that address critical needs such as risk management, compliance, and operational optimization.
A New Business Model: Adapting to Market Needs
The company has transitioned its operational model in response to evolving customer demands. Revenue from implementation services decreased modestly, reflecting reduced domestic demand, but post-implementation support services experienced significant growth, with revenue rising 49% year-over-year in Q3 2024.
This growth highlights the increasing reliance of global customers on OneConnect’s continuous support and maintenance services, a shift that improves customer retention and enhances long-term revenue streams.
Revenue from digital banking solutions totaled RMB106 million in Q3 2024, reflecting a 47.6% decline due to reduced transaction volumes in business origination and risk management.
However, these results are expected to stabilize as OneConnect’s product upgrades and deeper customer engagement efforts gain momentum in international markets.
Global and Industry Trends: Positioning for Future Growth
The global financial services industry is undergoing rapid digital transformation, with financial institutions seeking to modernize legacy systems and adopt AI, big data, and blockchain technologies.
OneConnect’s suite of solutions positions it to capitalize on this shift. Its integration of ESG principles, reflected in its 2023 ESG Report, also resonates with socially conscious investors and institutions prioritizing sustainable business practices.
Emerging markets, particularly in Asia and the Middle East, represent a significant growth opportunity for OneConnect as governments and institutions accelerate their digital transformation efforts.
The company’s ability to deliver localized, scalable solutions tailored to these markets provides a competitive edge over global FinTech peers.
Leadership Vision: Navigating the Path to Profitability
Chairman and CEO Chongfeng Shen emphasized OneConnect’s focus on leveraging AI technologies, enhancing operational efficiency, and expanding into international markets to achieve profitability. CFO Rubo Lin highlighted the importance of delivering high-value, standardized products to improve gross margins and meet the evolving needs of premium customers.
This vision is further supported by OneConnect’s strategic alliances with global and regional financial institutions, enabling the company to deliver collaborative solutions that address complex operational challenges. These partnerships provide a strong foundation for sustained revenue growth and enhanced shareholder value.
Looking Ahead: A Bullish Investment Case
OneConnect’s future outlook is underpinned by its ability to align strategic priorities with global FinTech trends. The company’s focus on international expansion, product standardization, and technological innovation positions it for sustainable growth.
As OneConnect continues to diversify its revenue streams and strengthen its presence in high-growth markets, its ability to generate value for shareholders will be amplified.
The ongoing shift toward profitability, supported by disciplined financial management and targeted investments, makes OneConnect a compelling opportunity for investors seeking exposure to the transformative potential of financial technology.
As the company continues to execute its strategic initiatives, its resilience, adaptability, and innovation stand out in a competitive and rapidly evolving industry.
Conclusion: A Bullish Prospect in Global FinTech
OneConnect Financial Technology Co. Ltd. represents a dynamic blend of innovation, strategic focus, and operational efficiency. Its pivot to global markets, enhanced customer engagement, and disciplined financial management have positioned it as a leader in the FinTech space.
For investors seeking exposure to a high-growth company driving digital transformation in financial services, OneConnect offers a strong, forward-looking investment thesis.
With its robust product suite, expanding global footprint, and commitment to achieving profitability, OneConnect is well-equipped to navigate market challenges and capitalize on emerging opportunities.
Its focus on sustainable growth and delivering value to customers and shareholders alike ensures it remains a bullish prospect in the global FinTech landscape.
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