Gross Margin of Continuing Operations[1] Improved by 0.3ppt and Net Margin of Continuing Operations to Shareholders Narrowed by 0.7ppt for First Quarter 2024 SHENZHEN, China, May 21, 2024 /PRNewswire/ -- OneConnect Financial Technology Co., Ltd. ("OneConnect" or the "Company") (NYSE:OCFT), a leading technology-as-a- service provider for financial services industry in China, today announced its unaudited financial results for the first quarter ended March 31, 2024. First Quarter 2024 Financial Highlights Revenue from continuing operations was RMB723 million as compared to RMB894 million for the same period of the prior year. Gross margin of continuing operations increased by 0.3ppt year-over-year to 37.7% as compared to 37.4% for the same period of the prior year; non-IFRS gross margin of continuing operations was 40.0% as compared to 40.1% for the same period of the prior year. Operating loss from continuing operations narrowed 15.1% to RMB66 million, as compared to RMB78 million for the same period of the prior year. Operating margin of continuing operations increased to -9.2% from -8.7% for the same period of the prior year. Net loss from continuing operations attributable to shareholders narrowed by 25.9% to RMB54 million, as compared to RMB72 million for the same period of the prior year. Net margin of continuing operations to shareholders narrowed by 0.7ppt to -7.4% as compared to -8.1% for the same period of the prior year. Net loss from continuing operations per ADS, basic and diluted, was RMB-1.48 as compared to RMB-2.00 for the same period of the prior year. [1] As previously reported, the Company completed the disposal of its virtual bank business (the "discontinued operations") to 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 have been reflected as the "discontinued operations" in the Company's condensed consolidated financial statements and the historical financial results of the remaining business of the Company have been reflected as the "continuing operations" in the Company's condensed consolidated financial statements of the first quarter of 2024 and of the comparative period in 2023.   In RMB'000, except percentagesand per ADS amounts Three Months Ended March 31    YoY 2024 2023 Continuing operations Revenue Revenue from Ping An Group   421,796   536,854   -21.4 % Revenue from Lufax 58,256 71,357 -18.4 % Revenue from third-party customers[1] 243,218 285,615 -14.8 % Total 723,270 893,826 -19.1 % Gross profit 272,403 334,657 Gross margin 37.7 % 37.4 % Non-IFRS gross margin 40.0 % 40.1 % Operating loss (66,348) (78,142) Operating margin -9.2 % -8.7 % Net loss from continuing operations    attributable to shareholders   (53,696)   (72,479) Net margin of continuing operations to shareholders -7.4 % -8.1 % Net loss from continuing operations per ADS[2], basic and diluted (1.48) (2.00)           [1] 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. [2] In RMB. Each ADS represents 30 ordinary shares. Chairman, CEO and CFO Comments Mr. Chongfeng Shen, Chairman of the Board and Chief Executive Officer, commented, "Since the beginning of 2024, we have been continuously optimizing our product and customer structure and focusing on our core businesses under the strategy of "Unite the Core, Empower the Wings" in order to achieve quality development. We have continued to expand our overseas business and have recorded rapid growth. Our revenue from third-party overseas customers from continuing operations increased by 14.8% on a year-over-year basis in the first quarter of 2024. In the same quarter, we achieved remarkable results in costs reduction and efficiency improvement, and our loss continued to narrow." Mr. Chongfeng Shen further commented, "We have strengthened our research capabilities and introduced high value and high-end products into the ever-involving financial technology industry. Our spirit of innovation has been well-received and recognized in the industry. In the future, we will continue focusing on digital banking, digital insurance and Gamma platform, and continue to optimize our product and customer structure, upgrade our services and further expand into overseas market. With our unique competence in integrating "technology + business", we endeavor to continue to promote the development of new productivity in the financial industry." Mr. Yongtao Luo, Chief Financial Officer, commented, "We continued to make steady progress towards its profitability targets in the first quarter of 2024. Gross margin of the Company's continuing operations for the first quarter was 37.7% and increased by 0.3ppt on a year-over-year basis. Benefiting from our success in costs reduction and efficiency improvement, our operating expenses from our continuing operations decreased significantly by 17.7 % on a year-over-year basis. For research and development, we allocated our resources strategically and focused our capital and labor efficiently on high-quality products and projects. As a result, our research and development expenses decreased by 22.8% on a year-over-year basis while we also maximized the value of outputs from these research and development. As a result, our net loss from continuing operations attributable to shareholders decreased by 25.9% on a year-over-year basis. Going forward, we will continue to strictly implement cost control measures and improve operation efficiency. Meanwhile, we will enhance our product competitiveness and endeavor to drive revenue growth, especially third-party revenue growth, from premium-plus customers. These efforts combined will help us reach our profitability targets as early as possible and create more value for our shareholders and customers." "As previously disclosed, we received notifications from certain subsidiaries and associates of Ping An Insurance (Group) Company of China, Ltd. that they intend to cease to utilize the cloud services we provide under Gamma FinCloud platform. There are uncertainties as to whether any of the other connected customers will continue to utilize our cloud services. We have been actively monitoring the situation and evaluating our business plans and further measures in response to these developments and corresponding financial impact." Revenue from Continuing Operations Breakdown  Three Months Ended In RMB'000, except percentages      March 31 2024 2023 YoY Implementation 157,459 209,934 -25.0 % Transaction-based and support revenue Business origination services   12,835   49,046   -73.8 % Risk management services 65,483 77,743 -15.8 % Operation support services 134,062 222,545 -39.8 % Cloud services platform 318,307 292,247 8.9 % Post-implementation support services 14,921 12,341 20.9 % Others 20,203 29,970 -32.6 % Sub-total for transaction-based    and support revenue   565,811   683,892   -17.3 % Total Revenue from Continuing Operations 723,270 893,826 -19.1 %   Revenue from continuing operations in the first quarter of 2024 declined by 19.1% to RMB723 million from RMB894 million for the same period in the prior year, primarily due to a decline in transaction-based and support revenue as we continued to focus on high value products and reduced customized projects with low margins in the first quarter. Implementation revenue decreased by 25.0% on a year-over-year basis to RMB157 million, mainly due to a reduced demand for banking system products and Gamma Platform data middle platform system products in the first quarter. Revenue from business origination services decreased by 73.8% on a year-over-year basis to RMB13 million, primarily due to declined transaction volumes in Marketing Management Platform under digital retail banking solutions and in loan origination systems under digital credit management solutions. Revenue from risk management services decreased by 15.8% on a year- over-year basis to RMB65 million, mainly due to reduced transaction volume in banking related risk analytic solutions because of slower than expected recovery of banking activities in the first quarter. Revenue from operation support services decreased by 39.8% on a year-over-year basis to RMB134 million, which was primarily due to change of business model in some auto ecosystem services business that the Company migrates from acting as a contractor to a distributor. Revenue from cloud services platform increased by 8.9% on a year-over-year basis to RMB318 million due to the increased transaction volume of cloud services.  Three Months Ended In RMB'000, except percentages      March 31 YoY 2024 2023 Digital Banking segment 161,553 258,738 -37.6 % Digital Insurance segment 131,886 176,657 -25.3 % Gamma Platform segment 429,831 458,431 -6.2 % Total from Continuing Operations 723,270 893,826 -19.1 %   Revenue from Gamma Platform segment, decreased by 6.2% to RMB430 million in the first quarter of 2024 from RMB458 ...