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spk06: Good day, and thank you for standing by. Welcome to the OneConnect first quarter 2021 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. And to ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today. Speaker Patricia Chang, please go ahead.
spk08: Hello, everyone. Good to speak to you again. Welcome to the Q1 earnings call. On the line, we've got Mr. Ye Wangchun, Chairman and CEO of OneConnect, Mr. Luo Yongtao, CFO, Mr. Michael Fei, CEO of SME Banking, and Mr. Teng-Shu Wang, CEO of GammaO. Some housekeeping notes before we begin. First of all, you can download the earnings press release and presentation from the IR website. Second, our remarks today will include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements except as required under applicable law. During the call, we may present both IFRS and non-IFRS financial measures. A discussion of the limitations of non-IFRS measures and the reconciliation to IFRS is included in the earnings price release. I will now pass it over to Chairman Ye. His remarks will be in Chinese. Translation in English will follow. Ye Dong, please.
spk10: Hello, everyone. As for China's economic recovery and financial institutions' need for tax reform, the financial crisis has made a good start this year. I am very happy to report to you the results of the first quarter. In the first quarter, the growth of the income has increased by 41.1%. We have seen the impact of low-priced products, Through a variety of solutions, it supports the source of military income, although it is not in line with the market and supervision regulations, which has led to a significant decline in activity. However, the third-party customer income ratio has been steadily improved in the first two seasons.
spk09: Hello, everyone. I am pleased to say that OneConnect has got off to a solid start to this year, riding the cocktail of the economic recovery in China as well as the continuing demand for digital solutions from financial institutions. We achieved revenue growth of 41.1% year-over-year as we built on the momentum from the rollout of cloud services platform last year. which more than offset the gap from the exit of low-value products. Even though the drop in business origination widened following industry and regulatory headwinds, revenue mix from third-party customers rebounded for two consecutive quarters.
spk10: The increase in the number of customers increased rapidly. Through the management of domestic factories, it is necessary to improve the control of costs. The increase in the number of customers increased rapidly. 34.4% of the company's sales. The company's sales have exceeded more than 2.5 million customers. Of which, 3 have exceeded 10 million. The project budget is significantly higher than the average level. We continue to carry out our business under the technology. In order to realize the pre-setting transformation of the private bank, from the beginning to the new private bank,
spk09: Net loss also further improved, with net loss ratio narrowing by 34 percentage points, thanks to the strengthening of product management and continuous cost discipline. Further progress was made in customer expansion. In the first quarter, we signed over 20 deals worth more than 5 million yuan, three of which exceeded 10 million yuan. The contract size is significantly higher than average. From now on, financial institutions institute a total digitalization of retail banking business, building a digital bank from scratch. These projects reflect our all-round coverage of our clients' diverse needs and are a great testament to our technology plus business capabilities.
spk10: In the second quarter, we will continue to increase the value of our products and our customers. We are determined to promote the improvement of our products. We will actively develop, build, and measure solutions. We will increase the core competitiveness of our products. We will increase the supply and demand of our products. We will increase the spread of our new products. We are determined to promote the improvement of our customers. The coming quarter, OneConnect remains committed to strengthening product value as well as customer value.
spk09: We will continue to upgrade our products and enhance the end-to-end delivery, improve the core competitiveness of our offering. For more mature products, we will further broaden the customer reach and volume. For newly launched ones, we will step up sales to third-party customers. At the same time, we also seek to deepen the engagement with our customers. Certain financial institutions have different needs. Through cross-selling and up-selling, we will improve the water share as well as customer value.
spk10: Looking forward to the future, under the control of the epidemic, under the large scale of the recovery of China's economic order, we are confident that today's income growth rate is not lower than last year. Fortunately, the economic order needs double-digit improvement. I hope you can continue to support the development of the financial industry. Thank you.
spk09: Lastly, I would like to reiterate our confidence that as the Chinese economy returns to normal after this pandemic, the revenue growth rate this year will be no less than that last year. We also expect to get double-digit percentage points improvement in the net loss ratio. Thank you again for your interest in and support for OnConnect. Your comments and questions will be welcome as always.
spk08: Thank you, Chairman Ye. Next, CFO Luo Yongtao will go through the financial results in more detail. Luo Yongtao, please.
spk04: Thank you, Patricia. Good morning, everyone. This is my first results briefing. It's an honor to speak to you and present our results. The first quarter, as Chairman Ye said in his opening speech, was a period of consolidation. along which we continued with our strategy to reinforce products and sales. Starting with the top line, revenue increased by 41.1% year-over-year to $820 million in the first quarter. Transaction activities provide a good snapshot of our business. Our revenue is driven by transactions or usage of our solutions. There are three main indicators that we look at. Retail loan volume, SME loan volume, and auto claims. Retail loan process by our system rose 11% year to year to 14 billion, reversing from a drop in previous quarters, thanks to a pickup in risk management solutions, which I'm going to talk about in a bit. SME loans processed also posted an increase, up by 25% to 7 billion. The number of auto claims processed rose 56% to 1.56 million. You have all seen the impressive GDP growth China reported in the first quarter. Although the situation surrounding COVID-19 remains fluid and there are some up and downs in different sectors, the recovery of the domestic economy is generally underway. Improvements in transaction activities will further drive our business. By business segment, the cloud services platform was the biggest driver of revenues, contributing 181 million, or 22% of the total revenue generated. Their business was launched at the end of the second quarter last year, which means that we are unable to make a year-over-year comparison at this stage. Our rapid growth shows OneConnect's ability to break into new markets, just like five years ago when we established the company. In terms of size, operations support was the biggest. Revenue rose 29%, to 212 million, representing 26% of the total. Gold side assistance and AI customer service continue to see strong demand from financial institutions. Risk management also did well, growing 21% to 99 million. You saw in the earlier slide the rebound in retail lending activities. Fast claims also falls under this category. Nonetheless, revenues from business origination continued to remain weak. It fell 34% year-over-year to $118 million. As we explained on previous earnings calls, a combination of internal and external factors have been weighing on this segment. Internally, as the intensity of product optimization was stepped up in the middle of last year, residual pressure from the exit will set out in the first half of this year. Externally, there has been a tightening in regulation and industry changes towards the end of last year. The impact is also evident in the performance of our customer groups. All three customer groups, Ping An, Lupex, and third-party customers, saw a drop in business origination revenues. Revenue from Lupex fell 9.9% to 75 million as a result. The team is working hard to make up for the loss over the course of this year. In respect to Ping An Group, revenue rose 92% year to year to 436 million. Expansion to cloud services platform provides strong support, more than offsetting the drop in business origination. In terms of third party customers, this group did experience a bigger decline in business origination revenue because that was our first business line. and the third-party ratio tends to be higher for more mature solutions. Despite having a bigger hole to fill, third-party customers delivered 14% revenue growth in the first quarter. Aside from business origination, all other segments achieved an increase year over year. While business origination is still undergoing consolidation, we are seeing signs of recovery. The 14% growth rate is higher than the level seen in the third and the fourth quarter last year. Equally, the proportion of the third-party revenue has been rebounding from 34% in third quarter last year to 36% in the fourth quarter, and now 38%. Even the timing of old product phase-out and new product launches does skew year-over-year numbers. The quarter-on-quarter trend is a better indication of the progress made. This is the same with gross margin. Year-over-year, the metric dipped from 34.8% to 34%. You have to take into consideration of the change in mix of solutions. Quarter on quarter, on a non-FRS basis, those margins rose from 42.8% in fourth quarter 2020 to 43.5% in fourth quarter this year. Next, I would like to discuss operating expenses. The three main expense items all reported a drop in ratio. Let's look at them one by one. Research and development expenses rose 17% to $281 million. The rollout of cloud services platform does require more investment. As a percentage of revenue, the ratio was lower year over year from 41% to 34%. We also spend more in sales and marketing. about 7% higher year-over-year to 167 million as resources got directed to promotion of new solutions. However, as a percentage of revenue, the ratio went down from 27% to 20%. In terms of general and administrative expenses, we cut spending by over 6% year-over-year. to 180 million. As a percentage of revenue, the ratio dropped from 33% to 22%, representing an improvement of over 11 percentage points. The scale that we are building has led to a significant amount of operating leverage, adding in cost of discipline, operating loss ratio improved from 77% to 42%, a drop of close to 35 percentage points. The bottom line also made a similar progress. Net loss to shareholders fell to 305 million from 415 million. As a percentage of revenue, net loss ratio improved by 34 percentage points to 37.2% for the first quarter. Overall, we're pleased to have had a solid first quarter. It is important to continue to innovate and grow a diversified revenue mix to address the changing needs of financial institutions in this evolving market. I will now hand it over to Michael, who will talk about the progress in our sales efforts.
spk05: Thank you, Wozong. Hi, everyone. If you have the presentation in front of you, actually, we have a second section talking about the business highlights. We have several case examples of our product and client case examples that I will go through one by one together with you. The first one, our major drive for our revenue this quarter with cloud service platform. Our cloud is actually designed specifically to cater to the needs of financial institutions. Security, safety, and compliance are the most important considerations for financial institutions and also the key differentiating factor for our financial cloud services. On this page, you can see the current case example as a joint stock bank. 95% of the test environment and 30% of the production environment are now already on cloud. As a result, the bank is able to deliver a resource much faster, with more flexibility, and also at a much lower cost. We had several successful third-party client signings on cloud services since the beginning of the year. Next page is a case example for another joint stock bank. We have implemented a corporate banking risk control platform for that bank. It covers over 80,000 of its corporate banking customers and over 70% of its corporate loan portfolio. We help the bank consolidate over 20 types of various internal and external data to develop 80-plus labels. We also offer a model platform and a rule engine We help the bank develop over 600 early warning signals, early warning rules. Many of these rules are based on our understanding of the business. This is a testimonial of our business and technology capability. The bank is now using this platform in its whole credit process, from preventing customer profile, to risk awaiting, to personal management, or even collection. We are actively replicating this product to other banks in China. The third case is for leading city commercial banks. Our mandate is to carry out the digitalization of the retail banking business. We started with the smart banking consultancy services. We need to first understand the existing business, what the bank wants, and then help redesign the solution that can achieve those objectives. Two of the products that have been delivered so far are the mobile banking application and the operation middle office. Through the application and the middle desk, we help the bank create a digital platform for their whole retail banking workforce. They can run data operations, management workflows, conduct various customer analysis, deploy tasks and feedback, share experience and insight, et cetera, et cetera. The platform now supports over 6,000 relationship managers and eight middle office centers. Similarly, the product is being rolled out to multiple other clients. The last example you can see here is to build a brand new bank. In our full year result, we shared a similar client case example. We have the digital bank in a box that is putting all our capabilities in one bundle. This is not the first time that OneConnect was interested with the mission to build a digital bank. We built a digital bank from scratch. This time, we got the mandate from a different country. This particular one is the country's first full digital bank. It comprises a digital mobile banking application, a core banking system, which will power the features such as remote banking services, loan, remittance, account opening, as well as cardless eATMs, AR customer service, et cetera. Many of the functions have already been launched, such as a real-time QR code payment, which was the first in that country. As well as during COVID-19, the bank used our system tools to deliver digital disbursements of relief subsidies to all the citizens in the country. as well as a simple three-step online account opening process. I hope these products and client case examples can provide you with a better sense of our business and the impact we are delivering to our clients. I will pass back to Patricia.
spk08: Thank you, Michael. Operator, we are ready for questions. Can you please open the line?
spk06: Thank you, presenters. As a reminder, to ask a question, you'll need to press star 1 on your telephone. Again, press star 1 on your telephone. And to withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Young View with Morgan Stanley. Your line is open.
spk00: Thank you for the opportunity to ask questions and congratulations on the strong top-line growth. I have two questions here. First one is on growth margin. Because we saw meaningful business mix change, no matter from a year-on-year on QMQ perspective, we see the business origination part and low margin cementation part decrease. but the gross margin is still largely flat-ish. So could you please update us what is the progress so far? I think the company is cutting some low-margin business internally, but from the reported gross margin perspective, the positive impact is still not visible so far. And especially we see the cloud platform is growing super fast. Is that still a relatively low margin business at the current stage? The second question is related with OPEX. We see a very solid OPEX control this quarter, only 7% young year increase. does management think that is a new normal or target a similar growth for the full year or it is kind of a one-off impact due to some reasons? Thank you.
spk08: Thank you, Liu Yang. Our CFO, Luo Yongtao, is going to take both of your questions.
spk04: Okay. Yeah. Thank you for the question. I think I will probably combine your first one and the signal went together because they are related. The gross margin, yes, from year-to-year basis is from 34.8% to 34%. It's about 0.8%. But the year-to-year basis is a result of the mix of our business, just as you said. We launched the product optimization in 2019, and the intensity of the action actually was stepped up in the middle of last year. That one, the impact is gradually, we will see it. But we compare this quarter and last quarter to one last year. The major change is cloud corruption. Because in last year, we didn't have the cloud business service. And this year, the cloud production is 22% of the total revenue. For the cloud services platform, as the new launches, in the early stage, the gross margin cannot be very high. So at this stage, it didn't. contribute too much to improve the magic. Actually, I think it's better to look at this magic on a quarter basis because from Q4 last year to Q1 this year, the proportion of the business is similar or comparable because in Q4, the cloud The cloud service platform is about 18%, and this year is 22%. From Q4 to Q1, on the SRS basis, it's 34.2% to 34%. So I would say it's in the pretty same level. But There is also another consideration we have to look at. Because the gross margin on the numerator, we have the amortization of the intangible assets. It's a pretty flat number, actually, across the four quarters. But on the denominator, the revenue, have some seasonality. And Q4 is much higher than Q1. From the number we can see, it's about 30% higher than the Q1 number. So if we exclude this impact, then we better look at the non-FRS basis. So that's why on our slide, we compared the quarter-to-quarter comparison based on the non-affiliated basis is from 42.8% to 43.5%. So we can see that it's a rebound from the Q1. And I think with ongoing of our product optimization and the growth margin improvement in the new launches, we will see the trend of the improvement of the growth margin going forward. So the third one, can you repeat the question, please?
spk00: Oh, the question is, we see the OPEX trend marketing R&D G&A increase is just a single digit in first quarter. Do you think that this kind of growth is sustainable, or is there any well-off reason to lead to a relatively good cost control in first quarter?
spk04: Yeah, for the operating expenses, with more and more The scale we're building actually will lead to the operating leverage. We'll see the operating expenses will go down further, actually. And some one-time input will be lower and lower in the next quarters.
spk00: Yeah, thank you. A quick follow-up question. Sorry, a quick follow-up here. I think, as you mentioned, to use the RFRS metric gross margin and also mentioned about the pretty good cost control or the R&D OPEX control. I just want to make sure there's no change to a company's R&D capitalization policy.
spk04: No, no, no. We don't have any changes on this policy. Thank you.
spk05: Actually, I want to also provide more information, more insight on the question you just mentioned on the margin. You have pointed out, and also Mr. Wu has said, we faced out some business organization, business product in the past two years. But in the meantime, we also launched many new products. Cloud is just one example. As we have explained in today's briefing, I have explained four examples. In addition to cloud, we also have this corporate risk banking, risk management platform, the retail banking, also the digital banking box. These are all, many of them are actually new products we have launched after our IPO. And you know, for all those SaaS products, in the early stage, a lot of the standardization work is required. So that's the margin tend to be lower for this new product. But as we build more client case examples, the cost will go down and the margin will gradually improve. So I think that also is one reason why you see our margin relatively stable.
spk00: Thank you.
spk08: Thank you, Vioyang. Operator, we can go to the next question.
spk06: Your next question comes from the line of Hans Chung with KeyBank. Your line is open.
spk02: Thank you for taking my question. So good morning, management team. So I have three questions. First, if you look at retail loans versus the business origination revenue, And I know we have been going through some optimization in our product portfolio. But we actually see for the past few quarters, we saw a decline in retail loans year over year. And then we also see the decline in business organization revenue. But things should be directionally related. But in the quarter, in the Q1, we have seen growth in retail loans, while we have seen even larger decline in business organization revenue. So I just want to know, how do we reconcile the trend underlying? And then, so that's my first question. And then second question, just, I assume that cloud revenue majority of cloud revenue is from Ping An customer. And then so if I subtract the cloud revenue from Ping An group, then it seems like group about roughly low teams year over year and then down nearly 40% sequentially. And it seems that larger than before. And then considering we have a lower base for first quarter last year, So I just want to know, is there any color you can provide to help us understand the dynamic in the Q1 for our P&I group, the single customer? And that's the second question. And the third question is, I remember that last time we have revenue outlook for the full year to be no less than last year, which would be 42% year-over-year growth. And now we have, for Q1, we have slightly lower, which was 41%. And are we continuing to maintain our guidance for revenue outlook for this year, 42%? And if so, that would imply a growth rate of variation afterwards, and then what would be the driver for that? Thank you.
spk08: Thank you, Hans. So three questions.
spk05: The first one, let's have... I will take the first one, and the second and third one, I think.
spk08: Okay, let's do it this way.
spk05: Thank you. Hi, Hans. Yeah, very good question. You spotted the growth in retail loan volume, but they're dropping our nation's revenue. Well, the answer is actually quite simple, is that because we have a shift in the loan portfolio we serve. So actually before 2019, many of the loans we serve are those consumer landings without any collateral security. So the margins tend to be much higher for these types of loan services. But now, I think our portfolio has been shifting to those more collateralized lending, the mortgages, the car loans, etc. The net interest margin for these products is much lower compared with consumer credit, and that's also our service fee is much lower. So that explains why we have a growth in the volume, but in the meantime, a drop in the revenues.
spk04: On a second question, in the first quarter, the main driver is coming from the cloud services platform. But if we talk about the cloud, other business growth is about in the teen percentage. I think for Ping An, we should look at the whole customer because the business coming from one single customer, we have some agreement between One Connect and Ping An. Also, for Ping An, there is an impact from the product optimization for the business origination line because we have also business with Ping An falling into this business line. Actually, if we're excluding the cloud, the other segments aside from aside from the business elimination, is still growing. That is more than offsetting the decline in the business origination. And also, I think for the pin line, with the improvement in the business relation, I think the income, the growth will be coming back actually, or it's maintaining the similar pace.
spk05: Yeah, just to add on to the Ping An question, I think we should treat Ping An the same as other clients. I don't suggest we actually strip out the cloud, because we launch new products for Ping An, also we phase out old product. So I would suggest we look at the Ping An revenue as a whole. Cloud is just one of the new products we provided to Ping An Group. There's a bunch of other new products we provided to Ping An Group too. So we just treat it as a whole. We have a new product and we face out all the products and we are confident that our services with Ping An will be long-term, will continue to grow our support to the Ping An Group.
spk02: So can I correct? So we have the, let's say, yeah, we rent out new product and then phase out old product. And so the rationale behind the phase out is because of low margin, low value, just as we have seen in the overall business origination segment, right? Yeah.
spk05: Yes, you can see that. Okay.
spk04: Okay. On the third question, I think, yeah, in the Q1, the increase is about 41%. But looking for the full year, actually, yeah. Yes, I think... We will continue our product optimization and we will have more efforts in the sales. So we are confident that for the full year, our revenue growth will be more than last year's rate. Yeah. Thank you.
spk02: Okay.
spk08: Can I have one more question? Of course.
spk02: Yes, please go ahead. Thank you. I just wanted to ask about what's the implication from the launch of the digital currency by the central bank? Because I think for PBC, they seem to adopt the hybrid model which is conditional centralized database versus decentralized laser technology. And so I just want to know, like, is there any trend, like, or is there an original for the commercial banks? They may adopt the DLT, I mean, as opposed to the current legacy, the infrastructure. And Is that something that we can benefit from the trend? Just want to hear any color about the overall implication from the digital renminbi. That would be helpful.
spk08: Thank you. Michael is going to share his thoughts.
spk05: Thanks, Hans. We are actually very closely monitoring the situation. We maintain a very close interaction with the central bank to understand the progress. At the current stage, we see actually most of the big four, the big ones, are piloting this digital new currency. We are monitoring the situation to see when there will be a large-scale rollout of this digital currency application. And once I think it is kind of rolled out to the largest scale, definitely, there will be a lot of requirements from those
spk08: Those banks and other also the merchants to upgrade their payment infrastructure Okay, so so thank you operator, okay, okay, thank you Yeah, we can continue offline on this topic operator let's have the next question the next person comes from the line of even one with CLSA and
spk06: Your line is open.
spk02: Hello, management. Thank you for the presentation. And thank you for presenting us with two examples of the cloud services that is helpful. But just want to add more color. Can you share the current split of the revenue source from Planned Group versus the parties? We believe Planned Group accounts for the majority, but can we get maybe some numbers on that? That is the first question. And the second question, so we understand that one can serve to financial institutions, but is there any plan, or are we doing it actually to serve the government as well? Is there any opportunity here? Thank you.
spk08: Thank you, Ethan. Why don't we ask Xu Banzong, because he's in charge of the cloud business, to talk about our cloud strategy to give you some better idea. And then the second question about the government business, Michael will take it.
spk01: Hello everyone, my name is Chen Qihua. Regarding the first question, since last year, we have been focusing on our customers mainly in Tiananmen Square. Since the first quarter of this year, we have increased our number of external customers, especially in security, insurance, and related corporate financial companies. Thank you. I would like to firstly answer your first question. Last year, when we launched the cloud services platform, most of our customers are from Ping An Group.
spk09: However, for the first quarter of this year, we are adding more and more third-party customers, including financial holding companies, insurance companies, and financial companies at provincial levels. For these financial company deals that we signed, most of them are over 10 million yen. So we are confident that the number will subtract that of PM groups.
spk05: The second question about serving the government. Yes, we do serve government agencies. but we are very targeted. We actually see government as a part of the ecosystem of us to providing financial technology services to the banks and the insurance companies. I will give you one example. Last year, we actually launched the SME financing platform together with the Guangdong provincial government. The platform integrated over 200 of different data sources from various government departments. And we use this data, we use this information to build the credit profiles, to build the customer ratings, to help banks to do better SME risk assessments. And also we leverage on this platform to penetrate into many of the scenarios of SME financing. For example, supply chain finance, invoice finance, et cetera. So we will continue actually to replicate this model to other areas in China. In fact, we have several more signings with the provincial government starting from early this year. So the short answer is yes, we do see government agencies as one of our target customers, but we are very targeted. We try to build an ecosystem for financial technology services and help the financial institutions to grow their business.
spk02: Thank you. Maybe just a very quick follow-up on this front, because we've seen headlines surrounding our SDI JV with SDI in Japan since that's been terminated and SDI even quoted some political issues surrounding that. So do we have any comment on that? I know the financial impact is limited, but how will this impact our overall strategy of growing overseas in the future? Thank you.
spk05: Yeah. Well, thanks for noticing this news. As you said, the financial impact will be very, very limited. I think the JV, there are success cases, there are failure cases. Just unfortunately, the JV with SBI in Japan didn't work out for the past year, probably because of the COVID or various other situations. So I think we mutually decided to close the JV. But our cooperation with SBI will continue. They remain a major shareholder of us. They're committed to the company, and we had a lot of corporations outside of Japan, in Southeast Asia, Hong Kong, et cetera. Got it.
spk11: Thank you.
spk08: Thank you, operator. We can have the next question.
spk06: The next question comes from the line of Elsie Chang with Goldman Sachs. Your line is open. Good morning, Ms.
spk07: Guan. Thank you for accepting my question. I have two questions. The first one is that I would like to follow up on our loan business. Because the overall business volume has seen a better rate of recovery. So I would like to ask, first of all, can we expect a volume of this loan business to continue to recover? especially in the next few seasons. Following up on Michael's answer, I would like to ask, if there is an increase in the debt ratio in the retail business, can you explain the ratio of the debt ratio to the non-debt ratio in history? And in the next few seasons, will there be a change in the season? This is the first question about the loan business. The second is about the management, including the analysis department, and some updates on the product side. I actually want to ask Yuying again. Although most of the income comes from G-PIN, and we just shared some new customers, in my understanding, in terms of the number of customers, in fact, there may have been almost 20 or more three-party customers last year. If you want to ask if these 20 companies have developed to this year, is there any updated data here? And then the second is overseas customers. Because just now, in Southeast Asia, there are some business development shares. So I want to ask about the level of overseas customer income and our total income. What is it like now? Then I will quickly translate it myself. Morning Management, thank you for taking my question. Then I have two questions. First one is just to follow up on the loan businesses. we do see a very nice growth recovery into the first quarter. I'm just wondering for the next few quarters into this year, can we expect sort of a similar trend where we can have a growth recovery continuously to be higher into the year? And then the follow-up question previously mentioned about retail loan business mix. In terms of secured and unsecured lending, do you have an idea, like, what's the historical level and what is it now? And into the next few quarters, how it will actually change. Then the second question is more on the business update. Like, you know, based on some of the previous discussion, I just want to follow up a bit more on the cloud side. What are the customer numbers, not in terms of the revenue, as revenue contribution from third-party customers is small, but in terms of customer numbers? what's the current level for the cloud business specifically. And the second thing here is about our overseas revenue contribution. We have seen a lot of developments in the Southeast Asia for our overseas businesses. So just want to have an update on the revenue contribution from this segment. Thank you very much.
spk08: Thank you, Elsie. Michael is going to take your questions related to our lending solutions. And then the second one about the cloud business, we go to Shihua Zone. And then finally, CFO will talk about the overseas revenue.
spk05: Thank you, Elsie. The first question is about the recovery of the loan service ratio. We have always seen the scale of our loan service as an important indicator of our monitoring. We are also very happy to see that the recovery of the first quarter and the last quarter is partial. We still hope that such a trend can continue to recover. You just asked about the change in the composition and the change in the mix. So just very quickly to translate, I think for the room service volume, this is one of the key KPIs for our different business lines. We monitor the growth of the volume actually month by month, and also we hope that the trend will continue to recover. as well as to the mix, to change up one mix. Unfortunately, we don't have the information on hand. We will come back to you later if we have this information. Thank you.
spk01: For crowd services platform, all together we now have 38 customers, 8 of which are from Ping An Group, whereas 30 are third-party customers. Okay, let me add one more thing. In fact, why do we have more market contracts this year? And maybe there will be more markets next year. There are several reasons. I will share them with you here. The first is that the management and policy of the financial industry is gradually becoming clear. From 2019, we built the financial industry of the entire industry to 2020. At the same time, due to our experience in Ping'an Group, we are leading the industry in financial and technical education. Thirdly, we are working on the market strategy. From the creation of standard customers and the processing of the underlying technology, OK, I'll add to that.
spk09: I would also like to give you more colors on why we are seeing bigger market shares in financial cloud. Firstly, since we started building financial cloud in 2019, we've been seeing a clear trend in regulatory and policy environment. The government is laying out more clear policies. And secondly is on technology. For many years, big technology companies have been developing public cloud, and they are leading in this area. Whereas for financial cloud, all of us are newcomers. And Ping An, as an experienced group, we have leading technologies in financial cloud. The third is our strategy when we are marketing. We focus on We focus on big customers and we pack cloud service with other products of OneConnect. We specifically target city commercial banks and financial holding companies and sell them a whole bundle. In addition, Financial Cloud is also the basis of technologies and products for OneConnect. All together, this is why we have been able to secure bigger market shares starting from this year.
spk04: Okay. I'll cover the third question. So the progress on the overseas business. So far, we have entered 20 overseas markets. So far, mainly in Southeast Asia, such as Indonesia, Malaysia, Singapore, and Cambodia. And so far, we have about over 100 customers already. And on this scope, our solutions include risk management, fast claims, and banking system. Also, we launched our VB in Hong Kong last year. As probably you have known that it's one of the eight VB in Hong Kong. But I think our strategy is a little bit different from others. We mainly provide the online banking services for the SME customers. So it's also in line with our overall objective to support SMEs. In terms of the proportion of the revenue, the revenue coming from overseas is still small. It is still in a low single digit so far. But with the progress, I think we will see more and more weighting coming from the overseas revenue. Thank you.
spk07: I understand. Thank you, Mr. Guan. Very clear.
spk08: Thank you, LC. Operator, do we have anyone else on the line?
spk06: We do have one more question from the line of Alex Yao with JP Morgan. Your line is open.
spk11: Thank you, management, for taking my question. I just have a very quick follow-up on the cloud business. Can you talk about the competitive dynamic in this market segment, i.e. aside from you guys, who else is providing the similar cloud services to financial institutions? And also, what's your competitive advantage in this financial cloud market? Thank you.
spk08: Thank you, Alex. This question will go to Xu Huazhong.
spk01: In the financial industry, we have several competitors. The first one is Ali's financial cloud. The second one is Tencent's financial cloud and Huawei's financial cloud. These three are our direct competitors in the industry. Compared to them, our advantages are mainly in a few places. The first one is high security. The third one is high compatibility. So we have an advantage in terms of the operation of the entire private sector. This is a few parts. The last one.
spk09: Right now, in Financial Cloud, we are competing with Ali, Tencent, and Huawei. We think our advantages in Financial Cloud include four aspects. Number one, we are more secure. As Ping An Financial Cloud originates from Ping An Group's financial business, we have We have great focus and we prioritize the security of our cloud. Secondly, in terms of compliance, we are closely working with the regulators to improve our compliance capability. Thirdly, our financial cloud work with a variety of platforms. We are able to incorporate local cloud with public cloud as well as private cloud. Fourthly, in terms of cost, as Tiananmen Financial Cloud has been in operation for many years, we are confident that we can maintain our cost at a very competitive level. 第二点,是在整个的金融行业,除了云之外,像云上面必须有帕子层和帕子层的产品。
spk01: At this point, in fact, our entire financial cloud, we have been improving our path from the beginning of this year to the present, for different industry paths. The second is for the entire SaaS product software in the financial industry, and our entire path and cloud are connected. This is also an advantage in the industry, because like the other types, it may only provide a low-end technical framework.
spk09: Lastly, in the industry, we know that other than cloud, we have PaaS and SaaS. For us, we have been improving our capacity in PaaS since 2019, so we're confident that we can outperform our competitors. Secondly, we can also connect SaaS to PaaS, whereas our competitors may only provide PaaS services.
spk08: I think that sums up our earnings call today. We have overrun a little bit. Thank you for staying with us and thank you everyone for joining the call today. We appreciate your interest in following us and we look forward to speaking with you again. Thank you.
spk06: This concludes today's conference call. Thank you for participating. You may now disconnect.
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