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Operator
Hello, everyone, and welcome to the OCFT 2022 Q3 earnings release. My name is Emily, and I'll be coordinating your call today. At the end of today's presentation, you will have the opportunity to ask a question by pressing start, followed by the number one on your telephone keypads. I will now turn the call over to our host, Danielle Goh, Head of Investor Relations. Please go ahead.
Ping An
Thank you. Hello, everyone, and welcome to our third quarter 2022 earnings conference call. Our financial and operating results were released earlier today and are currently available on our IR website. Today, you will hear from our Chairman and CEO, Mr. Shen Chongfeng, who will give opening remarks and Q3 business highlights. Afterwards, our CFO, Mr. Luo Yongtao, will offer a closer look into our financials. And then in question and answer session, our management team will be available we have our Head of Southeast Asia Business, Ms. Chen Mingyu, and Chief Executive of Hong Kong Virtual Bank, Mr. Michael Fei, and our Head of Strategy and Products, Ms. Ellen Jia. In today's conference, our management team will make statements in Mandarin or in English. For those in Mandarin, a consecutive translation will be provided. If any discrepancy, management statement in original language will prevail. unless otherwise stated. Growth rate of all the metrics refer to the year-over-year growth versus the same period of loss here. And the currency is an RMB. Before we start, let me quickly cover the safe harbor statement, as we will be making forward-looking statements, which will involve the number of risks and uncertainties that would cause actual results to differ materially. Please note that we may present both FRS and non-FRS financial measures, With that, I'm now pleased to turn the call to our Chairman and CEO, Mr. Shen Chongfeng. Shen Dong, please.
Shen Chongfeng
Hello everyone, I'm Shen Chongfeng.
Shen Chongfeng
Thank you for taking the time to dial in OneConnect's 2022 Q3 earnings release. Before I begin, I'd like to announce the personnel change first. During today's board meeting, the board approved Dr. Ye Wangchuan's resignation as the executive director and appointed Ms. Fu Xin, the chief operating officer and director of the Strategic Development Center of P9 Group. as a non-executive director. The board thanks and appreciates Dr. Ye's contribution to the company during his tenure as executive director.
Shen Chongfeng
Three seasons, accompanied by complex changes in the international situation and the impact of the epidemic, the uncertainty of the public-private environment has brought challenges to our performance growth. Facing the difficult situation International complexities, implications from COVID, and macro uncertainties perpetuated into the third quarter. Despite these challenges, while connecting overcame difficulties,
Shen Chongfeng
went all out and achieved solid performance in Q3. Revenue in the first nine months, up by 13%, reached 3.22 billion yuan.
Shen Chongfeng
and the reduction of the energy consumption of the insurance vehicle.
Shen Chongfeng
Marco Economics and the pandemic continue to weigh on the growth of parts of our business, including some implementation projects and usage or volume-based products. In other words, we see declining usage in lending products and auto insurance ecosystem products.
Shen Chongfeng
But we also see that in addition to these affected products, Other than these products, we did not robust development from other solutions.
Shen Chongfeng
For example, offerings from Gamma Platform, especially AI customer services, maintained its strong growth momentum in the first half of 2022 in both customer number and revenue. Overseas business, which includes Ping An Long Connect Bank in Hong Kong, registered a growth rate more than double last year.
Shen Chongfeng
In addition, as one of the important points in the strategic 2.0, the product integration and upgrade of Yizhangfeng is also constantly pushing forward. In the insurance section, Yizhangfeng launched a digital management platform for low-risk agents and a global top 50 international insurance company to develop cooperation in its business in the South Africa region. In the bank section, Yizhangfeng launched a unified technical structure of a unified technical structure of a unified technical structure. As an important initiative in our Stage 2 strategy, OneConnect has continued product integration and upgrades
Shen Chongfeng
by launching new offerings. In digital insurance, we released a digital management platform for life insurance agents and kicked off cooperation with a global top 50 insurance company, applying our products to its business in South Africa. As for digital banking, we have integrated retail and SME lending systems and built a needle platform based on a unified technology architecture. On top of that, we proactively adjusted our product portfolio by phasing out projects with heavy customization and low RI, as well as improving product standardization. Over the short term, this is at the expense of some projects and the growth rate. But looking forward, these efforts will further cement OneConnect's competitiveness in our core products and generate valuable returns.
Shen Chongfeng
Next, I'll brief you on business development in this quarter. So please go to page three of our slide.
Shen Chongfeng
我们以平安和各类金融机构为主要目标客户群整个产品搭建加码平台。 This year, we are still at the second stage of our development, that is broadening customer engagement, where we focus on Ping An Group and financial institution customers, as well as integrate products and build gamma platform. 好,下一页。 Now we're at page four. We remain committed to one body to win strategy in stage two, which means we continue to focus on financial institution customers while expanding ecosystem and overseas business.
Shen Chongfeng
In Q3, total revenue reached 1.07 billion yuan.
Shen Chongfeng
premium-plus customers increased by 9 year-over-year to 163. Operation efficiency improved significantly. Margin of net profit attributable to shareholders narrowed markedly by 13 percentage points to negative 12.4%. Okay, page 5.
Shen Chongfeng
Following the deep promotion of the two-billion strategy,
Shen Chongfeng
Next, at page 5, as one body to win strategy takes root, OneConnect achieved greater coverage of financial institution customers in the first three quarters. 银行板块,通过数字化信贷,智慧银行家等产品,我们与华夏银行,宁波银行, digital banking products including digital lending ai banker app deepened our engagement with hua xia bank bank of ningbo bank of suzhou and many other customers enabling them in their digital infrastructure and accelerating applications of home developed technology
Shen Chongfeng
In digital insurance, we initiated a relationship with many insurers in the first nine months.
Shen Chongfeng
Dajia Property and Casualty Insurance, Liberty Mutual, Taikang Insurance, and Jingtai Insurance, to name just a few. These brand names demonstrate our growing penetration among insurance companies.
Shen Chongfeng
In terms of Gamma platform, upgraded HIT products including AI customer services continue to make new market breakthroughs.
Shen Chongfeng
as you can see from projects with Bank of Guizhou, Bank of Beijing, and Bank of Chongqing, etc. 下一页,第六页。 高销毛的标准化产品是宜藏通作为B端服务商的未来。 我们看到智慧语音产品凭借着宜藏通独特的业务加技术的优势, 结合丰富的金融产品经验和领先的技术能力,
Shen Chongfeng
It includes smart customers, smart consumption, smart marketing, three major business scenarios, and robot platforms. The bottom of the product is equipped with five large knowledge pools, more than 1,600 AI scenarios, more than 200 index models, and more than 3 million AI sales, graphics and materials. The AI recognition rate has reached 94%.
Shen Chongfeng
Standardization of high gross margin products is the key to OneConnect's future as a business and service provider. As you can see on page 6, AI customer services, leveraging OneConnect's unique advantage of business plus technology and incorporating diverse financial scenarios and leading technologies, now spans a wide range of functions, including smart customer service, smart loan applications, smart marketing, and a robust platform. Five knowledge bases, 1,600 AI service scenarios, over 200 quality assurance models, and over 3 million AI sales scripts underpin the product, boosting AI adoption rate to as high as 94%.
Shen Chongfeng
At the end of September, the external income growth of smart language is more than twice that of the beginning of last year.
Shen Chongfeng
By the end of September, third-party revenue growth in AI customer service doubled on a year-over-year basis. Premium Plus customers also expanded significantly. Its customers are also quite sticky, Net expansion rate for Premium Plus customers in the first three quarters exceeded over 100%.
Shen Chongfeng
Next, please go to page 7.
Shen Chongfeng
Overseas business remains a key initiative in our one-body, two-week strategy as we continue to strengthen international presence in Hong Kong and the Middle East.
Shen Chongfeng
我们的PAOB是香港虚拟银行中首家侧重为中小微企业提供服务的虚拟银行。 我们也是目前唯一一家采用替代数据建模为中小微企业实现简化精准放款。 or Hong Kong Financial Management Bureau and Hong Kong Securities and Securities Co., Ltd. are recognized by Hong Kong virtual banks. PAOB's digitalized general finance concept can complete digitalized opening and opening online within a day, and 30% of the service customers are first-hand goods and services companies. Our 21-year income increase ranked first in Hong Kong virtual banks, Ping An One Connect Bank is the first virtual bank in Hong Kong to focus on SME services.
Shen Chongfeng
We are also the only one to use alternate data for modeling, which means simpler and more precise loan approvals for SMEs and won't ask recognition from Hong Kong MA and Hong Kong MC. PLB is committed to digital financial inclusion. Account opening can be done online and within one day. Of the customers we serve, 30% are first-timer loan applicants. Revenue growth in 2021 ranked first among virtual banks in Hong Kong, and revenue continued to show strong growth momentum in the first nine months of 2022, increasing by two-fold year over year. DAOV also enjoys great brand name in the industry, evidenced by awards from renowned financial news outlets, including Asia Money, Euromoney, and Hong Kong Economic Journal. The bank ranks 45th in the global top 100 digital-owning banks ranking, top one in Hong Kong.
Shen Chongfeng
Our Hong Kong credit company, Ping'an Financial, is one of the most successful credit companies in Hong Kong. With a personal credit business qualification this week, we expect the CRA to open in 2023. After the opening, Our credit reference services agency in Hong Kong, Ping An One Connect CRA,
Shen Chongfeng
also went well, and we officially received a license for CRA business this week. The company is expected to launch business in 2023 to provide three types of products and services, namely traditional credit reference services, innovative credit reference services, and cross-boundary services, for example, issuing cross-boundary credit reports. As always, we aim to deliver differentiated, diverse, and accessible credit reference products and service models, contributing to the establishment and improvement of credit reference systems in the Greater Bay Area.
Shen Chongfeng
Next page, page 8. At the same time, we actively expand our deployment in the Middle East region. At the same time, we have broadened our presence in the Middle East
Shen Chongfeng
On September, we announced our collaboration with Abu Dhabi Global Market to empower the development of the SME financing platform. The platform aims to promote financial inclusion in the region, improve transparency, and lower operating costs for SMEs. We officially launched our UAE subsidiary in Abu Dhabi Global Market this October. to provide digital services with leading technologies such as the cloud computing, artificial intelligence, to empower financial institutions in the Middle East and North Africa in their digital transformation journey.
Shen Chongfeng
In addition, we are also very happy to announce that our low-risk new products have also made a breakthrough overseas. In the insurance sector, we launched a low-risk agent digital management platform, all-power agent. also on page eight. Additionally, we are also happy to announce that our brand new life insurance products made advances in the international market as well.
Shen Chongfeng
with the new digital and efficient all-in-one platform for life insurance agents, which spans a wide range of insurance services from digital advisory experience and sales assistance to customer insights. We formed a strategic partnership with a global top 50 insurer to empower the digital transformation of its life insurance agents in South Africa.
Shen Chongfeng
As mentioned before, standardized products are the key to the development of the financial industry in the future. In the first three seasons, the construction and promotion of standardized functions around each product is estimated to take place more than 60 times. In the bank version, the credit and retail credit system are opened up, and a unified price structure has been formed. In the gamma platform, the data price product has been further improved and the AI ability of smart money has been improved. We believe On page 9, as I mentioned in the opening remarks,
Shen Chongfeng
The future of OneConnect lies in product standardization. During the first nine months, we continued to improve our products by standardizing functions and completed over 60 updates. In digital banking, we integrated retail and SME lending systems and built a Lino platform based on a unified technology architecture. Upgrades in gamma platform include data middle platform improvement and AI capability improvement in AI customer services. We're confident that standardized products will boost OneConnect's overall profitability. Another part of our efforts to execute this key initiative in stage two strategy, i.e. product integration and upgrade, is to proactively adjust our products of our projects We faced our projects with heavy customization and low ROI. As a result, we see improved ROI in Q3.
Shen Chongfeng
Today, after the end of 2022, there is only one more month left. The epidemic should spread all over the country. For the Asian-Americans, the third and fourth seasons will be challenged by the pandemic. Growth will be suppressed. But this will not change our confidence in the future. Our confidence comes from the recognition of the market and customers, from the improvement of product competitiveness, and from the improvement of performance achieved by the team's joint efforts. We believe that these external challenges are temporary. As a young technology company, we will actively respond to market changes and continue to improve external income and achieve profit.
Shen Chongfeng
While COVID outbreak resurges across China, we are only one month away from the end of 2022. For OneConnect, the macro environment and pandemic has put business growth under pressure. However, this does not undermine our confidence in our future, which stems from recognition by the market and our customers. boosted product competitiveness, and the growth in financials that our team has worked hard to deliver. We believe these external challenges are only temporary. As a young tech company, we will remain agile and remain committed to improving third party revenue and becoming profitable.
Shen Chongfeng
Next, our CFO Luo Zong will give you a detailed update on our financials in Q3 and the first nine months.
Shen Chongfeng
Luo Zong, please.
Luo Zong
Okay, thank you. Good evening, everyone. Next, I will give you an update on our financial results in Q3. Total revenue in third quarter reached $1.07 billion, and third-party revenue remained steady at $0.35 billion. Premium Plus customers or customers with revenue contribution over $1 billion was upped by nine customers to 163. Net loss this quarter was $0.13 billion, with a net profit margin at negative 12.4%, which improved significantly for 13 percentage points from negative 25.3% in Q3 2021. Let's start it from the top line. Revenue remained stable at $1.07 billion this quarter and increased by 13% to $3.22 billion in the first nine months of 2022. In Q3, the revenue increase was driven by operation support, implementation, and others. However, this was offset by the revenue drop from business origination and risk management resulting from pandemic curves and our continuous phase-out of low-value projects as a core initiative in our second stage strategy. I will give you more colors on revenue growth drivers later. Revenue mix by customer type remains roughly the same in this quarter compared to the same time period last year. Revenue from third-party customers reached to 351 million, same as Q3 last year, and accounted for 33% of total revenue. Due to COVID impact, revenue from business origination, auto insurance claim products, and domestic implementation business shrank. Phase-out of low-value products also reduced our revenue. Other than the businesses mentioned above, we still achieved stable improvements. Contributions from LUFAX grew slightly by 5.2% from $113 million to $118 million, representing 11% of total revenue. Opportunity support business contributed most of the revenue growth. Revenue from PN Group reached 599 million in the third quarter and made up 56% of the total revenue. The overall contribution from PN Group remained steady. The usage volumes of some transaction-based products decreased. For example, PNC claim-related products and banking lending products. This was offset by customer service support business and new launched projects to meet the business requirements. Moving to revenue mix by business type, implementation revenue accounted for 19% of total revenue, reached 202 million from 189 million in the same time period last year, which was driven by the ongoing digital transformation NPM Group, and our new overseas life insurance business expansion. On the other hand, implementation revenue from domestic third-party customers dropped due to the pandemic travel restrictions and our continuous phase-out of low-value projects with high customized requirements. Revenue from business originations was $94 million compared to $115 million for the same period in last year, primarily due to the decreased loan volumes as a result of pandemic curves and macroeconomics. Revenue from risk management was $105 million this quarter versus $113 million for the same period last year. primarily due to the decreased usage volumes of P&C insurance claim-related products that are more susceptible to COVID control measures. Revenue from operation support rose to 294 million from 280 million for the same period in the prior year, primarily benefiting from the increase in product usage charged by stock-based fees, especially various types of business for customer services. Revenue from cloud services platforms remains steady this quarter, with revenue contribution of $294 million slightly dropped from 297 million slightly dropped from 303 million in some period last year. As mentioned in previous earnings release, our cloud services business has entered into a stock stage, and the revenue will remain at a stable level, which is subject to actual usage volumes of our clients. Third quarter's revenue is in line with company's expectations. Both implementation and other revenue was up by 19.2% to 78 million from 65 this quarter, accounted for 7% of total revenue. Such improvement was mainly driven by the robust growth of virtual bank business in Hong Kong as a key part to our strategy in the Great Bay Area and overseas. PLB's revenue kept improving multiple times faster than our overall business. Let's turn to the revenue mix by product type. Gamma platform, a strategic focus for innovation, was the biggest chunk of our revenue, which accounted for 49% of total revenue in the third quarter. AI customer service core banking system and other initiative businesses kept presenting remarkable growth. Revenue growth from overseas insurance business contributed to the increase of digital insurance revenue with the proportion of 21%. Meanwhile, digital banking make up 28% of total revenue and the POB accounted for 2%. For the revenue mix by product type, in the nine months of 2022, digital banking, digital insurance, gamma platform, and the PLB contributed 28%, 19%, 51%, and 2% of the total revenue, respectively. This quarter, we continue to commit to our Stage 2 strategy. where we focus on potential from premium class customers. The total number of premium class customers continue to grow this quarter by nine customers to 163, with most of them being our existing customers. The increase also testifies our success in deepening engagement with existing customers. We are happy to see that more and more Premium Plus customers are using multiple products from our different product lines. Gross profit was $375 million in the third quarter. And the gross margin of 35.1% remains above the flat level at the same period last year. On non-FSR basis, cost margin was 38.4% compared to 42.2% in the prior year. This was a mixed result caused by different factors. On one hand, with product integration and upgrades being a key initiative in our Stage 2, we continue to optimize our product strategy, improving ROI and product standardization and proactively phase out projects, requiring heavy customization. On the other hand, usage volume of products with relatively higher gross margin, such as P&C claims-related products and loan products in risk management, decreased due to the intense macro circumstances. We are pleased to see that we are well on track to our break-even target as we made provident progress in loss reduction this quarter. First of all, our research and development expenses came to 287 million from 323. As a percentage of revenue, it amounted to 26.9%, compared with 30.4% in the prior year. We continue to implement our second stage strategy on product integration. Our products, on the overall point of view, are more and more mature gradually. At the same time, we commit to improve our development efficiency by optimizing our tailing structures. Looking forward, we will keep spending most resources on research and development to upgrade and develop products to strengthen our competitiveness in the market. Sales and marketing expenses for the third quarter of 2022 decreased to 94 million compared with 131 million in the prior year. The percentage of revenue decreased to 8.8% from 12.3%. The improvement was benefited from enhanced sales capability and efficiencies. We managed to further reduce our total sales labor cost while remaining revenue growth. Meanwhile, telecommunication, marketing, and travel-related expenses also decreased compared with the same period of 2021, partially due to the COVID control policy. General and administrative expenses came to $167 million from $170 million in the same period last year. As a percentage of revenue, it decreased to 15.7% from 15.9%, notwithstanding some one-off expense included. we managed to decrease general and administrative expenses by various stringent cost control measures. Benefited from all above, our net loss narrowed to $133 million from $270 million in the same period last year, and the margin improved by 12.9 percentage points. from negative 25.3% to 12.4%, continuing to deliver double-digit improvements. On this page, you can find a comparison of costs in the past three years and the first nine months in 2022, which shows clearly the path towards breakeven by midterm. We will continue to implement higher ROI product requirements and phase out products which are missing our standards. We will also maintain stringent cost discipline to curb the expenditures. With all these measures, we are confident about breaking even with regard to our business plan. I would like to reiterate the key focuses of OneConnect in 2022. third-party revenue growth and cost discipline to pass to profitability. Due to the current circumstances, we are still facing pressure on both total and third-party revenue growth. However, we do believe that the growth will recover once the COVID control measures ease and micro-situations respond. We can also see the product integration and optimization will further improve our revenue growth and profit improvement. Lastly, we summarized key financial metrics in the third quarter and the first nine months, as well as the adjustments in 9FR's growth margin through references. Thank you.
Ping An
Thank you, Luo Zong. Operator, we are ready for questions. Please open the line.
Operator
Thank you. If you would like to ask a question, please do so now by pressing start followed by the number one on your telephone keypad. When it is your turn to speak, I will instruct you and your line will be open. As a reminder, that is start followed by the number one on your telephone keypad. Our first question today comes from Timothy Zow with Goldman Sachs. Please go ahead.
Timothy Zow
Thank you for accepting my question. I have two questions for you. The first is about the industry. You mentioned that the industry is affected by the pandemic and the pandemic. Can you share with us the financial industry, including security and third-party customers, and the current situation of IT? How do we look at the entire industry to the IT expenditure in 2023 and the impact on our income. This is the first question. The second question is about overseas business. I see that we have some progress in different business types and different regions. I have two questions. The first one is about industry. Can management share some color on how the management team looks at the IT spending of the financial industry, including Ping An and third-party customers, and also in that bigger industry context, how should we look at the industry IT spending into next year and how that will impact our revenue growth. And secondly, on the overseas business, I see that our overseas business has progressed in different business lines and in different regions. Could Medran share our strategy in terms of our expansion on a high level and how should we think about revenue contribution for next year? Thank you.
Ping An
Thank you, Timothy. Shenzong will take your first question and Michael and Mingru will take your second question. Shenzong, please.
Shen Chongfeng
Let me answer the first question about the development of the financial industry.
Shen Chongfeng
So I'll answer your question about the development of financial institutions and the industry.
Shen Chongfeng
The pandemic and the economic downturn have had a certain impact on the development of the banking industry. In the short term, some financial institutions are also seeking to increase their capital, which may have a certain impact on IT needs.
Shen Chongfeng
The market environment and the pandemic have put the business development of banks under pressure. So over the short term, some financial institutions may cut their IT investment to lower costs and improve efficiency.
Shen Chongfeng
But in the long term, the demand for digital shutdowns in the banking industry is still relatively obvious. Banks need to improve efficiency.
Shen Chongfeng
But looking forward over the mid to longer term, we do see market demands from banks. So banks are under business pressure and need to boost their operational efficiency, mainly from risk management and operation support.
Shen Chongfeng
And we see great digital transformation demands from the following areas. 科技因素的自主封控能力,数字化经营,数据安全,信创,
Shen Chongfeng
So firstly, banks have demands in risk management capabilities from technology applications, digital operations, data security, and the adoption of home-developed technologies. And these are also the key focuses of our R&D investment in digital banking and gamma platforms. 那中小银行更需要在经济下行时期整体数字化转型。 During economic downturn, medium and small-sized banks are more in need of a head-to-toe digital transformation. 所以业务加技术的整个方案也是中小行更加需要。 And that means small and medium-sized banks need business-plus technology solutions.
Shen Chongfeng
Thank you.
Shen Chongfeng
Thank you.
Ping An
Can you hear me? Yeah, we can hear you.
spk04
Yeah, okay. I'll take the question on the Southeast Asia or the overseas question, right? So I think Southeast Asia, we have positions as a region that has more than $2 billion growth potential. And in the next two years with the economic entering into potentially recession, actually you see Southeast Asia as the one bright spot the highest GDP growth or that region having more than 5% GDP growth. So we continue to be very bullish about Southeast Asia growth. Today, we are servicing more than 100 customers in over 20 countries. The revenue ticket size is very positive because the sales is in US dollars and the ability to price the same solution in US dollars brings us much more profits. And then going into 2023, in fact, in Q3 this year, we started two collaborations. One is the PISMO collaboration so that we combine what is good from the east with what is good from the west in terms of fast core banking. So in this collaboration, we started launching Q3. We are foreseeing good results coming potentially next year. And in Q3, we also launched the ADGM entity. We actually had the entity earlier on. It's just that we did the product and the actual entity launch with the Jitex event, which is the FinTech event in Abu Dhabi last quarter. So at this moment, I think we're seeing good enough growth. Q3 growth is very good for us. We doubled Q3 compared to year on year. For percentage of revenue, I remember we started off initially in the earlier year single digit to the revenue. And then we were in the early teens. As at this quarter, we are about 20% of external revenue of OneConnect. And we continue to see the growth continue to grow.
spk08
Okay, thanks, Meru. Let me talk about the Hong Kong business. I think the overseas business for OneConnect, we have two parts. One is the Southeast Asia, which Meru just described. And then is the Hong Kong. In Hong Kong, we actually have three different different segments. One is the technology services for financial institutions in Hong Kong. I think that's very similar to what you just described, the market, our competitive edge, etc. So I will not repeat that. The other two segments of our business, one is the virtual bank, the other is the credit reference agency business. We have two very valuable licenses in Hong Kong. So for PLOB, I think Mr. Shen has already introduced in his main presentation that we continue to be one of the best performing visual banks among the eight. I think the reason for that was that, first of all, we have a very different positioning. We are different from the rest of the seven that we serve, we dedicate to serve SMEs. Now, the second advantage is that we had an OC at our back. So we had a lot of the technology, we had a lot of the learnings that we can actually from OC in mainland and that implement in the Hong Kong market. I think at the next step, we will continue to focus on the SMEs. We will continue to using technology to help the SMEs in the Hong Kong market and then gradually to expand to a broader segment on a supply chain around the GBA area. We will partner with more and more partnerships to using alternative data to serve SMEs. if you were in the entire week last week you will notice that during the hong kong mx formal launch of cdi commercial data interchange kov is actually one of the first actually we are the largest contributor of cdr's usage in hong kong so we expect to continue to move on we continue to grow very rapidly in our revenue and continue to improve our bottom line The second valuable license we have is the credit reference agency. We are one of the three companies that were brought to the license earlier. We formally received the license earlier this week from Hong Kong Banking Association. We are starting to do the initial data loading, which means we will get all the data from the various banks, and we estimate to launch our formal services in the second half next year. I think this is also very we were very optimistic about this one because I think given the more and more closer connection between GBA, between mainland China and Hong Kong, for OneConnect, I think as one of the mainland-based companies that has a license in Hong Kong, we are uniquely positioned to leverage our strong technology leadership and our experience in the mainland and try to connect the private information in mainland China as well as Hong Kong so that we can provide more holistic credit reference reports to the banks. And also, I think our technology advantage also would allow us not just providing a report, but we will also be able to provide risk services, risk management services, connotative services, et cetera, to the banks or the financial companies using our reports. I think as a whole, we are very, very optimistic about the growth of our business in Hong Kong.
Meru
Thank you.
Operator
Our next question comes from Tianan Xiao with Orient Securities. Please go ahead.
spk00
Thank you for accepting my question. I have two questions. The first question is about finance. I would like to ask about the current financial situation of the company. The second question is about management. I will also do the translation. And the first one is a quick finance question about the cash and what's our current cash position. And second one is after Shen Zong's lead, what was the biggest change during the last one year? Thank you.
Ping An
Thank you, Tian. And our CFO Luo Yongtao will take your first question.
Luo Zong
Okay, let me answer the first question. The first question is about cash. As of 930, our special fund is 23.7 billion, which is close to the level of 2.4 billion. This includes PEOB in Hong Kong, which has about 4.2 billion in special fund. The other 1.5 billion I will answer your question about our cash position.
Shen Chongfeng
So as of the end of September, we now have around $23.7 billion of cash. Around $420 million is at our virtual bank, PAOB, and the rest is with our other entities.
Luo Zong
We see a significant improvement in our cash control measures.
Shen Chongfeng
Firstly, we have narrowed our losses remarkably, and this has benefited our cash position.
Luo Zong
Furthermore, we have increased our return on receivables. We have seen a significant improvement in all kinds of indicators, including the number of days and the number of accounts.
Shen Chongfeng
Secondly, we also increased our efforts in the collection of account receivables. As a result, we see decreased days of account receivables and shortened account age.
Luo Zong
At the same time,
Shen Chongfeng
measures in cash management have all paid off. So with sufficient cash position and sound business operation, we are confident that this cash will be enough to sustain us till mid-term, that is, when we reach break-even. So I'll answer your second question about what has changed over the past year.
Shen Chongfeng
I have three main messages. The first is that our products are more focused.
Shen Chongfeng
The second is that we have broadened engagement with our customers. The third change is that we see lowered cost and improved efficiency. As a result, we see significant improvements in our operational efficiency. Looking forward, we remain committed to our second stage strategy that is broadening customer engagement.
Shen Chongfeng
And achieve
Shen Chongfeng
product standardization, sales standardization, as well as delivery standardization.
Shen Chongfeng
So that OneConnect will remain committed to our target of
Shen Chongfeng
business, achieving business plus technology.
Meru
Thank you.
Operator
Those are all the questions we have time for today, so I will hand back to the management team for any concluding remarks. Thank you everyone for joining the call today.
Ping An
If you have any questions, please feel free to contact our IR team. We appreciate your interest in following us and we're looking forward to speaking with you again. Thank you.
Operator
Thank you everyone for joining us today. This concludes our call. You may now disconnect your lines.
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