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OneConnect Financial Technology Co., Ltd. (NYSE:OCFT)
Q1 2021 Earnings Call
May 12, 2021, 9:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and thank you for standing by. Welcome to the OneConnect First Quarter 2021 Results Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I'd now like to hand the conference over to your speaker today, speaker Patricia Cheng. Please go ahead.

Patricia Cheng -- Investor Relations

Hello everyone. Good to speak to you again. Welcome to the Q1 earnings call. On the line we've got Mr. Ye Wangchun, our Chairman and CEO on OneConnect; Mr. Luo Yongtao, CFO; Mr. Michael Fei, CEO of SME Banking; and Mr. Chen Xuhua, CEO of Gamma O.

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 reconciliation to IFRS is included in the earnings press release.

I will pass it over to Chairman, Ye. His remarks will be in Chinese, translation in English will follow.

[Foreign Speech]

Ye Wangchun -- Chairman and Chief Executive Officer

[Foreign Speech]

Hello everyone. I'm pleased to say that OneConnect has gone off to a solid start to the 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 build on the momentum from the rollout of cloud services platform last year, which more than offset the gap from the exit of low-hanging products. Even though the drop in business origination widened following industry and the regulatory headwinds, revenue mix from third-party customers rebounded for two consecutive quarters.

[Foreign Speech]

Net loss also further improved with net loss ratio narrowing by 34 percentage points, thanks to the strengthening of product management and continuous cost difference. Further progress was made in customer expansion. In the first quarter, we signed over 20 deals worth more than RMB5 million, three of which exceeded RMB10 million. The contract spend is significantly higher than average. From the [Technical Issues] financial institutions issued a total digitalization of retail banking business to building a digital bank from scratch. This project reflects our all round coverage of our clients diverse needs and are a great testament to our technology plus business capability.

[Foreign Speech]

In the coming quarter, OneConnect remains committed to strengthening product value, as well as customer value. We will continue to upgrade our products and enhance the end-to-end [Technical Issues] to 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. Financial institutions, who have different needs through cross selling and upselling, we will improve the wallet share, as well as customer value.

[Foreign Speech]

Exactly, I would like to reiterate our confidence that as the Chinese economy returns to normal after this pandemic. The revenue growth rate this quarter getting [Phonetic] 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 OneConnect. Your comments and the questions will be welcomed as always.

Patricia Cheng -- Investor Relations

[Foreign Speech]Thank you, Chairman, Ye. Next, CFO, Luo Yongtao will go through the financial results in more detail. Luo, please.

Luo Yongtao -- Chief Financial Officer

Yes. Thank you, Patricia. Good morning, everyone. This is my first results briefing. It's 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, during which we continued with our strategy to reinforce products and the sales.

Starting with the top line, revenue increased by 41.1% year-over-year to RMB820 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 processed by our system rose 11% year-to-year to RMB14 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 RMB7 billion. The number of auto claims processed rose 56% to RMB1.56 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 under way. Improvements in transaction activities will further drive our business.

By business segment, the cloud services platform was the biggest driver of revenues, contributing RMB181 million or 22% of the total revenue generated. The business was launched at the end of a second quarter last year, which means that we are unable to make a year-over-year consideration at the 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, operation support was biggest. Revenue rose 29% to RMB212 million, representing 26% of the total. Roadside assistance and AI customer service continue to see strong demand from financial institutions. Risk management also did well, owing 21% to RMB99 million.

You saw in an earlier slide, the rebound in retail lending activities. Past claims also falls under this category. Nonetheless, revenues from business origination continued to remain weak. It fell 34% year-over-year to RMB118 billion. 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 was out in first half of this year. Externally, there's been a tightening in regulation and the industry changes toward the end of last year. The impact is also evident in the performance of our customer groups. All three customer groups: Ping An, Lufax and the third-party customers saw a drop in business origination revenues. Revenue from Lufax fell 9.9% to RMB75 million, as a result. The team is working hard to make up for the loss over the course over this year.

In respect to Ping An Group, revenue Rose 92%, year-to-year to RMB436 million. The expansion into cloud services platform, provides strong support, more than offsetting the drop in business origination. In terms of third-party customers, this group did experienced a bigger decline in business origination revenue, because that was our first business line. And the third-party issue tends to be higher for more mature solutions.

Despite having a bigger hole to heal, third-party customers delivered 14% revenue growth in the first quarter. Aside from business origination, all other segments, achieved an increase year-over-year. Well, business origination is still undergoing consolidation. We are seeing signs of recovery. The 14% growth rate is higher than the levels seen in the third and the fourth quarter last year.

Essentially, the production of the third-party revenue has been rebounding from 34% in the third quarter last year to 36% in the fourth quarter and then now 38%. Even the timing of old product phase out, and a new product launches does scale 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'll have to take into consideration of the change in mix of solutions. Quarter-on-quarter, our non IFRS basis, gross margins rose from 42.8% in fourth quarter 2020 to 43.5% in first 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 RMB281 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 a 7% higher year-over-year to RMB167 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 RMB180 million. As a percentage of revenue, the ratio dropped to from 33% to 22%, representing an improvement over 11 percentage points. The scale that we are building has led to a significant amount of operating leverage. I think in quarter 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 RMB305 million from RMB415 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'll now hand it over to Michael, he will talk about the progress in our sales efforts.

Michael Fei -- Chief Executive Officer, SME Banking

Thank you, Wangchun [Phonetic]. 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 content examples that we'll 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 cloud example as a Joint Stock Bank. 95% of the test environment and the 30% of the production environment are now already on Cloud. As a result, the bank is able to deliver results much faster with more flexibility and also at a much lower cost. We had several successful third-party cloud signings and cloud services since the beginning of the year.

Next page is a example, by 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 helped the bank consolidate over 20 types of various internal and external data to develop 80 plus labels. We also offer a model platform and new endings. 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 as the whole credit process from pre-lending customer profile to risk awaiting to post loan management, or even collection. We are actively replicating this product to other banks in China.

The third case is for our leading City Commercial Banks. Our mandate is to carry out the digitalization of the retail banking business. We started with a small banking consultancy services, we need to first understand that the existing business what the bank wants, and then help with design the solution that can achieve those objectives. To have the product that have been delivered so far are the mobile banking application and the operation middle office. To the application and the middle desk, we have the bank create a digital platform for their whole retail banking workforce. They can run their operations, management workflows, conduct various customer analysis, deploy task and feedback, share experience and insight etc, etc.

The platform now supports over 6,000 relationship managers and eight middle office centers. Similarly, the product is being rolled out to multiple other kinds. The last example you can see here is to build a brand new bank. In our full-year result, we shared a similar concrete 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, to build a digital bank from scratch. This time, we got a mandate from a different country. This particular one is the country's first of 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 cordless eATMs, online [Phonetic] customer service, etc.

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 use our system tools to deliver digital disbursement of relief's subsidies to all the citizens in the country, as well as a simple three step online account opening process. I hope these products and concrete examples can provide you with a better sense of our business and the impact we're delivering to our clients.

I will pass back to Patricia.

Patricia Cheng -- Investor Relations

Thank you, Michael. Operator, we are ready for questions. Can you please open the line?

Questions and Answers:

Operator

Thank you, presenters. [Operator Instructions] Our first question comes from the line of Yang Liu with Morgan Stanley. Your line is open.

Yang Liu -- Morgan Stanley -- Analyst

Thank you for the opportunity to ask question, and congratulations on the strong top line growth. I have two questions here. First one is growth margin, because we saw meaningful business mix change no matter from a year-on-year and Q-on-Q perspective. We see the business of origination part and low margin implementation part decrease, but the gross margin still largely flattish. So could you please update us what's your progress so far? I think the company is cutting some low margin business internally. But why from the reporting gross margin perspective we can -- the positive impact is still not visible so far. And especially we see the cloud platform is growing super fast, is that a still very low margin business at the current stage?

The second question is related with opex. Are we still very solid opex control this quarter, only 7% year-on-year increase? Does management think that is a new normal or the target is similar growth for the full-year or it is kind of a one off impact due to some reasons? Thank you.

Patricia Cheng -- Investor Relations

Thank you Liu Yang. Our CFO, Luo Yongtao is going to take both of your questions.

Luo Yongtao -- Chief Financial Officer

Okay. Yes. Thank you for the question. I think, I will probably combine your first one and the second one together, because they are related. The gross margin, yes, from year-to-year basis is from 34.8 to 34%. It's been 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 impact is gradually, we will see it.

But we compare this quarter and last quarter, Q1 last year, the major change is a cloud production, because in last year, we didn't have the cloud business service. And this year, the cloud production is to 22% of the total revenue. For the cloud services platform as a 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 metric. Actually, I think it's better to look at this metric on quarter-on-quarter basis, because from Q4 last year to Q1 this year, the production of the business is similar or comparable, because in Q4, the cloud service platform is about 18% and this year is 22%. From Q4 to Q1, on the SRS basis is 34.2% to 34%. So I would say it's in pretty same level.

But there is also another consideration when we have to look at it because the gross margin on the numerator, we -- amortization of the intangible assets, it's a pretty flat number, actually across four quarters. But on the denominator, the revenue have some seasonality in Q4 is much higher than Q1 from the number we can see it's about 30% higher than the Q1 numbers. So if we exclude this impact, then we better look at the non-IFRS basis.

So that's why on our slide we compare the quarter-to-quarter variation based on the non-IFRS basis is from 42.82% to 43.5%. So that's we can see it's a rebound from the Q1. And I think with ongoing our production optimization and the gross margin improvement in the new launches, where we will see the trend of the improvement of the gross margins going forward.

So the third one can you repeat the question, please?

Yang Liu -- Morgan Stanley -- Analyst

The question is we see the opex, sales and marketing, R&D, G&A increase, it's just a single-digit by the first quarter, do you think that this kind of growth is sustainable? Or, is there any way of return to lead to a relatively good cost control in first quarter?

Luo Yongtao -- Chief Financial Officer

Yes. For the operating expenses, we have with more and more revenue, the skill we will be building actually will lead to the operating leverage. We will see the operating expenses will go down further, actually. And some one-time input will be lower and lower in the next quarters.

Yang Liu -- Morgan Stanley -- Analyst

Yes. Thank you. I have quick follow-up. Sorry, a quick follow-up here.

Luo Yongtao -- Chief Financial Officer

Yes. Go ahead.

Yang Liu -- Morgan Stanley -- Analyst

I think the -- as you mentioned to use the non-IFRS 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 company's R&D capitalization policy.

Luo Yongtao -- Chief Financial Officer

No, no, no. We don't have any changes on this policy.

Yang Liu -- Morgan Stanley -- Analyst

Yes. Thank you, thank you.

Michael Fei -- Chief Executive Officer, SME Banking

Yes, there are 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. Ye has said, we faced out some business organization vendors product in the past two years. But in the meantime, we also launched the many new products, called just a one example. As we have explained in today's briefing, I have explained four examples, in addition to car, we also have this risk of -- corporate risk of banking, risk management platform, the retail banking, also the digital banking in a box. These are all many of them are actually new products we have launched after our IPO.

And so all those SaaS products in the earliest 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 concrete 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 is relatively stable.

Yang Liu -- Morgan Stanley -- Analyst

Thank you.

Patricia Cheng -- Investor Relations

Thank you, Liu Yang. Operator, we can go to the next question.

Operator

Your next question comes from the line of Hans Chung with KeyBanc. Your line is open.

Hans Chung -- KeyBanc Capital Markets -- Analyst

Thank you for taking my correction. So good morning, management team. So I have three questions. First, if we look at the retail loans versus the business origination revenue, and I know, we have been went through -- going through some optimization in our product portfolio. So -- but we actually see, for the past few quarter, we saw a decline in retail loan year-over-year and now -- and we also see the decline in business origination revenue. There seems to be a directionality related. And -- but in the quarter in the Q1, we have seen growth in retail loans, while we have the -- even larger decline in business origination revenue. So just want to know, how do we reconcile the trend underlying and then -- and so that's my first question.

And then second question, just -- I will assume that now cloud revenue -- majority of cloud revenue is from Ping An customers. And then -- so if I subtract the cloud revenue from our revenue from Ping An group, then it seems like grew about roughly low teens year-over-year and then down nearly 40% sequentially. And it seems like larger than before. And then considering we have a lower base for first quarter last year. So just want to know, is there any color you can provide to help us understand like the dynamic in Q1 for our Ping An Group, the single customer. And that's second question.

And third question is, I remember that last time we have revenue outlook for the full-year to be no less than last year, which will be 42% year-over-year growth. So -- and now we have -- for Q1, we have slightly lower, which is 41%. And are we continuing to maintain our guidance for revenue outlook for this year, 42%? And if so, that would imply growth with acceleration afterwards. And then -- and what will be the driver for that? Thank you.

Patricia Cheng -- Investor Relations

Thank you, Hans. So three questions. The first, the first one, let's have...

Luo Yongtao -- Chief Financial Officer

I will take the first one and Wangchun will take the second and third one, I think.

Patricia Cheng -- Investor Relations

Okay. Yes, let's do it this way. Thank you.

Luo Yongtao -- Chief Financial Officer

Yes. Hi, Hans. Yes. Very good question. You spotted the growth in retail loan volume, but the drop in our nation 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 lendings without any collateral security. So the margin tend to be much higher for these type of loan services. But now, I think, our portfolio has been shifting to those more collateralized lending, the mortgages, car loans, etc. The net interest margin for these products is much lower, compared with consumer credit. And that also our service fee is much lower. So that explains why we have growth in the volume, but in the meantime, a drop in the revenue.

Ye Wangchun -- Chairman and Chief Executive Officer

On the second question, in the first quarter, the main driver is coming from the cloud services platform. But if we strip out the cloud, other business growth is about in the 10 percentage. But I think for Ping An, we should look at as a whole customer, because the business coming from one single customer -- we have some agreement between OneConnect and Ping An.

Also for Ping An there is a impact from the product optimization for the business origination line, because we have also business with the Ping An flowing to this line of business line. The -- actually, if we excluding the cloud, the other segments aside from the business elimination is still growing that is more than offsetting the decline in the business origination. And also, I think, the -- for the Ping An with the improvement in the business origination, I think, the income, the growth will be coming back, actually or it's a maintain the similar pace.

Luo Yongtao -- Chief Financial Officer

Yes. Just to -- has just to add on to the Ping An question. I think we should treat the Ping An the same as other client, yes. I don't suggest we actually strip out the cloud, because we launched a new product for Ping An also we phased out old product. So I would suggest we look at the Ping An revenue as a whole, yes. Cloud is just one of the new products we provide to Ping An group. There's another bunch of a new product we provide to Ping An Group too, yes. So we just treated as a whole we have a new product and we phase out older product and we are confident that our services with Ping An will be a long time will continue to grow our support to the Ping An group.

Hans Chung -- KeyBanc Capital Markets -- Analyst

So can I correct -- so we have to say, yes, we rent out new product and 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 the business origination segment, right?

Ye Wangchun -- Chairman and Chief Executive Officer

Yes. You can say that.

Hans Chung -- KeyBanc Capital Markets -- Analyst

Okay. Okay.

Ye Wangchun -- Chairman and Chief Executive Officer

On the third question, I think, yes, in the Q1 the increase is about 41%. But looking for the full-year, actually, yes -- yes, I think, we will continue our product optimization and we will have for -- have more efforts in the sales. So we are confident that for the full-year, we -- our revenue growth will be more than last year's rate. Thank you.

Hans Chung -- KeyBanc Capital Markets -- Analyst

Okay. Okay. Can I have one more question?

Patricia Cheng -- Investor Relations

Yes, please go ahead.

Hans Chung -- KeyBanc Capital Markets -- Analyst

Yes, thank you. Thank you. I just wanted to ask about what's the implication from the launch of the digital currency by the Central Bank. And -- because I think, for PVC, they seem to adopt that hybrid model, which is traditional centralized database versus decentralized ledger technology. And -- so I just want to know, like is there any trend like -- or is there any rationale for the commercial banks, they may adopt the DLT -- I mean, as opposed to the current legacy infrastructure? And is that something that we can benefit from the trend? Just -- maybe just want to hear any color about the overall implication from digital Renminbi? That will be helpful.

Patricia Cheng -- Investor Relations

Thank you. Michael is going to share his thought.

Michael Fei -- Chief Executive Officer, SME Banking

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 -- at the most -- the Big Four, the big ones, piloting this digital new currency. We are monitoring situation to see when there will be a larger scale rollout of this digital currency application and once I think it is a kind of a road out, the largest built definitely, there will be a lot of the requirement from those banks and other -- also the merchants to upgrade their payment infrastructure.

Hans Chung -- KeyBanc Capital Markets -- Analyst

Okay so...

Patricia Cheng -- Investor Relations

Thank you. Operator?

Hans Chung -- KeyBanc Capital Markets -- Analyst

Okay. Thank you.

Patricia Cheng -- Investor Relations

Yes, Hans, we can continue offline on this topic. Operator, let's have the next question.

Operator

The next question comes from the line of Ethan Wang with CLSA. Your line is open.

Ethan Wang -- CLSA -- Analyst

Hello management. Thank you for the presentation and thank you for presenting us with two examples of your cloud services. That is helpful. But just want to have more color on the cloud services. Can management share the current split of the revenue source from playing good versus third-parties. We believe group accounts for majority, but can we get -- maybe some members on that? That is first question.

And a second question. So, we understand that OneConnect served financial institutions, but is there any plan or are we doing actually that to serve the government as well, is there any accuracy here? Thank you.

Patricia Cheng -- Investor Relations

Yes, thank you, Ethan. Why don't we ask [Indecipherable], because he's the 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, would take it.

Unidentified Speaker

Okay. [Foreign Speech]

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. However, for the first quarter this year, we're adding more and more third-party customers, including financial holding companies, insurance companies, and the financial companies at the provincial level. For these financial company deals that we signed, most of them are over RMB10 million. So, we are confident that the number will surpass that Ping An Group.

Michael Fei -- Chief Executive Officer, SME Banking

Hi, Ethan, the second question about serving the government. Yes, we do serve government agencies. But we are very targeted, 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 bet -- to build credit profiles, to build a customer ratings, to help banks to do better SME risk assessment.

And also with average on this platform to penetrate into many of the scenarios of SME financing, for example, Supply Chain Finance, Invoice Finance, etc. So, we will continue at 3Q this to replicate this model to other areas in China. In fact, we have several more findings with this provincial government starting from the early this year. So the short answer is yes, we do see government agencies as one of our target customer, but we are very targeted. We tried to build an ecosystem for financial technology services and help the financial institutions to grow their business.

Ethan Wang -- CLSA -- Analyst

Got it. Thank you. Maybe just a very quick follow-up on this front, because we've seen headlines surrounding our FBI [Phonetic], JV with FBI in Japan since that's been terminated, and FBI even quoted, like some political issues surrounding that. So, do we have in common than -- I know the financial impact is limited? But how will this impact our overall strategy of growing overseas in the future? Thank you.

Michael Fei -- Chief Executive Officer, SME Banking

Yes. Well, thanks for noticing this news. As you said, the financial impact will be very limited. I think the JV, there's a success cases. There are failure cases. Yes, just the unfortunately, the JV with FBI in Japan, didn't work out for the past year and probably, because of the COVID or various other situations. So I think we mutually decided to close the JV. But our cooperation with FBI will continue to remain a major shareholder for us. They're committed to the company and we had a lot of cooperation's outside of Japan, in Southeast Asia, Hong Kong etc.

Ethan Wang -- CLSA -- Analyst

Got it. Thank you.

Patricia Cheng -- Investor Relations

Thank you, operator. We can have the next question.

Operator

The next question comes from the line of Elsie Cheng with Goldman Sachs. Your line is open.

Elsie Cheng -- Goldman Sachs -- Analyst

[Foreign Speech]

Good morning, management. Thank you for taking my questions. And 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 am just wondering for the next few quarters into this year, can we expect a sort of a similar trend, where we can have a growth recovery continuously, to be higher into the year. And then a follow-up question on 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 based on some of this previous discussion, I just want to follow-up a bit more on the cloud side, whether the customer numbers are not in terms of the revenue, as revenue contributions from third-party customers are small, but in terms of customer numbers, you know, what was 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 oversea businesses. So just want to have an update on the revenue contribution from the segment. Thank you very much.

Patricia Cheng -- Investor Relations

Thank you, Elsie. Michael is going to take your questions related to our lending solutions. And then a second one about a cloud business, we go to Wangchun, and then finally CFO will take -- will talk about the overseas revenue.

Michael Fei -- Chief Executive Officer, SME Banking

[Foreign Speech]

So just very quickly to translate. I think for the One service logon, this is one of the key KPIs, actually for our different opinions as we monitor this growth of the volume actually month-by-month and also we hope that the trend will continue to recover as versus of mix, change of one mix. Unfortunately, we don't have the information on hand. We will come back to you later, if we have this information.

Ye Wangchun -- Chairman and Chief Executive Officer

[Foreign Speech]

For the cloud services platform, altogether we now have 38 customers, eight of which are from Ping An Group, whereas 30 are third-party customers.

Luo Yongtao -- Chief Financial Officer

[Foreign Speech]

I would also like to give you more colors on why we are seeing bigger market shares from -- in financial clouds. Firstly, since we started building financial cloud in 2019, and 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 are -- we have leading technologies in financial cloud.

And third is our strategy, when we are marketing, we focus on big customers, and we packed cloud service with other products of OneConnect. We target -- we specifically target commercial -- 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, altogether this is why we have been able to secure bigger market shares starting from this year.

Michael Fei -- Chief Executive Officer, SME Banking

Okay. I'll cover the spirit question. So the progress on the overseas business, so far we have entered the 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, we -- our solutions include like risk management, fast claims, and the banking system.

Also, we launched our VP in Hong Kong last year, as probably you have know that, it's one of the eight VP 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 production of the revenue, the revenue coming from overseas is still a small, it's still in the 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.

Elsie Cheng -- Goldman Sachs -- Analyst

[Foreign Speech]

Patricia Cheng -- Investor Relations

Thank you, Elsie. Operator, do we have anyone else on the line?

Operator

We do have one more question from the line of Alex Yao with JPMorgan. Your line is open.

Alex Yao -- JPMorgan -- Analyst

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.

Patricia Cheng -- Investor Relations

Thank you Alex. This question will be -- we'll go to Ye Wangchun.

Ye Wangchun -- Chairman and Chief Executive Officer

[Foreign Speech]

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 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. Certainly, our financial cloud work with a variety of platforms, we are able to incorporate local cloud with public cloud, as well as private cloud. Firstly, in terms of costs, at Ping An financial cloud has been in operation for many years, we are confident that we can maintain our cost at a very competitive level.

[Foreign Speech]

Firstly, in the industry we know that other than cloud we have had SaaS for us we have been improving our capacity in PaaS since 2019, so we are confident that we can outperform our competitors. Secondly, we can also connect SaaS to PaaS whereas our competitors may only provide a PaaS services.

Patricia Cheng -- Investor Relations

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.

Operator

[Operator Closing Remarks]

Duration: 63 minutes

Call participants:

Patricia Cheng -- Investor Relations

Ye Wangchun -- Chairman and Chief Executive Officer

Luo Yongtao -- Chief Financial Officer

Michael Fei -- Chief Executive Officer, SME Banking

Unidentified Speaker

Yang Liu -- Morgan Stanley -- Analyst

Hans Chung -- KeyBanc Capital Markets -- Analyst

Ethan Wang -- CLSA -- Analyst

Elsie Cheng -- Goldman Sachs -- Analyst

Alex Yao -- JPMorgan -- Analyst

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