① On the evening of May 8, in response to questions such as when connected customers will stop using it and how it will affect the company's revenue situation in the future, Finance One Account responded to the Financial Services Association reporter saying that it is actively negotiating with related customers and evaluating their business plans and further measures, and is currently still in the discussion stage. ② Affected by related news, the Hong Kong stock price of Financial One Account fell close to 15% on May 8, hitting a minimum of HK$0.53 per share.
Financial Services Association, May 9 (Reporter Guo Zishuo) After an announcement triggered a sharp drop in stock prices, Financial One Account (6638.HK; OCFT.US) finally gave a clear response.
On the evening of May 8, in response to questions such as when connected customers will stop using it and how it will affect the company's revenue situation in the future, Financial One Account responded to the Financial Services Association reporter saying that it is actively negotiating with related customers and evaluating their business plans and further measures, and is currently still in the discussion stage. The company is closely monitoring developments and will promptly disclose them. However, in connection with the specific time when customers stopped using it, Financial One Account did not clearly state anything.
Financial One Account suggests that there is uncertainty about whether any other related customers will continue to use (or stop using) the company's cloud services at the current level. Currently, the company is actively monitoring the situation and will continue to follow up the progress of the situation.
Regarding the follow-up arrangements, Financial One Account further responded to the Financial Federation reporter. In the first phase of the strategy, the company's revenue was fully diversified. In the second phase, the company will increase customer cultivation, plan to provide more products and solutions, and increase the customer's use of the company's solutions. It will also help increase the company's gross profit margin to further enhance overall profitability.
On the evening of May 7, Beijing time, Financial One Account issued an announcement stating that some related customers intend to stop using the company's cloud services, and the two sides are discussing the effective time and any transitional arrangements relating to the termination of use. In response to the impact of the termination of related business on the company's revenue, Financial One Account said that the company is actively negotiating with related customers and evaluating the possible impact it may have on the company and is still in the discussion stage. The company is closely monitoring developments and will promptly disclose them.
In the announcement, Financial One Account did not specify the specific information of “associated customers.” It only stated that for the year ended December 31, 2022 and 2023, these related customers contributed about 16.7% and 19.2% of the Group's total revenue, respectively, from purchasing the Group's cloud services. In 2022 and 2023, Financial One Account's cloud service revenue was 1,316 billion yuan and 1,246 billion yuan respectively, accounting for about 29.5% and 34% of the total revenue for those years. More than 99% of this revenue came from China Ping An Insurance Group and its subsidiaries and associated companies, also known as related customers. According to historical share estimates, more than 10% of the group's total revenue will be affected.
Affected by this news, the Hong Kong stock price of Financial One Account fell close to 15% on May 8, hitting a minimum of HK$0.53 per share. Since then, the share price decline has narrowed somewhat. Meanwhile, the latest closing price of the Financial One Account US stock was 0.600 US dollars/share, down 3.23%.
Reviewing the Financial One Account 2023 Annual Report, it is easy to find that the pressure of a sharp decline in customers and reduced demand has been transmitted layer by layer to various sectors of the company, affecting revenue performance. According to Financial One Account, due to a decrease in revenue from technology solutions, the company's revenue for the full year of 2023 decreased 17.8% year-on-year to 3.67 billion yuan. However, Finance One Account admits that the reason for the decline was not price fluctuations, but shrinking demand.
According to the company's 2023 annual report, due to reduced demand, the revenue of Financial One Account's cloud service platform fell 5.3% year over year to RMB 1,246 billion. Meanwhile, the decline in revenue from customer service and operation support services also led to a sharp drop of 19.2% in the previous year's revenue segment, from 4.358 billion yuan in the year ended 31 December 2022 to 3,522 billion yuan in the same period in 2023.