guidance at its 2Q21 results to not less than 25% yoy, from not less than 42.3% yoy (Fig 12).

OneConnect maintained its FY21F net margin guidance at a double-digit percentage point improvement yoy. 2Q21 net margin improved 6.7%-pts yoy, with 1H21 net margin improving 18.5%-pts yoy

Revenue growth has been slowing, from FY18’s 143% yoy to FY20’s 42% yoy and 1Q21’s 41% yoy. While OneConnect’s revenue relies heavily on Ping An Group and its associate, Lufax, with both of these comprising 65% of total revenues in 1H21, it had been making an effort to expand revenues from other parties.

Unfortunately, the Covid-19 outbreak has made it more difficult to source new customers.

Consequently, OneConnect announced at its 2Q21 results that it has decided to shift its strategy to focus more on existing premium customers, including the ‘premium plus’ segment. OneConnect defines the ‘premium plus’ segment as customers (excluding Ping An Group and its subsidiaries) with annual revenue contribution of at least Rmb1m, which is in contrast with the ‘premium’ segment, which is defined as customers (excluding Ping An Group and its subsidiaries) with annual revenue contribution of at least Rmb100,000.

Figure 22: Revenue by source

FY17	FY18	FY19	FY20	1H20	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Revenue by customer (Rmb m)
Ping An Group	236	528	995	1,727	1,000	317	228	392	491	616	436	564
Lufax	175	387	299	343	165	114	83	95	88	77	75	90
3rd-party customers	171	499	1,034	1,242	623	341	270	287	302	383	309	314
Total	582	1,413	2,328	3,312	1,788	773	581	774	881	1,076	820	968
Mix of revenue by customer
Ping An Group	41%	37%	43%	52%	56%	41%	39%	51%	56%	57%	53%	58%
Lufax	30%	27%	13%	10%	9%	15%	14%	12%	10%	7%	9%	9%
3rd-party customers	29%	35%	44%	38%	35%	44%	46%	37%	34%	36%	38%	32%
Total	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%
Growth yoy
Ping An Group	124%	89%	74%	61%	40%	11%	68%	105%	94%	92%	44%
Lufax	121%	-23%	15%	-8%	3%	30%	44%	61%	-33%	-10%	-6%
3rd-party customers	192%	107%	20%	12%	98%	50%	29%	4%	12%	14%	9%
Total	143%	65%	42%	32%	51%	30%	48%	51%	39%	41%	25%

SOURCES: CGS-CIMB RESEARCH, COMPANY REPORTS

Figure 23: Revenue by customer type

(Rmb m)	FY17	FY18	FY19	FY20
Ping An Group	236	528	995	1,727
Premium Customers	345	865	1,306	1,517
Basic Customers	1	21	27	68
Total	582	1,414	2,328	3,312
Growth yoy
Ping An Group	124%	89%	74%
Premium Customers	151%	51%	16%
Basic Customers	1960%	33%	150%
Total	143%	65%	42%
Mix
Ping An Group	41%	37%	43%	52%
Premium Customers	59%	61%	56%	46%
Basic Customers	0%	1%	1%	2%
Total	100%	100%	100%	100%

SOURCES: CGS-CIMB RESEARCH, COMPANY REPORTS

OneConnect has two main types of revenue: (i) implementation and (ii) transaction-based and support services.

Implementation revenue primarily consists of revenue from customer-specific software development, or customisation services provided to customers for using OneConnect’s platform either via cloud offerings or on-site.

On the other hand, transaction-based and support services relate to revenue charged to financial institution customers (mainly retail banking) based on the transaction volume generated on OneConnect’s platform. As of FY20, 74% of OneConnect’s revenue was transaction-based, and rose to 79% in 1Q21.

OneConnect has six main sources of transaction-based and support services. Business origination services were previously the most important, comprising 78% of total revenue in FY17. This segment has fallen markedly in importance, contributing only 18% of total revenue in FY20 (and only 12% in 2Q21). Business origination services involved OneConnect assisting financial institutions in acquiring customers for their loans, wealth management products and insurance policies. This is typically via the provision of customer leads, either via their own systems or third-party sources.

The most important revenue segment at the end of FY20 was operation support services, comprising 32% of revenues in FY20. FY20 growth was an impressive 82% yoy. Operation support services primarily include artificial intelligence (AI) customer services and adjuster and roadside assistance management modules.