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RESULTS PRESENTATIONH1 FY19
DISCLAIMER
The material in this presentation is general background information about Afterpay Touch Group Limited (APT) and is current at the date of the presentation, 26 February 2019. The information in
the presentation is given for informational purposes only, is in summary form and does not purport to be complete. It is intended to be read by a professional analyst audience in conjunction with
APT’s other announcements to ASX, including the H1 FY19 Half Year Results announcement. It is not intended to be relied upon as advice to current shareholders, investors or potential investors
and does not take into account the investment objectives, financial situation or needs of any particular shareholder or investor. No representation is made as to the accuracy, completeness or
reliability of the presentation. APT is not obliged to, and does not represent that it will, update the presentation for future developments.
All currency figures are in Australian dollars unless otherwise stated. Totals may not add up precisely due to rounding.
This presentation contains statements that are, or may be deemed to be, forward looking statements. These forward-looking statements may be identified by the use of forward-looking
terminology, including the terms “believe”, “estimate”, “plan”, “target”, “project”, “anticipate”, “expect”, “intend”, “likely”, “may”, “will”, “could” or “should” or similar expressions, or by discussions of
strategy, plans, objectives, targets, goals, future events or intentions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.
You are cautioned not to place undue reliance on such forward-looking statements. Such forward looking statements are not guarantees of future performance and involve known and unknown
risks, uncertainties and other factors, many of which are beyond the control of APT or any of its related entities which may cause actual results to differ materially from those expressed or implied
in such statements. There can be no assurance that actual outcomes will not differ materially from these statements.
2
AFTERPAY IS SCALING…
AFTERPAY
UNDERLYING SALES/GMV
AFTERPAY
TOTAL INCOME2
(PRO FORMA)3
AFTERPAY
ACTIVE CUSTOMERS
1
AFTERPAY
GROSS LOSSES4 (PRO FORMA)
3
AFTERPAY
ACTIVE MERCHANTS
1
AFTERPAY
NET TRANSACTION MARGIN (PRO FORMA)
3
147% 124%
118% 32%
101%
0.9b 47.8m
1.4m
11.5k
2.3%
1.6%
H1 FY18 H1 FY18
H1 FY18 H1 FY18
H1 FY18 H1 FY18
H1 FY19 H1 FY19
H1 FY19 H1 FY19
H1 FY19 H1 FY19
2.3b 107.1m
3.1m
23.2k 2.3%
1.1%
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. AS AT 31 DECEMBER 2018, DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 2. AFTERPAY TOTAL INCOME INCLUDES AFTERPAY INCOME AND OTHER INCOME
(LATE FEES) 3. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS
WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 4. GROSS LOSSES ARE DEFINED AS THE AFTERPAY RECEIVABLES IMPAIRMENT EXPENSE AS A PERCENTAGE OF UNDERLYING SALES
UP UP
IMPROVEDUP
UP
$$
$ $
3
KEY HIGHLIGHTS - H1 FY19
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE
WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL
PLATFORM GROWTH
• Afterpay underlying sales +147% over pcp
• Significant growth in ANZ continues
• US scale-up above expectations
• UK preparing for launch in H2 FY19
REDUCED LOSSES
• Gross losses significantly reduced (1.6% to 1.1% pro forma1)
• >30% improvement over pcp
• Improvement notwithstanding contribution of higher US (early lifecycle) losses
FINANCIAL PERFORMANCE
• Group total income +91% (pro forma1) over pcp
• Transaction margins maintained notwithstanding rapid scaling in US
• Significant investment in international expansion
REDUCED LATE FEES
• Significantly reduced from 1.2% of underlying sales to 0.8% (a 32% improvement)
• Capped late fees from 1 July 2018
• Improved customer tiering and scoring
STRONG BALANCE SHEET
• Significant growth headroom
• Equity capital raising completed September 2018 ($142m before costs)
INNOVATION
• Continue to invest significantly in platform growth
• Customer engagement spend and ‘lifetime value’ increasing
• Major lead referrer to merchant partners
CAPITAL MANAGEMENT
• Increased AU facilities ($500m) and extended term
• Stand-alone US facility (US$300m) in progress; similar terms to AU
REGULATION
• Strongly supportive of regulatory development
• Support proposed ASIC product intervention powers (PIP)
• Senate Committee supportive of PIP and Afterpay supports other recommendations
4
OUR MISSION AND PROGRESS
5
THE POWER HAS SHIFTED TO THE MILLENNIAL CONSUMER
BY 2025, MILLENNIALS WILL
CONTRIBUTE ALMOST HALF OF ALL SALARY
EARNED INCOME IN THE U.S.
3
MILLENNIALS MAKE UP 27% OF
THE ENTIRE GLOBAL POPULATION
1
BY 2020, MILLENNIALS WILL HAVE THE HIGHEST SPENDING POWER
AT ALMOST $15 TRILLION WORLDWIDE
2
SOURCE: 1. A.T. KEARNEY (2016) 2. FINANCIAL TIMES (2018) 3. VISA (2015) 6
OUR MISSION
We are empowering a generational movement
away from traditional credit products
The power has shifted to the millennial consumer and we are building a long-term relationship with them today
TO BE THE WORLD’S
MOST LOVED WAY TO PAY
GEN XMILLENNIALS BABY BOOMER
71%
7%
22%39%
36%
25%
AFTERPAY AUSTRALIA
AUSTRALIA18+2
AFTERPAY DEMOGRAPHICS
CREDIT CARDS
DEBIT CARDS
1994 2018
500
0
AUSTRALIAN CARD TRANSACTIONS1
MONTHLY, BY VOLUME, ‘000
SOURCE: 1. RESERVE BANK OF AUSTRALIA (2018) 2. AUSTRALIAN BUREAU OF STATISTICS (2018). NOTE: “MILLENNIALS” ARE DEFINED AS PEOPLE BORN AFTER 1981 AND OLDER THAN 18; “GEN X” ARE DEFINED AS PEOPLE BORN BETWEEN 1960-1981; “BABY BOOMERS” ARE DEFINED AS PEOPLE BORN BEFORE 1959
7
PURPOSEFULLY DIFFERENT
MAJORITY OF INCOME EARNED FROM RETAILER NOT CUSTOMER
FREEZE ACCOUNTS IF A SINGLE PAYMENT IS LATE
TEST EVERY SINGLE TRANSACTION IN REAL-TIME (REJECT ~30%)
NOT A LINE OF CREDIT – ONLY FOR DISCRETE PURCHASES
LATE FEES CAPPED AND DON’T ACCUMULATE
FREE SERVICE TO CUSTOMERS WHO PAY ON TIME
LOW TRANSACTION VALUES WITH STRICT CAPS
MUST BUY TO OWN; NOT RENT – PAY OFF IN FULL IN SHORT TIME FRAMES
NO INTEREST AND NO HIDDEN FEES (SIGN-ON, ADMIN, MONTHLY, ETC.)
LOWER FIRST-TIME LIMITS - ONLY EXPANDS FROM GOOD BEHAVIOUR
1
3
5
2
4
7
9
8
10
6
...TO TRADITIONAL CREDIT AND OTHER BNPL1
PRODUCTS
NOTE 1. BUY NOW PAY LATER 8
BUILDING TRUST BECAUSE WE ARE DIFFERENT
43.2
35.4
48.3
30.1
24.4
30.4
42.3 42.0
31.5
46.4
32.4
16.6
33.1
61.1
37.5
30.3
0
10
20
30
40
50
60
70
BILLPAY MASTERCARD PAY TAP & PAY PAY
NE
T P
RO
MO
TE
R S
CO
RE
BANKS’ OWN MOBILE PAYMENTS OTHER CONTACTLESS/CARDLESSMOBILE PAYMENTS
BILL PAYMENT SERVICES ONLINE PAYMENT PLATFORMS BUY NOW PAY LATER PAYMENTS 2
DIGITAL PAYMENTS NTS - ROY MORGAN1 NET TRUST SCORE
PROPORTION OF NON-INTEREST INCOME TO TOTAL INCOME
RIS
K A
DJU
ST
ED
RE
TU
RN
5
LISTED SMALL CASH LOANS/EQUIPMENT RENTAL COMPANY
NOT DRAWN TO SCALE
BUBBLE SIZE REFLECTS AVERAGE REVENUE
GENERATING ASSETS / RECEIVABLES
LISTED DOMESTIC NON-BANK CONSUMER/COMMERCIAL RENTAL AND LEASING COMPANIES6
11
REGIONAL BANKS
AVERAGE8
MAJOR BANKS AVERAGE7
PUBLISHED BNPL COMPARATOR10
020%10% 30% 40% 50% 60% 70% 80% 100%90%
30%
40%
20%
10%
OFFSHORE CONSUMER
BANKS9
SOURCE: 1. ROY MORGAN RESEARCH BASE: AUSTRALIANS 14+; JULY 17 – JUNE 18 NPSSM AND NET TRUST SCORE IS A SERVICE MARK OF BAIN & COMPANY, INC., SATMETRIX SYSTEMS, INC., AND MR. FREDERICK REICHHELD. 2. BUY NOW PAY LATER PAYMENTS (AFTERPAY,
ZIPPAY, ZIPMONEY) FROM OCT 2017 3. ROY MORGAN ARTICLE (14 FEB 2019) 4. CITIBANK: COMPANY FILINGS. CALCULATIONS BASED ON LAST REPORTED OR LAST TWELVE MONTHS (FY18 UNLESS OTHERWISE INDICATED) 5. RISK ADJUSTED RETURN IS CALCULATED
BASED ON TOTAL INCOME LESS IMPAIRMENT EXPENSE AS A PERCENTAGE OF AVERAGE INTEREST EARNING ASSETS; 6. INCLUDES FLEXIGROUP AND THORN (LTM 31 DEC 2018); 7. INCLUDES CBA (LTM 31 DEC 2018), NAB, WBC AND ANZ. INCLUDES INCOME FROM ASSETS
ANNOUNCED FOR DIVESTMENT BUT WHICH HAVE NOT YET BEEN DIVESTED; 8. INCLUDES BOQ AND BEN (LTM 31 DEC 2018); 9. INCLUDES SYNCHRONY, CEMBRA (LTM 30 JUN 2018) AND MONETA; 10. BASED ON REPORTED PROPORTION OF NON-CUSTOMER BASED
INCOME IN FY16 OF ~58% 11. BUBBLE SIZE BASED ON H1 FY19 UNDERLYING SALES ANNUALISED
MAJORITY OF AFTERPAY REVENUE FROM MERCHANT (NOT CUSTOMER)4
BANKS NTS3
NEGATIVE
9
AFTERPAY HIGHEST NTS SCORE
(ROY MORGAN)
BUT MORE IMPORTANTLY...
OUR CUSTOMERS TRUST US AND ARE ‘STICKY’
OUR CUSTOMERS ARE GROWING WITH US
NOTE: 1. AUSTRALIAN CONSUMERS DEFINED AS HAVING TRANSACTED AT LEAST ONCE SINCE INCEPTION 2. PERCENTAGE OF ACTIVE CUSTOMERS THAT TRANSACTED EACH MONTH
STRONG GROWTH...
0JAN 16 JAN 16 JAN 16DEC 18 DEC 18 DEC 18
2.5 50
0 0
$400
CUSTOMER BASE GROWING STRONGLYTREND LINE
GROWING CUSTOMER ENGAGEMENT2
TREND LINE
GROWING CUSTOMER SPENDTREND LINE
Illustrates that Customer Lifetime Value should be our core focus to maximise long-term shareholder value. Our business is more about customers than transactions
AU
AU
AU
TO
TA
L A
CT
IVE
1 CU
ST
OM
ER
S (
MIL
LIO
NS
)
PE
RC
EN
TA
GE
CU
ST
OM
ER
S T
RA
NS
AC
TIN
G P
ER
MO
NT
H
AV
ER
AG
E C
US
TO
ME
R S
PE
ND
PE
R M
ON
TH
($
)
10
A U S T R A L I A
LARGEST PORTFOLIO OF LEADING BRANDS IN ANZ
11
WE ARE A PLATFORM
BRANDS
CUSTOMERS
25,000+MERCHANTS
>10%2 ALLE-COMMERCE
>95% GMV FROM
RETURNING CUSTOMERS IN
AUSTRALIA4
AFTERPAY HAS BECOME A LIFESTYLE
MULTI-CHANNEL
3.5 MILLIONCUSTOMERS
EFFECTIVE NEW CUSTOMER CHANNEL BASED ON DEEP RETAIL
INSIGHTS7m shop directory
leads in December 2018
ONE OF THE LARGEST RETAILER LEAD REFERRERS IN
ANZ2.7+ MILLION AFTERPAY
APP DOWNLOADS
(TODAY1 AND GROWING)
(TODAY1 AND GROWING)
RETAIL
SERVICES
(and ~13% of Australian 18+ population)3
Expanding strongly into Health, Wellness and Entertainment
~15% ANZ GMV from In-store
in Australia is processed through Afterpay
SOURCE: 1. AS AT 22 FEBRUARY 2019, DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 2. NAB ONLINE RETAIL SALES INDEX DECEMBER 2018 3. AUSTRALIAN BUREAU OF STATISTICS. NOTE: “MILLENNIALS” ARE DEFINED AS PEOPLE BORN AFTER 1981 AND OLDER THAN 18; “GEN X” ARE DEFINED AS PEOPLE BORN BETWEEN 1960-1981; “BABY BOOMERS” ARE DEFINED AS PEOPLE BORN BEFORE 1959 4. DURING JANUARY AND FEBRUARY 2019
~24% OF AUSTRALIAN MILLENNIALS3
12
AFTERPAY HAS BECOME A LIFESTYLEWITH DIVERSIFIED PARTNERS THAT GO BEYOND FASHION AND BEAUTY AND HAS EXPANDED TO HOME, HEALTHCARE, TRAVEL AND MORE
WE EMPOWER CUSTOMERS TO LIVE
THEIR LIFE THEIR WAY
WE ARE DESIGNED AROUND WHO OUR CUSTOMERS ARE
AND WHO THEY WANT TO BE
FASHION HEALTH AND WELLBEINGBEAUTY EXPERIENCES
A U S T R A L I A
NOTE: 1. ASOS AND NIKE ARE LIVE IN AUSTRALIA AND NEW ZEALAND
1
1
13
DEMONSTRATED IMPROVING PERFORMANCE AS WE HAVE SCALED
H1 FY16 H1 FY19H1 FY18H1 FY17
2,000
1,000
0
UNDERLYING SALES/ GMV GROWTH
TRENDLINE
MERCHANT MARGIN 3.7% 3.9% 20 bpts
GROSS LOSS 1.7% 1.1% 60 bpts
NTL 0.8% 0.5% 30 bpts
NTM 2.1% 2.3% 20 bpts
FY16 CURRENTPRO FORMA1
IMPROVEMENT
NOTE 1. CURRENT REFLECTS PRO FORMA H1 FY19. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND NET TRANSACTION LOSS. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL
A$
M
14
US CONTRIBUTION IN THE FIRST 6 MONTHS
FIRST SIX MONTH PERIOD
US CONTRIBUTION TO GROUP
IN H1 FY19
BUILDING SUCCESS IN THE USIN THE LAST SIX MONTHS THE US BUSINESS HAS ACHIEVED A$260 MILLION GMV
BY COMPARISON IT TOOK 28 MONTHS TO ACHIEVE THIS NUMBER IN THE AUSTRALIAN BUSINESS
RETAIL PARTNERS
(TODAY)1
CUSTOMERS (TODAY)2
(~650K AS AT 31 DEC)
SHOP DIRECTORY
LEADS
(IN DEC 18)
2,800 900K 2M
GMV11.6%
ACTIVE
CUSTOMERS
26.3%
ACTIVE
MERCHANTS
7.5%
NOTE 1. INCLUDES ACTIVE AND INTEGRATING MERCHANTS AS AT 22 FEBRUARY 2019 2. AS AT 22 FEBRUARY 2019, DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS
TODAY2
TODAY2
15
RESONATING WITH KEY US RETAILERSTHE FREEDOM THAT AFTERPAY PROVIDES TRANSLATES INTO LOYAL CUSTOMERS, HIGHER CONVERSIONS, AND BIGGER CARTS. WITH AFTERPAY, RETAILERS GET PAID UPFRONT WHILE CUSTOMERS GET TO PAY OVER TIME
We couldn’t be happier
with our Afterpay
partnership. Our customers
have absolutely loved the
service. Afterpay has been
incredibly easy to work
with and a tremendous
partner for our business.
MIKE KARANIKOLAS, CO-CEO & CO-FOUNDER REVOLVE
Afterpay has been a strong
partner for URBN. Their
team has been responsive
and the integration was
straightforward, but more
importantly, customers of our
multiple brands have embraced
Afterpay very favorably, so we
are excited to expand to new
markets in the future.
DAVE HAYNE, CHIEF DIGITAL OFFICER URBN GROUP
16
POSITIVE REGULATORY DEVELOPMENT
Senate Inquiry was an important process for Parliament to better understand our business and how it’s different to traditional credit. It was clear during the Senate process that Afterpay’s model is unique in the industry for not leaning on the consumer for income
The Government, the Opposition, ASIC, the Senate Committee and Afterpay support Product Intervention Powers as an appropriate way to regulate the BNPL1 industry
We’re proud of the progress we have made in capping late fees - now under 20% of Afterpay total income (the inverse is true for credit cards)
Significantly lower percentage of income earned from customers than any other traditional credit or published BNPL1 provider
Afterpay supports further minimum standards for the industry, including compulsory membership of AFCA, genuine hardship policies and an industry code of practice
We look forward to continued engagement and self-improvement
AFTERPAY’S MODEL UNIQUE
LATE FEES LESS THAN 20% AFTERPAY TOTAL INCOME
ON THE PATH TO REGULATION
CONTINUED ENGAGEMENT AND SELF-IMPROVEMENT
<20%
NOTE: 1. BUY NOW PAY LATER 17
OUR STRATEGY
18
?
OUR ADDRESSABLE OPPORTUNITY IS SUBSTANTIALOur immediate markets where Afterpay is present represents a A$6 trillion opportunity
The online contribution in these three markets is A$780 billion
Our Australian success has shown the applicability of our product across the majority of retail categories
AUSTRALIA
ONLINE $30B1
ONLINE $130B2
RETAIL $320B1
RETAIL $720B2
RETAIL $5T3
ONLINE $620B3
UNITED KINGDOM
REST OF WORLDUNITED
STATES
SOURCE: 1. NAB ONLINE RETAIL INDEX DECEMBER 2018 2. UK HOUSE OF COMMONS (2018) 3.NATIONAL RETAIL FEDERATION (2019), FTI CONSULTING (2017) 19
GREATEST OPPORTUNITY IS AHEAD
CONTINUE TO GROW IN EXISTING AND NEW VERTICALS IN ANZ
• In-store remains a significant untapped opportunity
UK LAUNCH IN H2 FY19
• Technical set up and in-market team development well progressed. Retail based engagement also in progress
• Welcome commitments from Urban Outfitters who have agreed to be our launch partner merchant for the UK
US OPPORTUNITY IS CLEAR AND NOW
• Merchant and customer growth beyond expectations for first six months
• Pipeline of integrating merchants is significant
• Co-marketing with Enterprise retailers yielding strong results
CUSTOMER LIFETIME VALUE IS GROWING AND ENHANCED THROUGH PLATFORM INNOVATION
• Continue to invest and build on strong existing engagement and create new income opportunities
1
JUN-15
49
DEC-18
0
200
400
100
US SCALING
US EARLY IN LIFECYCLE
FIRST TIME
RETURNING
57%
43%
95%
5%
RETURNING CUSTOMER SPEND % MONTHLY ORDERS
MONTHLY UNDERLYING SALES, TRENDLINE, A$M
MONTHS AFTER LAUNCH
ANZ RETURNING CUSTOMER SPEND (% H1 FY19 ORDERS)
US RETURNING CUSTOMER SPEND (% H1 FY19 ORDERS)
959491
86
75
66
54
38
60
80
40
20
61
27
US
ANZ
AU
US
20
RESULTS SUPPORT ACCELERATING GROWTHTHE BOARD AND MANAGEMENT BELIEVE SHAREHOLDER VALUE WILL BE MAXIMISED BY ADOPTING A MORE WEIGHTED APPROACH TO MERCHANT AND CUSTOMER GROWTH
ACCELERATE GMV GROWTH
(PARTICULARLY US AND INTERNATIONAL)
INVEST IN ENTERPRISE
KEY BRAND RELATIONSHIPS
INVEST FURTHER IN
PLATFORM INNOVATION
SCALE SMB GROW INTERNATIONAL EXECUTION CAPABILITY AHEAD OF THE CURVE
BROADEN BASE
CAPABILITIES APPROPRIATELY
US SCALE-UP OPPORTUNITY IS
APPARENT AND REAL
UK LAUNCH IN H2 FY19
ST
RA
TE
GY
RA
TIO
NA
LE CO-MARKETING
INVESTMENT HAS HIGH ROI
EFFICIENT DRIVER OF CUSTOMER BASE
AND PLATFORM VALUE
STRONG MARGINS
DEEP POOL
MIX TAKES SOME TIME TO BLEND MARGIN HIGHER
CUSTOMER LIFETIME VALUE FOCUS
SOLIDIFY ALREADY ‘STICKY’ CUSTOMER
ENGAGEMENT
GLOBAL SUPPORT AND
INFRASTRUCTURE
RISK AND COMPLIANCE
21
MAINTAINING A STRONG MID-TERM MARGIN FOCUS
SHORT-TERM (H2 FY19-FY21) MID-TERM (FY22)
GMV MIX
MARKETING
OTHER VARIABLE COSTS
EBITDA
Higher proportion of ‘first time’ customers and higher blended losses
GMV skew to lower margin Enterprise
Higher returning customer mix from larger base and lower losses
Higher SMB contribution (catch-up) and higher blended merchant margin
Higher fixed cost marketing
Variable Enterprise co-marketing
Variable Enterprise co-marketing is front ended and rolls off quickly
Lower fixed cost marketing
Lower cost profile as current ‘step-change’ initiatives completed and take hold
Increased margins and fixed cost base leverage as GMV scales and merchant and customer mix matures
Current cost profile
Maintain positive performance despite short term margin mix impact, marketing and fixed cost investment (at least additional A$10 million investment in H2 FY19)
AN ACCELERATED INTERNATIONAL GROWTH STRATEGY GLIDEPATH
22
MID-TERM STRATEGY
OUR EXECUTION PATH AND EXPANSION PLAN IS BASED
ON MAXIMISING LONG TERM SHAREHOLDER VALUE
FY20 FOCUSED
INTERNATIONAL EXPANSION
STRONG MERCHANT AND CUSTOMER EXPANSION
EBITDA GROWTH
FY22 OPERATING LEVERAGE
FY21 CONTINUED PLATFORM GROWTH
INVESTMENT IN GROWTH AND
CUSTOMER LIFETIME VALUE
TARGET $20B++ GMV
AND c. 2% NTM
(POST ACCOUNTING CHANGES) (END FY22)
23
H1 FY19 FINANCIAL RESULTS
OVERVIEW AND ANALYSIS
24
GROUP FINANCIAL SNAPSHOT
A$M (UNLESS OTHERWISE STATED) H1 FY19
H1 FY19 PRO FORMA1
(EXCL ACC. CHANGES) H1 FY18 CHANGE2 %
GROUP - KEY FINANCIAL METRICS
TOTAL INCOME 112.3 116.1 60.7 91%
AFTERPAY3 103.4 107.1 47.8 124%
PAY NOW 8.9 8.9 12.9 (31)%
NET TRANSACTION MARGIN4 51.6 57.1 28.0 104%
AFTERPAY 46.7 52.2 21.2 146%
PAY NOW 4.8 4.8 6.8 (28)%
EBITDA (EXCLUDING SIGNIFICANT ITEMS) 11.5 17.0 14.3 19%
INTEREST (4.9) (4.9) (2.2) 125%
EBTDA (EXCLUDING SIGNIFICANT ITEMS) 6.6 12.1 12.1 0%
LOSS FOR THE PERIOD - STATUTORY (22.2) N/A (0.7) N/A
8%
8%
21%
25%
92%
92%
79%
75%
AFTERPAY
AFTERPAY
AFTERPAY
AFTERPAY
PAY NOW
PAY NOW
PAY NOW
PAY NOW
H1 FY18
H1 FY19
H1 FY18
H1 FY19
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR
PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 2. CHANGE PERCENTAGE IS BASED ON H1 FY19 PRO FORMA COMPARED TO H1 FY18
3. AFTERPAY INCLUDES AFTERPAY INCOME AND OTHER INCOME (LATE FEES) 4. NET TRANSACTION MARGIN IS EQUAL TO AFTERPAY NET TRANSACTION MARGIN AND PAY NOW GROSS MARGIN
TOTAL INCOME CONTRIBUTION1
NET TRANSACTION MARGIN MIX1
25
PRO FORMA ACCOUNTING CHANGE ADJUSTMENTS
PRO FORMA2 IMPACT
Income – Afterpay income recognised
over the life of receivable (income
deferred by approximately 1 month)
Net Transaction Loss – Receivables impairment expense increased but does not reflect any change in actual cash loss experience
EBITDA – Combined impact of the above
103.413.6
11.5
H1
FY
19
H1
FY
19
H1
FY
19
3.7 (1.8) 5.5
IMPA
CT
OF
A
CC
OU
NT
ING
S
TA
ND
AR
D
CH
AN
GE
S
AFTERPAY TOTAL INCOME1
A$M
NET TRANSACTION LOSS
A$M
EBITDA (EXCL SIGNIFICANT ITEMS)
A$M
IMPA
CT
OF
A
CC
OU
NT
ING
S
TA
ND
AR
D
CH
AN
GE
S
IMPA
CT
OF
A
CC
OU
NT
ING
S
TA
ND
AR
D
CH
AN
GE
S
107.1
CHANGE +124%
CHANGE +19%
11.8
17.0
H1
FY
19
PR
O F
OR
MA
2
H1
FY
19
PR
O F
OR
MA
2
H1
FY
19
PR
O F
OR
MA
2
47.86.6
14.3
H1
FY
18
H1
FY
18
H1
FY
18
NO IMPACT ON INCOME RECEIVED IN CASH OR ACTUAL LOSS EXPERIENCE
NTL % (0.6%) (0.5%) (0.7%)
A B BA +
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. AFTERPAY TOTAL INCOME INCLUDES AFTERPAY INCOME AND OTHER INCOME (LATE FEES) 2. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND
RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES26
GROUP STATUTORY RESULTS
A$M (UNLESS OTHERWISE STATED) H1 FY19 H1 FY18
AFTERPAY INCOME 85.2 37.1
PAY NOW REVENUE 8.9 12.9
OTHER INCOME 18.2 10.8
TOTAL INCOME 112.3 60.7
COST OF SALES (25.9) (13.0)
GROSS PROFIT 86.4 47.7
DEPRECIATION AND AMORTISATION (11.2) (4.8)
SHARE-BASED PAYMENTS (SBP) (18.1) (5.3)
SALARIES, WAGES AND ON-COSTS (21.0) (9.2)
RECEIVABLES IMPAIRMENT EXPENSES (27.4) (15.1)
OPERATING EXPENSES (25.4) (10.4)
OPERATING (LOSS)/PROFIT (16.6) 2.9
FINANCE INCOME 0.2 0.2
FINANCE COST (5.1) (2.4)
(LOSS)/PROFIT BEFORE TAX (21.5) 0.7
INCOME TAX EXPENSE (0.7) (1.5)
LOSS FOR THE PERIOD (22.2) (0.7)
SIGNIFICANT ITEMS
Share-Based Payments ($18.1m) – Predominantly non-cash
One-Off Costs ($1.1m) – International business formation costs ($2.4m) partially offset by a one-off net gain of $1.3m for sale of European e-Services business
Foreign Currency Gain ($2.3m) – Relates to favourable FX movement on USD denominated balances
ACCOUNTING CHANGES
AASB 9 ($5.5m) - Negative impact on (Loss)/Profit Before Tax as described previously
27
AFTERPAY KEY FINANCIAL METRICS
A$M (UNLESS OTHERWISE STATED) H1 FY19AASB9
ACC. IMPACTH1 FY19
PRO FORMA2 H1 FY18 CHANGE3 %
UNDERLYING SALES 2,272.6 - 2,272.6 918.3 147%
ANZ 2,009.0 - 2,009.0 918.3 119%
US 263.7 - 263.7 - -
AFTERPAY INCOME1 85.2 3.7 88.9 37.1 140%
% OF UNDERLYING MERCHANT SALES 3.7% 0.2% 3.9% 4.0% -
NET TRANSACTION LOSS (NTL) (13.6) 1.8 (11.8) (6.6) 79%
% OF UNDERLYING MERCHANT SALES (0.6%) 0.1% (0.5%) (0.7%) -
OTHER VARIABLE TRANSACTION COSTS (INCL. FINANCE COSTS) (24.8) - (24.8) (9.2) 170%
% OF UNDERLYING MERCHANT SALES (1.1%) - (1.1%) (1.0%) -
NET TRANSACTION MARGIN (NTM) 46.7 5.5 52.2 21.3 145%
% OF UNDERLYING MERCHANT SALES 2.1% 0.2% 2.3% 2.3% -
EBTDA CONTRIBUTION 22.3 5.5 27.8 14.5 92%
EBITDA CONTRIBUTION 25.3 5.5 30.8 16.9 82%
TOTAL ACTIVE CUSTOMERS (M) - 31 DEC4 3.1 - 3.1 1.4 118%
ANZ 2.5 - 2.5 1.4 72%
US 0.7 - 0.7 - -
TOTAL ACTIVE MERCHANTS ('000) - 31 DEC4 23.2 - 23.2 11.5 101%
ANZ 21.8 - 21.8 11.5 89%
US 1.4 - 1.4 - -
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. AFTERPAY INCOME IS INCOME FROM MERCHANT FEES 2. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO
ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 3. CHANGE PERCENTAGE IS BASED ON H1 FY19
PRO FORMA COMPARED TO H1 FY18 4. AS AT 31 DECEMBER 2018, DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS
28
AFTERPAY PLATFORM GROWTHSTRONG GROWTH ACROSS ALL REGIONS AND CHANNELS
Increased acceptance and penetration
Strong US contribution in first six
months ($263.7m) with strong
pipeline in-train with key millennial
brands
December largest GMV month ever
Over 23k merchants globally at end
of December (over 25k today)
Today the US already has over 1.9k
active merchants and an additional
~0.9k merchants in the process of
integrating
Over 3.1m active customers
at end of December globally
(approximately 3.5m today)
Over 650k US active customers
at end December increasing to
over 900k today
Over 17k shop fronts in ANZ at end
of December (over 19k today)
12k more shop fronts
(228% increase) since pcp
In-store now ~15% of total ANZ
GMV – driven by Enterprise
merchants (SMB to come)
UNDERLYING SALES/GMV A$M
ACTIVE MERCHANTS1
THOUSANDS
ACTIVE CUSTOMERS1
MILLIONS
IN-STORE SHOP FRONTS3
THOUSANDS
+147%
+101%
+118%
+228%
918.3
11.5
1.4
5.4
2,272.6
23.225.3
3.1
17.819.5
3.5
263.7
1.41.9
0.7 0.9
2,009.0
21.8 23.4
2.5 2.6
H1 FY18
H1 FY18
H1 FY18
H1 FY18
H1 FY19
H1 FY19
H1 FY19
H1 FY19 TODAY2TODAY2
TODAY2
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 2. AS AT 22 FEBRUARY 2019 3. DEFINED AS NUMBER OF PHYSICAL IN-STORE LOCATIONS THAT HAVE TRANSACTED
WITH AFTERPAY AT LEAST ONCE SINCE INCEPTION
ANZ
ANZ ANZ
US
US US
ANZ
29
AFTERPAY MERCHANT INCOME MARGINSSTRONG PERFORMANCE IN LIGHT OF INCREASED SKEW TO ENTERPRISE MERCHANTS
REGIONAL MERCHANT TIER MIXPERCENT OF UNDERLYING SALES
GROUP MERCHANT TIER MIXPERCENT OF UNDERLYING SALES
AFTERPAY MERCHANT INCOME MARGIN
ONLINE VS IN-STORE CHANNEL MIXPERCENT OF UNDERLYING SALES
32%37%
6%14%
68%63%
94%86%
H1 FY19 ANZ
45%
55%
H1 FY18
H1 FY19 US
36%
64%
H1 FY19
H1 FY19 H1 FY18
ENTERPRISE
OTHER
ENTERPRISE
OTHER
ONLINE
IN-STORE
DRIVEN BY:
• Strong Enterprise performance in Christmas period
• ANZ In-store currently dominated by Enterprise brands and sales
• US has higher Enterprise mix given early stage of lifecycle
EXPECT LONGER TERM NORMALISATION AS:
• The ANZ and US SMB online pool builds (higher margin) consistently over time (currently on-boarding over 1k SMBs per month)
• ANZ In-store gets progressively rolled out to SMBs (early stages)
0.2%3.7%
3.9% 4.0%
IMPACT OF ACCOUNTING
STANDARD CHANGES
H1 FY19 PRO FORMA1
H1 FY18H1 FY19
PERCENT OF UNDERLYING SALES
NOTE: 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH
REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL30
REDUCED LOSSES AND LATE FEESNET TRANSACTION LOSS (NTL) PERFORMANCE DRIVEN BY LOWER GROSS LOSSES AND LOWER CONTRIBUTION OF LATE FEES
1.6% 1.2% 0.7%
H1 FY18 H1 FY18 H1 FY18
GROSS LOSSPERCENTAGE1
LATE FEESPERCENTAGE1
NTL2
PERCENTAGE1
1.2%
0.8%
0.6%
AASB 9 IMPACT
IMPROVEMENT (PRO FORMA)
IMPROVEMENT (PRO FORMA)IMPROVEMENT
AASB 9 IMPACT
H1 FY19 H1 FY19 H1 FY19
1.1%PRO FORMA
0.5%PRO FORMA
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. GROSS LOSS, LATE FEES & NTL ARE SHOWN AS A % OF UNDERLYING SALES OR GMV IN THE PERIOD 2. NTL CALCULATION ALSO INCLUDES OTHER ADJUSTMENTS (CHARGEBACKS AND DEBT
RECOVERY COSTS WHICH WERE 0.2% IN H1 FY19 AND 0.3% IN H1 FY18)
32% 28%32%
31
DRIVING LOSSES LOWER WHILE SCALING
COMMENTARY
Continued improvement achieved in H1 FY19 which was especially pleasing given:
• Continuing to rapidly scale
• US contribution of higher losses early in its lifecycle (as previously flagged)
• New vertical expansion in ANZ
• Lower contribution of late fees
UNDERLYING SALES VS NTL H1 FY16 TO H1 FY19
H1 FY16 H1 FY17 H1 FY18 H1 FY19
1.4%
0%
$3.0B
0
Pro forma NTL represents like for like comparison to prior year (i.e. pre AASB 9 impact)
UNDERLYING SALES
NET TRANSACTION LOSS
PRO FORMA1 NET TRANSACTION LOSS
NOTE: 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH
REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 32
NET TRANSACTION MARGIN (NTM)
NET TRANSACTION MARGIN CALCULATION
AFTERPAY INCOME
OTHER VARIABLE TRANSACTION
COSTS
NET TRANSACTION
LOSS (NTL)
NET TRANSACTION MARGIN (NTM)
Finance, processing and other variable costs
NET TRANSACTION MARGINPERCENT OF UNDERLYING SALES
• Maintained with pcp on a pro forma basis (i.e. pre AASB 9 impact)
• Incorporates contribution of lower NTM in US, which will increase in proportionate terms as US continues to scale rapidly in H2 FY19
H1 FY18 H1 FY19 PRO FORMA1
AASB 9 IMPACT
H1 FY19
2.3% 2.3% (0.2%)
2.1%
NOTE: 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH
REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 33
PAY NOW SEGMENTREDUCED CONTRIBUTION FROM E-SERVICES AS ITS EUROPEAN BUSINESS WAS DIVESTED IN OCTOBER 2018 FOR A $1.3M GAIN ON SALE
A$M (UNLESS OTHERWISE STATED) H1 FY19 H1 FY18 CHANGE %
REVENUE
MOBILITY 5.4 7.7 (30%)
E-SERVICES 2.0 3.9 (48%)
HEALTH 1.5 1.2 23%
TOTAL REVENUE1 8.9 12.9 (31%)
COST OF SALES1 (4.1) (6.1) (33%)
GROSS MARGIN 4.8 6.8 (28%)
OTHER EXPENSES (2.3) (2.2) 4%
EBITDA CONTRIBUTION 2.5 4.5 (44%)
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. PAY NOW REVENUE WAS ADVERSELY IMPACTED IN H1 FY19 BY CHANGES IN ACCOUNTING STANDARDS ($2.2M), HOWEVER AS THE CHANGES HAD A CORRESPONDING POSITIVE ADJUSTMENT TO
COST OF SALES AND NIL IMPACT ON EBITDA THEY HAVE BEEN EXCLUDED FROM THE PRESENTATION OF PRO FORMA FINANCIALS. REFER TO NOTE 13 IN THE HALF YEAR REPORT FOR FURTHER DETAILS.34
CASH FLOW STATEMENT
H1 FY19 OPERATING CASH FLOW RECONCILIATION1
A$M
COMMENTARY
Positive underlying operating cash flow after adjusting for the change in receivables (funding of receivables)
Significant investment to set up and expand operations in US and UK reflected in H1 FY19 adjusted operating cash flow
Proceeds from equity includes $142.0m related to the equity capital raising completed September 2018
(21.5)
11.2
18.14.9 (2.3) (5.8)
29.5 33.5 (191.3)
(157.8)
OP
ER
AT
ING
C
AS
H F
LO
W
AD
JU
ST
ED
O
PE
RA
TIN
G
CA
SH
FLO
W
NE
T F
INA
NC
E
CO
ST
INC
RE
AS
E IN
P
RE
PA
YM
EN
TS
A
ND
OT
HE
R
AS
SE
TS
DE
PR
EC
IAT
ION
A
ND
A
MO
RT
ISA
TIO
N
INC
RE
AS
E IN
R
EC
EIV
AB
LE
S
INC
RE
AS
E IN
T
RA
DE
AN
D
OT
HE
R
PA
YA
BL
ES
SH
AR
E-B
AS
ED
PA
YM
EN
T
EX
PE
NS
E
FX
GA
IN
LO
SS
B
EF
OR
E
TA
X
A$M (UNLESS OTHERWISE STATED) H1 FY19 H1 FY18
RECEIPTS FROM CUSTOMERS 2,039.2 928.0
PAYMENTS TO MERCHANTS AND SUPPLIERS (2,175.6) (1,000.9)
PAYMENTS TO EMPLOYEES AND OTHER (21.3) (8.3)
OPERATING CASH FLOW (157.8) (81.2)
INCREASE IN RECEIVABLES2 191.3 95.3
ADJUSTED OPERATING CASH FLOW 33.5 14.1
PAYMENTS FOR INTANGIBLES (9.8) (5.0)
PROCEEDS FROM SALE OF BUSINESS 4.0 ~
OTHER (0.5) (0.6)
INVESTING CASH FLOW (6.3) (5.6)
PROCEEDS FROM BORROWING 43.5 82.8
PROCEEDS FROM EQUITY 147.5 1.6
INTEREST AND BANK FEES (5.7) (2.3)
OTHER (4.7) ~
FINANCING CASH FLOW 180.6 82.1
NET INCREASE / (DECREASE) IN CASH 16.5 (4.6)
FX ON CASH BALANCE 0.4 ~
STARTING CASH 25.5 29.6
ENDING CASH 42.3 25.0
NOTE: 1. AMOUNTS MAY NOT SUM DUE TO ROUNDING 2. MOVEMENT EXCLUDES ALLOWANCE FOR DOUBTFUL DEBTS AND IMPACT OF ACCOUNTING STANDARD CHANGES 35
COMMENTARY
71% or $169.6m increase in receivables reflecting the continued growth in Afterpay underlying sales
Growth in debt is less than the growth in receivables as net proceeds from equity raise ($137.4m3) were used to repay debt and partially fund receivables
STRONG GROUP BALANCE SHEET
NOTE: 1. RELATES TO CASH HELD IN TRUST UNDER THE AUSTRALIAN RECEIVABLES WAREHOUSE FACILITY DISCLOSED AS OTHER FINANCIAL ASSET 2. THE CHANGE IN RECEIVABLES RECOGNISED ON THE BALANCE SHEET DIFFERS FROM THE CASHFLOW STATEMENT
DUE TO THE ALLOWANCE FOR DOUBTFUL DEBTS AND THE IMPACT OF ACCOUNTING STANDARD CHANGES 3. COMPRISED OF THE $117.0 MILLION INSTITUTIONAL PLACEMENT AND THE $25.0M SHARE PURCHASE PLAN TOTALLING $142.0 MILLION LESS TRANSACTION
COSTS OF $4.7M. THIS FIGURE EXCLUDES THE $5.5M PROCEEDS RECEIVED FOR EXERCISE OF SHARE OPTIONS
A$M (UNLESS OTHERWISE STATED) 31 DECEMBER 2018 30 JUNE 2018
CASH 42.3 25.5
RESTRICTED CASH1 2.2 23.7
RECEIVABLES2 408.7 239.1
OTHER CURRENT AND NON-CURRENT ASSETS 132.8 104.0
TOTAL ASSETS 585.9 392.2
PAYABLES 50.9 42.9
DEBT 182.2 161.6
OTHER LIABILITIES 12.0 4.2
TOTAL LIABILITIES 245.1 208.7
EQUITY 340.8 183.6
RECEIVABLESBY BUSINESS UNIT
FY18
H1 FY19
233.9
404.2
5.2
4.5
AFTERPAY
PAY NOW
36
SIGNIFICANT CAPACITY FOR CONTINUED GROWTH IN AU AND INTERNATIONAL
GMV GROWTH CAPACITY
AU
A$500m total receivables funding facility; only $133.6m4 drawn
Can sustain well over $5b of annualised GMV in AU
Average life of debt is 1.9 years which is consistent with pcp
INTERNATIONAL
Excess liquidity (over $200m) in current balance sheet can sustain over $2b annualised GMV outside of AU (without restricting AU growth)
Will be substantially enhanced by planned US dedicated receivables facility of US$300m
Term sheets signed with two major international investment banks5
Expected completion in H2 FY19
NOTE: 1. REPRESENTS THE AMOUNT DRAWN. THIS DIFFERS TO THE REPORTED DRAWN AMOUNT OF $49.7M DUE TO ACCOUNTING ADJUSTMENTS FOR CAPITALISED BORROWING COSTS AND ACCRUED INTEREST 2. THE AUSTRALIAN FACILITY IS COMPRISED OF THE $300M
NAB FACILITY RECENTLY EXTENDED AND NOW DUE TO MATURE IN NOVEMBER 2020 AND THE $200M CITIGROUP FACILITY DUE TO MATURE IN AUGUST 2020 3. TOTAL BORROWING CAPACITY BASED ON THE RECEIVABLES BALANCE AS AT 31 DECEMBER 2018 4. COMPRISED
OF DRAWN DEBT UNDER THE SECURED RECEIVABLES WAREHOUSE FACILITY OF $133.6M WHICH IS UNADJUSTED FOR CAPITALISED BORROWING COSTS AND ACCRUED INTEREST. REFER TO NOTE 7 OF THE HALF YEAR REPORT FOR FURTHER DETAILS 5. THE GROUP HAS
YET TO ENTER FORMAL DOCUMENTATION IN RELATION TO THE U.S. FUNDING FACILITY
FUNDING FACILITY POSITION
A$M
FUNDING FACILITY MATURITY PROFILE
A$M
TOTAL FACILITIES
TOTAL RECEIVABLES WAREHOUSE
CAPACITY
FY20UNUSED RECEIVABLES WAREHOUSE CAPACITY
FY21
UNRESTRICTED CASH
LIQUIDITY
DRAWN4
UNDRAWN
FY22
50.01569.0
19.0
500.02
303.73
19
170.1
170.1
133.6
500
200
300
42.3 212.4
50
AUSTRALIA FACILITY
NAB (AU FACILITY)
CITI (AU FACILITY)
ASB (NZ FACILITY)
CORPORATE BONDNEW ZEALAND FACILITY CORPORATE BOND
37
APPENDIX
38
GROUP STATUTORY FINANCIAL RESULTS – EBITDA RECONCILIATION
(22.2)
1.1
LO
SS
FO
R T
HE
P
ER
IOD
-
STA
TU
TO
RY
ON
E-O
FF
C
OS
TS
0.7
(2.3)
11.5IN
CO
ME
TA
X
EX
PE
NS
E
RECONCILIATION - LOSS FOR THE PERIOD TO EBITDA
A$M
FO
RE
IGN
C
UR
RE
NC
Y
GA
IN
SIGNIFICANT ITEMS
EB
ITD
A (
EX
CL
S
IGN
IFIC
AN
T
ITE
MS
)
(21.5)
18.1
5.5
LO
SS
B
EF
OR
E T
AX
NE
T F
INA
NC
E
CO
ST
SH
AR
E-
BA
SE
D
PA
YM
EN
TS
IMPA
CT
OF
A
CC
OU
NT
ING
S
TA
ND
AR
D
CH
AN
GE
S
11.2
4.9
(5.4)
17.0
DE
PR
EC
IAT
ION
AN
D
AM
OR
TIS
AT
ION
EB
ITD
A
(UN
AD
JU
ST
ED
)
PR
O F
OR
MA
1 EB
ITD
A
(EX
CL
SIG
NIF
ICA
NT
IT
EM
S)
NOTE: 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH
REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL39
NET TRANSACTION LOSS RECONCILIATION
NOTE: 1. ‘PROVISION FOR DOUBTFUL DEBTS’ IS REFERRED TO AS THE ‘TOTAL ALLOWANCE FOR DOUBTFUL DEBTS’ IN THE FINANCIAL STATEMENTS 2. OPENING PROVISION IS ADJUSTED FOR AASB 9 IMPACT ON BALANCES PROVIDED FOR AS AT 1 JULY 2018. FOR MORE
DETAIL PLEASE REFER TO NOTE 13 IN THE HALF YEAR REPORT 3. ‘BAD AND DOUBTFUL DEBTS (BDD) EXPENSE’ IS REFERRED TO AS THE ‘RECEIVABLES IMPAIRMENT EXPENSE’ IN THE FINANCIAL STATEMENTS 4. LATE FEES AS A PERCENTAGE OF AFTERPAY TOTAL INCOME
H1 FY19 H1 FY18
LATE FEES AS PERCENTAGE OF UNDERLYING SALES 0.8% 1.2%
LATE FEES AS PERCENTAGE OF AFTERPAY INCOME4 17.6% 22.5%
27.4
(17.3)
17.3
27.4
OP
EN
ING
P
RO
VIS
ION
2
BD
D E
XP
EN
SE
3
H1
FY
19
NE
T W
RIT
E-O
FF
H
1 F
Y19
(18.2)28.2
(1.8)
STATUTORY0.6% OF
UNDERLYING SALES
1.2% OF UNDERLYING
SALES
PRO FORMA0.5% OF
UNDERLYING SALES
BD
D E
XP
EN
SE
H
1 F
Y19
BALANCE SHEET PROVISION FOR BAD AND DOUBTFUL DEBTS1
INCOME STATEMENTPROFIT AND LOSS NTL BRIDGE
LA
TE
FE
ES
NE
T
TR
AN
SA
CT
ION
LO
SS
4.5 13.6
11.8
NE
T W
RIT
E-O
FF
H
1 F
Y19
PA
YM
EN
T
RE
CO
VE
RY
C
OS
TS
AN
D B
AN
K
CH
AR
GE
S
IMPA
CT
OF
A
CC
OU
NT
ING
S
TA
ND
AR
D
CH
AN
GE
S
NE
T
TR
AN
SA
CT
ION
LO
SS
(P
RO
F
OR
MA
)
10.1
18.1
CLO
SIN
G
PR
OV
ISIO
N
NE
T IN
CR
EA
SE
IN
PR
OV
ISIO
N
A$M
40
CORPORATE COSTS
H1 FY19 PRO FORMA EBITDA
(EXCLUDING SIGNIFICANT ITEMS)A$M
H1 FY18 PRO FORMA EBITDA
(EXCLUDING SIGNIFICANT ITEMS)A$M
AFTERPAY1,2 AFTERPAY1,2PAY NOW
PAY NOW
CORPORATE CORPORATEPRO FORMA2
EBITDA (EXCL
SIGNIFICANT ITEMS)
PRO FORMA2 EBITDA (EXCL
SIGNIFICANT ITEMS)
30.8
16.9
2.5
4.5
(16.3)
(7.2)17.0
14.3
COMMENTARY
Corporate cost increase primarily due to:
• Investments in business systems and processes to plan for and execute international expansion (as previously flagged)
• Continued investment in our people to enhance capabilities in technology, finance and operations to support global growth
NOTE: 1. AFTERPAY INCLUDES AFTERPAY AU, AFTERPAY US AND OTHER 2. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR
PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL41
SIGNIFICANT ITEMS AND DEPRECIATION AND AMORTISATIONCOMMENTARY
International expansion costs comprised one-off set up costs for the UK business
Net gain on sale of business related to sale of e-Services EU business
Foreign currency gains relate to favourable FX movement on US denominated receivables and cash
COMMENTARY
Depreciation and amortisation of $11.2m resulting primarily from amortisation of acquired intangibles (Touchcorp merger & ClearPay at approx. $3.8m) and amortisation of internally generated technology (approximately $6.5m)
A$M (UNLESS OTHERWISE STATED) H1 FY19 H1 FY18
ONE-OFF COSTS
INTERNATIONAL EXPANSION COSTS (1.5) (0.5)
NET GAIN ON SALE OF BUSINESS 1.3 ~
BUSINESS COMBINATION & OTHER COSTS (0.9) (0.7)
FACILITY ESTABLISHMENT COSTS ~ (0.1)
SUBTOTAL (1.1) (1.3)
FOREIGN CURRENCY GAINS/(LOSSES) 2.3 ~
TOTAL 1.2 (1.3)
A$M (UNLESS OTHERWISE STATED) H1 FY19 H1 FY18
DEPRECIATION (0.9) (0.9)
AMORTISATION (10.3) (3.9)
TOTAL (11.2) (4.8)
A$M (UNLESS OTHERWISE STATED) H1 FY19 H1 FY18
GROUP HEAD OPTIONS1 (10.7) (3.8)
OTHER (7.4) (1.5)
TOTAL SHARE-BASED PAYMENTS (18.1) (5.3)
SIGNIFICANT ITEMS
DEPRECIATION AND AMORTISATION
SHARE-BASED PAYMENTS EXPENSE
NOTE: 1. IN H1 FY18, EXPENSE RELATED TO THE PROPOSED GRANT OF 2M LOAN SHARES TO DAVID HANCOCK, GROUP HEAD. AS AT 31 DEC 2018, THIS IS REPLACED BY THE AWARD OF ~2.7M SHARE OPTIONS 42
BALANCE SHEET – MOVEMENT IN CASH, DEBT AND LIQUIDITY
A$M 31 DECEMBER 2018 30 JUNE 2018 CHANGE
CASH1 44.5 49.2 (4.7)
DEBT2 182.2 161.6 20.6
NET DEBT 137.7 112.4 25.3
LIQUIDITY 212.4 124.6 87.8
CASH, DEBT AND LIQUIDITY SUMMARY
NET DEBT MOVEMENTJUN-18 TO DEC-18
COMMENTARY
Balance sheet and liquidity position as at 31 December 2018:
• Cash of $44.5m, reflecting a similar position to pcp
• Net debt of $137.7m as at 31 December 2018, $25.3m higher than the pcp
• Capital raising proceeds of $137.4m ($142.0m issue proceeds less capital raising costs of $4.7m) used to repay debt and fund growth in underlying sales
• Significant increase in liquidity to $212.4m as at 31 December 2018 due to using capital raising proceeds to repay debt and partly fund growth in receivables (creating borrowing capacity)
NOTE: 1. COMPRISED OF CASH AND CASH EQUIVALENTS OF $42.3M AND $2.2M CASH HELD IN TRUST DISCLOSED AS OTHER FINANCIAL ASSET 2. PRIMARILY COMPRISED OF $50.0M FULLY DRAWN CORPORATE BOND AND $133.6M OF DRAWN DEBT IN THE RECEIVABLES
WAREHOUSE FACILITY ADJUSTED FOR CAPITALISED BORROWING COSTS AND ACCRUED INTEREST 3. COMPRISED OF THE $117.0 MILLION INSTITUTIONAL PLACEMENT AND THE $25.0M SHARE PURCHASE PLAN TOTALLING $142.0 MILLION LESS TRANSACTION COSTS OF
$4.7M. THIS FIGURE EXCLUDES THE $5.5M PROCEEDS RECEIVED FOR EXERCISE OF SHARE OPTIONS
(25.0)
(137.4)
PRO FORMA NET CASH 30 JUN 18
CAPITAL RAISING
PROCEEDS3
191.3
MOVEMENT IN NET DEBT TOTALLING $162.7M
CASH TO FUND
RECEIVABLES GROWTH
OTHER
(33.5)
4.9 137.7
UNDERLYING OPERATING CASH FLOW
NET DEBT 31 DEC 18
112.4
NET DEBT 30 JUN 18
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COMMENTARY
Strong balance sheet position with $44.5m of cash and $212.4 of total liquidity (cash available for funding)
Significant increase in liquidity reflecting the capital raising completed in September 2018
Relatively ungeared with the % of bank debt to receivables at only 32.3%
Increase of $130.2m of undrawn committed facilities represents an increase in the ability to fund future growth
BALANCE SHEET – DEBT METRICS
A$M (UNLESS OTHERWISE STATED) 31 DECEMBER 2018 30 JUNE 2018 CHANGE $ CHANGE %
CASH1 44.5 49.2 (4.7) (9.6)%
SECURED INTEREST BEARING BORROWINGS 132.0 111.6 20.4 18.3%
SENIOR UNSECURED NOTES 49.7 49.5 0.2 0.4%
OTHER 0.5 0.5 (0.0) (2.9)%
TOTAL DEBT 182.2 161.6 20.6 12.8%
NET DEBT2 137.7 112.4 25.3 22.5%
A$M (UNLESS OTHERWISE STATED) 31 DECEMBER 2018 30 JUNE 2018 CHANGE $ CHANGE %
INTEREST COVER RATIO3 4.4x 5.5x (0.9)x (16.9)%
TOTAL LIQUIDITY4 212.4 124.6 87.8 70.5%
BANK DEBT/RECEIVABLES5 32.3% 46.7% ~ (14.4)%
UNDRAWN COMMITTED FACILITIES6 387.0 256.8 130.2 50.7%
FIXED INTEREST RATE DEBT7 27.3% 30.6% ~ (3.3)%
BALANCE SHEET
DEBT PROFILE
NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. CASH COMPRISED OF CASH IN BANK OF $42.3M AND CASH HELD IN TRUST OF $2.2M DISCLOSED AS OTHER FINANCIAL ASSET 2. COMPRISED OF $182.2M OF DEBT LESS $44.5M OF CASH ACROSS
THE GROUP 3. INTEREST COVER RATIO BASED ON LTM EBITDA AND NET INTEREST EXPENSE AND STATED AS “TIMES” (“X”) 4. COMPRISED OF UNDRAWN BORROWING CAPACITY OF $170.1M IN THE AUSTRALIAN RECEIVABLES FACILITY AND $42.3M OF CASH ACROSS THE
GROUP, EXCLUDES CASH HELD IN TRUST 5. COMPRISED OF $132.0M OF SECURED INTEREST BEARING BORROWINGS AND $408.7M OF RECEIVABLES ACROSS THE GROUP 6. COMPRISED OF $519.0M OF BANK FUNDING FACILITY LIMITS LESS $132.0M OF SECURED INTEREST
BEARING BORROWINGS DRAWN AGAINST THESE FACILITIES, WHICH INCLUDES THE AUSTRALIAN RECEIVABLES FACILITY AND THE NEW ZEALAND CASH ADVANCE FACILITY 7. AS A PROPORTION OF TOTAL DEBT
44