AFTERPAY LIMITED (ASX: APT) ASX Announcement 27 February 2020 H1 - PDF document

AFTERPAY LIMITED (ASX: APT) ASX Announcement 27 February 2020 H1 FY20 Financial Results Presentation Afterpay Limited (Company) attaches a copy of the Company’s H 1 FY20 Presentation. Authorised by : Anthony Eisen CEO & Managing Director ENDS For further information, contact: Investors: Company: Media: Marie Festa Christopher Stevens Melissa Patch Director Investor Relations General Counsel & Company Secretary melissa.patch@afterpay.com marie.festa@afterpay.com chris.stevens@afterpay.com media@afterpay.com +61 405 494 705 Afterpay Limited ACN 618 280 649 Phone: 1300 100 729 Level 5, 406 Collins Street, Melbourne VIC 3000

MOMENTUM MOMENTUM MOMENTUM MOME MOMENTUM MOMENTUM TUM H1 FY20 RESULTS PRESENTATION

DISCLAIMER The material in this presentation is general background information about Afterpay Limited (APT) and is current at the date of the presentation, 27 February 2020. 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 the ASX, including the H1 FY20 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 and change calculations may not equate 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

STRONG GROWTH AND PERFORMANCE ACROSS KEY DRIVERS $4.8b $212.2m UP UP AFTERPAY AFTERPAY 109% 105% $103.4m $2.3b UNDERLYING TOTAL SALES INCOME 2 H1 FY19 H1 FY20 H1 FY19 H1 FY20 7.3m $102.0m UP UP AFTERPAY AFTERPAY NET 118% 134% $46.7m 3.1m ACTIVE TRANSACTION CUSTOMERS 1 MARGIN H1 FY19 H1 FY20 H1 FY19 H1 FY20 43.2k 1.2% 1.0% UP 17% AFTERPAY AFTERPAY 86% 23.2k IMPROVEMENT ACTIVE GROSS MERCHANTS 1 LOSSES 3 H1 FY19 H1 FY20 H1 FY19 H1 FY20 NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. ACTIVE IS DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 2. AFTERPAY TOTAL INCOME INCLUDES AFTERPAY INCOME AND OTHER 3 INCOME, EXCLUDES PAY NOW REVENUE 3. GROSS LOSSES ARE DEFINED AS AFTERPAY RECEIVABLES IMPAIRMENT EXPENSE AS A PERCENTAGE OF UNDERLYING SALES

KEY TAKEAWAYS H1 FY20 Global underlying sales Record number of active 86% increase in global active customers 1 at 7.3m globally merchants 1 driven by strong up 109% averaging >16,800 new growth in all markets Run rate now over $11b p.a. customers per day in H1 FY20 16,000 (based on Q2 trading) Merchant margins remain stable ( >22,900 per day in November at 3.8% (3.7% in H1 FY19) and December 2019) Canada - next target market in 2020 Validates Afterpay business model Gross losses 2 materially lower In-store offering in ANZ Continue to invest in developing and new markets continues to grow down 17% on H1 FY19 despite 24% of total ANZ underlying increased contribution from new Ambition to exceed mid-term plan sales, additional 14.2K store fronts and developing markets targets on H1 FY19 Net Transaction Margin stable at Australia’s maturing performance Significant global opportunity - 2.1% notwithstanding significant provides strong investment case to invest ahead of the curve, Launch US H2 FY20 contribution from newer markets notwithstanding near-term Group and lower late fees profitability impact NOTE : ALL METRICS ARE AS AT 31 DECEMBER 2019 UNLESS OTHERWISE STATED 1. ACTIVE IS DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 2. GROSS LOSSES ARE DEFINED AS AFTERPAY RECEIVABLES IMPAIRMENT EXPENSE AS A PERCENTAGE OF UNDERLYING SALES 4

PERFORMANCE VALIDATES AFTERPAY’S UNIQUE APPROACH PURPOSEFULLY DIFFERENT TO TRADITIONAL CREDIT AND OTHER BNPL PROVIDERS DIFFERENT IN OUR SERVICE DIFFERENT IN OUR MERCHANT PARTNERS ! Budgeting tool DIFFERENT IN OUR ! Global enterprise brand portfolio ! Late fees capped and don’t accumulate BUSINESS MODEL ! No interest or hidden fees ! Shared retail insights and data to drive value ! Majority of income generated from ! No revolving debt entrapment merchant fees not customers ! Pioneered In-store movement at ! Discrete purchases, not a line of credit scale ! Profitability relies on good customer behaviour ! Low outstanding customer balances 2 (avg ~$211) DIFFERENT IN OUR PLATFORM DIFFERENT IN OUR CUSTOMERS ! Lower risk and industry leading ! Channel to hard to reach audience loss rates ! Customers trust us because we Data driven insights and functionality ! are different and on their side ! Increasing frequency and Merchant and product promotion ! customer return rates drives ! NPS > 80 1 ! Retail events higher margins ! Frequency keeps rising ! New customer and customer lifetime ! Short receivables book (<30 days) ! Global scale >7m customers value focus drives high ROCE NOTE: 1. NET PROMOTER SCORE – INDUSTRY STANDARD SURVEY COMPLETED IN JULY 2019 THAT MEASURES HOW LIKELY CUSTOMERS ARE TO RECOMMEND AFTERPAY 2. AFTERPAY GROUP, AS AT 31 DECEMBER 2019 5

BUSINESS PERFORMANCE BY REGION CHANGE 1 % H1 FY20 1 H1 FY19 1 UNDERLYING SALES (A$) 4.8b 2.3b 109% ANZ 3.1b 2.0b 55% US 1.4b 0.3b 445% UK 0.2b - - ACTIVE CUSTOMERS 2 7.3m 3.1m 134% ANZ 3.1m 2.5m 26% US 3.6m 0.7m 443% - UK 0.6m - ACTIVE MERCHANTS 2 43.2k 23.2k 86% ANZ 35.5k 21.8k 63% US 7.4k 1.4k 421% - UK 0.4k - NOTE: 1. SUM AND CHANGE MAY NOT EQUATE DUE TO ROUNDING 2. ACTIVE IS DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 6

SUSTAINED GROWTH IN ANZ Continued customer SMB now represents a Frequency keeps KEY MERCHANTS growth in our most meaningful proportion LIVE 1 IN Q2 FY20 rising across highly mature market of underlying sales, active customer supporting profitability Tracking consistently base over past 12 months Large recent verticals Early cohorts now still nascent and purchasing growing ~23x per annum High profitability In-store is gaining Pipeline remains momentum and strong across High acceptance + remains largest enterprise and new high frequency = growth opportunity verticals more data, insights and lower losses E.g. health and ticketing NOTE : 1. DEFINED AS HAVING TRANSACTED 7

ANZ CUSTOMER FREQUENCY KEEPS RISING PURCHASING FREQUENCY OVER TIME BY ANZ CUSTOMER COHORT PER ANNUM FY15-17 ~23x ! Customer tenure drives higher purchase frequency, lower loss rates and improved customer FY18 lifetime value ~15x ! Frequency curve continues to climb for all customer cohorts FY19 ~8X in ANZ ! Newer markets (US and UK) FY20 ~3X following glidepath at equivalent stage of lifecycle JUN-16 DEC-16 JUN-17 DEC-17 JUN-18 DEC-18 JUN-19 DEC-19 8

ANZ BALANCES REMAIN LOW AND LOSSES KEEP DECLINING LOWER AVERAGE OUTSTANDING BALANCES CREDIT CARD 2 HIGHER PURCHASING ~$3,380 FREQUENCY WITH AFTERPAY AFTERPAY 1 DOES NOT MEAN HIGHER ~$211 CONSUMER DEBT Purchases must be paid off within 4 instalments ! Restricted from making more purchases if single ! HIGH REPEAT CUSTOMER payment is late CONTRIBUTION ANZ RETURNING CUSTOMER, Payment terms cannot be extended ! MONTHLY ORDERS 98% Means only responsible spenders stay on the ! platform 98% of ANZ orders are from repeat purchasers ! 38% JUN 15 DEC 19 NOTE: 1. AFTERPAY GROUP, AS AT 31 DECEMBER 2019 2. RBA (DECEMBER 2019) 9

ANZ IN-STORE MOMENTUM LARGEST GROWTH OPPORTUNITY IN-STORE UNDERLYING SALES PER 6 MONTH PERIOD A$M Since H1 FY18: In-store underlying sales is 12.5 ! 736.3 times higher Store fronts have increased by ! ~26k 481.4 In-store underlying sales in H1 FY20 represents ~24% of total underlying 315.2 sales in ANZ Leverage momentum to capture 143.1 greater portion of Australia’s ~A$140b addressable omni-channel 59.0 16.6 market 1 4.2 0.0 H2 FY16 H1 FY20 NOTE: 1. STATISTA, EUROMONITOR, ABS, IBIS 10