E H T T S O E B M O S T ’ D L Y R A O W W Y D A E P V O O T L F Y 2 0 1 9 R E S U LT S P R E S E N TAT I O N
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, 28 August 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 the ASX, including the Group 2019 Annual 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
FY19 GROWTH AND PERFORMANCE CONTINUES… $ 5.2b $ 251.6m AFTERPAY AFTERPAY UNDERLYING $ TOTAL INCOME 2.2b 2 UP UP $ 116.8m 140 % 115 % SALES 3 (PRO FORMA) FY18 FY19 FY18 FY19 $126.1m 4.6m AFTERPAY UP NET TRANSACTION AFTERPAY 126 % $55.7m ACTIVE 2.0m UP MARGIN 130 % 1 CUSTOMERS 3 (PRO FORMA) FY18 FY19 FY18 FY19 32.3k 1.5% AFTERPAY AFTERPAY 16.0k 1.1% ACTIVE UP DOWN GROSS LOSSES 4 40 101 % MERCHANTS 1 3 (PRO FORMA) BPS FY18 FY19 FY18 FY19 NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING. 1. DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS, AS AT 30 JUNE 2019. 2. AFTERPAY TOTAL INCOME INCLUDES AFTERPAY INCOME AND OTHER INCOME. 3 3. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME, PAY NOW REVENUE 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 APPENDIX FOR FURTHER DETAIL. 4. GROSS LOSSES ARE DEFINED AS THE AFTERPAY RECEIVABLE IMPAIRMENT EXPENSE AS A PERCENTAGE OF UNDERLYING SALES
AGENDA 1. OUR MISSION AND MOMENTUM 2. BUSINESS OVERVIEW GROW PERFORM INNOVATE SUSTAINABILITY 3. FY19 FINANCIAL SUMMARY APPENDIX - FY19 FINANCIAL DETAIL 4
OUR MISSION AND MOMENTUM SECTION ONE 5
OUR MISSION AND VALUES OUR MISSION TO BE ‘THE WORLD’S MOST LOVED WAY TO PAY’ CUSTOMER UNLOCKING RETAIL IS IN MILLENNIAL AND TRUST A MOVEMENT OUR BLOOD AND TECHNOLOGY We put trust in our customers We are empowering a Providing merchants with FIRST MINDSET and encourage good behaviour generational movement away a channel to the world’s from traditional credit products best customers They love us in return It works and Millennials prefer debit cards evokes a feeling It’s as simple as that and want to spend their own NPS 1 >80 money (no entrapment) NOTE: 1. NET PROMOTER SCORE – INDUSTRY STANDARD SURVEY THAT MEASURES HOW LIKELY CUSTOMERS ARE TO RECOMMEND AFTERPAY 6
PURPOSEFULL Y DIFFERENT …TO TRADITIONAL CREDIT AND OTHER BNPL PROVIDERS DIFFERENT IN DIFFERENT IN DIFFERENT IN OUR MERCHANTS OUR SERVICE OUR CUSTOMERS 6. Retail is in our blood Majority of income Customers trust earned from merchant us because we are 1. We are a brand 9. not customer different – we are on 7. focused payments their side company No interest and 2. no hidden fees NPS 1 >80, strong 10. Global merchant customer satisfaction relationships that Late fees capped and 3. 8. increase platform don’t accumulate Loyal and ‘sticky’ – value and merchant 11. growing engagement Not a line of credit – benefit and spend only for discrete 4. purchases Millennial origins but demographic profile Low transaction values 12. of customer base 5. with strict caps continues to broaden NOTE: 1. NET PROMOTER SCORE – INDUSTRY STANDARD SURVEY THAT MEASURES HOW LIKELY CUSTOMERS ARE TO RECOMMEND AFTERPAY 7
NEXT GENERATION: THE WORLD’S MOST VALUABLE CONSUMER MILLENNIALS MAKE UP 27% 1 OF THE ENTIRE GLOBAL POPULATION BY 2020, MILLENNIALS WILL HAVE THE HIGHEST SPENDING POWER ALMOST US$15 TRILLION WORLDWIDE 2 BY 2025, MILLENNIALS WILL CONTRIBUTE ALMOST HALF OF ALL SALARY EARNED IN THE U.S. 3 MILLENNIALS AND GEN Z ARE DRIVING 27% OF AU MILLENNIALS AND AFTERPAY IS CHANGE IN GLOBAL SPENDING HABITS 16% 4 OF ENTIRE AU PURCHASING UNIQUELY POSITIONED WHICH IS MEANINGFUL TODAY AND WILL POPULATION HAVE TRANSACTED TO BENEFIT FROM BE EVEN MORE MEANINGFUL IN 10 YEARS WITH AFTERPAY THIS SHIFT 8 SOURCE: 1. A.T. KEARNEY (2016) 2. FINANCIAL TIMES (2018) 3. VISA (2015) 4. AUSTRALIAN BUREAU OF STATISTICS (2019)
BUSINESS MODEL ALIGNED TO CUSTOMERS BNPL AS AN INDUSTRY IS POORLY DEFINED MAJORITY OF AFTERPAY INCOME FROM MERCHANT (NOT CUSTOMER) HISTORICAL 2 YEAR REVENUE CAGR 1 BUBBLE SIZE 200% BASED ON >A$5.2B DOMESTIC LISTED SMALL CASH IN SALES 7 INSTALMENT LOANS/EQUIPMENT FINANCE PEER 6 RENTAL COMPANY LISTED DOMESTIC NON-BANK 100% CONSUMER / COMMERCIAL RENTAL AND LEASING COMPANIES 2 MAJOR BANKS AVERAGE 3 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% NOT DRAWN TO SCALE REGIONAL OFFSHORE BUBBLE SIZE REFLECTS AVERAGE REVENUE BANKS CONSUMER GENERATING ASSETS / RECEIVABLES AVERAGE 4 BANKS 5 -100% PROPORTION OF NON-CUSTOMER INCOME TO TOTAL INCOME SOURCE: COMPANY FILINGS, FACTSET, IRESS AND BROKER CONSENSUS. CALCULATIONS FOR PROPORTION OF NON-INTEREST INCOME TO TOTAL INCOME BASED ON LAST REPORTED OR LAST TWELVE MONTHS (FY19 UNLESS OTHERWISE INDICATED) NOTES: (1) CALENDARISED HISTORICAL 2 YEAR REVENUE CAGR TO 30 JUNE 2019. (2) INCLUDES FLEXIGROUP (LTM 31 DEC 2018) AND THORN (LTM 31 DEC 2018); (3) INCLUDES CBA, NAB (LTM 31 MAR 2019), WBC (LTM 31 MAR 2019) AND ANZ (LTM 31 MAR 2019). INCLUDES INCOME FROM ASSETS ANNOUNCED FOR DIVESTMENT BUT WHICH HAVE NOT YET BEEN DIVESTED; (4) INCLUDES BOQ (LTM 28 FEB 2019) AND BEN; (5) INCLUDES SYNCHRONY (LTM 30 JUN 2019), CEMBRA (LTM 30 JUN 2019) AND MONETA (LTM 30 JUN 2019). CONVERTED INTO AUD AS AT 14 AUGUST 2019; (6) INCLUDES ZIP CO. ZIP CO IS BASED ON PROPORTION OF CUSTOMER BASED INCOME AT FY19 (7) FY19 GMV 9
WE HAVE ACHIEVED SIGNIFICANT GROWTH BUT THE OPPORTUNITY REMAINS IMMENSE AS WE EXPAND ONLINE $30B+ ONLINE ONLINE THE OPPORTUNITY $650B+ $780B+ GROWS AU 1 + US 2 + UK 3 AU 1 AU 1 + US 2 $6.0+ $5.3+ $320+ TRILLION TRILLION BILLION RETAIL OPPORTUNITY RETAIL OPPORTUNITY RETAIL OPPORTUNITY $5.2B UK 0.01 US 0.93 AFTERPAY UNDERL YING SALES $2.2B ANZ 4.3 US 0.01 $0.6B ANZ 2.2 ANZ 0.6 FY17 FY18 FY19 SOURCE: 1. NAB ONLINE RETAIL INDEX DECEMBER 2018 2. NATIONAL RETAIL FEDERATION (2019), FTI CONSULTING (2017) 3. UK HOUSE OF COMMONS (2018) 10
EXECUTING ON OUR MID-TERM STRATEGY OUR ADDRESSABLE OPPORTUNITY IS SUBSTANTIAL ACCELERATE INVEST IN GMV GROWTH ENTERPRISE THE IMMEDIATE MARKETS WHERE MAXIMISE OUR GLOBAL KEY BRAND AFTERPAY IS PRESENT REPRESENTS MARKET OPPORTUNITY RELATIONSHIPS A $6 TRILLION OPPORTUNITY, INCLUDING AN ONLINE CONTRIBUTION OF $780 BILLION BROADEN INVEST SCALE SMB FURTHER IN BASE FY20 investment strategy: PLATFORM GROW INTERNATIONAL CAPABILITIES EXECUTION CAPABILITY INNOVATION AHEAD OF THE CURVE APPROPRIATELY • Accelerated growth in the US • Build our business in the UK MID-TERM STRATEGY • Continued investment in Australia and New Zealand $20BN++ 2% GMV NTM • New markets will be considered FY22 11
STRATEGIC PILLARS GROW PERFORM INNOVATE SCALE OUR NETWORK AMONGST DELIVERING CONTINUED CUSTOMER AND OUR CUSTOMERS AND MERCHANTS STRONG FINANCIAL MERCHANT INNOVATION OF OUR AS WE CONTINUE ON OUR MISSION PERFORMANCE AND PRODUCT AND PLATFORM , REFLECTIVE TO BECOME THE ‘WORLD’S MOST VALUE OF OUR CORE VALUES AND LOVED WAY TO PAY’ DIFFERENTIATED APPROACH DO THE ASPIRING TO ‘DO THE RIGHT THING’ RIGHT BY OUR PEOPLE , OUR COMMUNITIES THING AND ALL OF OUR STAKEHOLDERS 12
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