FY2018 results presentation
AGENDA SECTION 1. OUR STORY 3 SECTION 2. FY2018 FINANCIAL OVERVIEW 9 SECTION 3. OUR CORE - OUR CUSTOMERS AND RETAILERS 28 SECTION 4. RETAILER LED INTERNATIONAL EXPANSION 42 2
Section one Our story 3
NO ONE SAYS THEY DO SAY OUR MISSION (OUR TODAY) 'I LOVE HOW I PAID 'I LOVE TO BE THE WORLD’S MOST BUT... FOR THAT ITEM’ AFTERPAY’ LOVED WAY TO PAY. 4
Afterpay is an amazing OUR CUSTOMERS LOVE Love love love Afterpay! and wonderful… US BECAUSE WE ARE Afterpay is an amazing and Love love love Afterpay!! Best DIFFERENT wonderful way of getting thing ever!! I have been able to the things you need and buy so many items from lighting want without having to pay for the house, to clothes, birthday everything upfront. They are Absolutely LOVE Afterpay gifts galore and treats for myself AfterpaY has been understanding when you miss without having to spend hundreds great for my family… Absolutely love Afterpay. It makes a payment, just get in touch of dollars in one go!! I have 5 it so much easier to afford, when with them and they are there orders at the moment, and I Afterpay has been great for it’s spread over 4 fortnightly to help. can afford to do it this way as my family we are able to payments. And if something because [sic] I have always paid buy things we want without Nicole Smith, Trustpilot unexpected comes up, I have my past orders on time, if I order having to break the bank. found Afterpay excellent, in moving something today, Afterpay do not I found Afterpay to be very a payment back a few days. Also charge me until another fortnight flexible thank you Afterpay! the app is insanely easy to use! but send my orders right away!! Josh, Trustpilot It is the best thing ever - just like Susan, Trustpilot layby except you just need to pay it within 4 installments and you All I have to say get it right away!! I recommend it Will always choose afterpay to everyone! Better than a credit ‘I love afterpay’ card, no interest fees - I will I’ve used them so many times. The best of all Lena Fuller, Trustpilot continue to use Afterpay forever!! of them. Got Supercheapauto new battery so MS Latu, Trustpilot easy. Thank you Afterpay. Saved me. Big time. Dane.K.2017, Trustpilot 5
WE HAVE BUILT A TRUE PARTNERSHIP WITH OUR RETAILERS Afterpay transforms paying into the most pleasant part of shopping “Afterpay is a perfect Unlike traditional credit products, our match for the M.A.C. brand retailers understand that they are paying and ouR customers” a fee to us on behalf of the customer because they too want to provide M.A.C Cosmetics “I have been amazed at how the customer an amazing purchase quickly our customers have experience. They love their customers as embraced Afterpay; so much much as we do. so, that iT is now the Consumers don’t want to take out a loan single most popular payment to purchase a smaller lifestyle item, they “Since launching Afterpay on method for our website” simply want more flexibility and a better our online channel in 2016 we paying experience that aligns with their Adore Beauty have seen consistent growth spending preferences. and conversion over the time” Lorna Jane 6
BUILDING FROM OUR CORE - OUR CUSTOMERS AND RETAILERS MORE TO COME... ATTRACTING AND GROWING GLOBAL TALENT E A M T A SOCIAL VIRALITY AND N D RETAIL LEAD GENERATION LOAD BASED, C SCALABLE SYSTEM A P AFTERPAY A B RETAIL EVENTS AUSTRALIAN BUILT I y L t I HIGH ENGAGEMENT - i T REPEAT ACTIVITY 17.7K RETAILERS n I u E CUSTOMER m S EMPOWERMENT ACTIVE m 2.3M CUSTOMERS o c 21M TRANSACTIONS SINCE INCEPTION p r e s t c e IN-STORE PAY IT IN 4 AUSTRALIA n u d c o e r PERSONALISATION ONLINE p NEW ZEALAND APP SHOPPING U.S.A. U.K. MORE TO COME... MORE TO COME... 7
Section TWO FY2018 financial overview 8
FY18 - KEY HIGHLIGHTS PLATFORM STRONG FINANCIAL LOWERING AFTERPAY GROWTH PERFORMANCE LOSSES AND LEVERAGING DATA AT SCALE • Revenue and Other Income $142m • Over $2.18b underlying Afterpay (+390%) sales (+289%) Net Transaction Loss - 0.4% (FY17 0.6%) • EBITDA excluding signifjcant items $34m declined while: • Q4 2018 underlying sales (+468%) annualised is approximately $3b • Growing underlying sales EBTDA excluding signifjcant items $28m • • Moving into new verticals • Stable Pay Now revenue (+380%) • Expanding to new geographies CAPITAL MANAGEMENT INTERNATIONAL INVESTING FOR EXPANSION SUSTAINABLE GROWTH AND • Citi $200m Australian facility completed LIFETIME CUSTOMER VALUE • Developing a retailer-led • Complements existing NAB $300m 1 Australian expansion strategy facility and NZ$20m ASB N.Z. facility • Global, scalable system and world class team • U.S. building momentum • $50m Australian bond completed in H2FY18 • Product innovation and new customer benefjt features • Small U.K. acquisition • Underwritten institutional placement (and • Retailer value added service - SPP) to facilitate international expansion and • Consolidating position in N.Z. building partnership benefjts cornerstone future international debt facilities NOTE: 1. AT AFTERPAY'S REQUEST NAB AUSTRALIAN RECEIVABLES WAREHOUSE FACILITY REDUCED FROM $350M TO $300M 9
FY18 - GROUP FINANCIAL SNAPSHOT AFTERPAY TOUCH AFTERPAY CHANGE 1 COMMENTS A$M (UNLESS OTHERWISE STATED) FY18 FY17 % Strong fjnancial performance in FY18, driven by strong growth in Afterpay and a full year contribution from Pay Now. GROUP - KEY FINANCIAL METRICS FY18 revenue and other income of $142.3m, up 390% on FY17, with Afterpay now comprising the majority (82%) of Group REVENUE AND OTHER INCOME 142.3 29.0 390% revenue. AFTERPAY 116.8 29.0 302% FY18 revenue and other income growth driven by signifjcant PAY NOW 25.6 ~ ~ increase in Afterpay underlying sales and a stable merchant margin. EBITDA (EXCLUDING SIGNIFICANT ITEMS) 33.8 6.0 468% FY18 Afterpay underlying sales of over $2.18b, up 289% on EBTDA (EXCLUDING SIGNIFICANT ITEMS) 27.7 5.8 380% FY17 and driven by growth across all key demand drivers EBTDA 9.7 (11.7) 183% (new customers, repeat customer activity, new retailers, increased share of checkout). NET PROFIT/(LOSS) AFTER TAX - STATUTORY (9.0) (9.6) 7% EBTDA (excluding signifjcant items) of $27.7m in FY18, up 380% on FY17. AFTERPAY - KEY METRICS EBTDA (excluding signifjcant items) positively impacted by UNDERLYING MERCHANT SALES 2,184.6 561.2 289% lower NTL% and higher NTM%. MERCHANT REVENUE % 2 4.0% 4.1% ~ NET TRANSACTION LOSS (NTL) % 2 (0.4)% (0.6)% ~ 18% 17% NET TRANSACTION MARGIN (NTM) % 2 2.6% 2.5% ~ EBTDA REVENUE TOTAL ACTIVE CUSTOMERS (M) - CURRENT 3 2.3 0.8 176% CONTRIBUTION 4 CONTRIBUTION NUMBER OF MERCHANTS (‘000) - CURRENT 3 17.7 6.0 195% 82% 83% AFTERPAY PAY NOW NOTE: 1. CHANGE PERCENTAGE IS BASED ON FINANCIALS PRESENTED IN THE ANNUAL REPORT 2. % OF UNDERLYING SALES 3. FY18 METRICS AS AT 31 JULY 2018 4. CALCULATION BASED ON SEGMENT EBTDA (EXCLUDING SIGNIFICANT ITEMS) WHICH IS PRE 10 $14.5M OF CORPORATE COSTS
FY18 - GROUP STATUTORY FINANCIAL SUMMARY COMMENTS AFTERPAY TOUCH AFTERPAY A$M (UNLESS OTHERWISE STATED) FY18 FY17 D&A increased largely due to a full year REVENUE FROM AFTERPAY 88.3 22.9 contribution from Touchcorp and the amortisation of acquired intangibles from the merger of Afterpay REVENUE FROM PAY NOW 25.6 ~ and Touchcorp (non-cash). REVENUE 113.9 22.9 Employment expenses increased largely due to a share-based payment expense (non-cash) COST OF SALES (28.2) (5.3) of $16.4m in the period and a full year of Touch GROSS PROFIT 85.7 17.6 employment expenses. OTHER INCOME 28.4 6.1 Receivables impairment expense increased in line with the signifjcant increase in Afterpay DEPRECIATION AND AMORTISATION (17.3) (2.7) underlying sales. EMPLOYMENT EXPENSES (38.6) (6.6) Operating expenses increased to $27.1m in FY18 but declined as a % of sales due to RECEIVABLES IMPAIRMENT EXPENSE (32.6) (8.2) operating leverage. OPERATING EXPENSES (27.1) (20.3) Tax paid in FY18 due to the profjtability of Afterpay. OPERATING PROFIT/(LOSS) (1.5) (14.0) Statutory net loss after tax improved from $9.6m FINANCE INCOME 0.5 0.3 in FY17 to $9.0m in FY18 in spite of a signifjcant increase in D&A (non-cash) and share-based FINANCE COST (6.6) (0.8) payment expenses (non-cash). PROFIT/(LOSS) BEFORE TAX (7.6) (14.4) INCOME TAX (EXPENSE)/BENEFIT (1.4) 4.8 PROFIT/(LOSS) AFTER TAX (9.0) (9.6) 11
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