RESULTS PRESENTATION H1 FY19 DISCLAIMER The material in this - - PowerPoint PPT Presentation

RESULTS PRESENTATION H1 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 INCOME

2

(PRO FORMA)

3

AFTERPAY

ACTIVE CUSTOMERS

1

AFTERPAY

GROSS LOSSES

4

(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 IMPROVED UP 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
• f PIP and Afterpay supports
• ther 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 X MILLENNIALS BABY BOOMER

71% 7% 22% 39% 36% 25%

AFTERPAY AUSTRALIA AUSTRALIA 18+

AFTERPAY DEMOGRAPHICS

CREDIT CARDS DEBIT CARDS 1994 2018 500

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

PURPOSEFULL Y 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 – ONL Y 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, MONTHL Y , ETC.) LOWER FIRST-TIME LIMITS - ONL Y EXPANDS FROM GOOD BEHAVIOUR

1 3 5 2 4 7 9 8 10 6

...TO TRADITIONAL CREDIT AND OTHER BNPL

1 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 10 20 30 40 50 60 70

BANKS’ OWN MOBILE PAYMENTS OTHER CONTACTLESS/CARDLESS MOBILE 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 RISK ADJUSTED RETURN5 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

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...

JAN 16 JAN 16 JAN 16 DEC 18 DEC 18 DEC 18 2.5 50 $400

CUSTOMER BASE GROWING STRONGLY

TREND LINE

GROWING CUSTOMER ENGAGEMENT2

TREND LINE

GROWING CUSTOMER SPEND

TREND 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 TOTAL ACTIVE1 CUSTOMERS (MILLIONS) PERCENTAGE CUSTOMERS TRANSACTING PER MONTH AVERAGE CUSTOMER SPEND PER MONTH ($)

10

LARGEST PORTFOLIO OF LEADING BRANDS IN ANZ

11

WE ARE A PLATFORM

BRANDS CUSTOMERS

25,000+ MERCHANTS >10%

2 ALL

E-COMMERCE >95% GMV FROM RETURNING CUSTOMERS IN AUSTRALIA

4

AFTERPAY HAS BECOME A LIFESTYLE MULTI-CHANNEL 3.5 MILLION CUSTOMERS EFFECTIVE NEW CUSTOMER CHANNEL BASED ON DEEP RETAIL INSIGHTS

7m shop directory leads in December 2018

ONE OF THE LARGEST RETAILER LEAD REFERRERS IN ANZ

2.7+ 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 MILLENNIALS

3

12

AFTERPAY HAS BECOME A LIFESTYLE

WITH 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 WELLBEING BEAUTY EXPERIENCES

NOTE: 1. ASOS AND NIKE ARE LIVE IN AUSTRALIA AND NEW ZEALAND

13

DEMONSTRATED IMPROVING PERFORMANCE AS WE HAVE SCALED

H1 FY16 H1 FY19 H1 FY18 H1 FY17 2,000 1,000

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 CURRENT

PRO 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 US

IN 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

GMV

11.6%

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

TODAY 2 TODAY 2

15

RESONATING WITH KEY US RETAILERS

THE 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

• f 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 SUBSTANTIAL

Our 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 $130B

2

RETAIL $320B1

RETAIL $720B

2

RETAIL $5T

3

ONLINE $620B

3

UNITED KINGDOM

REST OF WORLD

UNITED 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

• pportunity

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-18 200 400 100

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)

95 94 91 86 75 66 54 38 60 80 40 20 61 27

US ANZ

AU US

20

RESULTS SUPPORT ACCELERATING GROWTH

THE 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 STRATEGY RATIONALE 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

• ver 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

103.4 13.6 11.5 H1 FY19 H1 FY19 H1 FY19 3.7 (1.8) 5.5 IMPACT OF ACCOUNTING STANDARD CHANGES

AFTERPAY TOTAL INCOME1

A$M

NET TRANSACTION LOSS

A$M

EBITDA (EXCL SIGNIFICANT ITEMS)

A$M

IMPACT OF ACCOUNTING STANDARD CHANGES IMPACT OF ACCOUNTING STANDARD CHANGES 107.1 CHANGE +124% CHANGE +19% 11.8 17.0 H1 FY19 PRO FORMA2 H1 FY19 PRO FORMA2 H1 FY19 PRO FORMA2 47.8 6.6 14.3 H1 FY18 H1 FY18 H1 FY18

NO IMPACT ON INCOME RECEIVED IN CASH OR ACTUAL LOSS EXPERIENCE

NTL % (0.6%) (0.5%) (0.7%) A B B A +

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 CHANGES

26

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 T ax as described previously

27

AFTERPAY KEY FINANCIAL METRICS

A$M (UNLESS OTHERWISE STATED) H1 FY19 AASB9

• ACC. IMPACT

H1 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 GROWTH

STRONG 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

• f 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

• ver 900k today

Over 17k shop fronts in ANZ at end

• f 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 23.2 25.3 3.1 17.8 19.5 3.5 263.7 1.4 1.9 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 TODAY2 TODAY2 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 MARGINS

STRONG PERFORMANCE IN LIGHT OF INCREASED SKEW TO ENTERPRISE MERCHANTS

REGIONAL MERCHANT TIER MIX

PERCENT OF UNDERLYING SALES

GROUP MERCHANT TIER MIX

PERCENT OF UNDERLYING SALES

AFTERPAY MERCHANT INCOME MARGIN

ONLINE VS IN-STORE CHANNEL MIX

PERCENT 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

• ver time (currently on-boarding
• ver 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 FY18 H1 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 DETAIL

30

REDUCED LOSSES AND LATE FEES

NET 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 LOSS

PERCENTAGE1

LATE FEES

PERCENTAGE1

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

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

• ther variable costs

NET TRANSACTION MARGIN

PERCENT 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 SEGMENT

REDUCED 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 RECONCILIATION

1

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 18.1 4.9 (2.3) (5.8) 29.5 33.5 (191.3) (157.8) OPERATING CASH FLOW ADJUSTED OPERATING CASH FLOW NET FINANCE COST INCREASE IN PREPAYMENTS AND OTHER ASSETS DEPRECIATION AND AMORTISATION INCREASE IN RECEIVABLES INCREASE IN TRADE AND OTHER PAYABLES SHARE-BASED PAYMENT EXPENSE FX GAIN LOSS BEFORE TAX

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

RECEIVABLES

BY 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;

• nly $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 T erm 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 FY20 UNUSED RECEIVABLES WAREHOUSE CAPACITY FY21 UNRESTRICTED CASH LIQUIDITY DRAWN4 UNDRAWN FY22 50.01 569.0 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 BOND NEW ZEALAND FACILITY CORPORATE BOND

37

APPENDIX

38

GROUP STATUTORY FINANCIAL RESULTS – EBITDA RECONCILIATION

(22.2) 1.1

LOSS FOR THE PERIOD - STATUTORY ONE-OFF COSTS

0.7 (2.3) 11.5

INCOME TAX EXPENSE

RECONCILIATION - LOSS FOR THE PERIOD TO EBITDA

A$M

FOREIGN CURRENCY GAIN SIGNIFICANT ITEMS EBITDA (EXCL SIGNIFICANT ITEMS)

(21.5) 18.1 5.5

LOSS BEFORE TAX NET FINANCE COST SHARE- BASED PAYMENTS IMPACT OF ACCOUNTING STANDARD CHANGES

11.2 4.9 (5.4) 17.0

DEPRECIATION AND AMORTISATION EBITDA (UNADJUSTED) PRO FORMA1 EBITDA (EXCL SIGNIFICANT ITEMS)

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

39

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 OPENING PROVISION2 BDD EXPENSE3 H1 FY19 NET WRITE-OFF H1 FY19 (18.2) 28.2 (1.8)

STATUTORY 0.6% OF UNDERLYING SALES 1.2% OF UNDERLYING SALES PRO FORMA 0.5% OF UNDERLYING SALES

BDD EXPENSE H1 FY19

BALANCE SHEET

PROVISION FOR BAD AND DOUBTFUL DEBTS1

INCOME STATEMENT

PROFIT AND LOSS NTL BRIDGE

LATE FEES NET TRANSACTION LOSS 4.5 13.6 11.8 NET WRITE-OFF H1 FY19 PAYMENT RECOVERY COSTS AND BANK CHARGES IMPACT OF ACCOUNTING STANDARD CHANGES NET TRANSACTION LOSS (PRO FORMA) 10.1 18.1 CLOSING PROVISION NET INCREASE IN PROVISION 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 AFTERPAY1,2 PAY NOW PAY NOW CORPORATE CORPORATE PRO 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

• perations 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 DETAIL

41

SIGNIFICANT ITEMS AND DEPRECIA TION AND AMORTISA TION

COMMENTARY International expansion costs comprised

• ne-off set up costs for the UK business

Net gain on sale of business related to sale

• f 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 (T

• uchcorp 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 MOVEMENT

JUN-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

43

COMMENTARY Strong balance sheet position with $44.5m

• f 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