Investor Presentation March, 2019 - Amazon S3
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Investor Presentation
March, 2019
Top 2 fastest-growing Top 50 fastest-growing private Europe’s 100 Hottest The most innovative in Top-250 fintech Innovation
fintech in Europe European companies Startups credit scoring services companies leader
Contents
Page
3 Executive Summary
12 Business Overview
21 Financial Highlights
2
Executive Summary
ID Finance – A Fast Growing International Fintech
ID Finance has a unique technology platform, a proven track record and is focused on expansion in Spain & Latin America
c.US$50 mm
Top-2 fastest growing fintech in Europe according to Financial Times FT1000 ranking (2019) revenue in 2018
Introduction
Focused on unsecured lending in Spain and Latin America
Tripled since 2017
In 2015 launched operations in Spain and LatAm, where there is a compelling growth opportunity US$155 bn
The Opportunity TAM in Spain
in Spain & LatAm Quickly became a market leader in the competitive Spanish market and reached profitability and LatAm
Proven track record in Eurasia since 2012 (IDF Eurasia¹):
- exponential growth to 6 mm clients and c.US$600 mm loans issued
- highly profitable operations (US$15 mm profit for 2018)
- undisputed leader in alternative lending in the region 1.5 mm unique
registered users
Profitable in Spain, strong unit economics in LatAm
Why ID Finance
State-of-the-Art IT Platform: robust data science and credit scoring capabilities built on proprietary 90%
technology with fully dedicated in-house teams retention rate
Highly Qualified Global Team: combination of deep local market knowledge with global best practices
pave the way for a successful execution
1 – IDF Eurasia was spun off from ID Finance in 2018
4
ID Finance – Empowering the Underbanked
A leading digital finance provider focused on Spain and Latin America
Key Business Highlights Volume Issued (US$ mm)
Robust financial indicators and rapidly growing business: Loans New Products
2000
1800
− Revenues: US$49 mm for 2018 (x2.6 YoY growth) 1600
1400
− Issuance: US$92 mm for 2018 (x2.2 YoY growth) 1200
1000
800
Strong operating performance resulting in profitability: 600 2.2x
3.5x
400
− 1.5 mm users as of Dec/18 (x2.4 YoY growth) 200
0
2016A 2017A 2018A 2019F 2020F 2021F 2022F
− +25,000 new users weekly
Revenues (US$ mm)
− 90% customer retention rate
Loans New Products
1200
− Profitability achieved in Spain
1000
Global structure ready to scale up: 800
− Fully established international team: 400+ professionals 600
400 2.6x
− 5 offices: 3.7x
200
Headquarters: Barcelona 0
Operating companies: Spain, Brazil and Mexico 2016A 2017A 2018A 2019F 2020F 2021F 2022F
IT, data science and risk teams: Russia and Belarus
5
Exceptional Traction Achieved So Far in Spain and Latin America
ID Finance is ready for rapid scaling
Loan Issuance (US$ mm)
20,000 3,000 2,000
18,000 reached profitability
achieved positive unit economics
1,800 achieved positive unit economics
2,500
16,000 1,600
14,000 1,400
2,000
12,000 1,200
10,000 1,500 1,000
8,000 800
1,000
6,000 600
4,000 400
500
2,000 200
0 0 0
4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
6
The Fintech Revolution in Latin America and the Potential for Growth in Credit
Latin America is widely recognized as one of the fastest growing fintech markets in the world
ID Finance Total Addressable Market* Domestic Credit as % of GDP (2018)
0% 50% 100% 150% 200%
US$98 bn US$57 bn
Brazil, Mexico, Peru, Colombia,
Spain Hispanic USA
LatAm World
ID Finance Strategy focused on entry into selected high growth markets
* TAM calculation is based on under(un)banked population on the analyzed markets and average check amounts
Sources: Company, E&Y Survey (2017), World Bank
7
Favorable Market Trends for Digital Finance in Latin America
Young and vibrant fintech companies, quickly reshaping retail banking while increasing financial inclusion in Latin America
1
Low Level of Highly concentrated markets = very high borrowing costs
Competition Incumbents have outdated technology, oversized operations, bureaucratic processes
2
Under(Un)banked
Population 50%+ of Brazil and Mexico populations are under-banked or financially excluded
3
More smartphones than bank accounts in Mexico; more than people in Brazil
Technology
Technology is enabling adoption of new, digital financial solutions
Drivers of Disruption New distribution channels for financial services, turning “offline-banking” obsolete
Digital Finance
Growth in 4
Central banks have created a fintech-friendly environment
LatAm Regulatory
This helps modernize financial services and reduce banking concentration
Framework
E.g. Central Bank of Brazil (res. 4.656/18) gives fintechs status of financial institutions
5
Demographic New generation of users: young, educated, tech-savvy, financially literate
Bonus Growing demand for convenience and customized services
6
Political stability in Brazil and Mexico, key LatAm markets
Economic Recovery Expectation of greater fiscal discipline and much needed structural reforms
This is likely to lead to sustainable economic and social growth
8
ID Finance Differentiated Position in the Market
Deep understanding of target customers and positioning strategies
Target Clients Positioning
High margin
20-45 years old
Demand convenience
target lending market
TAM (Spain + LatAm):
Under(un)banked c.US$155 bn
Banks’
US$1-1.5k disposable income
Low margin
maximum
Banks’ target margin
lending market
Tech-savvy
Affluent Middle Lower Middle Subprime
Loan users / clients without
credit history Served by banks Under(un)banked clients
ID Finance helps customers who are underserved by traditional financial institutions
9
Product Portfolio Aligned with Market Demand
Customized products and solutions targeted to specific markets and client groups
Helps people solve short-term cash Long-term loans for entrepreneurs,
flow needs SMEs, and for under-banked
consumers
Fully automated lending service
operating online 24/7 Fast and convenient financial
services via web and mobile
Fast and convenient financial
platforms
services via web and mobile platforms
Adresses finance inclusion in the
Proprietary IT-stack
emerging markets
Credit scoring using alternative data
Proprietary IT-stack and scoring
sources
using alternative data sources
Loan size up to US$1.3k up to US$800 up to US$600 up to US$3.5k
Term up to 4 months from 3 to 12 months up to 1 month up to 3 years To be launched
Interest rate ~16% per month ~18% per month ~27% per month ~3% per month
10Strategic Focus on Capturing the Market Opportunity
ID Finance has built a solid foundation in Spain and Latin America
2015 2016 2017 2018 2019F 2020F 2021-2023F
Reach profitability in Brazil and Mexico MEX SPA
Expand product range:
credit cards / revolving facilities TAM:
ID Finance founded ►
Expansion to Mexico (Sep/17) current accounts / deposits c.US$98 bn
Team hired ►
Unsecured lending
platform is launched
BRA c.2.5%
Achieved positive unit
economics in Spain 2,485
Expand product range:
► new consumer loans
► overdrafts
► currency exchange tools
Expansion to Brazil (Nov/16) ► money transfers
Reached profitability in Spain
Achieved positive unit
Launched in Spain (Jul/15) economics in Brazil and Mexico
Exploring scaling
opportunities in
other countries
Gross Loan Portfolio
(US$ mm) 273
119
6 28 52
I II III IV
Pre- LatAm Expansion and
Launch in Spain Launch in LatAm Further Scaling
operational New Products Launch
11II. Business Overview
Highly Qualified Global Management Team
Boris Batin, PhD Alexander Dunaev, CFA Kieran Donnelly
co-founder, CEO co-founder, COO Board member
15+ years of work experience in banking 10+ years of experience in banking and finance 30+ years of management experience in banking
Previously held various senior positions at Previously experience: Deutsche Bank, London and finance
Deutsche Bank, Renaissance Capital and RBS in Holds Chartered Financial Analyst degree Served as CEO of 4finance
London and Moscow Graduated from Imperial College with a degree of Holds senior roles at Standard Bank Group, MDM
Graduated from Cambridge University with a Master in Finance Bank and Renaissance Group
degree of Master in Economics
Javier Lopez Ekaterina Kazak Alessandro Ceschel
Chief Financial Officer (CFO) Chief Risk Officer (CRO) Chief Marketing Officer (CMO)
20+ years of work in financial services 10+ years of work experience in risk management 11 years experience in Digital Marketing and
Previous experience in General Electric and Previously worked as Head of Russia & CIS international IT Projects
Standard Chartered Bank Experian Analytics Developed online businesses B2C, B2B and P2P
Graduated from ESADE University (Barcelona, Graduated from Moscow State University of in Spain – Ulabox, Logismarket, Socialcar, worked
Spain) with a degree of MBA Economics, Statistics and Informatics in MNC (Nestlé) and in early stage startups
Graduated from Padova University with a Master in
Industrial Engineering and Business Administration
13Latin America Strategy Driven by Experienced Local Teams
Marco Silva Alisa Severe Antonio de Brito
Country Manager Moneyman Spain Country Manager Plazo Spain Country Manager Brazil
15+ years of work experience in Credit & 15+ years of experience in finance 15+ years of experience in finance and asset
Collections, in which he held senior positions at Citi Held senior positions at Twinero, Via SMS Group, management industry
Bank and Ricoh Europe FKM and GE Capital Previously worked at Enova (multinational online
Holds MBA from Universitat Oberta de Catalunya Holds a bachelor’s degree in Business lending company) as Strategy Operations Manager
Administration from RISEBA University and MBA Graduated from Duke University, with degree of
from IESE Business School MBA (Operations and Strategy)
Yannick Del Ponte Bonilla Ademir de Araujo Vanadis Caballero Abarca
Country Manager Mexico Chief Financial Officer (CFO) Brazil Chief Financial Officer (CFO) Mexico
20+ years of work in financial services 28+ years of work in accounting and finance 10+ years experience in the Financial Industry
Previously held senior positions in Servicios Previously worked as CFO and COO at Société Previously CFO for LatAm at Bayport Finance.
Financeiros con Valor, Pretmex and Fullerton Générale Equipment Finance and as Finance Previously held positions in Audit at KPMG,
Financial Holdings Director at GE Healthcare Life Sciences Finance at Unilever, Product Manager at Citibank
Certified in Financial Institutions for Private Holds a bachelor’s degree in Accounting from and other SOFOMS
Enterprise Development at Harvard Kennedy FECAP and MBA from FGV Bachelor degree in Business Management and
School; Post Graduate Certificate in Corporate Public Accountant and Master’s Degree in Finance
Finance at Universidad Intercontinental by the ITAM
14Seamless User Experience
Automation facilitates great user experience in a cost effective way
90% of customers who repaid first loan took a second one
Loan Selection Application Decision Disbursement
Selection of product, loan Basic information required: 98% of loans decisions are Easy and convenient
size, duration, etc ► personal data made instantaneously disbursement options,
including direct debit, card-to-
► employment
card, e-wallets, etc
OCR – Google Vision Know Your Customer
Parsing ID number from ID Identity verification
documents Fraud detection
Matching with ID number
provided by clients
15Strong Brand Awareness
Proven methodology for becoming highly recognized brand in very short period of time
# of Brand Searches (‘000) Average Monthly Brand Searches
160,000
Spain Brazil Mexico Total
120,000
80,000
411
40,000
339 0
Competior Moneyman Competior Competior Competior Competior Competior Competior Competior
#1 #2 #3 #4 #5 #6 #7 #8
160,000
120,000
247
80,000
199 204
40,000
0
152 Competior #1 Moneyman Competior #2 Competior #3 Competior #4 Competior #5
115 160,000
87 120,000
80,000
40,000
0
Competior Competior Competior Moneyman Competior Competior Competior Competior Competior
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 #1 #2 #3 #4 #5 #6 #7 #8
16Loyal Customer Base with 90% Retention Rate
Constantly innovating to capture and maximize customers’ lifetime value
ID Finance focuses on retention of high value clients Conversions to repeat clients
Products are customized to fit clients’ need
1st loan 100% 100% 100%
Collecting data, monitoring relationship, quickly
addressing problems
2nd loan 83% 86% 95%
Propensity score matching based on machine learning
Loyalty programs and bonuses 3rd loan 86% 93% 96%
Constantly develop and offer innovative products
4+ loans 89% 95% 98%
High retention is key for profitability
17Core of Our Business – Artificial Intelligence (AI)
ID Finance is well positioned for global expansion
Deep expertise in both IT and data science Data science team is expert in statistics, data analysis,
machine learning and related methods
IT team is a resident in Hi-Tech Park in Belarus - one of the
leaders among innovative IT clusters in Europe The effective combination of both teams drives product
innovation and transforms customer experience using
Our IT team constantly improves AI expertise at Hi-Tech Park
modern AI technologies
IT department Risk and Data analytics department
179 Chief Technical Officer 16 Chief Risk Officer
people people
employed employed
Quality assurance
Portfolio management
Developers
Business Analysts Data science
Security
Financial modelling
System Administration
AI expertise – a core of IDF business
18State-of-the-art Proprietary IT Platform
One of the largest IT companies in Belarus
Using user-centric approach, constantly
179 improving usability, accessibility, empowering
people
employed
high-quality visual designs and front-end
Web and Mobile development
Application
Proprietary IT platform makes
Based on IT innovations hub in personal baking services
High Technology
Europe: Belarus High Technology available for thousands of active
Technologies Park Park mobile users thorough automated
banking activities
Highly efficient organizational #Top25 IT companies in
structure: Dedicated In-house IT infrastructure allows
Belarus
Front-end, java, back-end ID Finance to quickly adapt to
developers
Development Flexibility changing fintech market
Quality assuarance Team conditions faster than competitors
Business analysts
Ongoing IT-
support
CRM support
Security issues
Regular back-ups 13 years of experience in software development,
including development of high-load applications
and financial systems
Pavel Shareyko Previous experience: Lead developer at Itransition
Chief Technical Officer Graduated from Belorussian State University
19World’s Best Practices in Risk Management and Data Science Technologies
ID finance controls the entire customer journey through highly efficient risk management
Risk management presents at every step of client life cycle Data driven approach
Client acquisition Global solutions Rating models covering life cycle
In house Web analytics module
Credit history consolidation
Fraud prevention Client card transactions information
Scoring and fraud-analysis
Application inconsistencies
X-matches
Local solutions Phones information
Device analysis and identity
Legal support
Browsing history and searches
CLIENT LIFE CYCLE Client management
Service behavior information collection
and internal credit history
Over 10000 data points are collected
Collections Pre-collections
Global team: 6
Proprietary scoring engine that analyses vast amounts of
data (incl. behavioral biometrics), identifies anomalies and
increases risk assessment efficiency by 50% Local team: 10
Ekaterina Kazak
Chief Risk Officer (CRO)
20Financial Highlights
Financial Highlights: Group
Fascinating historical monthly growth of 11% in 2015-2018. Expected monthly growth for all products is 6% up to 2023
Highlights Gross Revenues (US$ mm)1
Annual issuance more than doubled in 2018 and planned to 600.0
Short-term loans New products
reach c.$3bn in 5 years 500.0
400.0
Gross portfolio doubled in 2018 and expected to achieve
300.0
c.$3bn in 5 years
200.0
Focus on new products: the share of new products issuance is 100.0
expected to reach more than half of total issuance in 5 years
0.0
Issuance (US$ mm)1 Gross Portfolio (US$ mm)1
1,000.0 3,000.0
Short-term loans New products Short-term loans New products
900.0
2,500.0
800.0
700.0 2,000.0
600.0
500.0 1,500.0
400.0
1,000.0
300.0
200.0 500.0
100.0
0.0 0.0
1Q18
2Q18
3Q18
4Q18
1Q19F
2Q19F
3Q19F
4Q19F
1Q20F
2Q20F
3Q20F
4Q20F
1Q21F
2Q21F
3Q21F
4Q21F
1Q22F
2Q22F
3Q22F
4Q22F
1Q23F
2Q23F
3Q23F
4Q23F
1 – Includes Poland up to 4Q18
22Financial Highlights: Existing product on the focused markets
Strong improving trend in 2017-2018 is expected to continue
Highlights Key financials* (US$ mm) 1
Both Gross Revenue and Net revenue nearly doubled in 2018 Strong profitable growth
14.0
Gross revenue
EBITDA margin turned positive in 4Q2018 at 10% 12.0
Revenue net of impairments
Existing business model allows to decrease operating leverage
10.0
8.0
substantially: with av. quarterly revenue growth of 32% admin
6.0
expenses increased only by av. 7%
4.0
Profitability in Spain achieved with $1.5m net profit for 4Q2018, 2.0
positive unit economics already achieved in all countries 0.0
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Operations 100% ready for scaling
Gross Portfolio (US$ mm)1 Operating leverage* (US$ mm) 1
Operating leverage decreases as the business grows
45.0 14.0
40.0 Revenue
12.0
35.0
30.0 10.0 Admin expenses
25.0 8.0
20.0 6.0
15.0
4.0
10.0
5.0 2.0
0.0 0.0
1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
1 – all financials are presented for focused markets only: Spain, Brazil, Mexico
23Financial Highlights: New Products
Long-term products successfully launched in Spain and planned to be introduced in LatAm
Highlights Gross Revenues (US$ mm)
Long-term loans Plazo has been already launched in Spain in 2018 350.0
300.0
Plans to start issuing new products in 2H2019 in LatAm 250.0
200.0
New products to include:
150.0
− credit cards / revolving facilities
100.0
− current accounts / deposits
50.0
− new consumer loans
0.0
− overdrafts
− currency exchange tools
− money transfers
Issuance (US$ mm) Gross Portfolio (US$ mm)
700.0 2,000.0
1,800.0
600.0 1,600.0
500.0 1,400.0
1,200.0
400.0
1,000.0
300.0 800.0
200.0 600.0
400.0
100.0 200.0
0.0 0.0
24Boris Batin
Co-founder, CEO @ ID Finance
Boris.batin@idfinance.com
Thank you!
Alexander Dunaev
Co-founder, COO @ ID Finance
Alexander.dunaev@idfinance.com
25Disclaimer
• This document and its contents are confidential and may not be reproduced, redistributed, published or passed on to any other person,
directly or indirectly, in whole or in part, for any purpose.
• This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in,
any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require
any registration or licensing within such jurisdiction.
• The information in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to
the accuracy, completeness or fairness of the presentation and the information contained herein and no reliance should be placed on such
information.
• This presentation contains forward-looking statements, which include all statements other than statements of historical facts, including,
without limitation, any statements preceded by, followed by or including the words “targets”, “believes”, “expects”, “aims”, “intends”, “may”,
“anticipates”, “would”, “could” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors beyond the company’s control that could cause the company’s actual results, performance or
achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous assumptions regarding the company’s present and future business
strategies and the environment in which it will operate in the future. These forward-looking statements speak only as at the date of this
presentation. The company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-
looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or
circumstances on which any of such statements are based.
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