RESULTS PRESENTATION H1FY18 - Afterpay Touch
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RESULTS PRESENTATION H1FY18
STRONG RESULTS CHANGING THE WAY PEOPLE SHOP FUTURE GROWTH
• H1FY18 highlights and We get: • Afterpay everywhere retail –
financial results online and in-store
• Millennials
• Segment performance • New verticals
• Retail
• Balance sheet and • New geographies
funding • Community
• New partnerships
• Merger progress • Responsibility
• Major new retailers onboarding
and migrating instore
2
Strong results
3
S T R O N G R E S U LT S
H1FY18 Highlights
MERGER WITH AFTERPAY STRONG AFTERPAY
TOUCHCORP GROWTH MOMENTUM GEOGRAPHIC
COMPLETED CONTINUES EXPANSION
NEW LEADERSHIP TEAM IN PLACE >1.5 MILLION CUSTOMERS NEW ZEALAND LAUNCHED
AND WORKING WELL
NOW >12,000 MERCHANTS ON-BOARDED U.S. PARTNERSHIP ESTABLISHED
VERTICAL INTEGRATION COMPLETE WITH MATRIX
IN-STORE GROWTH, 5,000+ SHOPFRONTS,
PLATFORM SYNERGIES PROGRESSING >1 MILLION APP DOWNLOADS STRONG RETAILER
ENGAGEMENT
MAJOR NEW RETAILERS ON-BOARDING
VERTICAL EXPANSION
STRONG FINANCIAL STRONG INVESTING AND
PERFORMANCE BALANCE SHEET PARTNERING
STRONG FINANCIAL PERFORMANCE INCREASED DEBT FACILITIES
FOR GROWTH
$12.1M EBTDA (EXCL SIGNIFICANT ITEMS) FROM NAB AND ASB GLOBAL PLATFORM EXPANSION
PROFITABLE AND SCALABLE AFTERPAY STRONG UNDERLYING OPERATING CASH DATA DRIVEN CAPABILITIES
CONTRIBUTION FLOW/EQUITY CAPITAL INTACT
INNOVATION
LOW AFTERPAY LOSS RATES AND EQUITY PLACEMENT TO MATRIX
STRONG MARGINS MAINTAINED STRONG TEAM AND CULTURE
STABLE TOUCHCORP BUSINESS 4
CONTRIBUTION
S T R O N G R E S U LT S
H1FY18 FINANCIAL ACCOUNTS
important information
• Afterpay Touch Group Limited was incorporated
on 30 March 2017 for the purpose of the merger
between Afterpay Holdings Limited and
Touchcorp Limited (each separately listed entities
prior to the merger)
• H1FY18 is the first financial period that reflects
the performance and cashflows of the whole
Afterpay Touch Group post merger MERGER COMPLETED JUNE 2017
• Prior year financial performance comparatives
only represent the performance of Afterpay and
its subsidiaries while the Balance Sheet as at 30
June 2017 reflects the Group’s combined financial
position post merger
• Non-statutory metrics and commentary has been
provided to give financial context to the current
period results, but this information has not been
audited
5
S T R O N G R E S U LT S
H1FY18 FINANCIAL
CONSOLIDATED PERFORMANCE
Highlights
AFTERPAY TOUCH AFTERPAY CHANGE COMMENTS
$M (UNLESS OTHERWISE STATED) H1FY18 H1FY17 %
• PERFORMANCE NOW INCLUDES BOTH
REVENUE FROM ORDINARY ACTIVITIES 49.9 6.0 732% AFTERPAY AND TOUCH BUSINESSES
REVENUE FROM AFTERPAY 37.1 6.0 518% • GROWTH IN REVENUE PRIMARILY
REFLECTS THE STRONG GROWTH IN THE
REVENUE FROM TOUCH 12.8 - N/A AFTERPAY BUSINESS
GROSS PROFIT 36.9 4.8 669% • ONE-OFF COSTS INCLUDE:
OTHER INCOME (AFTERPAY) 10.8 1.2 800% - MERGER RELATED COSTS (SUCH
AS TAX AND LEGAL EXPENSES,
RESTRUCTURING COSTS)
EBTDA (EXCL SIGNIFICANT ITEMS) 12.1 0.6 1917%
- INTERNATIONAL EXPANSION COSTS
SHARE-BASED PAYMENTS (NON-CASH) -5.3 -0.5 960% (NEW ZEALAND AND PRELIMINARY
WORK IN USA)
ONE-OFF COSTS -1.3 -0.6 117%
- DEBT FACILITY ESTABLISHMENT
EBTDA 5.5 -0.5 1200% (ASB FACILITY AND INCREASE IN NAB
FACILITY)
DEPRECIATION & AMORTISATION -4.8 -1.4 243%
• SHARE-BASED PAYMENTS ARE NON-
NET PROFIT/(LOSS) BEFORE TAX 0.7 -1.9 137% CASH AND ARE EXPLAINED ON PAGE 8
NOTE: EBTDA REFERS TO EARNINGS BEFORE TAX, DEPRECIATION AND AMORTISATION (BUT AFTER INTEREST REVENUE AND EXPENSES)
6
S T R O N G R E S U LT S
H1FY18 FINANCIAL
SEGMENT CONTRIBUTION
Highlights
CONSOLIDATED
$M (UNLESS OTHERWISE STATED) AFTERPAY TOUCH AFTERPAY TOUCH
REVENUE AND OTHER INCOME 47.9 12.8 60.7
EBTDA CONTRIBUTION 14.7 4.6 -
CORPORATE COSTS 7.2
EBTDA (EXCL SIGNIFICANT ITEMS) 12.1
SHARE-BASED PAYMENTS (NON-CASH) 5.3
ONE-OFF COSTS 1.3
EBTDA 5.5
21% 24%
AFTERPAY BUSINESS
CONTRIBUTED TOTAL EBTDA
NEARLY 80% OF INCOME CONTRIBUTION
TOTAL INCOME
AFTERPAY 79% 76%
TOUCH
7
S T R O N G R E S U LT S
STATUTORY RESULTS analysis
AFTERPAY TOUCH AFTERPAY COMMENTS
$M (UNLESS OTHERWISE STATED) H1FY18 H1FY17
• PERFORMANCE DRIVEN BY STRONG
REVENUE FROM PAY LATER 37.1 6.0 GROWTH IN AFTERPAY BUSINESS
REVENUE FROM PAY NOW 12.8 -
• GROWTH IN COST BASE REFLECTS
REVENUE 49.9 6.0 INCLUSION OF TOUCH BUSINESS WITHIN THE
GROUP
COST OF SALES -13.0 -1.2
GROSS PROFIT 36.9 4.8 • PROFITABILITY WAS AFFECTED BY SHARE-
BASED PAYMENT EXPENSES (NON-CASH)
OTHER INCOME 10.8 1.2 AND ONE–OFF COSTS
DEPRECIATION AND AMORTISATION EXPENSES -4.8 -1.4 • $14.5M EMPLOYMENT EXPENSES INCLUDES
EMPLOYMENT EXPENSES -14.5 -2.4 $5.3M SHARE-BASED PAYMENT COSTS (NON-
CASH) FOR KEY EMPLOYEES INCLUDING THE
RECEIVABLES IMPAIRMENT EXPENSES -15.1 -1.9 GROUP HEAD.
OPERATING EXPENSES -10.4 -2.1
- THE GROUP HEAD WAS APPOINTED IN
OPERATING PROFIT/(LOSS) 2.9 -1.8 AUGUST 2017.
FINANCE INCOME 0.2 0.2 - SHARES ISSUED UNDER THE CONTRACT
FINANCE COST -2.4 -0.3 REQUIRE SHAREHOLDER APPROVAL.
PROFIT/(LOSS) BEFORE TAX 0.7 -1.9 - AN ESTIMATE OF THE VALUE OF THE
SHARE ISSUE HAS BEEN PROVIDED IN
INCOME TAX (EXPENSE)/BENEFIT -1.4 0.5 THE ACCOUNTS PENDING SHAREHOLDER
PROFIT/(LOSS) FOR THE YEAR -0.7 -1.4 APPROVAL.
• OTHER INCOME REFLECTS LATE FEES FROM
AFTERPAY
8
S T R O N G R E S U LT S
Afterpay KEY FINANCIAL METRICS
AFTERPAY CHANGE COMMENTS
$M (UNLESS OTHERWISE STATED) H1FY18 H1FY17 %
• AVERAGE MERCHANT MARGIN
UNDERLYING MERCHANT SALES 918.3 144.8 534% STABLE (MIX VARIANCES
BETWEEN PERIODS)
AFTERPAY MERCHANT REVENUE 37.1 6.0 518% • NET TRANSACTION MARGIN
% OF UNDERLYING MERCHANT SALES 4.0% 4.2% N/A AFFECTED BY DEBT FUNDING
COSTS (NOT MATERIAL IN H1FY17)
NET TRANSACTION LOSS -6.6 -0.9 N/A
% OF UNDERLYING MERCHANT SALES -0.7% -0.7% N/A
OTHER VARIABLE TRANSACTION COSTS -9.2 -1.2 N/A
% OF UNDERLYING MERCHANT SALES -1.0% -0.8% N/A
NET TRANSACTION MARGIN 21.3 3.9 446%
% OF UNDERLYING MERCHANT SALES 2.3% 2.7% N/A
NET TRANSACTION MARGIN 21.3
OTHER EXPENSES -6.7
EBTDA CONTRIBUTION 14.7
(EXCL SIGNIFICANT ITEMS)
9
S T R O N G R E S U LT S
Afterpay NET TRANSACTION LOSS ANALYSIS
COMMENTS
BALANCE SHEET INCOME STATEMENT • H1FY18 UNDERLYING NET
TRANSACTION LOSS OF $6.6M OR
PROVISION FOR PROFIT AND LOSS 0.7% OF UNDERLYING SALES
DOUBTFUL DEBTS NTL BRIDGE FY18
• MARGINAL INCREASE IN NTL
FROM FY17 IS A PLEASING RESULT
15.1 (6.8) GIVEN:
- TRANSACTION VOLUMES
INCREASED BY 534% FROM
6.8 15.1 (10.8) H1FY17 TO H1FY18
13.6
- GROWTH IN THE IN-STORE ROLL
0.7% OF
OUT WITH >300% INCREASE IN
UNDERLYING
SALES STORE FRONTS SINCE JULY 17
8.3
2.3 6.6 - NEW VERTICAL EXPANSION
5.3
STABLE LATE
PAYMENT FEES AS H1FY18 FY17
$M OPENING NET NET BDD
PROVISION WRITEOFF OF INCREASE EXPENSE RECOVERY PERCENTAGE
RECEIVABLES IN BDD H1FY18 COSTS OF UNDERLYING 1.2% 1.1%
AND BANK SALES
CHARGES
BDD EXPENSE CLOSING WRITEOFF OF RECOGNISED NET
(MMT IN PROVISION RECEIVABLES LATE FEES TRANSACTION
PROVISIONS) LOSS 10S T R O N G R E S U LT S
Touch KEY
FINANCIAL METRICS
STABLE
UNDERLYING TRANSACTION VOLUMES AND RECURRING
REVENUES IN THE KEY TOUCHCORP BUSINESS LINES
GROSS MARGIN REDUCTION DUE TO REVENUE MIX AND
INCREASES IN PROCESSING COSTS
TOUCH
$M (UNLESS OTHERWISE STATED) H1FY18 H1FY17 REVENUE MIX REVENUE
EXCLUDING AFTERPAY EXCLUDING AFTERPAY
REVENUE 12
UNAUDITED $M
$M 11.4
6 MONTHS 31 DEC 16 10.9
MOBILITY (EX AFTERPAY) 7.7 7.4
6 MONTHS 31 DEC 17
E-SERVICES 3.9 4.0 10
HEALTH 1.2 1.1
TOTAL REVENUE 12.8 12.5 8 7.4 7.7
COST OF SALES 6.2 5.4
6
GROSS MARGIN 6.7 7.1
4
GROSS MARGIN 6.7
2.3
OTHER EXPENSES 2.2 2.1
1.9
2 1.6 1.6 1.4
1.1 1.2
EBTDA CONTRIBUTION 4.5
(EXCL SIGNIFICANT ITEMS)
0
MOBILITY
PROFESSIONAL
E-SERVICES
AUS
E-SERVICES
EUROPE
HEALTH
SERVICES
TRANSACTION
11S T R O N G R E S U LT S
CASHFLOW analysis CONSOLIDATED
$M AFTERPAY TOUCH AFTERPAY
POSITIVE $M (UNLESS OTHERWISE STATED) H1FY18 H1FY17
2.4 UNDERLYING CASH FLOWS FROM OPERATING ACTIVITIES
5.3 OPERATING
CASHFLOW RECEIPTS FROM CUSTOMERS (INC OF GST) 928.0 102.2
15.1 (0.2)
PAYMENTS TO EMPLOYEES (INC ON-COSTS) -8.3 -1.5
4.7 14.1 (95.3)
PAYMENTS TO MERCHANTS AND -1,000.9 -131.7
SUPPLIERS (INC OF GST)
4.8
0.7 (18.7) (81.2) NET CASH FLOWS USED IN -81.2 -31.1
0 OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
INTEREST RECEIVED 0.2 0.3
PAYMENTS FOR INTANGIBLES -5.1 0.2
PURCHASE OF PLANT AND EQUIPMENT -0.7 -0.1
NET CASH FLOWS USED IN -5.6 0.0
INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM BORROWINGS 89.7 8.1
PROCEEDS FROM EQUITY TRANSACTIONS 1.6 36.0
CAPITAL RAISING EXPENSES - -1.6
INTEREST AND BANK FEES PAID -2.2 -0.3
INCREASE IN OTHER FINANCIAL ASSET -6.9 -3.3
TRUST'S ADMINISTRATION FEES -0.1 -
NET CASH FLOWS FROM 82.1 39.0
FINANCING ACTIVITIES
CASH FLOW
DOUBTFUL
PAYMENT
YEAR REPORT
FLOW PER HALF
TAX
PROFIT BEFORE
DEPRECIATION
AND
AMORTISATION
BAD AND
DEBTS EXPENSE
SHARE-BASED
EXPENSE
FINANCE COSTS
FINANCE INCOME
INCREASE IN
PREPAYMENTS AND
OTHER ASSETS
INCREASE IN
TRADE AND OTHER
PAYABLES
OPERATING
OPERATING CASH
INCREASE
IN TRADE
RECEIVABLES
NET INCREASE IN CASH AND CASH -4.6 8.0
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT 29.6 19.7
BEGINNING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT END OF 25.0 27.7
THE PERIOD
NON-CASH ITEMS
12S T R O N G R E S U LT S
Balance SHEET CONSOLIDATED
AFTERPAY TOUCH
$M (UNLESS OTHERWISE STATED) 31 DECEMBER 2017 30 JUNE 2017 % CHANGE
ASSETS
CURRENT ASSETS
COMMENTS
CASH AND CASH EQUIVALENTS 25.0 29.6 16%
OTHER FINANCIAL ASSET 15.8 8.9 78% • INCREASE IN CURRENT RECEIVABLES DUE TO THE
TRADE RECEIVABLES 185.3 98.4 88% CONTINUED GROWTH IN AFTERPAY UNDERLYING
OTHER CURRENT ASSETS 24.1 11.9 102% SALES
TOTAL CURRENT ASSETS 250.2 148.8 68%
• INCREASE IN INTEREST BEARING DEBT REFLECTS
NON-CURRENT ASSETS
THE GROWTH IN DRAWN NAB FACILITY TO
PROPERTY, PLANT AND EQUIPMENT 4.1 4.5 8%
SUPPORT AFTERPAY UNDERLYING SALES GROWTH
INTANGIBLE ASSETS 70.0 68.7 2%
OTHER NON-CURRENT ASSETS 19.6 18.3 7% • INCREASE IN PAYABLES REFLECTS THE GROWTH
TOTAL NON-CURRENT ASSETS 93.7 91.5 2% IN MERCHANT PAYMENTS BETWEEN JUNE AND
TOTAL ASSETS 343.9 240.3 43% DECEMBER (AGAIN, RELATED TO GROWTH IN
LIABILITIES AFTERPAY UNDERLYING SALES)
CURRENT LIABILITIES
TRADE AND OTHER PAYABLES 36.7 24.0 53%
ONEROUS CONTRACT PROVISION 3.6 6.2 41%
EMPLOYEE AND OTHER PROVISIONS 1.6 1.4 9% AFTERPAY AND PAY NOW RECEIVABLES $(M)
TOTAL CURRENT LIABILITIES 41.9 31.6 32%
NON-CURRENT LIABILITIES
EMPLOYEE AND OTHER PROVISIONS 0.5 0.4 60% DEC17 179.7 5.6
ONEROUS CONTRACT PROVISION - 1.5 100%
INTEREST-BEARING BORROWINGS 136.5 46.7 192%
TOTAL NON-CURRENT LIABILITIES 137.0 48.6 182%
JUN17 92.1 6.3
AFTERPAY
TOTAL LIABILITIES 178.9 80.2 123%
NET ASSETS 165.0 160.1 3% DEC16 39.3 PAY NOW
EQUITY
ISSUED CAPITAL 173.3 171.4 1%
ACCUMULATED LOSSES -14.0 -13.2 6%
RESERVES 5.7 1.9 200%
TOTAL EQUITY 165.0 160.1 3% 13S T R O N G R E S U LT S
Afterpay RECEIVABLES FUNDING
FACILITY AND CAPACITY
SALES GROWTH CAPACITY
COMMENTS
H1FY18
AU $M CAPITAL • FACILITY WITH NAB NOW AT $350M
REMAINING AND NZ $20M WITH ASB
TOTAL $256.7
• DEBT WAREHOUSE CONTINUES
LOW TO BE THE FOCUS FOR FUNDING
GEARING RECEIVABLES GROWTH BUT CAPITAL
MANAGEMENT ACTIVITIES WILL BE
TOTAL $210.3
CAPITAL EMPLOYED TO OPTIMISE COSTS
EMPLOYED • CASH 31 DEC 17 ($25M) EXCLUDES
CASH PROCEEDS FROM MATRIX
TRANSACTION (A$18.9M) WHICH
EQUITY $48.8 OCCURRED IN JANUARY 2018
UNDRAWN DEBT
FACILITY $213.5
RECEIVABLES
$185.3
RECEIVABLES
$185.3
DEBT $136.5 DEBT $136.5
ASB UNDRAWN
DEBT $18.2
CASH $25.0 CASH $25.0
14S T R O N G R E S U LT S
SIGNIFICANT POST BALANCE DATE ITEM
SHARE AND CONVERTIBLE NOTE PLACEMENT TO MATRIX PARTNERS
AFTERPAY TEAM In January 2018, Afterpay Touch
INVESTIGATING entered into a strategic relationship
OPPORTUNITIES TO and new share issuance transaction
ENTER THE UNITED with US based Matrix Partners, a
STATES MARKET long-established, technology-focused
venture capital firm
Matrix invested approximately A$18.9m
in Afterpay Touch – via a new share
issuance at A$6.51 per share and
US$100,000 via convertible note
issuance from Afterpay US, Inc.
Afterpay US, Inc. incorporated as a 100%
owned subsidiary of Afterpay Touch
Mr. Dana Stalder, a General Partner of
Matrix, also joined the Afterpay Touch
Board
15CHANGING
THE WAY people shop
16AFTERPAY IS resonating
INTEGRATED UNDERLYING
OVER
12.5
RETAIL MERCHANTS 11.5 MERCHANT SALES 918.3
10K
800M
6.0 416.3
2.0 144.8
MILLION 0.3 6.5 30.1
0.1
TRANSACTIONS 0
H1FY16 H2FY16 H1FY17 H2FY17 H1FY18
0
H1FY16 H2FY16 H1FY17 H2FY17 H1FY18
TO DATE
OVER MERCHANT FEES UNIQUE AFTERPAY 1.5 MILLION
2
$ 40M 37.1
CUSTOMERS
1M
0.8
BILLION
16.9
0.4
UNDERLYING 0.2 1.1
6.0
0.0
0.1
SALES RUN RATE 0 0
H1FY16 H2FY16 H1FY17 H2FY17 H1FY18 H1FY16 H2FY16 H1FY17 H2FY17 H1FY18
(BASED ON RECENT
QUARTERLY PERFORMANCE)
17C H A N G I N G T H E WAY P E O P L E S H O P
Customers at the core
OF EVERYTHING WE DO
BEING OUR APPROACH IS FUNDAMENTALLY DIFFERENT:
REALLY WE FOCUS ON WE PARTNER WITH
REALLY RETAIL INNOVATION – RETAIL FOR THE
CUSTOMER NOT FINANCE BENEFIT OF RETAIL
CENTRIC
WE GENUINELY AIM TO WE FOCUS ON
IS NOT JUST A PROVIDE CUSTOMERS LIFETIME CUSTOMER
STATEMENT BUT WITH A FREE SERVICE VALUE
A WAY OF LIFE
PRACTICED BY
OUR TEAM AND
UNDERPINNED BY WE USE INDUSTRY AFTERPAY IS “SOCIAL”,
OUR VALUES AND LEADING TECHNOLOGY TO POWERED BY OUR
BUSINESS MODEL PROMOTE RESPONSIBLE DATA INSIGHTS AND
CUSTOMER BEHAVIOUR APPLICATION
18C H A N G I N G T H E WAY P E O P L E S H O P
WE GET millennials TAKE NOTICE! MILLENNIALS ARE
ALREADY THE LARGEST CONSUMER
DEMOGRAPHIC ON THE PLANET AND
THEY LIKE TO DO THINGS DIFFERENTLY
TECH SAVVY
DON’T GO FOR GIMMICKS
DISFAVOUR CREDIT AND WARY OF GETTING INTO DEBT
AGE AFTERPAY CUSTOMER
VALUE TRANSPARENCY AND BRAND AUTHENTICITY
18+ POPULATION GENERAL POPULATION
VALUE LIFESTYLE AND FLEXIBILITY
40
36%
31%
BY 2030 MILLENNIALS WILL BE
30-50
18%
AUSTRALIA’S LARGEST
YEARS
DEMOGRAPHIC
OLD
SOURCE: ABS, ALPHABETA ANALYSIS, MACQUARIE BANK RESEARCH
6.0 24
15% 15%
13% 13% 12%
9% 10%
%
2 3
4%
1%
AND
0
45-54 55-64 WILL OUT OF
18-24 25-34 35-44 65+
MILLION OF THE EARN EVERY
PEOPLE POPULATION
DOLLARS IN AUSTRALIA
MACQUARIE BELIEVES
ONLINE RETAIL OMNI CHANNEL IS HERE
80
PENETRATION WILL REACH
17.5
%
%
OF MILLENNIALS LOOK UP
OF TOTAL ONLINE RETAIL PRODUCTS ONLINE ON THEIR
IN AUSTRALIA BY 2030 PHONE WHILE IN STORE
CURRENTLY ONLY 5% 19C H A N G I N G T H E WAY P E O P L E S H O P
WE GET LIFESTYLE AND community
You and 3.3k others
Yesterday at 9:37 am Like Reply 21
ENT PEOPLE REACHED 753,541
COMMENTS SHARES
REACTIONS 6,810
POST CLICKS 36,664 FAN CLUBS
PEOPLE REACHED 870,095
COMMENTS SHARES
REACTIONS 19,780
POST CLICKS 35,697 PRODUCT FINDING
PEOPLE REACHED 344,614
COMMENTS SHARES
REACTIONS 1,563 STORE SEARCH
POST CLICKS 4,549
People reached: 753,541 People reached: 344,614
Reactions Comments & Shares: 6,810 Reactions Comments & Shares:1,563
Post Clicks: 36,664 Post Clicks: 4,549
20C H A N G I N G T H E WAY P E O P L E S H O P
WE GET retail
AFTERPAY IS NOW ONE OF THE LARGEST RETAIL AFFILIATE PROGRAMMES
IN AUSTRALIA
AFTERPAY WEB
AFTERPAY PROMOTION
AFTERPAY APP
AFTERPAY EVENTS
OVER BIGGEST
24 HOUR
SALES
MILLION EVENT EVER
MILLIONS OF MONTHLY
APP RETAILER REFERRALS 14/15 FEBRUARY
DOWNLOADS 2018
21C H A N G I N G T H E WAY P E O P L E S H O P
OUR CONTRIBUTION
incremental
NO CREDIT
TO RETAIL IS NO EXTENDED PAYMENTS
NO SUBSEQUENT FINANCE
A CUSTOMER CENTRIC APPROACH IS GOOD FOR PRODUCT “HOOK”
BUSINESS… AND OUR RETAIL PARTNERS GET IT.
I have been amazed Afterpay is the fastest We love how Since launching Afterpay on Afterpay is a perfect
at how quickly our growing payment choice passionate our our online channel in 2016 we match for the MAC brand
customers have for Booktopia customers. customers are about have seen consistent growth and our customers. Close
embraced Afterpay; Australians are seeking Afterpay. We can see and conversion over the time, to half of our customers
so much so, that it is out retailers that offer Afterpay customers this has been such a success are using Afterpay and
now the single most Afterpay which means it converting 10% higher that we have since launched spending 14% more on
popular payment generates sales as well than non-Afterpay it in store after the high their purchases as well.
method for our as offering a manageable customers, which is performance and customer We’ve been delighted
website. payment plan. great for our business. demand for this service. with the results.
KATE MORRIS, TONY NASH, MARK BAARTSE, LAUREN WILLIAMS, KATHERINE MAMONTOFF,
FOUNDER & CEO, CEO, CHIEF MARKETING OFFICER, GLOBAL ONLINE MANAGER, ONLINE GENERAL MANAGER,
ADORE BEAUTY BOOKTOPIA SHOWPO LORNA JANE ESTEE LAUDER COMPANIES
DRIVING INCREASED CONVERSIONS,
AVERAGE ORDER VALUES AND REPEAT PURCHASES
22A ADORE BEAUTY ADAIRS ANACONDA
C H A N G I N G T H E WAY P E O P L E S H O P
B BIG W BONDS BRAS N THINGS
C CUE COUNTRY ROAD CULTURE KINGS
LARGEST D DAVID JONES DOTTI DUSK
PRESENCE
E EZIBUY ESTHER BOUTIQUE E- MURA
F FANTASTIC FRENCH
FSHN BNKR
FURNITURE CONNECTION
WITH THE G GENERAL PANTS GLUE STORE GLASSONS
major brands H
I
J
HYPE DC HONEY BIRDETTE
INDUSTRIE CLOTHING ILABB
JETSTAR AIRWAYS JAY JAYS
HARRIS SCARFE
ICEONLINE.COM.AU
JUST JEANS
K KOOKAI KATHMANDU KIKKI K
L LORNA JANE LA SIENNA LACOSTE AUSTRALIA
AFTERPAY + BRANDS > M MYER MIMCO MICHAEL HILL
CUSTOMER EXPERIENCE N NUTRITION
WAREHOUSE NONI B GROUP NINE WEST
O
WE ARE PRIVILEGED TO BE PARTNERING OFFICEWORKS OROTON OVERLAND
WITH THE LEADING CORE RETAIL AND P PRINCESS POLLY PLATYPUS SHOES PETER ALEXANDER
MILLENNIAL BRANDS Q QUAY AUSTRALIA QUIKSILVER QUEENBEE
R REBEL RAY'S RM WILLIAMS
S SUPER CHEAP AUTO SPOTLIGHT SEPHORA
T THE ICONIC TARGET TRADE ME
U UNIVERSAL STORE UNCLE RECO CLOTHING UNIQUE MUSCLE
V VERONIKA MAINE VANS SHOES VERGE GIRL
W WITCHERY WHITE FOX BOUTIQUE WITTNER SHOES
X XENIA BOUTIQUE XCELERATOR ONLINE X-POLE AUSTRALIA
Y YD YELLOW OCTOPUS YOUR JERSEY 23
Z ZALA ZANUI ZULU & ZEPHYRC H A N G I N G T H E WAY P E O P L E S H O P
...and SMALL TO
MEDIUM BUSINESSES
RAPID UPTAKE FROM ONLINE PLAYERS
NEW STAND-ALONE AFTERPAY POS INTEGRATION IN
DEVELOPMENT FOR IMMINENT IN-STORE RELEASE
SMB MERCHANTS 11.4
CUMULATIVE, THOUSANDS
6% WE’RE JUST
BEGINNING...
10
8.6
5.9
SMB MARKET
5 PENETRATION
3.5 ALL RETAIL TRADE
AUSTRALIA
2.0
0.8
0.1 0.1 0.3
0.0 94%
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
FY16 FY17 FY18
SOURCE: IBIS WORLD 24C H A N G I N G T H E WAY P E O P L E S H O P
Focus ON LIFETIME
CUSTOMER VALUE
STRONG ADOPTION RETURNING CUSTOMERS
PERCENTAGE OF MONTHLY TRANSACTIONS MADE BY A PREVIOUS
AFTERPAY CUSTOMER
100 90%
89%
RETURNING
66%
75% CUSTOMERS HAVE
49% MADE ON AVERAGE
50
8
54%
1
0
TRANSACTIONS
JUN DEC JUN DEC SEP DEC OVER THE PAST
15 15 16 16 17 17
12 MONTHS
25
1 TOTAL RETURNING CUSTOMER ORDERS DIVIDED BY TOTAL NUMBER OF RETURNING CUSTOMERS IN CALENDAR 2017.
FIGURES NOT ANNUALISED FOR CUSTOMERS THAT JOINED DURING THE COURSE OF THE CALENDAR YEAR.C H A N G I N G T H E WAY P E O P L E S H O P
UNIQUE APPROACH PROMOTES
CUSTOMER SPENDING
responsible
Afterpay is designed around financially healthy customers
77
who can and do use the Afterpay service regularly OF CUSTOMERS
SURVEYED
Life’s little extras – not the things you want a loan for % SAID THEY USE
AFTERPAY AS A
BUDGETING TOOL
Low transaction values SOURCE: IPSOS SURVEY DATA, ALPHABETA ANALYSIS
Every transaction evaluated – Afterpay Touch has been a
pioneer in the creation of this technology over more than THE KEY DIFFERENCE
15 years WITH AFTERPAY IS THE
CUSTOMER’S ACCOUNT IS
Strict personal order and total expense limits – it starts low and DISABLED IF PAYMENTS ARE
only increases if repayment history with Afterpay is positive NOT MADE ON TIME
One order at a time – no default policy; account always has to
be up to date
No extended repayment options – can’t “kick the can down the
road”
Communicate ‘in advance’ of payments becoming due
26C H A N G I N G T H E WAY P E O P L E S H O P
100% business model ALIGNMENT WITH
PROMOTING RESPONSIBLE CUSTOMER SPENDING
SHIFTED THE ECONOMICS IN
THE CUSTOMER’S FAVOUR TRANSACTION ECONOMICS
(PER TRANSACTION, PRE-OVERHEADS)
BY EARNING OUR REVENUE
PRIMARILY FROM THE RETAILER,
NOT THE CUSTOMER. MERCHANT FEE
REVENUE PRIMARILY DERIVED FROM
THE RETAILER (NOT THE CUSTOMER)
AFTERPAY PAYS RETAILERS UPFRONT AND ONLY
BENEFITS WHEN CUSTOMERS PAY OFF THEIR
PURCHASES IN FULL. TRANSACTION
PROCESSING COSTS
CUSTOMERS HAVE RESPONDED TO THIS
TRUSTED RELATIONSHIP BY BECOMING
ADVOCATES OF THE BRAND.
TRANSACTION FUNDING
FINANCE COSTS
IMPROVING WITH TRANSACTION
NET TRANSACTION LOSSES HISTORY AND INCREASING
RETURNING CUSTOMER MIX
NET TRANSACTION MARGIN 2.3%
IN H1FY18
27C H A N G I N G T H E WAY P E O P L E S H O P
The data SUPPORTING OUR MODEL
77 75 85%
77% OF USERS SAY WITHOUT AFTERPAY, LOW OUTSTANDING >85% DEBIT CARD
THEY USE AFTERPAY % CUSTOMERS WOULD BALANCES % TRANSACTIONS
TO HELP WITH HAVE LOOKED FOR >75% CUSTOMERS
HAVE BALANCES
AFTERPAY
BUDGETING ANOTHER STORE THAT
OUTSTANDING OFC H A N G I N G T H E WAY P E O P L E S H O P
DELIVERING A
different value proposition
50% Listed small cash NOT DRAWN TO SCALE
loans/equipment BUBBLE SIZE REFLECTS AVERAGE INTEREST / REVENUE
rental company GENERATING ASSETS /RECEIVABLES OUR BUSINESS MODEL DOES
NOT RELY ON EXTRACTING
VALUE FROM THE CUSTOMER
40% AND STANDS IN STARK
CONTRAST TO TRADITIONAL
RISK ADJUSTED RETURN1
RETAIL AND CONSUMER
Listed domestic non-bank
consumer/commercial FINANCE PROVIDERS
30% rental and leasing
companies
20%
AFTERPAY
Bubble size based on
Offshore ~$2b gross sales
consumer
banks
10%
SOURCE: COMPANY FILINGS, CALCULATIONS FROM LAST
REPORTED METRICS. NOTES: (1) RISK ADJUSTED RETURN
Banks Regional banks CALCULATED AS NET INTEREST INCOME LESS IMPAIRMENT
average average EXPENSES AS % OF AVERAGE LOANS OR RECEIVABLES. APT’S RISK
0 ADJUSTED RETURN IS BASED ON THE NET TRANSACTION MARGIN.
10% 20% 30% 40% 50% 60% 70% 80%
PROPORTION OF NON-CUSTOMER FEE INCOME TO TOTAL INCOME
29C H A N G I N G T H E WAY P E O P L E S H O P
Scalable AND HIGH
ROE BUSINESS MODEL
GROWING AND REPEAT CUSTOMER TRANSACTIONS
POSITIVE MERCHANT AND NET TRANSACTION MARGINS
EFFICIENT USE OF CAPITAL / MULTIPLE PER ANNUM TRANSACTION CYCLES
RETURN ON CAPITAL EMPLOYED (ROCE)
NET TRANSACTION MARGIN ~2.3% IN H1FY18
SHORT HIGH TRANSACTION HIGHLY DIVERSIFIED
TENOR OF VOLUME RECEIVABLES
RECEIVABLES ~12x PORTFOLIO
< 30 DAYS CAPITAL CYCLES LOW AVERAGE
P.A. ORDER VALUE MULTIPLE ANNUAL CAPITAL CYCLES ~12×
(C. $150)
SHORT TENOR DRIVES:
CAPITAL EFFICIENCY – ~12X CAPITAL CYCLES P.A. IMPLIED NET ROCE
(ANNUALISED, PRE-OVERHEADS) ~25-30%
LOW SENSITIVITY TO INTEREST RATE MOVES
LOW FUNDING COST PER TRANSACTION
RAPID VIEW OF BAD DEBTS/NO MATERIAL ROE SIGNIFICANTLY
HIGHER AS DEBT FUNDING
“GUESSWORK” REQUIRED PROGRESSIVELY UTILISED
NO LONG TAIL RISK
30Future growth
31F U T U R E G R OW T H
BUILDING A
TO ENABLE SUSTAINED GROWTH
great culture
WE ASPIRE TO BE AN EMPLOYER OF CHOICE - TO ATTRACT (AND KEEP) THE BEST TALENT BY:
DEVELOPING IMPROVING THE HEALTH AND DIVERSITY AND GIVING BACK CELEBRATING
AND GROWING WORKPLACE WELLBEING INCLUSION TO OUR MILESTONES
OUR PEOPLE ENVIRONMENT ACTIVITIES INITIATIVES COMMUNITY AND EVENTS
JAN 18 227 IN 4 35 % SINCE 1 JULY WE HAVE HIRED
KEY TALENT INCLUDING:
EMPLOYEES COUNTRIES FEMALE CHIEF PRODUCT OFFICER,
CHIEF MARKETING OFFICER,
UP UP UP FRAUD MANAGER, KEY
DEVELOPERS...
JUL 17 170 IN 2 30 %
EMPLOYEES COUNTRIES FEMALE
32F U T U R E G R OW T H
AFTERPAY
TO OUR CUSTOMERS’ LIFESTYLE
everywhere relevant
LEVERAGE EXISTING CUSTOMER BASE AND BRANDED RETAIL PRESENCE TO
GROW AND BECOME MORE RELEVANT TO OUR CUSTOMERS
AFTERPAY >25% AFTERPAY >8% AFTERPAY 0.4%
3.6 24.2 366
$ $ $
ONLINE ONLINE TOTAL
FASHION B RETAIL B RETAIL B
RETAIL AUSTRALIA AUSTRALIA1
AUSTRALIA TOTAL TOTAL TOTAL
75% 92% 99.6%
AFTERPAY >15% AFTERPAY >7%
LARGE MARKET
OPPORTUNITY
REMAINS IN AUSTRALIA
AND NEW ZEALAND
MILLENNIALS
AUSTRALIA 6.0
TOTAL
M
GENERAL (18+)
POPULATION
AUSTRALIA
19.1TOTAL
M
85% 93%
SOURCE: AFTERPAY ESTIMATES BASED ON NAB ONLINE RETAIL SALES INDEX DEC-17, ABS DATA, INTERNAL AFTERPAY DATA AND ESTIMATES. NOTE: TOTAL RETAIL AND TRAVEL INCLUDES ONLINE AND OFFLINE
NOTES 1. ABS DATA, TOTAL INCOME COMPRISING THE FOLLOWING CATEGORIES: OTHER STORE-BASED RETAILING, NON-STORE RETAILING AND RETAIL COMMISSION BASED BUYING AND/OR SELLING,
ACCOMMODATION, AIR AND SPACE TRANSPORT, PUBLISHING (EXCEPT INTERNET AND MUSIC PUBLISHING), MOTION PICTURE AND SOUND RECORDING ACTIVITIES, INTERNET SERVICE PROVIDERS, WEB SEARCH 33
PORTALS AND DATA PROCESSING SERVICES, ADULT, COMMUNITY AND OTHER EDUCATION (PRIVATE), MEDICAL AND OTHER HEALTH CARE SERVICES (PRIVATE), CREATIVE AND PERFORMING ARTS, SPORTS AND
RECREATION ACTIVITIES, PERSONAL AND OTHER SERVICESF U T U R E G R OW T H
In-store REMAINS A CORE FOCUS
AND LARGE OPPORTUNITY
MORE THAN 5,000 EXISTING SHOPFRONTS
AUSTRALIAN >5,000
SHOPFRONTS
1
~850
0
JUNE-17 DECEMBER-17 OVER
MILLION
ONLINE RETAIL CURRENTLY
APP DOWNLOADS
REPRESENTS ONLY 5% OF TOTAL
RETAIL MARKET IN AUSTRALIA
SOURCE: ABS
34F U T U R E G R OW T H
MAJOR NEW RETAILERS
KEEP ONBOARDING
NEW AND COMING SOON TO ONLINE
AND MORE...
35F U T U R E G R OW T H
...AND ADOPTING AFTERPAY IN-STORE
NEW AND COMING SOON TO IN-STORE
AND MORE...
36F U T U R E G R OW T H
TOUCHCORP BRINGS
synergies
STABLE REVENUE STREAMS MOBILITY
AND LARGE COMMERCIAL REVENUE ASSURANCE,
PARTNERSHIPS WITH MAJOR TRANSACTION INTEGRITY
CUSTOMER FACING BRANDS AND DATA ANALYTICS
HEALTH
TECHNICAL INTEGRATION
AND EXPERTISE, RELEVANT
FOR AFTERPAY
E-SERVICES
RETAIL POS EXPERTISE
– THOUSANDS OF
POINTS OF PRESENCE IN
AUSTRALIA AND EUROPE
37F U T U R E G R OW T H
REMAIN FOCUSED ON
EXPLORING US opportunities
MADE PROGRESS IN DEFINING AND
ASSESSING THE MARKET OPPORTUNITY
HAVE MADE SEVERAL US BASED HIRES
STRONG RETAILER ENGAGEMENT
USA
US VS AUSTRALIA
MILLENNIAL MARKET 87.7
(M)
MILLENNIAL 62.8
GENERATION X
AUS
NZ
6.0 6.8
0
AUSTRALIA US
SOURCE: GOLDMAN SACHS, US CENSUS BUREAU, ABS
38NEW collaborations
PRODUCT INTEGRATION
LINKING CUSTOMER
ACCOUNT/PAYMENT
APPLICATIONS
ACTIVATION
EXTENDING ACTIVITIES FOR
IN-STORE PROMOTION WITH
WESTFIELD AND OTHER
LARGE SCALE LANDLORDS
39Thank YOU
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