Harmoney Corp Ltd · ASX:HMY
Harmoney — FY2023 Earnings Presentation
31 slides from Harmoney's earnings presentation, Aug 25, 2023
Slide 1: FY23 Investor Presentation
FY23 Investor Presentation David Stevens CEO and Managing Director Simon Ward CFO All values in $AUD unless stated otherwise HARMONEY ©2023 FY23 INVESTOR PRESENTATION 25 25AUGUST AUGUST2023 2023 1 1
Slide 2: Important notice and disclaimer
Important notice and disclaimer The material in this presentation is provided for general information purposes No representation or warranty, express or implied, is made as to the fairness, only and is current as at the date of this presentation. It is not a prospectus or completeness, accuracy, ade
Slide 3: Contents
Contents 1. Delivering results FY23 2. Overview of business model 3. Financial results 4. Strategy and outlook HARMONEY ©2023 FY23 INVESTOR PRESENTATION 25 AUGUST 2023 3
Slide 4: Delivering results FY23
Delivering results FY23 HARMONEY ©2023 FY23 INVESTOR PRESENTATION 25 25AUGUST AUGUST2023 2023 4
Slide 5: FY23 results continue a resilient profitable growth story
FY23 results continue a resilient profitable growth story FY23 FY22 Change Loan book $744m $581m 28% Revenue $107m $73m 47% Net Interest Margin 9.6% 11.8% On Target Cost to income ratio 28% 37% 900bps Cash NPAT $4.7m $0.2m 2250% Cash Return on Equity 8.4% 0.3% 810bps HARMONEY ©2023 FY23 INVESTOR PRE
Slide 6: Continuing loan book growth in both countries
Continuing loan book growth in both countries Australian loan book now 51% Group Loan Book ● Group loan book $744m, up 28% on pcp, with growth in both countries. ● Moderated originations, 4% lower on 41% lower customer acquisition spend. ● Australian loan book surpassed New Zealand for the first time
Slide 7: Key points you should know about us
Key points you should know about us Financial Customer value Risk management Cash NPAT of $4.7m. Customers rate us! Quality portfolio. Cost to income ratio of 28%. Google & Shopper Approved >40% Homeowners. Unrestricted cash $27.5m. 4.7/5 overall rating from 3.6% losses. >53,000 reviews. 0.58% 90+ d
Slide 8: Overview of business model
Overview of business model HARMONEY ©2023 FY23 INVESTOR PRESENTATION 25 25AUGUST AUGUST2023 2023 8
Slide 9: Customer value proposition
Customer value proposition Delivering faster, fairer loans through our Use of funds smart technology • Personalised fixed rates based on customer credit characteristics. Renovation Loans Debt Consolidation • Loans up to $70,000 with terms of 3, 5 and 7 years. • Average new loan size ~$21,000. • Fundi
Slide 10: Harmoney's strategy: 100% consumer-direct
Harmoney’s strategy: 100% consumer-direct Deep Consumer Return on Lower Data + Lower Lower Fixed Equity target Machine = CAC + Losses + Funding + Opex = of 20% run rate Costs Learning + in FY25 Automation >20% Growth opportunities of consumer-direct model Unsecured Secured Other financial products p
Slide 11: Data + ML + Automation
Data + ML + Automation Deep Consumer Data + Machine Learning + = Lower CAC + Lower Losses + Lower Funding Costs + Fixed Opex = Return on Equity target of 20% run Automation rate in FY25 Every month, over 10,000 new customer accounts help us train High volumes of up-to-the-moment consumer financial da
Slide 12: The Harmoney business model maximises customer lifetime value
The Harmoney business model maximises customer lifetime value Right customer Great experience Massive scale • Build reliable target customer model • First-class customer experience • Exploit tech to build scale, speed, through machine learning and high creates annuity revenue as and automation to de
Slide 13: Financial results
Financial results HARMONEY ©2023 FY23 INVESTOR PRESENTATION 25 25AUGUST AUGUST2023 2023 13
Slide 14: Key performance indicators
Key performance indicators FY23 FY22 Change Loan book $744m $581m 28% Revenue $107.1m $72.8m 47% Net interest income % (FY22 a high point) 9.6% 11.8% (19%) Risk adjusted income % (FY22 a high point) 6.0% 9.3% (35%) Acquisition costs $12.3m $20.7m 41% Cost to income ratio 28% 37% 24% Statutory NPAT $
Slide 15: Book growth powering revenue growth
Book growth powering revenue growth Revenue growth 47% on pcp Group revenue growth ● Revenue of $107m, up 47% on pcp, powered by loan 47% book growth. Growth ● Average interest rate 15.5%, down from 15.9% pcp on loan book weighting towards lower rate calendar year 2021 originations. ● FY23 marks a l
Slide 16: Consumer-direct model and data deliver lower CAC
Consumer-direct model and data Deep Consumer Data + Machine Learning + = Lower CAC + Lower Losses + Lower Funding + Fixed Opex Return on Equity = target of 20% run rate deliver lower CAC Costs Automation in FY25 Acquisition costs reduce 41% on pcp CAC % to originations ● Continuing marketing efficienc
Slide 17: Deep data and machine learning deliver prime loan book
Deep data and machine learning Deep Consumer Data + Machine Learning + = Lower CAC + Lower Losses + Lower Funding + Fixed Opex Return on Equity = target of 20% run rate deliver prime loan book Costs Automation in FY25 Risk Adjusted Income (after losses) 6% Credit losses ● Convenient online consumer-
Slide 18: Diversified funding and hedging program lower risk
Diversified funding and hedging Deep Consumer Data + Machine Learning + = Lower CAC + Lower Losses + Lower Funding + Fixed Opex Return on Equity = target of 20% run rate program lower risk Costs Automation in FY25 Funding from 3 of the “Big 4” banks Average funding rate Interest Hedging ● Facilities
Slide 19: Stellare automation powers scalability
Stellare® automation powers Deep Consumer Data + Machine Learning + = Lower CAC + Lower Losses + Lower Funding + Fixed Opex Return on Equity = target of 20% run rate scalability Costs Automation in FY25 Scalability drives profitability Cost to income ratio of 28% Cost to ● Cost to income ratio impro
Slide 20: Strategy and Outlook
Strategy and Outlook HARMONEY ©2023 FY23 INVESTOR PRESENTATION 25 25AUGUST AUGUST2023 2023 20
Slide 21: Strategic growth initiative 1: Continue AU expansion
Strategic growth initiative 1: Continue AU expansion AU replicating in 9x market Huge potential for Harmoney in A$143bn market1 ● Stable market and an enormous growth opportunity for Harmoney as consumers gravitate online, with the vast majority of personal lending still provided by banks and tradit
Slide 22: Strategic growth initiative 2: Expand product offering
Strategic growth initiative 2: Expand product offering Non-prime accounts 800 / per month avg. New customers funded by Harmoney. 10,000 6,000 / per month avg. - Harmoney Opportunity per month avg. “Prime” accounts - bureau qualified people each month that are New customer not served by our current pr
Slide 23: Expanding product offering - Car loan update
Expanding product offering - Car loan update ● Product: In January 2023 Harmoney launched its innovative and disruptive car loan product, empowering customers with cash buyer confidence to buy privately or at the dealership, so they are not reliant on dealership finance options. Once customers drawdow
Slide 24: Expanding product offering - Stellare 2.0
Expanding product offering - Stellare 2.0 ● Stellare 2.0 is the next evolution of our proprietary software platform, providing expanded technical and product capability. ● This enhancement will reduce the time to market for innovative financial products, operating alongside our deep consumer data, ma
Slide 25: Stellare 2.0 is now live
Stellare 2.0 is now live ● Stellare 2.0, the next generation of our proprietary technology platform, Launched to select new customers in Australia on 18 August 2023. ● Provides a world class customer experience with 100% straight-through processing, and money in seconds. ● Built by our in-house prod
Slide 26: Outlook
Outlook Interest rates & asset quality Medium term growth FY24 outlook Ability to pass through targeted Harmoney consumer-direct model interest rate increases to maintain is taking market share from banks 1H24 Stellare 2.0 rollout 9-10% net interest margin. in $143bn Australian market. Focus on Stel
Slide 27: Appendix
Appendix HARMONEY ©2023 FY23 INVESTOR PRESENTATION 25 25AUGUST AUGUST2023 2023 27
Slide 28: $744m Loan Book
$744m Loan Book Loan Employment purpose Region status HARMONEY ©2023 FY23 INVESTOR PRESENTATION 25 AUGUST 2023 28
Slide 29: Profit and loss
Profit and loss Year ended Year ended 30 June 2023 30 June 2022 Change Change % $'000 $'000 Interest income 105,539 68,943 36,596 53% Other income 1,534 3,877 (2,343) (60%) Total income 107,073 72,820 34,253 47% Interest expense 39,824 18,122 21,702 120% Incurred credit losses 24,552 10,611 13,941 1
Slide 30: Key operating and financial metrics
Key operating and financial metrics Year ended Year ended 30 June 2023 30 June 2022 Change Change % Loan book value and growth Total originations ($'000) 426,234 442,540 (16,306) (4%) New customer originations ($'000) 253,595 283,607 (30,012) (11%) Existing customer originations ($'000) 172,639 158,
Slide 31: Cash Flow and Balance Sheet
Cash Flow Year ended 30 June 2023 Year ended 30 June 2022 Balance Sheet 30 June 2023 30 June 2022 $'000 $'000 $'000 $'000 Cash flows from operating activities Cash and cash equivalents 43,454 56,805 Interest received 102,558 68,969 Trade and other assets 1,968 1,665 Interest paid (38,734) (17,233) Fi