Humm Group Limited · ASX:HUM
Humm — Investor Day (October 2021)
63 slides from Humm's investor day presentation, Oct 27, 2021
Slide 1: The future of humm
The future of humm. Authorised for release by the hummgroup Board of Directors humm group limited ACN 122 574 583 Level 1, 121 Harrington St, The Rocks, Sydney NSW 2000 Investors Relations Contact: sukhee.lee@humm-group.com HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021
Slide 2: Today's Announcements
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | TODAY’S ANNOUNCEMENTS 01 | Return to dividends commencing in 1H22 02 | Exploring divestment of New Zealand Commercial business 2
Slide 3: Commitment to Shareholders
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | COMMITMENT TO SHAREHOLDERS 01 | Committed to growing shareholder value 02 | Will balance returns and investment for growth 03 | Investment to be measured against key performance hurdles 3
Slide 4: Who We Are
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | WHO WE ARE Bigger ticket Strength through a Leader in credit Profitable with the instalment plan diversified offering decisioning and ability to self-fund financier for consumers funding for larger our growth and SMEs purchases 4
Slide 5: Market Leadership
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | MARKET LEADERSHIP MARKET LEADER #2 NBFI THE LEADING NBFI in BNPL transactions over commercial asset issuer of new credit cards in $500 in value1 finance lender2 New Zealand (33% of market in 4Q21) ` #1 BNPL FINANCIER #1 BNPL FINANCIER B2B PLATFORM OF CHOIC
Slide 6: Our Achievements
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | OUR ACHIEVEMENTS 1. Proven ability to scale 3. Continued efficiency gains • Strongly grown the BNPL business – hitting over a $1b in volume in FY21 • Remain committed to target sub 40% CTI • Strongly grown the Commercial business – on a pathway to $1b • Em
Slide 7: Two Distinct Businesses
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | TWO DISTINCT BUSINESSES ESTABLISHED BUSINESSES RAPID GROWTH BUSINESSES CHARACTERISTICS • Stable earnings and growth • High-growth • Leading market positions • Disruptive – continual innovation • Strong margin • Low cost and rapid customer acquisition OPPOR
Slide 8: Equity Market Valuation Comparisons
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | EQUITY MARKET VALUATION COMPARISONS ESTABLISHED BUSINESSES GROWTH BUSINESSES PE Multiple 1 EV / Revenue Multiple 2,3 10.7x 10.1x 9.4x 8.4x 8.5x AVG 7.0x 6.9x 8.8x AVG 4.6x 2.3x 1.4x Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer A Peer B Peer C Peer D FY21 Establ
Slide 9: Investment Checklist
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | INVESTMENT CHECKLIST Strong and sustainable Diversified business unit economics model Partnership strategy A profitable business that Portfolio of successful Partner of choice for can self-fund growth growth and seasoned blue chip companies products Experi
Slide 10: Why You Should Think About Buying hummgroup Shares
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | WHY YOU SHOULD THINK ABOUT BUYING HUMMGROUP SHARES We’re the only profitable BNPL Benefit from a global niche player in Australia financing bigger ticket items We’re a portfolio of strategic We’re not dependent on future and successful businesses equity is
Slide 11: Introduction of Speakers
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | INTRODUCTION OF SPEAKERS ` REBECCA JAMES CHRIS LAMERS ADRIAN FISK ROB WRIGHT TIM MOULTON Group Chief Executive Officer Deputy Group CEO Chief Financial Officer Commercial Australia Country Head – Canada & Chief Customer Growth Officer & New Zealand 11
Slide 12: Agenda
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 01 | Our vision 02 | Instalment products overview 03 | Partnerships AGENDA 04 | International expansion 05 | Commercial and Leasing 06 | Finance 07 | Summary 12
Slide 13: Our Vision
@hunmgoup | OUR VISION
Slide 14: Strategic Priorities to Deliver Shareholder Value
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | STRATEGIC PRIORITIES TO DELIVER SHAREHOLDER VALUE To provide easy instalment plans that enable you to buy now pay later and budget responsibly for the things customers need and MISSION | love. VISION | To be the favoured way to pay for bigger purchases. ST
Slide 15: Market Context
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | MARKET CONTEXT BNPL 1.0 BNPL 2.0 BNPL 3.0 (INITIATION) (GROWTH & OPEN LOOP) (PARTNERSHIPS) >$2,000 LIMIT <$2,000 LIMIT 15
Slide 16: Our Customer Proposition
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | OUR CUSTOMER PROPOSITION BNPL for grown ups Quick and easy to process application, and quick approval. Awesome service So much better than a personal loan An ally for life’s expenses 16
Slide 17: Our Merchant Proposition
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | OUR MERCHANT PROPOSITION Probably about 60% of our business is done through humm, on average. If it wasn’t for that ability, 60% of our business would disappear. Our average sale price is around $3,500. The fact that you guys are not only offering somethin
Slide 18: Our Value Proposition
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | OUR VALUE PROPOSITION LOW-VALUE, SHORT TERM PLANS MERCHANT BLENDED FUNDING PAYER FUNDED ~70% Merchant // ~30% Consumer1 SIZE $1 – $2k $1 $30k TERM 2 months 2.5 months 72 months Fashion Retail Retail // Luxury retail // Dental // Solar VERTICALS Home improv
Slide 19: Our Value Proposition
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | OUR VALUE PROPOSITION LOW-VALUE, SHORT TERM PLANS PERSONAL LOANS/TRADITIONAL CREDIT MERCHANT BLENDED FUNDING CONSUMER PAYER FUNDED ~70% Merchant // ~30% Consumer1 FUNDED SIZE $1 – $2k $1 $30k Up to ~$75k TERM 2 months 2.5 months 72 months Up to 60 months F
Slide 20: Total Addressable Market
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | TOTAL ADDRESSABLE MARKET Total addressable retail market (A$1.9t) $77b $91b $349b $613b $778b ‘Big things’ total addressable market (A$500b+)2 Home & Home Improvement $69b $74b $59b $2b $2b Health $13b $63b $55b $5b $5b Automotive $12b $51b $11b $7b $3b Lu
Slide 21: Clear Partner of Choice
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | CLEAR PARTNER OF CHOICE THE BNPL/CREDIT PARTNER OF CHOICE FOR BLUE CHIP COMPANIES RELIABLE INNOVATIVE RESPONSIVE TRUSTED ` We deliver We lead in product We don’t have Blue chips attracted development fintech arrogance to our inherently strong and profitabl
Slide 22: Growth Targets
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | GROWTH TARGETS FY21 MEDIUM-TERM1 TARGETS $2.7b $>2x FY21 Volume Volume $443.9m $~2x FY21 Gross income Gross income ` $2.6b $~2x FY21 Average net Average net receivables receivables $68.4m $100m+2 CNPAT CNPAT 54.6% Sub 40% Cost to income Cost to income 1. M
Slide 23: Strategy for Growth
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | STRATEGY FOR GROWTH Expanding the reach Driving customer New audiences International of instalment engagement New products expansion payments New partnerships New merchants and platforms Driving customer Finding new Expansion into in current markets engage
Slide 24: Instalment Products Overview
INSTALMENT PRODUCTS OVERVIEW
Slide 25: The Founders, The Shoppers, The Balancers
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 The Founders The Shoppers Live for cashflow Live life adding to cart The Balancers Live in the moment The Amplifiers Live life making what they have go further 25
Slide 26: Product Overview
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | PRODUCT OVERVIEW TOTAL ADDRESSABLE PRODUCT PRODUCT DESCRIPTION AU NZ IE CA UK MARKET (A$m) • Buy Now Pay Later $500b+ • The product going global ✓ ✓ ✓ opportunity in humm ✓ ✓ ✓ ✓✓ ✓ ✓ • Our traditional BNPL product allowing for purchases of ‘Big things’ up
Slide 27: Cross-sell/Customer Acquisition Strategy
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | CROSS-SELL/CUSTOMER ACQUISITION STRATEGY MEDIUM-TERM CROSS-SELL OVERLAPS (ILLUSTRATIVE) FY21 CURRENT CROSS-SELL 18% overlap between humm (‘Big things’ and ‘Little things’) 25% of bundll customers have humm 3% overlap between Cards and humm Buy your way MAR
Slide 28: The Power of One (Video)
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | THE POWER OF ONE (VIDEO) 28
Slide 29: The Power of One
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | THE POWER OF ONE 29
Slide 30: humm Offers a Simple and Savvy Way of Buying Bigger Goods
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | HUMM OFFERS A SIMPLE AND SAVVY WAY OF BUYING THOSE BIGGER GOODS OR SERVICES CUSTOMERS WANT OR NEED IN THEIR LIFE MEDIUM-TERM MEDIUM-TERM HUMM AUSTRALIA (LITTLE THINGS) FY20 FY21 HUMM AUSTRALIA (BIG THINGS) FY20 FY21 TARGETS TARGETS Volume (A$m) 90.9 178.7
Slide 31: Buy Now. Pay Later. Anywhere.
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | BUY NOW. PAY LATER. ANYWHERE. REPLACES THE DEBIT CARD | THE ONLY BUY NOW PAY LATER DESIGNED FOR BUSINESS BUNDLL AUSTRALIA MEDIUM-TERM HUMMPRO AUSTRALIA MEDIUM-TERM FY20 FY21 FY21 AND NEW ZEALAND TARGETS AND NEW ZEALAND TARGETS Volume (A$m) 13.1 117.2 >6x F
Slide 32: Product Summary: humm90
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | PRODUCT SUMMARY MEDIUM-TERM PRODUCT DESCRIPTION HUMM90 FY20 FY21 TARGETS humm90 is a new breed of credit card, providing longer interest free periods, up to Volume (A$m) 596.5 416.9 >2x FY21 60 months interest free at selected retailers and the ability to
Slide 33: Product Summary: New Zealand Cards
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | PRODUCT SUMMARY MEDIUM-TERM PRODUCT DESCRIPTION NEW ZEALAND CARDS FY20 FY21 TARGETS The New Zealand Cards portfolio is an established and seasoned business consistently Volume (A$m) 750.6 695.4 $950m+ generating strong profits and today issuing one in ever
Slide 34: Partnerships
@rurm > | PARTNERSHIPS
Slide 35: Partnership Rationale
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | PARTNERSHIP RATIONALE FOR HUMMGROUP FOR ENTERPRISES CAPITAL LIGHT BANKS LOYALTY RETAILERS SCHEMES 01 | Capital light model PROGRAMS 02 | LOW CUSTOMER ACQUISITION COSTS/FAST SCALING Access to high quality pre-qualified ` customers at a low cost DEMAND FOR O
Slide 36: Partnership Models
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | PARTNERSHIP MODELS DISTRIBUTION JOINT VENTURE OUTSOURCED LICENSING • Distribution only model • A distribution agreement for bundll to be • hummgroup manages the product day to • Model where hummgroup’s market • Mitre10/Home Hardware: Retailers marketed by
Slide 37: International Expansion
@hanmo INTERNATIONAL EXPANSION
Slide 38: Why We Believe We Can Compete and Win
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | WHY WE BELIEVE WE CAN COMPETE AND WIN WE’RE ‘BIG TICKET EXPERTS’ WE HAVE ESTABLISHED ’ WE’RE LEVERAGING ONE POINT MERCHANT RELATIONSHIPS OF INTEGRATION TO SERVICE MULTIPLE IN KEY MARKETS MARKETS Leveraging a scalable platform with Entry into new markets vi
Slide 39: BNPL Market Opportunity
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | BNPL MARKET OPPORTUNITY GLOBAL CANADA UK US$680 BILLION C$50 £240+ BILLION BILLION will be spent by global consumers using ePOS of the total represents the opportunity in Canada Outstanding credit debt in the United Kingdom as at finance/Buy Now, Pay Later
Slide 40: Canada and United Kingdom: How Our Products Work
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | CANADA AND UNITED KINGDOM: HOW OUR PRODUCTS WORK We enable seamless approvals for purchases big, small or business related. Empowering consumers to choose how they wish to pay, with flexible terms from five fortnightly payments through to 72 months. CANADA
Slide 41: Canada: Our Differentiated Offering
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | CANADA: OUR DIFFERENTIATED OFFERING NO MINIMUM PURCHASE AMOUNT ✓ X X X X X X X LITTLE THINGS ✓ ✓ ✓ ✓ ✓ ✓ X X BIG THINGS ✓ X X ✓ X ✓ ✓ ✓ FLEXIBLE PAYMENT PLANS ✓ X X ✓ X ✓ ✓ ✓ NO-FEE PRODUCTS ✓ ✓ ✓ ✓ ✓ ✓ X X HIGH LIMITS > C$20K ✓ X X X X X ✓ ✓ 1. Peers incl
Slide 42: United Kingdom: Our Differentiated Offering
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | UNITED KINGDOM: OUR DIFFERENTIATED OFFERING NO MINIMUM PURCHASE AMOUNT ✓ ✓ ✓ X X ✓ ✓ X LITTLE THINGS ✓ ✓ ✓ ✓ ✓ X ✓ X BIG THINGS ✓ X X X ✓ X ✓ ✓ FLEXIBLE PAYMENT PLANS ✓ ✓ ✓ ✓ X ✓ ✓ ✓ NO-FEE PRODUCTS ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ HIGH LIMITS £30K ✓ X X X X X X ✓ 1. Peers
Slide 43: UK and Canada
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | UK AND CANADA HUMM UNITED KINGDOM AND CANADA MEDIUM-TERM TARGETS PRODUCT DESCRIPTION humm ‘Big things’ offers a simple and financially savvy way of buying those bigger goods or Volume (A$m) ~5x FY22 services customers want or need in their life. Product yi
Slide 44: Commercial and Leasing
e@hurm™ COMMERCIAL AND LEASING
Slide 45: NZ Commercial Divestment
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 COMMERCIAL & LEASING | NZ COMMERCIAL DIVESTMENT Following significant market Divestment is subject to any The current New Zealand Any proposed transaction interest, hummgroup is proposed sale meeting Commercial portfolio will not impact the successful curren
Slide 46: Our Customers and Value Proposition
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | OUR CUSTOMERS AND VALUE PROPOSITION THE MARKET OPPORTUNITY $41b equipment finance market in Australia. THE TARGET AUDIENCE SMEs looking to grow their business via the purchase of revenue generating assets. OUR POSITIONING Superior service enabled by strong
Slide 47: Broker Testimonial
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | BROKER TESTIMONIAL In our opinion, flexicommercial do three things very well. First, distribution. They’re a broker only distribution model. They focus on specialist equipment finance brokers and give them the comfort of not competing with them. Brokers co
Slide 48: Strong Growth Since Reorienting the Business
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | STRONG GROWTH SINCE REORIENTING THE BUSINESS COMMERCIAL AUSTRALIA VOLUME (A$M) 188.3 166.6 119.7 95.1 96.9 82.3 62.7 66.8 ` 38.2 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 Experienced team with a credible track record of delivering business transformatio
Slide 49: Changing Portfolio Origination Mix
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | CHANGING PORTFOLIO ORIGINATION MIX (VOLUME) FY19 FY21 MEDIUM-TERM TARGETS ` 60% Commercial Lending 100% Commercial Lending 100% Commercial Lending 26% Commercial Leasing 65% Primary 55% Primary 14% Managed Services 25% Secondary 30% Secondary 10% Tertiary
Slide 50: Product Summary: flexicommercial Australia
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 |PRODUCT SUMMARY MEDIUM-TERM PRODUCT DESCRIPTION FLEXICOMMERCIAL AUSTRALIA FY20 FY21 TARGETS Equipment finance primarily comprising of chattel mortgages to fund the purchase of revenue Volume (A$m) 263 465 1,000+ generating assets for small to medium busines
Slide 51: Financials
@hunmgoup | FINANCIALS
Slide 52: Equity Market Valuation Comparisons
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | EQUITY MARKET VALUATION COMPARISONS ESTABLISHED BUSINESSES GROWTH BUSINESSES PE Multiple 1 EV / Revenue Multiple 2,3 10.7x 10.1x 9.4x 8.4x 8.5x AVG 7.0x 6.9x 8.8x AVG 4.6x 2.3x 1.4x Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer A Peer B Peer C Peer D FY21 Establ
Slide 53: Growth Targets
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | GROWTH TARGETS FY21 MEDIUM-TERM1 TARGETS $2.7b $>2x FY21 Volume Volume $443.9m $~2x FY21 Gross income Gross income ` $2.6b $~2x FY21 Average net Average net receivables receivables $68.4m $100m+2 CNPAT CNPAT 54.6% Sub 40% Cost to income Cost to income 1. M
Slide 54: Gross Income
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | GROSS INCOME INVESTMENT FOR GROWTH • Expect BNPL to deliver up to 40% of gross income for hummgroup over the medium-term. • Expect UK and Canada to represent at least 25% of gross income in the BNPL segment over the medium-term. • Expect Commercial Austral
Slide 55: Opex and Credit
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | OPEX AND CREDIT COST TO INCOME RATIO1 ACTIVITIES TO REACH SUB 40% CTI OVER MEDIUM-TERM 55% • Decommissioning legacy platforms of discontinued products. 48% • Re-platforming humm Australia and New Zealand to global tech stack. 49% 44% 46% • Continue to impr
Slide 56: Improving Capital Efficiency
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | IMPROVING CAPTIAL EFFICIENCY 1 CAPITAL EFFICIENCY (%) 30.5% 22.8% ` 11.6% 11.4% 10.0% 10.5% 10.0% 6.8% 6.3% humm AU Cards (AU & NZ) Commercial AU FY19 FY21 Medium-term target 1. Average direct capital employed / average net receivables. 56
Slide 57: Funding
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | FUNDING HEADROOM TO FUND FUTURE GROWTH • Strong balance sheet positioning the business for growth, with the ability to support forecast receivables growth in the UK and Canada. $110m • A$110m three year syndicated revolving loan facility providing maximum
Slide 58: Securitisation
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | SECURITISATION GROWTH UNDERPINNED BY ACCESS TO SECURITISATION MARKETS • hummgroup’s ability to access public securitisation markets is a competitive differentiator ISSUANCE VOLUME enabling diversification of funding sources and an extension of funding capa
Slide 59: Capital Management
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | CAPITAL MANAGEMENT DIVIDEND POLICY • Board has approved recommencement of dividends with a payout ratio of 30% - 40% commencing in 1H22. CASH POSITION • Unrestricted cash as at 30 September of $65.2m. • Unrestricted cash estimated to improve by $20m+ as at
Slide 60: Summary
eum | SUMMARY
Slide 61: Why You Should Think About Buying hummgroup Shares
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | WHY YOU SHOULD THINK ABOUT BUYING HUMMGROUP SHARES We’re the only profitable BNPL Benefit from a global niche player in Australia financing bigger ticket items We’re a portfolio of strategic We’re not dependent on future and successful businesses equity is
Slide 62: Thank You
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 THANK YOU 62
Slide 63: Disclaimer
HUMMGROUP INVESTOR DAY // 27 OCTOBER 2021 | DISCLAIMER This presentation has been prepared by humm group limited ACN 122 574 583 (“hummgroup”). and agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence) for any direct or indirec