Slide 1: Acquisition of QuadPay and Capital Raise
Acquisition of QuadPay and Capital Raise Zip Co Ltd (ASX: Z1P) 2 June 2020
Slide 2: Transaction highlights
Transaction highlights Zip continues to deliver on its long term growth strategy GLOBAL EXPANSION: Zip accelerates its global expansion strategy with the proposed acquisition of US-based, Buy Now Pay Later (“BNPL”) company, QuadPay for $403m1. LEADING US PLATFORM: QuadPay is a leading, high growth,
Slide 3: QuadPay adds significant scale and growth
QuadPay adds significant Zip QuadPay scale and growth $0.9b $70m 30% 28% Post completion, the combined Group cements its position as a global BNPL leader, with: $3bn $250m Pro forma Pro forma Annualised TTV Annualised Revenue Annualised TTV of $3bn, increasing Zip’s pro-forma 70% 72% volume by > 40%
Slide 4: Zip to become a global BNPL leader, with operations in 5 countries
Zip to become a global BNPL leader, with operations in 5 countries and exposure to $6T+ of retail sales 25% stake AU NZ SA UK USA $320B1 $96B2 $67B3 $630B4 + $5T5 Retail Retail Retail Retail Retail $500B5 Online >15x size of AU 1. NAB Online Retail Sales Index (Dec 2018); 2. Nielsen Insights 2018 (N
Slide 5: Transaction Overview
01 Transaction Overview
Slide 6: Zip accelerates global expansion with the acquisition of US-BNPL, QuadPay and raises up to $200m
Zip accelerates global expansion with the acquisition of US-BNPL, QuadPay and raises up to $200m to drive growth ACQUISITION ● Zip has entered into an agreement to acquire 100% of the shares in BNPL player QuadPay for scrip1, DETAILS representing 23.3% of the pro forma group. ● Implies an acquisitio
Slide 7: Zip accelerates global expansion with the acquisition of QuadPay (cont.)
Zip accelerates global expansion with the acquisition of US-BNPL, QuadPay and raises up to $200m to drive growth (cont.) ACQUISITION ● Category innovator with leading payments app – QuadPay was one of the first BNPL’s to leverage virtual card RATIONALE (cont.) technology in partnership with Stripe, a
Slide 8: QuadPay: A Proven US Platform
02 QuadPay: A Proven US Platform
Slide 9: QuadPay key highlights
QuadPay key highlights Accelerating growth and market position 1.5 million customers Top 100 in the US App on the platform store shopping category. Over 1 million downloads Over 3,500 Annualised revenue of merchants live or $70m for the quarter signed ending March 2020 Annualised TTV Differentiated
Slide 10: QuadPay has delivered exceptional growth
QuadPay has delivered exceptional growth Customer Numbers (‘000) Monthly TTV ($m) Annualised TTV >$1.2b during 100.2 Dec ‘19 shopping period 96.1 Monthly 1,492 Monthly 82.4 CAGR of 16% 1,390 CAGR of 17% 69.6 73.2 1,254 1,131 918 49.1 664 32.7 517 420 23.4 358 316 291 14.9 264 241 216 9.8 9.6 8.5 194
Slide 11: Continuing to win leading merchants
Continuing to win leading merchants Growth in Merchant Numbers Integrated Merchants Merchants live or signed 3,500+ 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 11
Slide 12: Simple product construct
Simple product construct Customers pays in 4 instalments spread over 6 weeks, interest free Customer splits a purchase in 4. With Interest free repayment terms. at Ugg Merchants get paid upfront with risk and fraud liability absorbed. On average, merchants enjoy checkout conversions of up to 20% whe
Slide 13: 3 ways to pay with QuadPay
3 ways to pay with QuadPay At checkout and anywhere, online or instore 13
Slide 14: Pioneered QuadPay Anywhere
Pioneered QuadPay Anywhere One of the first-to-market with this technology In Mar ’19 QuadPay launched its Anywhere App enabling customers to pay in instalments instore or online at any merchant. The innovative solution leverages virtual card technology in partnership with Stripe issuing. Highly scal
Slide 15: Proven, portable technology
Proven, portable technology Built on the same code base as Zip Leverages the same global instalment technology platform acquired by Zip in 2019 (through its acquisition of PartPay). The technology stack is currently deployed by Zip in the UK & NZ. Proven portability and scalability to support global
Slide 16: QuadPay and Zip are culturally aligned, with responsibility and innovation at their core
QuadPay and Zip are culturally aligned, with responsibility and innovation at their core Founder led business with team retained as part of Zip’s global leadership team FICO scores and ID checks for customers 4 2 5 3 A trusted relationship with Zip already familiar 1 with management and the Californ
Slide 17: Market-leading risk decisioning technology
Market-leading risk decisioning technology Like Zip, QuadPay experienced strong credit performance during the recent Covid-19 trading period... Advanced machine learning algorithms Machine that get smarter over time enabling Learning QuadPay to maintain industry leading QuadPay’s focus on responsibi
Slide 18: SIG Investment
03 SIG Investment
Slide 19: Up to $200m investment by SIG
Up to $200m investment by SIG SIG partnership offers significant opportunity ● Capital provided via an affiliate of Susquehanna International Group (‘SIG’), Heights Capital Management (‘Heights’) through its affiliate CVI Investments, Inc. Leading US $100m ● SIG is one of the largest privately-held fi
Slide 20: Overview of investment terms
Overview of investment terms1 CONVERTIBLE ● $100m convertible notes. NOTE TERMS ● Tenor of 5 years and a fixed coupon of $0.75m per semi-annual installment. ● Standard events of default, and change of control clauses in place. CONVERSION ● Every 6 months, 10% of the convertible notes (i.e. $10m) and
Slide 21: Overview of investment terms (cont.)
Overview of investment terms (cont.)1 WARRANT TERMS ● Up to $100m warrants. ● Exercise period of 3 years. ● Variable exercise price, with an initial exercise price of $5.1639, a premium of 40% to Zip’s 1-day VWAP price of $3.6885 as of 29 May 20202. ● If these Warrants are fully exercised at the ini
Slide 22: Terms, Funding and Timetable
04 Terms, Funding and Timetable
Slide 23: QuadPay Founder incentives
QuadPay Founder incentives Retention package in place to ensure alignment and drive aggressive US growth QuadPay is a founder led business. The founders will The terms of this retention equity are summarised as follows: remain with the business and be responsible for driving growth in the US and suc
Slide 24: Terms and funding: QuadPay
Terms and funding: QuadPay ACQUISITION ● QuadPay is to be acquired for scrip consideration. VALUE ● Upon completion, QuadPay stockholders (excluding Zip) will be entitled to receive up to a maximum of 119m fully paid ordinary shares of Zip (“Merger Consideration Shares”), representing 23.3%1 of Zip’
Slide 25: Terms and funding: QuadPay
Terms and funding: QuadPay FUNDING ● The Purchase Price will be settled entirely by the issue of Zip ordinary shares1. TIMING AND ● Zip shareholder approval for the purposes of ASX Listing Rules 7.1 and 10.19 and section 200B of the Corporations CONDITIONS Act 2001 (Cth) (as applicable). ● Receipt o
Slide 26: Indicative timetable
TBU with figures Indicative timetable Announcement EGM Today June 2020 Q1 FY2021 Expected Completion Notice of EGM 26
Slide 27: Appendix
A Appendix
Slide 28: Disclaimer and important notice
Disclaimer and important notice The information contained in this presentation has The Company does not have a significant operating Usability of Zip’s products depend upon various The Company makes no undertaking to update or been prepared by Zip Co Limited ACN 139 546 428 history on which to base a
Slide 29: Thank you
Thank you 2 zip