Sezzle Inc. · NASDAQ:SEZL
Sezzle — Merger or Acquisition (February 2022)
48 slides from Sezzle's merger presentation, Feb 28, 2022
Slide 1: Zip and Sezzle: Stronger Together
28 FEBRUARY 2022 Zip and Sezzle: Stronger Together Filed by Sezzle Inc. pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a - 12 under the Securities Exchange Act of 1934 Subject Company: Sezzle Inc. Commission File No.: 000 - 56267 Date: February 28, 2022
Slide 2: Today's presenters
Larry Diamond Co - Founder & Global CEO Today’s presenters ● Co - founded Zip Co in 2013 ● Has overseen Zip’s growth from a technology start - up to a company with c. 10 million customers globally ● 12+ years experience in retail, IT, and investment banking at Pacific Brands, Macquarie Capital and D
Slide 3: Compelling strategic and financial rationale
Compelling strategic and financial rationale Notes: 1. Please refer to page 16 for more details on the composition of the potential synergies, including the material assumptions. Investors are also referred to the ‘Key risks’ in Appendix B of this Presentation (including, without limitation, the ris
Slide 4: Transaction overview
Tran s a c t ion overview ● Zip and Sezzle have entered into a definitive merger agreement under which Zip has agreed to acquire Sezzle in an all - scrip transaction (the “ Proposed Transaction ”) ● The Proposed Transaction has been unanimously recommended by the Sezzle and Zip Boards of Directors a
Slide 5: SEC registration and US listing
SEC registration and US listing ● In connection with the Proposed Transaction, Zip will also file with the United States Securities and Exchange Commission (the “ SEC ”) a registration statement on Form F - 4 (which will include a definitive proxy statement of Sezzle and a prospectus of Zip) with re
Slide 6: Sezzle: A US BNPL platform with strength in SMB
● US based Buy Now, Pay Later platform facilitating fast, secure and easy digital payments ● Provides short term (<2 month) interest - free pay in 4 installment products (paid over 6 weeks) ● Long term installment capability off balance sheet ● Credit building offering through Sezzle Up ● Over 3.4m
Slide 7: Sezzle key metrics: TTV, merchants, customers, revenue
TTV Active merc h a n t s 1 Total revenue % of TTV Active cu s t o mer s 2 Average annual transactions 4 Re p eat usage 3 49x Average annual transaction for Top 10% of Consumers 47 ,000 As of Dec. 2021 9 2 .8 % As of Dec. 2021 3.4M As of Dec. 2021 5 . 9 % 4Q21 Notes: 1. Active merchants is defined a
Slide 8: Sezzle: industry recognition across product capabilities, customer and employee experiences
4 .9 78,100 Reviews Best Startup Employer 2020 Core capabilities Sezzle: industry recognition across product capabilities, customer and employee experiences Industry recognition of Sezzle’s technology and product capabilities Sezzle has attracted and retained top BNPL talent with a leading managemen
Slide 9: BNPL expected to be the fastest growing eCommerce payment method
BNPL expected to be the fastest growing eCommerce payment method over the next two years 3 Significant opportunity in the global BNPL space $25t $ 5 .5t 2. 1 % 2x 1.6 % 3x Source: 1. eMarketer Global Ecommerce Forecast, 2021. 2. Retail Trade in the US, Ibis World, 2021. 3. Based on North America, Wo
Slide 10: Enhanced US footprint with strong Pay in offering
Enhanced US footprint with strong Pay in 4 offering Notes: As at 31 December 2021 for Zip and Sezzle – last 12 months; Sezzle financials converted to AUD using exchange rate of 1.3979; US includes Canada for Sezzle. Geographic mix (by TTV) Product mix (by TTV) 9 A. Transformational combination 50% 4
Slide 11: Global scale and enhanced customer and merchant network in the US
Zip and Sezzle deliver global scale and an enhanced customer and merchant network in the US Notes: 1. Customer and merchant numbers based on Zip and Sezzle’s definition of customers and merchants: Zip (number of active customer accounts and accredited merchants) and Sezzle (active customer and merch
Slide 12: Merchant network and product comparison
M e r c h a n t network 1 18.5k 42.0k Products Short duration Short duration, long duration, credit builder Channels App (open loop), check - out, in - store Ch e c k - o u t , in - store Merchant focus Enterprise SMB, enterprise 3 E n g a g e m e n t (Top 10%) 44x 4 49x 5 Providing Zip and Sezzle c
Slide 13: Deepening commitment to customers through a shared product vision
Deepening our commitment to customers through a shared product vision Short term BNPL Long term BNPL (off - balance sheet) Savings Account Credit Builder PFM Zip Business Merchant interest Zip Business Finance S u b s c ripti o n s Debit spend (Pay Now) Cross - border Express Checkout WALLET VISION
Slide 14: Channel mix and network benefits for customers
C h e c kout App US TTV channel mix (CY21) (illustrative) Integrated Network: Organic growth through our wallet is driving demand for our integrated p a rt n ers Open Network: Customers ability to shop anywhere is unlocking spend in new ca te g o r ies Zip customers gain access to a broad range of U
Slide 15: Complementary enterprise and SMB merchant networks
Brings together highly complementary enterprise and SMB merchant networks across a diverse set of verticals… Customer ne tw or k 1,2 5.7m 3.1m Products Pay in 4 Pay in 4, long duration Other merchant services Merchant dashboard, self service sign - up Merchant funding Pricing model Customer pays, me
Slide 16: Diversified product suite and capabilities to win together
Diversified product suite, with c. 60% of TTV from capital efficient Pay in 4 c. 129k merchants globally across a diverse mix of verticals 1 Healthy (c. 6 - 7%) revenue margins across both businesses >A$18 billion installments underwritten 2 on a combined basis Proof points c. 13m customers globally
Slide 17: Potential to realise up to c. $130m in EBTDA synergies
Potential to realise up to c. $130m in EBTDA synergies, supporting Zip’s path to profitability Notes: The prospective financial information included in this slide, including the references to the potential impact on EBTDA and the potential synergies, is predictive in character, may be affected by in
Slide 18: Synergy composition and assumptions
Notes: The prospective financial information included in this slide, including the references to the potential impact on EBTDA and the potential synergies, is predictive in character, may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially f
Slide 19: Placement size and structure
18 Placement size and structure ● Fully underwritten institutional Placement to eligible institutional, professional and sophisticated investors to raise approximately A$148.7m ● Issue of approximately 78.3 million new fully paid ordinary shares in Zip (“Placement Shares”), equal to 13.3% of current
Slide 20: Key information for the Placement and the SPP
19 Notes: The above timetable is indicative only and subject to variation. Zip reserves the right to alter the timetable at its absolute discretion and without notice, subject to ASX Listing Rules and the Corporation Act 2001 (Cth) and other applicable law. All dates and times are Australian Eastern
Slide 21: Concluding comments and takeaways
Concluding comments and takeaways Notes: 1. Zip and Sezzle pro forma metrics exclude potential synergies and any customer or merchant overlap. Customer and merchant numbers based on Zip and Sezzle’s definition of customers and merchants: Zip (number of active customer accounts and accredited merchan
Slide 22: Appendix A: Supporting Information
Appendix A: Supporting Information
Slide 23: Pro forma balance sheet
31 December 2021 1 (A$m) (US$m) (A$m) 2 Acquisition Ad jus t men t s (A$m) Capital Raise Ad jus t men t s (A$m) 4 Total Ad jus t men t s (A$m) 3 Pro Forma (A$m) Assets Cash and cash equivalents 266.8 78.9 110.3 (30.0) 148.7 118.7 495.8 Other receivables 64.0 8.4 11.8 - - - 75.8 Term deposit 1.5 0.0
Slide 24: Appendix B: Key Risks
Appendix B: Key Risks
Slide 25: Completion risks
1.1. Completion risks Zip expects the Proposed Transaction to proceed as advised in this Presentation. If the Proposed Transaction fails to complete or completion is delayed, Zip may not be able to realise some or all of the benefits that it expects to achieve within its expected timeframe or at all
Slide 26: Market value of the consideration
1.5. Market value of the consideration The price at which Zip’s shares will be quoted on the ASX and Zip’s American Depository Receipts (“ ADRs ") will be quoted on a U.S. exchange may experience price and volume fluctuations that are due to a number of factors outside Zip’s control and which are no
Slide 27: Key risks (cont'd): Regulatory risks
Key risks (cont’d) 1.8. Regulatory risks in United States and other countries Under the Proposed Transaction, Zip will be acquiring an entity incorporated in Delaware, and consequently Zip must comply with the laws and regulations of Delaware and the United States in relation to the Proposed Transac
Slide 28: Section 7874 of the Code
1.12. Section 7874 of the Code As described more fully below, under current law, Zip is not expected to be treated as a U.S. corporation for U.S. federal income tax purposes as a result of the Proposed Transaction. A corporation is generally considered a tax resident in the jurisdiction of its organ
Slide 29: U.S. Federal Income Tax Considerations to U.S. Holders of Sezzle Shares
1.13. U.S. Federal Income Tax Considerations to U.S. Holders of Sezzle Shares It is expected that the Proposed Transaction will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that Section 367(a) of the Code may apply to the exchange of Sezzle shares for Zip ordina
Slide 30: Legal and regulatory
2.1. Legal and regulatory Post completion of the Proposed Transaction, Zip will operate in a number of new jurisdictions including India and Germany, in addition to its existing jurisdictions, each with differing legal and regulatory requirements. Zip will be subject to additional legal, regulatory,
Slide 31: Loss of key contracts and relationships
2.3. Loss of key contracts and relationships The continued success of the Combined Business relies on each of Sezzle and Zip retaining their key contracts including their third party merchant partners. There is no guarantee that the key contracts and partnerships will continue after the Proposed Tra
Slide 32: Reputational damage
2.6. Reputational damage The Combined Business will rely heavily on its reputation to retain and increase its customer base, merchant partnerships and relationships after the Proposed Transaction . Maintaining Zip’s and Sezzle’s reputations in the future as the Combined Business will be part of the
Slide 33: Global markets and foreign exchange risk
2.9. Global markets and foreign exchange risk As a result of the Proposed Transaction, Zip is further increasing its concentration in the United States and therefore Zip will be further exposed to the performance of the United States’ domestic economy as well as global macroeconomic conditions. Zip
Slide 34: Reliance on third party partners and brand reputation
Key risks (cont’d) 33 2.13. Reliance on third party partners and brand reputation Zip and Sezzle’s business models rely on third party partners over which they have limited control to originate customers. The conduct, standing and product offerings of such partners has the potential to negatively af
Slide 35: Insurance
3.1. Insurance Zip considers it maintains insurance customary for businesses of its size and type. Not all risks are insured or insurable and Zip cannot be certain that its current insurance is adequate or that adequate insurance coverage for potential losses and liabilities will be available in the
Slide 36: Investment in equity capital
Key risks (cont’d) 4.1 Investment in equity capital Investment in equity capital and stock markets attract general risks. For example, as set out in the risks above, the price of Zip’s shares and Zip’s ADRs may fluctuate in line with broader market movements or in response to specific circumstances
Slide 37: Appendix C: Summary of Underwriting Agreement
Appendix C: Summary of Underwriting Agreement
Slide 38: Underwriting Agreement Summary
37 Underwriting Agreement Summary Zip has entered into an underwriting agreement with Merrill Lynch Equities (Australia) Limited (ABN 65 006 276 795) and Jarden Australia Pty Limited (ABN 33 608 611 687) (each an Underwriter, and together the Underwriters ), pursuant to which the Underwriters have a
Slide 39: Underwriting Agreement Summary (cont'd)
Underwriting Agreement Summary (cont’d) r) s) t) v) (*) hostilities not presently existing commence (whether war has been declared or not) or a major escalation in existing hostilities occurs (whether war has been declared or not) involving any one or more of Australia, New Zealand, the United State
Slide 40: Appendix D: Disclaimers and other notices
Appendix D: Disclaimers and other notices
Slide 41: Important notice and disclaimer
40 This presentation (together with oral statements made in connection herewith, the “Presentation”) is being delivered to you by Zip Co Limited (“Zip”) in connection with the : • definitive agreement under which Zip proposes to acquire Sezzle, Inc. (“Sezzle”, and together with Zip, the “ Companies
Slide 42: No Representations and Warranties
No Representations and Warranties This Presentation is for informational purposes only and does not purport to contain all of the information that may be required to evaluate a possible investment decision with respect to Zip, Sezzle and the Proposed Transaction and Capital Raising . The recipient a
Slide 43: Disclaimer (cont'd): Forward-Looking Statements
Disclaimer (cont’d) Cautionary Statement Regarding Forward - Looking Statements (Cont’d) (xx) impact of the costs of complying with various laws and regulations applicable to the BNPL industry in the United States and the international markets in which Sezzle and Zip operate ; (xxi) impact of macro
Slide 44: Disclaimer (cont'd): Financial and Other Information
Disclaimer (cont’d) Financial and Other Information The financial information contained in this Presentation has been taken from or prepared based on the historical financial statements of Zip and Sezzle for the periods presented . An audit of certain of these financial statements has not been compl
Slide 45: International Offer Restrictions (Placement)
International Offer Restrictions (Placement) This Presentation does not constitute an offer of new ordinary shares under the Placement ( Placement Shares ) of the Company in any jurisdiction in which it would be unlawful . In particular, this Presentation may not be distributed to any person, and th
Slide 46: International Offer Restrictions: Hong Kong
International Offer Restrictions (Placement) (cont’d) 45 Hong Kong WARNING : This Presentation has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap . 32 ) of Hong Kong, nor has it been authorised by the Securities and
Slide 47: International Offer Restrictions: Singapore
International Offer Restrictions (Placement) (cont’d) 46 Singapore This Presentation and any other materials relating to the Placement Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore . Accordingly, this Presentation an
Slide 48: International Offer Restrictions: United Kingdom
International Offer Restrictions (Placement) (cont’d) 47 United Kingdom Neither this Presentation nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial