Slide 1: HY22 Investor Presentation
ZIP CO LIMITED HY22 Investor Presentation 28 FEBRUARY 2022 1
Slide 2: Our Promise, Purpose and Mission
Our Promise A more financially fearless world. Our Purpose To create a world where people can live fearlessly today, knowing they are in control of tomorrow. Our Mission To be the first payments choice everywhere and every day. 2
Slide 3: Agenda
Agenda 01 Highlights 02 Financial Performance 03 Business Performance 04 Financial Statements 05 Outlook and Priorities 3
Slide 4: Highlights
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Slide 5: We are Zip
We are Zip Zip is a global payments technology leader with a footprint across 14 markets. HY22 snapshot $9.0b $604.4m Annualised Annualised TTV1 Revenue1 14 140%+ 11m+ Markets YoY transaction All time app growth2 downloads3 9.9m 81.8k Customers4 Merchants4 India Zip markets Philippines Strategic inv
Slide 6: We have a unique set of competitive advantages that enable us to win
We have a unique set of competitive advantages that enable us to win Products Network Flexibility Revenue Model Risk Management Global Scale We offer short and We operate both an Our unique revenue Our proprietary We are a global long term duration open and integrated model drives income decisioning
Slide 7: HY22 highlights
HY22 highlights Deep Customer Engagement More Value For Merchants Sustainable Global Expansion A Financially Fearless World Continued focus on innovation More value for merchants Capitalising on sustainable Investing in our people, and is driving deeper engagement: through enhanced solutions: opport
Slide 8: Financial Performance
02. Financial Performance 8
Slide 9: 70%+ growth across all key metrics
70%+ growth across all key metrics TTV ($) Transactions (#) Revenue ($) 4.5b 36.3m Up 93% YoY Up 147% YoY Up 89% YoY 302.2m 2.3b 14.7m 160.0m 1.0b 69.6m 4.6m HY20 HY21 HY22 HY20 HY21 HY22 HY20 HY21 HY22 Customers1 (#) Merchants1 (#) Revenue margin (%) Up 74% YoY Up 113% YoY Revenue margins remain 9.
Slide 10: Unit economics
Unit economics Financial performance1 HY22 HY21 We continue to deliver sustainable financial performance Total Transaction Volume (TTV) $4.5bn $2.3bn ● Transaction volumes grew 93% YoY with revenue up 89% YoY Revenue ● Revenue margins remained steady with Zip’s $301.3m $159.8m (less other income) uni
Slide 11: Cash cost of sales
Cash cost of sales % of TTV HY22 HY21 % change • Interest costs improved driven by reduced rates on US and AU facilities and faster Revenue 6.7% 6.9% -0.2% book recycling driven by US pay-in-4 volumes Interest expense 0.7% 1.1% -0.4% • Processing costs increased in line with US contribution to group
Slide 12: Business Performance
03. Business Performance 12
Slide 13: Continuing growth in the US is our highest priority
Continuing growth in the US is our highest priority Key performance metrics Growth Customer engagement TTV 2.1 Transactions 11.8 Strong growth, delivering 70%+ Driving deeper engagement with $b #m YoY growth across all key metrics. top 10% of App customers BNPL penetration remains low transacting 40
Slide 14: New customers and increasing engagement is driving growth in ANZ
New customers and increasing engagement is Key performance metrics¹ driving growth in ANZ TTV $b 2.3 Transactions #m 22.6 Growth Customer engagement 1.6 Continued growth in Zip’s most Engagement continues to deepen, mature market; 44% YoY in TTV with revenue per customer 9.8 44% 131% after eight yea
Slide 15: Deeper engagement is creating higher customer lifetime value
Deeper engagement is creating higher customer lifetime value Total transactions, top 20% ANZ customers1,2 Cumulative revenue per ANZ customer3 73.5x 300 # Transactions, 12 months to Dec-21 Cumulative revenue ($AUD) 250 51.1x 200 39.8x 37.5x 6 months only 34.2x 150 100 50 0 FY18 FY19 FY20 FY21 HY22 Y
Slide 16: Expansion markets TTV annualising at >$600m
Expansion markets TTV annualising at >$600m1 Monthly pro-forma TTV2 $m Canada Strong adoption of cross border shopping. Merchant wins include: Reaching >$50m in November and December Newegg, Fanatics, Lids, Famous Footwear and Naturalizer in HY22 52 51 Mexico Strong adoption at leading marketplace,
Slide 17: Our differentiated revenue model has ensured income margins remain strong
Our differentiated revenue model has ensured income margins remain strong Unit economics overview Revenue margin1 Revenue (Revenue as a % of TTV) Customer Instalment, account and late fees 7.1 6.9 6.7 Merchant service fees, transaction Merchant fees Network Interchange, affiliate fees Cash cost of s
Slide 18: We have successfully managed credit headwinds before, whilst maintaining growth
We have successfully managed credit headwinds before, 2020 AU & US TTV and net write-offs (as a % of TTV) whilst maintaining growth TTV ($m) Net write-off rate(%) 2.2 Several factors influenced credit performance in HY22: 320 2.0 ● Easing of government stimulus packages related to 280 1.8 Covid-19 1.
Slide 19: Improved capital recycling and reduced cost of funding
Improved capital recycling and reduced cost of funding positions us well to support execution Repayment velocity Interest rate on loans1 We remain well placed to (average months to recycle book) (Weighted average interest rate %) manage rising interest rates: 1. Significant headroom Continued improve
Slide 20: We strategically allocate capital to where we see the most opportunity
We strategically allocate capital to where we see the most significant opportunity for profitable growth 1. ANZ 2. US 3. Rest of the world Engine for earnings Strongly performing Longer term horizon to growth, innovation and market following ANZ’s scale and positive knowledge sharing path to positive
Slide 21: Financial Statements
04. Financial Statements 21
Slide 22: Segment financials
Segment financials HY22 $m APAC AMERI CAS EMEA Zip Business Total • APAC continues to grow and innovate, remaining Cash EBTDA positive Revenue 140.3 146.4 7.4 8.1 302.2 • Zip’s international footprint now generating over 50% of Group Revenue Group • As we exit COVID, Zip Business starting to 46.4% 48
Slide 23: Income statement
Income statement HY22 $m HY21 $m Operating Income 301.3 159.8 2 • Operating Income hit record levels, 89% increase on Cash cost of sales (205.8) (73.7) HY21. Strong growth in TTV and revenue margins Interest costs (33.8) (25.5) maintained Bank fees and data costs (56.6) (25.8) • Zip has diverse inco
Slide 24: Corporate items and one-off adjustments
Corporate items HY22 $m HY21 $m and one-off Reported EBTDA Share of loss of associates (157.6) (3.0) (14.8) (0.2) adjustments Acquisition costs (3.3) (7.8) Share-based payments (44.6) (74.4) • Acquisition costs incurred in acquiring Twisto and Spotiii Fair value gain / (loss) on financial instruments
Slide 25: Balance sheet
Balance sheet Cash and cash equivalents DEC 21 $m 266.8 JUN 21 $m 330.2 Other receivables 64.0 32.7 • $266.8m of cash and cash equivalents at Dec 21, which included $116.6m in restricted cash. Term deposit 1.5 1.5 Restricted balance seasonally higher due to Customer receivables 2,497.1 1,988.0 holid
Slide 26: Cashflows
Cashflows HY22 $m HY21 $m Operating income from customers 301.6 160.0 Payments to suppliers and employees (290.3) (114.3) Interest received from financial institutions 0.6 - • Net Cashflow to operations of $25.3m, including $17.6m on the Global re-brand, investment in growth Interest paid (33.9) (25.2)
Slide 27: Available cash
Available cash Zip Group - Total available cash and liquidity at 31 December 21 Increase Decrease Total ● Zip had $212.5m available cash and liquidity at 31 $300 Millions December 2021 ● Unavailable cash for the Group of $196.8m was $250 higher at 31 December compared to 30 June balance of $148.9m d
Slide 28: Funding update
Funding update • The Company is well placed with regards to available debt DEC 21 $m JUN 21 $m financing to support its global growth plans Facility limits • In September 21, Zip issued its first primary issuance under the Master Trust with a AAA rating assigned on the senior AU 2,277.6 2,131.4 notes
Slide 29: Outlook and Priorities
05. Outlook and Priorities 29
Slide 30: We continue to see a significant opportunity to scale
We continue to see a significant opportunity to scale Estimated growth in Addressable retail BNPL penetration of BNPL penetration of market1,2,5 eCommerce spend3,4 eCommerce (by 2024)3,4 $25t 2.1% 2x Global: $5.5t 1.6% 3x US: BNPL expected to be the fastest growing eCommerce payment method over the n
Slide 31: We have refined our priorities with a focus on accelerating our path to profitability
We have refined our priorities with a focus on accelerating our path to profitability Growth Unit Economics Cost Management Growth in core markets Improve unit economics Optimise global cost base Continue to pursue sustainable growth Take action to improve cost of sales Review global presence and righ
Slide 32: This focus will deliver improved financial performance
This focus will deliver improved financial performance Management actions Medium term target (% of TTV) ● Scale affiliates and rewards programs (AU) Revenue ● Scale physical cards (US) 6.5%-7% ● Deliver revenue accretive products and services (e.g. crypto, long duration lending) ● Adjust risk rules t