Harmoney Corp Ltd · ASX:HMY

Harmoney — Investor Day (November 2021)

62 slides from Harmoney's investor day presentation, Nov 24, 2021

1. Slide 1: Investor Day

   Investor Day Wednesday 24 November 2021 HARMONEY © 2021 Investor Day 24 November 2021 1

2. Slide 2: Agenda

   Agenda 1. Introduction 2. Trading update 3. Business recap 4. Why 100% consumer-direct wins 5. Growth opportunities of consumer-direct 6. Q&A 7. Appendices All amounts in this presentation are denominated in $NZD unless otherwise stated HARMONEY © 2021 Investor Day 24 November 2021 2

3. Slide 3: Trading update

   Trading update HARMONEY © 2021 Investor Day 24 November 2021 3

4. Slide 4: Trading update

   Trading update ● New customer loan origination momentum continues in Australia and New Zealand despite some suppression in NZ due to a continuing lockdown in Auckland. ● Group pro-forma receivables grew to $524m at 31 October 21. ● This momentum has further accelerated with November 21 expected to s

5. Slide 5: FY22 Market guidance

   FY22 Market guidance FY21A FY22F Change Group loan book $501M >$600M >20% Group revenue $79M >$92M >16% Net lending margin 6.8% >7% >0.2% Opex* to revenue 22% <20% >-2% Harmoney forecasts its transition to warehouse funding to be ~90% complete by 30 June 2022. FY21 and FY22 based on pro forma financi

6. Slide 6: Business recap

   Business recap HARMONEY © 2021 Investor Day 24 November 2021 6

7. Slide 7: Executive summary

   Executive summary Harmoney is the largest 100% online consumer-direct lender across Australia & New Zealand 1 2 3 4 Compelling Fundamentals Strong Market Position Credit Product Innovation Warehousing & Securitisation Attractive revenue profile, loan book, Established presence in New Zealand Opportun

8. Slide 8: Harmoney's growth evolution

   NOV 2020 Harmoney’s growth evolution IPO IPO on the ASX & NZX raising AU$70m. JUL 2014 AUG 2015 FEB 2017 NOV 2018 SEP 2019 MAR 2021 First P2P licence in NZ granted by the FMA to $100m Loaned in under 12 months. Australia $1.0b $1.5b $2.0b Harmoney. Loaned to date. Loaned to date. Brisbane pilot laun

9. Slide 9: Largest 100% online consumer-direct personal lender across Australia & New Zealand

   Largest 100% online consumer-direct personal lender across Australia & New Zealand Customer Team Key metrics 83 Net promoter score 75 FTEs (Auckland & Sydney) >$92m FY22 revenue guidance 4.8/5 Average rating >50% FTEs are engineers, product $2.4b Total loan originations managers and data scientists

10. Slide 10: Rapid growth across all key business metrics

    Rapid growth across all key business metrics 1. Account acquisition 2. New loan originations 3. Superior net margins 260% 51% NEW CUSTOMER ORIGINATIONS IN AU CAGR Powerful consumer-direct acquisition engine. Over 724k High growth of new customer originations in Australia Superior net interest margin

11. Slide 11: Current personal loan product

    Current personal loan product Fast, 100% online Use of funds • Personalised fixed rates based on Risk-based Unsecured customer credit characteristics from personal pricing loans 5.35% - 19.99% p.a. Renovation Loans Debt Consolidation • Loans up to $70k in Australia and New Zealand with loan terms of

12. Slide 12: Proprietary technology

    Proprietary technology A seamless consumer experience powered by data and technology >50% of employees Proprietary I.P. are engineers, product managers and data Developed and refined over 7 years, Stellare® scientists combines data analytics, machine learning, and in-house knowledge to create a truly

13. Slide 13: Our 100% online consumer direct brand

    Our 100% online consumer direct brand HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 13

14. Slide 14: Harmoney re-brand

    Harmoney re-brand Humanising money We are rolling out a new consumer-direct mobile-first online brand identity. HARMONEY © 2021 Investor Day 24 November 2021 14

15. Slide 15: 'Introducing Harmoney' video

    ‘Introducing Harmoney’ video HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 15

16. Slide 16: Why 100% consumer direct wins

    Why 100% consumer direct wins HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 16

17. Slide 17: The long term value of consumer-direct Harmoney growth flywheel

    Largest 100% online consumer-direct personal lender across Australia & New Zealand The long term value of consumer-direct Harmoney growth flywheel Our unique strategy is to create direct relationships with consumers 100% online, at scale, then nurture them to create high value now and into the future

18. Slide 18: Why 100% consumer-direct wins

    Why 100% consumer-direct wins Consumer-direct market tailwinds Deep Consumer High Lower Data Lower Lower Fixed = Funding = Shareholder + CAC Losses Opex Automation Costs Returns Growth opportunities of consumer-direct model Current personal loan Other financial products Home loans HARMONEY © 2021 INV

19. Slide 19: Consumer direct market tailwinds

    Consumer direct market tailwinds HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 19

20. Slide 20: The big banks were already retreating... then the pandemic hit

    The big banks were already retreating... then the pandemic hit and accelerated the trend Aussies and Kiwis migrate online. Ecommerce soars. Just as the consumer‑direct future is disintermediating categories like travel and retail, lending is being disrupted by nimble Fintechs offering people what the

21. Slide 21: More Aussies signed up for their personal loan online

    ● More Aussies signed up for their personal loan via online than via phone, branch, broker combined Google, Kantar Shopping Pulse, May 2021. HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 21

22. Slide 22: Harmoney & listed peers <2% Australian personal lending market

    Harmoney & listed peers <2% Australian personal lending market Huge market opportunity Australian personal lending (Sep 2021) ● The Australian personal lending market represents Harmoney and listed an enormous growth opportunity as consumers peers Australian market share as at 30 Sept 21 move online

23. Slide 23: Deep consumer data + automation

    Deep consumer data + automation Deep Consumer Lower High Data Lower Lower Fixed = Funding = Shareholder + CAC Losses Opex Costs Returns Automation HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 23

24. Slide 24: Consumer-direct means deep consumer data

    Consumer-direct means deep consumer data Broker: Limited data Direct: Deep data Deep data + A.I. 10010110000100111001101111001 10010110000100111001101111001 00001011100111111111100010110 00001011100111111111100010110 00000000110101011110111100001 01010101101011011000011110001 00110110111010110101010

25. Slide 25: How deep data improves our marketing efficiency

    How deep data improves our marketing efficiency Harmoney embraces deep data in three core areas. Data is obtained from different sources and utilised by Stellare® for real-time performance. Consumer behavioural data Financial performance data Operational data • Data-driven targeting and insights • Mini

26. Slide 26: Stellare's automated loan application process facilitates rapid scalability

    Stellare’s automated loan application process facilitates rapid scalability Fully automated loan applications are 68% Straight-through-processing (STP) measures the ratio of loans that complete a fully automated loan application process (no human intervention). Our STP settings can be temporarily ad

27. Slide 27: Reducing customer acquisition cost (CAC)

    Reducing customer acquisition cost (CAC) Marketing Platform Deep Consumer Lower High Data Lower Lower Fixed = Funding = Shareholder + CAC Losses Opex Costs Returns Automation HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 27

28. Slide 28: HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021

    HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 28

29. Slide 29: Google: paid search auction & organic results

    Google: paid search auction & organic results Paid search auction Organic search results $43.00 $0.00 $42.99 $40.50 HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 29

30. Slide 30: The 'banks' Google Ads strategy

    The ‘banks’ Google Ads strategy Inefficient and costly Competitors: ● Spend millions of advertising dollars buying clicks on Google using keywords such as ‘borrow money’ or ‘personal loans’. ● Use intuition to find their customers. ● Large marketing teams (high opex). HARMONEY © 2021 INVESTOR DAY 24 NO

31. Slide 31: Consumer-direct: the challenge for Fintechs

    Consumer-direct: the challenge for Fintechs Are unwanted consumers clicking my advertising? ● The "personal loans" search auction on Google is competitive and expensive (~$40+ per click) ● Harmoney has a prime credit criteria threshold which applicants must meet in order to receive a loan offer. ● Wi

32. Slide 32: How can we attract high intent and eligible applicants at scale?

    How can we attract high intent and eligible applicants at scale? HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 32

33. Slide 33: Anil Sabharwal, Vice President at Google video

    Anil Sabharwal, Vice President at Google video HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 33

34. Slide 34: Stellare + Google: integrated machine learning

    ® Stellare + Google: integrated machine learning We leave the competition to their expensive shotgun strategy whilst we are laser focused on our prime consumers. ● Rather than outspending the competition, can we attract our target customers, and exclude users unlikely to meet our credit assessment?

35. Slide 35: How does Google's integration with Stellare work?

    ® How does Google’s integration with Stellare work? Application Stellare® calculates the likelihood of the consumer to take the loan and their resulting customer lifetime value. CLV Value $ *CLV = Customer Lifetime Value HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 35

36. Slide 36: How does Stellare's integration with Google work?

    How does Stellare’s integration with Google work? CLV Value $ Google’s smart bidding algorithm Device Browsing & Search Location history +250 more data points Website browsing Demographic data Time of day data Harmoney’s advertising is seen by targeted high Anticipates next auction & bid price value

37. Slide 37: Efficient, accurate and optimised customer acquisition

    Efficient, accurate and optimised customer acquisition HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 37

38. Slide 38: Stellare / Google integration video

    ® Stellare / Google integration video HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 38

39. Slide 39: Harmoney has supercharged its advertising with Google

    ● Harmoney has supercharged it’s advertising with Google for exponential growth, creating a marketing strategy that connects with more high value ® As the application count grows, our Stellare consumers. algorithms blend with Google’s vast product network to become even more accurate. HARMONEY © 202

40. Slide 40: Recognised globally as thought leaders by Google

    Recognised globally as thought leaders by Google “Harmoney has one of the most advanced digital marketing models in Australia and New Zealand, if not the world.” Nick Love, Head of performance at Google in Australia & New Zealand, Oct. 2020 Australian Financial Review, October 19, 2020. HARMONEY © 2

41. Slide 41: The consumer-direct multiplier effect

    The consumer-direct multiplier effect Meeting customers evolving needs $594m ® ● With a consumer-direct relationship, Stellare targets customers for retention and re-marketing campaigns; offering the right solution for the customer’s next big financial decision at the right time. 5x ● The multiplier eff

42. Slide 42: Customer acquisition proven in NZ - now driving Australian growth

    Customer acquisition proven in NZ - now driving Australian growth Proven acquisition model CAC reducing over time ® ● The Stellare marketing model outbids competitors for target consumers, real-time feedback refines targeting, driving down CAC. ● The consumer-direct relationship then drives CAC Mode

43. Slide 43: Lower losses

    Lower losses Libra platform Deep Consumer Lower High Data Lower Lower Fixed = Funding = Shareholder + CAC Losses Opex Costs Returns Automation HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 43

44. Slide 44: Deep data refines Libra scorecards

    Deep data refines Libra scorecards Extensive rich data fuels our proprietary technology 7 yrs Rich customer application 724k People have joined Harmoney history $7.4b Personal lending enquiry $2.4b Funded loans Billions 0.47% Of data points 30 Sep 21 90+ days arrears HARMONEY © 2021 INVESTOR DAY 24 N

45. Slide 45: Libra: Harmoney's behavioural data powered credit decisioning engine

    Libra: Harmoney’s behavioural data powered credit decisioning engine Stellare® Libra 1.7/1.8: better-than-ever conversion Stellare® Libra 1.7: ~25% better credit performance Bureau credit scores are too generic to be Early analysis of arrears for loans solely relied on for sophisticated pricing scor

46. Slide 46: Continual Libra improvements lead to the best performance ever

    Continual Libra improvements lead to the best performance ever Group arrears & losses performance Arrears in Australia & New Zealand Group arrears and losses continue to perform ahead of expectation and are at historical lows. Implemented Libra 1.7 in Australia in Feb 2021 and Libra 1.8 in New Zeala

47. Slide 47: Lower funding costs

    Lower funding costs Deep Consumer Lower High Data Lower Lower Fixed = Funding = Shareholder + CAC Losses Opex Costs Returns Automation HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 47

48. Slide 48: Average funding rate

    Libra’s accuracy rewarded with funding diversity, lower cost of funds and increased return on equity Successful inaugural securitisation Significant cost of funds reduction ● Consistent loss rates have attracted top tier funding, with 8% Harmoney funders including two of the ‘Big 4’ banks. ● A$105m s

49. Slide 49: Scalability from fixed opex

    Scalability from fixed opex Deep Consumer Lower High Data Lower Lower Fixed = Funding = Shareholder + CAC Losses Opex Costs Returns Automation HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 49

50. Slide 50: Scalability powered by automation

    Scalability powered by automation Revenue grows materially faster than opex ● Automation powers operating cost efficiencies. $100m 25% ● 100% online application ● 68% of applications completed without human $90m 20% intervention… and climbing. ● Credit Officers static at 6 while annual originations

51. Slide 51: High shareholder returns

    High shareholder returns Deep Consumer Lower High Data Lower Lower Fixed = Funding = Shareholder + CAC Losses Opex Costs Returns Automation HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 51

52. Slide 52: $1billion average book is expected to generate ~$45m Cash EBITDA

    $1billion average book is expected to generate ~$45m Cash EBITDA Indicative model Cash EBITDA $60m FY21 At $1b Average Book ~% Avg $m ~$m Book Revenue 79 160 16% $45m $40m Net lending margin 33 100 10% Marketing opex 16 30 3% Fixed opex 21 25 2.5% 45x Normalisation (4) - - $20m Cash EBITDA 0 45 4.5%

53. Slide 53: Growth opportunities of consumer-direct

    Growth opportunities of consumer-direct HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 53

54. Slide 54: Harmoney's growth engine - three areas of focus

    Harmoney’s growth engine - three areas of focus 1. Australian expansion 2. AU/NZ conversion gains 3. Enhanced & new products New New initiatives products Dynamic limits Enhanced 9x NZ Libra 1.7 7 year term AU co-borrower loan offers / 1.8 Improving conversion rate ● Australian ‘personal loan’ ● Majo

55. Slide 55: Parity in conversion opens $1b p.a.

    1. Australia is on track to achieve NZ conversion as products align Parity in $1b originations per annum in Australia becomes achievable as conversion metrics reach parity with NZ conversion Parity with NZ in opens $1b p.a. new conversion opportunity in Parity with NZ in Australia retention $1b p.a.

56. Slide 56: Conversion improvements alone can rapidly grow our loan book

    2. Conversion improvements alone can rapidly grow our loan book Quality of accounts attracted to Harmoney Our journey to offering lending to more customers. represents untapped potential to convert credit worthy customers through initiatives With our current strong rate of account creation, continual

57. Slide 57: Our data superiority drives new products: beyond personal loans to personal lending

    3. Our data superiority drives new products: beyond personal loans to personal lending Data advantage The ultimate personal A product for everyone loan We will use our data advantage Strategy Strategy to identify opportunities and • Redesign the personal loan to fit the • Delivering value beyond the

58. Slide 58: Q&A

    Q&A HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 58

59. Slide 59: Appendices

    Appendices HARMONEY © 2021 INVESTOR DAY 24 NOVEMBER 2021 59

60. Slide 60: Listed peer analysis

    Listed peer analysis Key metric comparison Listed Listed Listed (A$) Harmoney Peer Avg. Peer #1 Peer #2 Peer #3 ● Highest FY21 pro forma FY21 Pro forma revenue. 74m 46m 27m 58m 53m Revenue ● Second largest pro forma loan book. Loan Book (Sep 2021) 496m 613m 471m 452m 915m ● Revenue to market FY21 Re

61. Slide 61: Further reading: case studies

    Further reading: case studies Publisher Title How Harmoney found a smarter way to surface lifetime value with machine learning Google How Smart Bidding helped Australasia’s Harmoney find and convert its best customers Marketo Harmoney continually raises the level of customer engagement with Marketo M

62. Slide 62: 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

Harmoney — Investor Day (November 2021) on 6ix