Slide 1: HY21 Investor Presentation
Zip HY21 Investor Presentation February 2021
Slide 2: Contents
Contents 01 We are Zip 02 US update Image to be sourced 03 ANZ update 04 Global and Zip Business 05 Financial results 06 Outlook
Slide 3: We are Zip
01 We are Zip
Slide 4: Our Purpose and Mission
Our Purpose Our Mission The freedom to To be the first own it payment choice, everywhere and every day 4
Slide 5: We have five key differentiators that set us apart
We have five key differentiators that set us apart We deliver a flexible product set that services all purchase values, across all verticals. We provide short Product and long term interest-free instalments globally. Our unique model derives revenue from both customers and merchants, supporting healthy
Slide 6: We are Zip
We are Zip Zip is a global BNPL leader with a footprint across nine markets $7.5bn+ $480m+ Annualised Annualised volume¹ revenue² 171%+ 600+ YoY transaction Employees growth³ 9 Markets 5.7m 38.5k Customers⁴ Merchants⁵ Source: Pro-forma figures based on Zip unaudited financials as of 31 December 2020.
Slide 7: We are delivering on our strategic priorities for FY21
We are delivering on our strategic priorities for FY21 Payment acceptance App engagement Global expansion Zip Business ● Launched Tap & Zip in ● #1 downloaded BNPL App ● Strong momentum in the ● Launch of Zip Business AU to unlock the instore in Australia in US following the Trade solution opportuni
Slide 8: HY21 Highlights
HY21 Highlights Zip cements its position as one of the fastest growing BNPL players in the US, and as a true global BNPL Solid growth leader, with over 5.7m customers, annualised TTV of c.$7.5bn and annualised revenue of c$480m - delivered 100%+ YoY growth across key metrics in HY21. Completed the a
Slide 9: Financial highlights
Financial highlights We continue to deliver exceptional Financial performance HY21 ($m) HY20 ($m) YoY Growth growth and sustainable financial Total Transaction Volume 2,320.6 964.7 141% performance (TTV) Revenue (less other income)1 159.8 69.1 131% ● Cash EBTDA positive as a group while investing sig
Slide 10: Operational highlights
+141% +217% Operational TTV ($m) 2320.6 Customers (m) 5.7 highlights 964.7 We have proven our ability to 1.8 execute across the globe 495.2 1.3 235.3 0.53 ● Our core business in ANZ has HY18 HY19 HY20 HY21 Dec 17 Dec 18 Dec 19 Dec 20 continued to perform very strongly ● Our US business (Quadpay) has
Slide 11: Capital efficiency
Capital efficiency The addition of Quadpay delivers a step change in yield and capital efficiency. Repayment velocity Revenue yield (average months to recycle book) (revenue / average receivables %) From Sep yield improved from 16% to 25%, with the receivables now turning every 3 months on average. 25 ●
Slide 12: Global BNPL adoption remains in its infancy
Even though we are 7 years in, global BNPL adoption remains in its infancy $ 22tn Addressable 1.6% BNPL penetration retail market¹ of global e-commerce spend2 Source: 1. eMarketer Worldwide Retail eCommerce Sales, 2. WorldPay Global Payments Report 2020. 12
Slide 13: US update
02 US update
Slide 14: Our US business has been a standout performer
Our US business has HY20 HY21 been a standout performer Pro-forma TTV HY21 vs 20 $m Customers Total at Dec-20 vs 19 #m Significant Market leading opportunity unit economics 256%2 200%2 The ~$5t¹ US retail Highly efficient business Growth (PcP) Growth (YoY) market presents a model with strong unit signi
Slide 15: Our market leading Quadpay product is available across all channels
Our market leading Quadpay product is available across all channels At Checkout Anywhere Instore Anywhere Online Chrome Extension Amazon Fanatics Apple Fashion Nova Walmart Target GameStop Whole Foods Underpinned by: Seamless sign up No impact on credit Instalments for effective Instant access to sho
Slide 16: We continue to partner with leading brands and strategic partners
We continue to partner with leading brands and leverage strategic partnerships to drive growth Key Merchants Key Merchants • Integrating lighthouse brands continues to be a key part of our business model driving customer acquisition and engagement • Grew our merchant base 7x in the year to December
Slide 17: Our unique model is accelerating our flywheel
Our unique model is accelerating our flywheel Open network Integrated network Organic growth through our App is driving demand for our integrated partners Amazon Fanatics Apple Fashion Nova Walmart Target GameStop Whole Foods Over 8.3k merchants Groceries Utilities Gas Customers ability to shop anywh
Slide 18: The App is delivering strong growth
The App is delivering strong growth App Transaction Volume App originated customers We optimised our product and marketing efforts to maximise Our App has been a strong source of growth, acquisition and engagement during peak retail events in H1 unlocking spend in new categories Approved applications
Slide 19: Our App is driving higher engagement
Our App is driving higher engagement App engagement The Quadpay App Customers are interacting with the App more frequently, with interactions per user growing >2.1m ~90% over the period Jan to Dec 2020 Downloads in HY21 • 1.2m average daily App users in December Average interactions per monthly user
Slide 20: Returning customer contribution is growing
Returning customer contribution is growing, this is expected to improve credit performance over time US returning customer contribution Monthly gross bad debts (% of monthly orders) (% of monthly TTV) 90 5.0 Over 85% of orders are from return customers. Returning customer cohorts are expected to 75
Slide 21: ANZ update
03 ANZ update
Slide 22: ANZ has continued to perform strongly
ANZ has continued HY21 to perform strongly HY20 TTV Customers HY21 vs 20 Total Dec-20 vs 19 $m #m Strong growth Product innovation We delivered strong We continue to launch growth across all key product innovations metrics including Tap & Zip and 55%1 58% 39%1 38% cash back rewards Growth (PcP) Grow
Slide 23: Our products enable customers to shop across all categories and values
Our products enable Our unique product set enables users customers to shop across to pay across all industry verticals, both online and instore all categories and values Groceries Electronics Product Zip Pay Zip Money Furniture Fashion Acceptance 30k merchant network + Everywhere anywhere online Aut
Slide 24: We continue to expand our partner network to fuel growth
We continue to expand our partner network to fuel growth Key Merchants Zip’s integrated partner relationships are a key Key Merchants accelerator of our flywheel • ~30k merchants across our ANZ network • We continue to partner with global merchants while understanding the importance of iconic brands
Slide 25: We are Australia's most downloaded BNPL App
We are Australia’s most downloaded BNPL App Zip App downloads (‘000s)1 Australia’s leading BNPL App 120 Zip continues to deliver best in class Monthly App Downloads customer experiences with App ratings: 100 4.9 star rating on Apple Store 4.8 star rating on Google Play 60 85% of our customers since
Slide 26: Engagement continues to accelerate, driving increased revenue per customer
Engagement continues to accelerate, driving increased revenue per customer cohort Key initiatives Tap & Zip Engagement per customer cohort Revenue per customer cohort Launched Tap & Zip, Newer cohorts are transacting more frequently Revenue per customer is improving reimagining BNPL instore with eac
Slide 27: Deep customer engagement delivering unrivalled credit performance
Deep customer engagement and market leading decisioning capability is delivering unrivalled credit performance Gross bad debt per cohort¹ Net bad debts² Our machine learning engines provide the agility to continuously adjust risk 5.0% 10% settings, leading to better credit performance Net bad debts
Slide 28: Global and Zip Business
04 Global and Zip Business
Slide 29: Zip Business is gaining momentum
Zip Business is eBay Facebook gaining momentum sellers advertising We are well positioned to capitalise on the significant small business opportunity in Australia: ● Public launch of Zip Trade (everyday spend up to $5k) in December with strong initial Coming uptake providing momentum into H2 Product
Slide 30: Zip has officially launched in the UK
Zip has officially launched in the UK Since launching in December we have focused on five key areas: 1 2 3 4 5 Core technology App Innovation Key merchants Team Replatform of core Launching a new mobile Enabling customers Go-live of enterprise Continued growth technology to mirror App enabling customer
Slide 31: Investing in new markets
Investing in new markets We have a dedicated New Markets team, which evaluates opportunistic and strategic expansion options across the globe Minority investment in leading BNPL player in Eastern Europe (Czechia and Poland) operating since 2014. ● 30+ headcount focussed Strong team on the ground led
Slide 32: Pocketbook is helping thousands of customers manage their money
Pocketbook is helping thousands of customers manage their money Pocketbook is a market-leading personal financial management app, 812k which is free for users and focused Users1 on financial wellbeing ● Allows users to manage savings and spend responsibly (track, budget, save) ● Aggregates a user’s ba
Slide 33: Financial Results
05 Financial Results
Slide 34: Segment financials
Segment financials • Cash EBTDA breakeven as a Group, a solid result, driven by strong unit economics balanced against significant spend for growth and global expansion. • Strong unit economics delivering Cash Gross Profit margins above 50%. • AU segment remains Cash EBTDA positive while continuing to
Slide 35: Income statement
HY21 $m HY20 $m Income statement Operating Income 159.8 69.1 Cash Cost Of Sales2 (73.7) (33.5) Interest Costs (25.5) (17.9) • Operating Income hit record levels, 131% increase on HY20. Bank Fees and Data Costs (25.8) (4.4) • Cash Gross Profit remains healthy as the business scales, with Cash GP margi
Slide 36: Corporate items and one-off adjustments
HY21 $m HY20 $m Corporate items and Reported EBTDA (14.8) (11.3) one-off adjustments Share of Loss of Associate (0.2) - Acquisition Costs (7.8) (2.3) Share-Based Payments (74.4) (10.4) • The Income Statement was impacted in the half by a number of one-off adjustments and non-cash movements. Fair Value
Slide 37: Quadpay acquisition adjustment
Quadpay acquisition Zip Share Price May 2020 - December 2020 adjustment 10.0 Shareholder approval $9.16 • No cash or business impact. Accounting only. Quadpay Acquisition Announced • Acquisition announced on 2 June 2020 (15 day VWAP to 29 May $3.39). Fair value equivalent to $6.50 • The number of Zi
Slide 38: Convertible notes and warrants
Convertible notes and warrants • Issue announced on 2 June 2020: • Convertible Notes issued with an initial conversion Convertible Convertible price of $5.53, a 50% premium to the 1 day VWAP. Notes Notes Net Debt Embedded • Warrants issued at a 40% premium to the 1 day VWAP. Host Derivatives Warrant
Slide 39: Balance Sheet
HY21 $m FY20 $m Balance Sheet Cash and Cash Equivalents Other Receivables 217.8 26.7 32.7 6.9 Term Deposit 1.5 1.5 • $217.8m of cash at Dec-20, which included $75.3m in Customer Receivables 1,603.6 1,116.6 restricted cash. Unrestricted balance includes amounts remitted to funding Trusts the followin
Slide 40: Cash Flows
HY21 $m HY20 $m Cash Flows Operating income from customers Payments to suppliers and employees 160.0 (114.3) 69.3 (46.0) Interest received from financial institutions - 0.1 • Generated positive Operating Cashflow of $13.9m in HY21 Interest paid (25.2) (16.7) ($20.5 excluding acquisition costs) compare
Slide 41: Funding update
Funding update • The Company is well placed with regards to available debt financing to support its global growth plans. HY21 $m FY20 $m • Zip completed its second rated note issuance within the Facility Limits Master Trust. Rating of senior notes improved two notches due to performance of the receiv
Slide 42: Outlook
06 Outlook
Slide 43: HY21 has provided strong momentum for H2
HY21 has provided strong momentum for us to build upon in H2 H1 was Remain focused We have global Our pipeline Relentless focus on transformational on key priorities momentum is strong unit economics H1 was our biggest result We remain focused We have set the We have a strong Our growth ambitions ye
Slide 44: Disclaimer and important notices
Disclaimer and important notices The information contained in this presentation has been prepared by Zip Co Limited ACN 139 546 428 (Company). This presentation may contain certain “forward looking statements”. Forward risks, uncertainties and other factors, many of which are outside the control of