Slide 1: FY21 Investor Presentation
FY21 Investor Presentation AUGUST, 2021
Slide 2: Strong growth across all key metrics
Strong growth across all key metrics 5.8b 41.3m Up Up 176% 293% 2.1b 10.5m TTV ($) Transactions (#) FY20 FY21 FY20 FY21 7.3m 51.3k Up Up 248% 109% 24.5k 2.1m Customers1 (#) Merchants1 (#) FY20 FY21 FY20 FY21 403.2m 198.0m Up Up 150% 147% 161.0m 80.1m Revenue ($) Cash Gross Profit ($) FY20 FY21 FY20 F
Slide 3: Strong margins and reduced capital intensity
Strong margins and reduced capital intensity 3.8% 3.5% Reduced Cash transaction margin 30bps ● Cash margins remain strong YoY, reduction resulting from business FY20 FY21 mix weighting to US and everyday spend ● Improved loss rates driven by 1.33% 1.28% high returning customer rates Improved and inv
Slide 4: We delivered on our FY21 strategic priorities
We delivered on our FY21 strategic priorities PAYMENT ACCEPTANCE APP ENGAGEMENT GLOBAL EXPANSION ZIP BUSINESS Launched Tap & Zip (AU) ~5m App downloads1 Completed Quadpay Launched Zip Business and Chrome Extension acquisition and Zipster product suite: Trade, (US) enabling BNPL Customer base grew in
Slide 5: Contents
Contents 01 Overview 02 Recap of FY21 03 Our US Business 04 Our ANZ Business 05 Global Expansion 06 FY21 Financial Results 07 FY22 Priorities 5
Slide 6: Overview
01. Overview
Slide 7: Mission Purpose Promise
Mission To be the first payment choice, everywhere and every day. Purpose Create a world where people can live fearlessly today, knowing they’re in control of tomorrow. Promise A more financially fearless world. 7
Slide 8: Our flywheel effect
Our flywheel effect We bring customers and merchants together for fair and valued payment experiences For Consumers: For Merchants: a digital wallet an integrated solution BNPL Payment acceptance Interest Free Consumers Merchants Referral traffic Bills, gift cards, Conversion promotions optimisation
Slide 9: 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 Our Product Flexible Solutions Our Business Model Risk Management Global Reach We offer short and We operate both an Our unique revenue Our proprietary We are a truly global long term duration open and integrated model drives decis
Slide 10: We are Zip
We are Zip Zip is a leading global BNPL player with operations in 12 markets, a single integration point and a rapidly expanding footprint $5.8b $403m FY21 TTV FY21 revenue 293%+ 1k 12 YoY transaction Employees Markets growth 7.3m 51.3k Customers1 Merchants1 Middle East Asia Pacific Core markets Euro
Slide 11: We deliver growth for some of the biggest brands
We deliver growth for some of the biggest brands AU AU 11
Slide 12: Same Zip. New look.
Same Zip. New look. A revitalised global brand. To create a platform for continued growth, we are uniting our rapidly expanding business under one, fearless and globally recognisable brand A unified global brand will enable us to: ● Continue to build trust with our customers and merchants ● Increase
Slide 13: Continued investment in people and the community
Continued investment in people and the community In addition to achieving significant growth in FY21, we continue to invest in our people and the community Our Employee Wellbeing Diversity, Equity and Inclusion Staff Launched employee mental wellbeing program. DEI communities established globally. In
Slide 14: Recap of FY21
02. Recap of FY21
Slide 15: FY21 highlights
FY21 highlights Strong growth across all key metrics - transaction volumes of $5.8b and revenue of $403.2m, delivering Growth 176% YoY TTV growth and 150% YoY revenue growth. Maintained market leading unit economics (3%+ cash transaction margins), generating $198m in cash gross profit and $44m in ope
Slide 16: Unit economics
Unit economics We continue to deliver significant growth Financial performance FY21 FY20 and strong financial performance Total Transaction Volume (TTV) $5.8b $2.1b ● Transaction volumes grew 176% YoY while revenue margins remained Revenue healthy at ~7%, with movement YoY (less other income) $402.7m
Slide 17: Capital efficiency
Capital efficiency Capital efficiency and Repayment velocity Revenue yield yield remain strong (average months to recycle book) (revenue / average receivables %) 6.3 ● Yield averaged ~22% over 5.1 the period with receivables 4.7 turning every 3-4 months 4.4 4.3 4.2 on average 3.8 4.0 3.8 4.0 3.9 3.5
Slide 18: Credit and risk
Credit and risk We delivered strong credit Returning Customer Contribution1 Net Bad Debts Written Off2,3 performance despite the (as a % of TTV) (as a % of TTV) impacts of Covid-19 90 ● Deeper customer engagement 1.33% 1.28% is driving high repeat usage 85% rates ● Investments in our proprietary 80
Slide 19: Our US Business
03. Our US Business
Slide 20: Our US business has achieved significant growth in FY21
Our US business has achieved significant growth in FY21 Pro-forma TTV FY21 vs 20 Customers Total at Jun-21 vs 20 $b #m Opportunity Partnerships We continue to capture Secured key distribution market share in the US $5t and strategic 225% 144% retail market. partnerships (e.g. Stripe, Growth (YoY) Gro
Slide 21: Our flywheel effect
Our flywheel effect Our growth and sustainable financial performance is underpinned by our unique model Open Network Integrated Network Customers ability to Organic growth shop anywhere is through our wallet is unlocking spend in new driving demand for our everyday categories integrated partners ~2/3r
Slide 22: Driving conversions and lead referrals is core to our merchant value proposition
Driving conversions and lead referrals is core to our merchant value proposition At Checkout Anywhere in-store Anywhere online Chrome Extension TTV growth: 2x at checkout 1 8x in-store 1 5x via our App 1 6x chrome extension 2 Our core integrated Huge opportunity Continues to be a Proven innovation g
Slide 23: Customer engagement
Customer engagement US App customers are transacting ~29x p.a. within two years of joining² Customers are deeply engaged using 1.5 years+ more of our products, more often. 29.4x 1 year+ More products 27.6x Transactions <1 year increase in customers using multiple 2x Zip products (App, Chrome, Web) 2
Slide 24: We continue to set the foundations to accelerate our two-sided network and maintain strong margins
We continue to set the foundations to accelerate our two-sided network and maintain strong margins Key Merchants Strategic Partnerships Treasury and Funding Key Merchants Strategic Partnerships Treasury and Funding We continue to partner with the world’s We continue to invest in strategic We success
Slide 25: Our ANZ Business
04. Our ANZ Business
Slide 26: FY21 was a year of strong growth in ANZ
FY21 was a year of strong growth in ANZ TTV FY21 vs 20 Customers Total Jun-21 vs 20 $b #m Growth Customer engagement We have maintained strong Customers are engaging with growth across our key metrics Zip more than ever with 52% 33% further cementing ourselves as monthly users transacting on Growth
Slide 27: We continue to deliver innovative products and services to our customers
We continue to deliver innovative 53m leads generated for merchants products and services ~80% of customers download our app in their first month to our customers Tap & Zip Rewards 1.1m downloads for the year (ANZ) 2 We have reimagined the Delivering more value to BNPL in-store customers through expe
Slide 28: Customer engagement in our wallet continues to deepen
Customer engagement in our wallet continues to deepen Newer cohorts are using multiple Zip products Continued focus on product innovation is driving deeper engagement % of customers with both Zip Pay and Zip Tap & Zip users total transactions in FY21³,⁴ Money products2 72.4x % of Cohort adopted Tap
Slide 29: The merchant network continues to expand
The merchant network continues to expand Key Merchants Key Merchants • Zip’s integrated partner relationships are a key accelerator to our flywheel, we added 11K new merchants to our ANZ network • We continue to build on our global merchant network through our market leading single merchant integrati
Slide 30: Zip Business
Zip Business AoV on Trade FY21 has set the foundations for 2.7 Monthly TxNs Per Trade user $2.1k products accelerated growth in Zip Business with strong early results QoQ growth in Addressable market 106% Trade TTV in Q4 $38.7m TTV in Q4 2 Supporting 2.3m SMBs in ANZ historically underserved by the
Slide 31: Global Expansion
05. Global Expansion
Slide 32: We see a huge opportunity for a truly global BNPL solution
We see a huge opportunity for a truly global BNPL solution 2.1% $24t 2x BNPL penetration Addressable retail eCommerce of global market2 BNPL penetration eCommerce spend1 to double by 20241 BNPL expected to be the fastest growing eCommerce payment method over the next 5 years1 Source: 1. WorldPay Glo
Slide 33: We are well placed to capitalise on global BNPL demand
We are well Why global? We hold strong conviction for a global BNPL proposition placed to Proven in core markets, Heightened demand We believe everyone, capitalise on there is a strong and growing demand from from regional and global partners for everywhere should have access to fair and consumers f
Slide 34: We continue to see our core markets as the backbone of our global solution
We continue to see our core markets as the backbone of our global solution Core markets underpin our growth Global partners strategy US/ Canada ● Global BNPL penetration growing from UK a low rate at ~2% $5.5t2 ● Demand from global merchants for a $763b3 single solution accelerating growth in adjace
Slide 35: UK is showing strong early momentum
UK is showing strong early momentum Key Performance Metrics (Q4 FY21) Accelerating growth $13.9m TTV 70k Customers Strong growth in the UK’s first full quarter since launch. Strong lead indicators across all key metrics ahead of peak trading period. Key Merchants Platform Successfully rolled out Zip’
Slide 36: Delivering fair and transparent payment products to new and emerging markets
Delivering fair and transparent payment products to new and emerging markets Components supporting adoption in emerging markets1 BNPL Product Products democratise access to credit in emerging markets Suitability supported by product construct, low limits and digital nature Internet Rapid growth in i
Slide 37: Strategic investments provide Zip an entry into key regions
Strategic investments provide Zip an entry into key regions (Europe) (Middle East) (Asia Pacific) Overview ● In May, Zip announced intention ● In May, Zip announced intention ● Zip completed a 25% minority to purchase the remaining shares to purchase the remaining shares investment in Q4 FY21 in Twis
Slide 38: Investment highlights: Payflex
Investment Strong first-mover advantage with access to broader African markets highlights Zip will purchase Why Africa? the remaining 400m mobile payments users4 Over 50% of the population Rapid smartphone adoption, with over shares in Payflex underbanked5 650m connections by 20256 Why Payflex? Founder
Slide 39: Strong growth in key metrics across emerging markets
Strong growth in key metrics across emerging markets and a healthy pipeline for further acceleration Payflex (Africa): Experienced Growth in TTV Growth in customers a step-change in growth over (multiples on Jan-211) (multiples on Jan-211) the past 12 months. Potential for further scaling across TTV
Slide 40: FY21 Financial Results
06. FY21 Financial Results
Slide 41: Segment financials
Segment financials Zip • Investing in growth and global FY21 $m AU Global Total expansion, Cash EBTDA for the Group Business ($22.9m) • Cash Gross Profit margins remain healthy at ~50% Revenue 207.6 184.7 10.9 403.2 • AU growing strongly and remaining Cash EBTDA positive • Zip’s investments in expandi
Slide 42: Income statement
Income statement FY21 $m FY20 $m Operating Income 402.7 160.1 2 Cash Cost Of Sales (204.7) (80.0) • Operating Income hit record levels, 152% increase on FY20 Interest Costs (58.7) (38.9) • Cash Gross Profit remains healthy as the business Bank Fees and Data Costs (71.5) (13.2) scales, with Cash GP ma
Slide 43: Cash Transaction Margin
Cash Transaction Margin FY21 $m FY21 FY20 % change Revenue 7.0% 7.6% 0.6% • Reducing interest costs as capital recycling faster Interest Expense 1.0% 1.9% -0.9% • Further improvement in interest costs through: Net bad debts written off 1.3% 1.3% 0.0% - US facility renegotiated and Bank fees and data
Slide 44: Corporate items and one-off adjustments
Corporate items FY21 $m FY20 $m and one-off Reported EBTDA (79.0) (24.2) adjustments Share of Loss of Associates (0.8) (0.2) Acquisition Costs (9.9) (10.3) Share-Based Payments (142.8) (20.4) • The Income Statement was impacted by a number of one-off adjustments and non-cash Fair Value (Loss)/gain o
Slide 45: QuadPay acquisition adjustment
QuadPay acquisition Zip Share Price May 2020 - December 2020 adjustment 10.0 • No cash or business impact. Accounting only Shareholder approval $9.16 • Acquisition announced on 2 June 2020 (15 day VWAP Quadpay Acquisition to 29 May $3.39) Announced • The number of Zip shares to be issued to acquire
Slide 46: Convertible notes and warrants
Convertible notes and Convertible Convertible warrants Notes Net Debt Host Notes Embedded Derivative Warrants Total Liability Convertible Notes Equity • $100.0m in Convertible Notes and 19.4m warrants Issued to CVI Investments: $m $m $m $m $m - Convertible Notes issued with an initial conversion pri
Slide 47: Balance sheet
Balance sheet Cash and Cash Equivalents FY21 $m 330.2 FY20 $m 32.7 Other Receivables 32.7 6.9 Term Deposit 1.5 1.5 • $330.2m of cash at Jun 21, which included Customer Receivables $41.0m in restricted cash. Unrestricted balance 1,988.0 1,116.6 includes amounts remitted to funding vehicles the Invest
Slide 48: Cash flows
Cash flows Operating income from customers FY21 $m 403.0 FY20 $m 160.5 Payments to suppliers and employees (292.6) (99.2) Interest received from financial institutions 0.2 0.1 • Generated positive Operating Cashflow of Interest paid (57.7) (38.4) $44.2m in FY21 ($52.9 excluding acquisition Acquisition
Slide 49: Available cash
Available cash Available Cash at 30 June 21 • Zip has raised $491.0m (after costs) $500.00 $26.6 through the issuance of Convertible $461.6 $253.7 Notes and $175.1m (after costs) through equity issuances during the year $400.00 • Cash is used to fund receivables in Zip’s $330.2 funding vehicles prio
Slide 50: Funding update
Funding update FY21 $m FY20 $m Facility Limits • The Company is well placed with regards to available debt financing to support its global growth plans AU 2,131.4 1,144.5 • Weighted average margin reduction of 1.07% achieved US2 399.0 - in latest rated note issuance as a result of ratings upgrade SME
Slide 51: FY22 Priorities
07. FY22 Priorities
Slide 52: We are laser focused on four key business areas for FY22
We are laser focused on four key business areas for FY22 1. Deep Customer Engagement 2. More Value for Merchants Developing new products and services to Delivering more value to merchants increase the utility of our digital wallet through enhanced and broader solutions (e.g. demand generation) Deliv
Slide 53: FY22 Outlook
FY22 0utlook Thematics Early indicators ● FY22 showing strong early signs with TTV growing 58% in AU and 240% in US YTD vs FY211 Growth ● Global market entries and investments to start contributing meaningful TTV in FY22 ● Continue to onboard global merchants driving customer acquisition and TTV gro
Slide 54: Thank you.
Thank you.
Slide 55: Appendix: Payflex Acquisition Terms
Appendix: Payflex Acquisition Terms Remaining shares in South African BNPL provider, Payflex, to be acquired for mostly scrip consideration with anticipated completion during Q3 FY22 ● Maximum potential purchase price of R184.4 million (~$16.9 million) for the remaining shares in Payflex1 that Zip does
Slide 56: 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