Zip Co Ltd. · ASX:ZIP
Zip — Shareholder Meeting (November 2017)
29 slides from Zip's shareholder meeting presentation, Nov 30, 2017
Slide 1: zipMoney AGM Presentation
zipMoney AGM Presentation 30 November 2017 1
Slide 2: Simplifying how you pay everywhere
Simplifying how you pay everywhere and save everyday, through easy-to-use, consumer-friendly and financially-responsible products. ASX: ZML zipMoney or Zip
Slide 3: Agenda
Agenda • Company Profile • FY17 Results & Q1 Update • Business Update • Outlook
Slide 4: Zip - a reminder
Zip - a reminder We offer point-of-sale credit and payment services at the checkout, online and in-store for enterprise and SMB merchants, targeting a $300bn market opportunity. For Consumers For Merchants We provide ‘buy now, pay later’ solutions We help merchants grow their sales where consumers h
Slide 5: Zip - overview
Zip - overview Digital wallet (up to $1,000) that helps customers buy now and pay later, interest free always, for everyday purchases online and in- store (fashion, hospitality, CE/IT products). www.zippay.com.au Digital wallet (up to $30,000) that helps customers buy now and pay later, interest fre
Slide 6: Unique business model
Unique business model • Zip is the only consumer finance option in market that is mobile, 100% digital and payments-oriented. We aren’t a plastic cards company. • We offer simple, fast and fair mobile credit and payment solutions, with a strong focus on interest free. • We can originate a customer a
Slide 7: Regulatory environment
Regulatory environment • Zip is a fully licensed and regulated credit provider. We hold an Australian Credit Licence and Financial Services Licence, and have a strong focus on responsible lending. • Our business was intentionally designed with the regulatory framework in mind, recognising it was nec
Slide 8: Zip - achievements to date
Zip - achievements to date Nov 2017 We have achieved a huge amount in a very short Receivables period of time. Book Hits $200m Nov 2017 Having incorporated a little over 4 years ago, Fantastic joins Zip now has a receivables book that recently hit May 2017 platform Nov 2017 Kogan joins $200m, a majo
Slide 9: Zip is targeting a $300B market
Zip is targeting a $300B market There is more than $300B spent annually in Zip’s target markets. With only 0.1% of the market captured (in TTV) and 6,000 retailers (of est. 3m), there presents a very large opportunity ahead. Retail Health Travel Source: ABS (2017)
Slide 10: FY17 Highlights & Q1 Update
FY 17 Highlights & Q1 Update
Slide 11: FY17 Key goals achieved
FY17 Key goals achieved • $300m in funding secured from NAB and Diversify source and Westpac, significantly increasing funding cost of funding capacity whilst lowering overall cost of funding. • Significant growth in both merchant and Grow merchant and customer base – up 6x and 9x customer base resp
Slide 12: FY17 results – discussion
FY17 results – discussion • Strong performance across the entire business – Revenue grew 431%, transaction volume by 348% and customers by 785% (FY17 v FY16). • Merchant numbers grew to 4,400 across Australia and NZ, both online and offline. • $40m strategic equity investment from Westpac – represen
Slide 13: FY17 results – highlights
FY17 results – highlights $17.0m $17.0m $152.0m $40.7m $152m $3.2m Revenue1 Receivables2 ↑431% ↑ 273% FY16 FY17 FY16 FY17 $230.7m 1.28% $230.7m 1.28% 0.80% $51.5m Transaction Volume Bad debts3 ↑348% FY16 FY17 ↑ 0.48% FY16 FY17 301k 4.4k 301k 4.4k 34k 740k Customers Merchants ↑785% FY16 FY17 ↑ 501% F
Slide 14: FY17 results and Q1 update – key drivers
FY17 results and Q1 update – key drivers 6.9 5.9 5.6 Revenue1 ($m) 4.7 Merchants (k) 4.4 3.2 3.9 2.2 2.8 1.4 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 404.0 176.4 Customers (k) 300.9 Receivables2 ($m) 152.0 198.1 114.7 119.1 87.7 63.3 59.7 Q1 FY17 Q2 FY17 Q3 FY1
Slide 15: Summary P&L
Summary P&L All figures $m FY 2017 FY 2016 • 466% FY17 portfolio income growth Portfolio income 16.4 2.9 driven by the increase in customers, Other income 0.6 0.3 merchants and transaction volume. Total income 17.0 3.2 • Cost of debt reducing in line with Interest 10.3 1.5 refinance. Doubtful debts
Slide 16: Summary Cash Flows
Summary Cash Flows All figures $m Q1 2018 FY 2017 FY 2016 • Westpac invested $40.0m in the Cashflow – operations (2.7) (7.6) (1.9) Company in August 2017. Cashflow – investing (29.5) (117.6) (36.1) • $29.9m used to repay costly Cashflow – financing 29.8 137.3 44.0 mezzanine capital in our funding st
Slide 17: Funding capacity and position
Funding capacity Today and Funding tomorrow position – end of year and current Q1 FY • At year end $413m in current debt All figures $m 30 Nov 2018 2017 commitments for receivables program. Facility size – Class A and B • 2017-1 Trust established in May-17 led 2017-1 Trust (NAB) 240.0 240.0 240.0 by
Slide 18: Strong loan book performance
Strong loan book performance All figures $m Q1 2018 FY 2017 FY 2016 • Growth in receivables on FY 2016 Receivables 176.4 152.0 40.7 supported by strong originations and re-transaction activity by Zip’s % growth 273% 1,296% customers. Aggregate limits1 520.8 406.3 76.5 Transaction volume 95.1 230.7 5
Slide 19: High quality customers
High quality customers strong credit customers, High quality performancestrong diversification Credit performance 1 Locale Age Residential Status1 TAS +50 3% 9% WA SA Home 10% 7% NSW Owner 33% 35-49 18-24 30% Rent 30% 24% 47% QLD Board 27% 6% Living VIC 25-34 20% with 37% Parents 17% Employment Stat
Slide 20: Strong underlying credit performance
Strong underlying credit performance Credit performance1 6.00% • As anticipated, bad debts continue to 5.00% trend towards 3% as the loan book 4.00% matures. 3.00% 2.00% • We are continuously iterating and 1.00% 0.00% enhancing our proprietary credit and fraud decision technology to improve the Bad
Slide 21: Business Update
Business Update
Slide 22: Recent customer wins and why they are important
Recent customer wins and why they are important • Largest Australian online retail platform with over 1 million customers and 70,000 products (ASX:KGN). • Consumer goods and fashion focus. • Travel, mobile and insurance. • Available in time for seasonally strong Christmas trading. • 77 stores nation
Slide 23: Other recent important wins
zip Other recent important wins YsFIus casiessus FURNITURE pumas Kogan CTY BEACH AUSTRALIA FUSION RETAIL BRANDS bras Mthings =" michael hill dana feror Mathers wiiiaMs COLORADO
Slide 24: Growing customer engagement
Growing customer engagement The average Zip customer has transacted more than 3x on the platform. 70% 68% 64% 59% 61% 58% 52% 46% 45% Jan Feb Mar Apr May Jun Jul Aug Sep
Slide 25: Awards and recognition in FY18
Awards and recognition in FY18 Finance Business of the Year (zipMoney) #2 in the Deloitte Technology Innovation of the Year (Pocketbook) Fast 50 Australia The Optus My Business Awards is the longest- The Deloitte Fast 50 program ranks standing business awards program in Australia, the 50 fastest gro
Slide 26: Outlook
Outlook
Slide 27: Outlook
Outlook Board Composition • Zip is currently reviewing candidates nominated by Westpac and hopes to be in a position to finalise a decision on their nominee shortly. • Further, the Board has commenced a process to identify candidates for a fifth seat and anticipates filling the position in a reasona
Slide 28: Pathway to cashflow breakeven
Pathway to cashflow breakeven Funding costs reduced, operating costs have stabilised. Quarterly Cash Operating Margin 20% 15% 10% 5% 0% -5% -10% -15% -20% Q4 17 (A) Q1 18 (A) Q2 18 (I) Q3 18 (I) Q4 18 (I) Portfolio Income % Funding Costs % Operating Costs % Cash Operating Margin % 1. Portfolio Incom
Slide 29: FY18 Goals
FY18 Goals • Expect cashflow breakeven on a Cash flow positive monthly basis in FY18. • On track with a number of important Continue to grow merchant retail wins in Q2 and customer and customer base engagement statistics. • High-cost, Victory Park facility fully repaid. Further diversify funding • I