Apart from the terrible sound quality at Morgan Stanley end Rebecca was clearly prepared to be very open on what should be even further enunciated on Strategy Day.
I took some fairly detailed notes for those who are interested. Hopefully no mistakes. All up certainly gives you no reason to sell with plenty of opportunity ahead. The only downer is the current share price.
First topic covered was Tap & Go - clearly a very smart way to cut costs for merchants, make it even easier for customers and speed up getting to market. A theme that extends across many of their initiatives. Not sure any of us really understand how smart this is as part of a much bigger plan - indicated was made easier because of all their credit card expertise. Seemed to be implying that their overall products and experience is providing benefits that cross fertilise more than understood.
EXPANSION
A/ 5 Countries (specifically)Aust/NZ Humm is the leader in >$500 .......and that is their focus.
Nos 3 BNPL across Aust/NZ but on $ value same for 2 & 3.
They are not about entering markets to compete with the Afterpays/ Klarna's/Clearpays
UK - 3 phases
1/ small tranactions since June using current relationship off back of Irish relationships
2/ as of next week up to 3000 pounds paid back over 12mths
3/ early next year 30k pounds ?? paid back over 24mths to 60mths
Canada - 2 main reasons for choosing Canada
1/ Regulatory - perfect favourable environment for a growing FinTech like Humm
2/ Retail Finance perspective - going through a huge shift dominated by White Label Credit Cards with Consumers shifting away to fixed instalments with no interest. Massive decline being experienced in usage with 2 huge players pulling out giving 2 years for retail to find another solution. Humm is the perfect replacement due to values impacted $2000 to $4000
B/ Players are wanting access to multiple jurisdictions - big push (possibilities will become more relevant as Humm grows)
C/ Practise Software e.g. medical
- provides ability for business to plug in across multiple markets ( another reason why they are going global)
MERCHANT FEES
Stretch from 2.5% up to 17% for 5 yr deals
Is their pressure on fees - immense in the small $ space everywhere. Not so bad at top end where they focus. Aust is the most competitive at POS in the world; other countries not that bad.
COST OF FUNDS
Current team members / size of business / scale / business duration a distinct competitive advantage
INVESTMENTS IN CREDIT & FRAUD
Bad Debt halved (not related to Govt stimulus) On going benefits expected - very pleased with this area. Morgan Stanley Analyst made unsolicited comment that Afterpays debt losses were worse ??
FREQUENCY OF TRANSACTION
Lifting constantly which is always a further big help to understand credit worthiness as customers move up value chain.
How are they going to address other markets. (This should be a big focus on strategy day)
Being driven by Big Tech / Loyalty companies / Big Retailers etc ....who all want a seat at the table.
This is where Humm has intentions of delivering on Partnerships as 1 of their 4 growth pillars.
e.g's already with Westpac & Virgin. Have a nos of other similar conversations underway with Retailers & Banks.
"This will be their way to the rest of the world."
In addressing this area they have a nos of Partnership models with an overall benefit of driving low cost customer acquisition e.g.
Mitre 10 and Virgin - is about distribution.
Westpac is a JV - branded and powered by Humm using Bundll
Cost plus models
Licensing opportunities
DOUUGH
- waiting for more customer scale before any launch
Interesting question on............what initiatives are helping to drive usage;
Clearly have multiple actions underway across customers and merchants.
- incentivising customers within first 7 days critical (85% of new custs spend within first 7 days)
- software that allows sign up and ability to shop within minutes
- prompting e.g. emails / SMS
- rewards for good credit e.g. no longer have to pay first payment, increased limit
- Hum Tap
- ability to BPay
- Marketplace offerings (recently launched) more than face value with e.g. affiliated revenues from white labelled merchants
REGULATORY
Welcome what ever will come ............. as a benefit would help to drive consistency across regulatory bodies who currently have different views. Humm better suited than some peers to cope because of current product suite which is already fully regulated.
UK - have chosen to go full credit check due to what is coming with UK regulation.
INVESTOR VIEW of share price which is close to all our hearts.
They see Humm as having 2 parts to the business
1/ long established , profitable PE type businesses
2/ BNPL's 3 new products
Will showcase how Humm values itself on 27/10
Statements;
It is not a winner takes all market
Its a shift in the ways of paying and
Humm see what they are doing as a way to disrupt the Personal Loan market with big ticket items.
Bring on Strategy Day.
(20min delay)