ASX CEO Connect
Zip Co Ltd (ASX: Z1P) December 2019
Our Purpose
The freedom to own it
Our Mission
To be the first payment choice, everywhere and every day
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Building the next digital wallet to bring customers and retailers together through a fair and valued payments experience
Customers love us
✓ Interest free terms
✓ Payment flexibility
✓ Exclusive deals and offers
✓ Great mobile experience
✓ Strong brand affinity
EXPERIENCE
PLATFORM
Retailers love us
✓ Increased sales
✓ Larger basket sizes
✓ Great repurchase rates ✓ Risk-free transactions ✓ Customer insights
DATA
Pocketbook
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BNPL is no longer the alternative
of all ecommerce in Australia is BNPL1
250%
BNPL user growth in 2018 alone2
1 in 5
Gen Xers use BNPL3
New merchant verticals
1 in 2
BNPL customers stopped using their credit cards4
Online
Instore
Early adopters
Mainstream customers
1. Calculated from (Spaceship Invest) and internal data (November 2019), 2. Australian Retailers Association Buy Now Pay Later - New? Old? Better? (October 2019), 3. Roy Morgan Single Source (Australia) (February 2018), 4. Mozo Buy Now Pay Later Report (2019).
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Compelling investment case
SIGNIFICANT GROWTH
Market leader in a dynamic industry, delivering 100%+ YoY revenue growth for the last five years1.
BRAND AFFINITY
The Zip brand lives where our customers shop each day, always front of mind.
NETWORK-DRIVEN BUSINESS
$1.7B2 annualised volume, 1.6M customers, 20K3 retail partners and over 45K points of acceptance.
ATTRACTIVE UNIT ECONOMICS
Cash GP margins above 50%. Pathway to increase Cash EBTDA.
100% PROPRIETARY PLATFORM
Leveraging big data to provide sophisticated real-time credit and fraud decisions.
MASSIVE MARKET OPPORTUNITY
More than $1T4 addressable payment market in Australia, and then there is global.
1. Calculated from Zip financials FY14-FY19, 2. Annualised based on Q1 FY20 results (includes PartPay), 3. As at Oct-19 (includes PartPay), 4. Sourced from RBA 2019.
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Responsibility is in our DNA
Significant investment in our
A revenue model that does not rely on customers falling behind
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decisioning technology and data science teams
2
1
Interest free terms, flexible repayments and transparent fees
3
Credit and ID checks
for all applicants
Tailored account limits
with greater control and transparency
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Uniquely paired with
financial management tools to encourage responsible spending
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Delivering best in class credit performance
1.68%
Net bad debts1
Market leading loss rates
1/100
Zip customers are late
in any given month compared to 1/6 for credit cards
Higher
Average Zip credit score
compared to the average “big 4” credit card applicant
1. Reported as at Q1 FY20.
Traditional Sources
Alternative sources
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Network data
Profile, accounts and event history
Multi-banking transactional data Debits, credits, loan account and merchant spend
Portfolio performance
Transaction history, delinquencies, AoV
Application data
Residential & employment status, dependencies
Merchants & shopping cart Location, industry, classification, online vs offline, basket
Credit bureau
Credit score, enquiries, SACC loans
Device & Identity (fraud) Proof of ID, devices location IP addresses
Momentum continues into 2020, with ANZ trading update to 31-Oct
New retailers live in the last 2 months
1.6m
Customers 77%
(vs 903k Oct 18’)
20k
Merchants 67%
(vs 12k Oct 18’)
$565m 105%
Transaction Volume
(vs $275m 4 months to 31-Oct YTD)
Colette
Barbeques Galore
Bing Lee
Carsales
Chemist Warehouse
The Warehouse Group
The Just Group
Big W
Freedom Furniture
Coco Republic
Redballoon
Seafolly
Air Asia
Lorna Jane
Toymate
Daikin
Hanes Group King Living
Betta Home Living
Optus
Chemist Call Direct
T2 Tea
Carpet
⠂ 4 months to 31-Oct YTD up over 100% YoY
⠂ November set to be a record month for the Company ⠂ Acquisition of PartPay completed 7-Nov
⠂ Retailers incl. Amazon, Chemist Warehouse, Seafolly
and Optus live in November
Source: All figures are from unaudited financial data as at 31-Oct-19 and includes PartPay figures.
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High quality customer base, strong demand for interest free
1.6
Customers in ANZ1
77%
Growth YoY1
97
Retention rate2
BY AGE2 Median age 31
AGE FEMALE MALE 18-24 11% 8%
25-34 22% 14% 35-44 15% 9% 45-55 10% 5% 55+ 4% 2%
ONLINE VS INSTORE3
BY EMPLOYMENT STATUS4
m
Instore is growing
68% 32%
Online
Instore
%
Majority have a steady income stream
1. Group figures include PartPay as at 31-Oct-19, 2. Retention rate calculated as total account numbers less customer churn for FY19, 3. Percentages calculated as a share of volume as at 31-Oct-19, 4. Based on Zip Money portfolio.
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We help retailers drive growth, risk-free
Retail 52% Home 21% Other 15% Health 6% Auto 4% Travel 2%
47k
points
of presence1
20k
businesses1
1. Based on internal financial and marketing metrics as at 31st October 2019
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2019 has been a pivotal year for Zip
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Ongoing investment in technology prepares the platform for future growth
TECHNOLOGY
• New architecture delivers step-change to system speed and stability
• New APIs deliver faster checkout experience 10x
• Multi-region deployments for resilience and ease of entry into new markets
• New APIs and SDK allows us to target new verticals (eg ticketing and everyday)
• Heavy use of automation and tooling reduces time to production from days to minutes
• Significant investment in security
Transactional capacity1
5x
Faster API response times1
1. Based on internal testing metrics
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We continue to push ourselves to deliver customer centric products
CUSTOMER CENTRICITY
Our new, faster native instore checkout Launching in-app personalisation
to drive greater engagement
One-click checkout for a frictionless buying experience
4.8 60+
on Google Play1 NPS1
4.9 1.2m
on Apple Store1 Downloads1
1. Figures are as at 31st October 2019
App usage has seen strong user engagement,
new customer cohorts are transacting more often
CUSTOMER CENTRICITY
Active App Users
27%
average growth q/q2
App Users vs Non-App Users
New customers are transacting
30%more often from day one compared to 20185
26% higher transaction frequency among existing
customers5
93%of transactions are from existing customers5
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App users transact on average
3.4x
more than non-app users3...
Rebase (#)1
#300 #250 #200 #150 #100
Sep-18 Dec-18 Mar-19 Jun-19 Sep-19
Monthly Active App users at the end of the month
...with only
0.73%
in arrears vs 1.03% for non-app users4
1. Rebased to the number of app users as at 30 September 2018; 2. Calculated as a compounded average growth rate on the past four quarters’ rebased numbers; 3. Since 30 September 2018; 4. Based on % of accounts with >65 days arrears; 5. Based on an internal cohort analysis performed in October 2019.
Our first brand campaign has gained solid traction in market
CUSTOMER CENTRICITY
440
screens1
39
shopping centres1
NSW, VIC & QLD
1. Campaign metrics are as at 31st October 2019
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Made possible by our incredible team of Zipsters
PEOPLE
350+
Zipsters1
40%
Product & Tech split1
80%
Favourable engagement score2
New additions to the executive team
Steve Brennen
Chief Customer Officer
20+ years of sales, marketing & management experience. Awarded Australia’s most innovative and effective CMO by CMO50. Formerly at Uber, PayPal, Virgin and eBay.
Patrick Collins
Chief Product Officer
20+ years of entrepreneurial experience across tech businesses in San Francisco. Founded, scaled and exited multiple ventures including 5th Finger.
1. As at 31 October 2019, 2. 2019 Zip Employee Engagement Survey.
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As we dive into 2020, the company is focused on 3 growth areas
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A simple strategy to win -> more customers, transacting in more places, more often
CORE
INCREASED RETAILER ACCEPTANCE
—
Continue to grow the Zip network online and instore, expand into new verticals and build payments partnerships.
DEEPEN CUSTOMER ENGAGEMENT
—
Drive monthly transacting users via the native app, personalisation, everyday and more utility.
‘BEST IN CLASS’
SERVICE ———
RETAILER INSIGHTS
TECHNOLOGY AND PLATFORM
Shopper insights to help drive user demand generation (eg deals and offers) and campaign management.
Provide quality service to both customers and retailer partners, over the phone and in- store, using the latest tech tooling.
Continue to invest
in technology, data science and analytics driving performance levels and improving the velocity of delivery.
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Zip Biz, our instalment product for small business is in Beta
57%
of GDP
77%
have a B2B offering
2.3m
SMBs
PRODUCT EXPANSION
• Zip Biz is an interest-free digital wallet
• Up to $25k revolving line of credit
• Instore at over 20,000 Zip retailers
• Approval in under 3 minutes!
• In market in beta, full rollout 3Q 2020
1. ABS 2019
2. NAB More Than Money Business Whitepaper 2017
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Taking advantage of a global BNPL opportunity
GOING GLOBAL
$630B2
15% stake
$5T1
Strategic interests
Zip In market (100% owned)
25% stake
$67B4
$320B5
$96B3
1. US Census 2019 (US), 2. Retail Economics UK (2018) 3. Nielsen Insights 2018 (NZ) 4. Dept of Statistics South Africa (2019) 5. NAB Online Retail Sales Index (Dec 2018)
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Regulatory update
INDUSTRY LEADER
BNPL is not regulated under consumer credit laws, however Zip’s practices still lead the industry.
Zip welcomes lifting industry standards.
BNPL CODE OF CONDUCT
Zip actively supports the Code development.
RBA AND SURCHARGES
RBA to review policy in 2020.
Zip adds value to retailers through data insights, referrals customer conversions
& more.
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Zip’s business model and systems put in place from Day 1, position it to embrace any possible regulatory changes with little to no disruption.
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Financial targets
We are confident in our ability to drive growth, achieve targets, and expand globally with a deliberate lift, shift & scale strategy.
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2.5m
customers annualised transaction by June 2020 volume by June 2020
$2.2b
NB: These are only targets and do not represent a forecast. There are a large number of factors and risk, some of which are out of our control, that may affect the companies ability to meet these targets.
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Thank you
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