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The Proposed Transaction is expected to deliver the scale to support sustainable growth and the path to profitability, creating enhanced value for Zip and Sezzle securityholders, as summarised below.
1. Significantly enhances Zip’s scale and product offering, with the capabilities to accelerate in the U.S.
▪ Significant untapped market potential as BNPL represents 2.1% of global eCommerce spend in a $25 trillion addressable retail market11
▪ As one of the largest BNPL markets globally, the U.S. continues to be the highest priority for Zip and Sezzle.
▪ With enhanced scale across 8.8 million customers and 60.5k merchants in the U.S., approximately 60% of the TTV of the combined business is estimated to be derived from the U.S., up from Zip’s 48% as of 31 December 202112
2. Provides meaningful customer benefits unlocking BNPL anywhere for Sezzle customers and provides Zip customers access to Sezzle’s U.S. merchant network
▪ Broadened product suite to drive increased customer engagement in a combined ecosystem with merchants, thereby reducing customer acquisition costs.
▪ Complementary models and flexible solutions that enable Zip and Sezzle customers access to BNPL everywhere, expected to drive increased customer engagement across both app and checkout.
▪ Potential benefits across improved unit economics, expected to attract new customers and support higher frequency of usage.
3. Brings together highly complementary enterprise and SMB merchant networks with a strengthened set of capabilities to win together, across a diverse set of verticals
▪ Combining Zip’s strength in global enterprise and Sezzle’s SMB focus to create deeper merchant experiences and offerings.
▪ Enhanced proposition for U.S. merchants through breadth of product suite, channels and industry verticals.
▪ Risk management bolstered by combined proprietary credit platforms that drive informed decision making for merchants in an effort to deliver profitable outcomes.
4. Enables potential material cost synergies to be achieved and opportunities for improved unit economics, supporting Zip’s path to profitability
▪ Potential material cost synergies and opportunities for revenue and margin uplift with targeted potential EBTDA benefits of up to c. A$130 million EBTDA in FY24, of which A$60-80 million EBTDA are expected to be cost synergies13, 14
▪ First realisation of potential synergies targeted in FY23 with initiatives across two key categories: (1)operating expenses and (2) revenue and net transaction margin opportunities.
▪ Zip and Sezzle are engaging in integration planning for the businesses including across key functions,brands and technology. Zip intends on retaining a significant footprint in Minneapolis, Minnesota,where Sezzle is headquartered in the U.S.
5. Integration path to deliver near-term financial benefits including accretion and balance sheet support todeliver sustainable growth and realisation of potential synergies; potential to create significant value forZip and Sezzle securityholders
▪ The Proposed Transaction is expected to be accretive to revenue per share and EBTDA per share inFY24F, assuming the full impact of the targeted potential synergies15.
▪ Supports path to EBTDA profitability with expected EBTDA and cash flow positive during FY24, assumingthe full impact of the targeted potential synergies16.
▪ Balance sheet strength positioned for sustainable growth following the Placement, with more capitalrunway to execute on the potential synergies.
▪ Improved capital recycling driven by an increase in volume coming from Pay in 4 to c. 60% (an increasefrom c. 50% in volume coming from Pay in 4 for Zip).
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