Announcement PDF Q1FY21 Interim Update. GOLDMAN SACHS OCTOBER • 2020 Table of contents. 1 V I S I O N , O P P O RT U N I T Y A N D K E Y N U M B E R S 2 B U S I N E S S U P DAT E A N D F I N A N C I A L P E R F O R M A N C E 3 GROWTH AND OUTLOOK 1 1 We’ve built a scalable business model that is... Purpose-led Fast-growing Efficient A vision to bring financial wellness to all Australians New model already delivering a profitable operational outcome Market-leading proprietary tech platform backed by great customer service Since Q1FY20, we’ve delivered: OMNI-CHANNEL CUSTOMER REACH Smarter, fairer, fully-digital products with market-leading customer experience Australia’s leading credit score comparison platform, utilising positive credit reporting data Wisr App banking transaction data helps customers pay down debt, with any bank (or Wisr) faster Financial literacy initiatives and innovative new features to leverage open banking regime 358% Revenue Growth Automated business engine 132% Loan Originations 193% Ecosystem Growth Innovative Wisr Ecosystem: fast-growing and data driven channel Strong funding platform and loan unit economics Unique Wisr Ecosystem channel delivering market-leading economics with massive opportunities ahead New product launch taking advantage of sizeable market opportunity Huge opportunities to scale from small but growing share of the $120B consumer finance market1 September launch of new secured product expands reach to $33B2 market opportunity Innovation and growth in Wisr Ecosystem to deliver financial wellness to more Australians Consumer marketing (B2C) Broker channel (B2B) Strategic partnerships (B2B and B2C) C U ST OMER D A T A POW ER S I NT EL L I GENT C R ED I T ENGI NE Source: 1Equifax Credit Pulse 2019 (published August 2019), RBA, APRA 2 Includes consumer and commercial lending segments. ABS 5601.0 LTM to Dec-19, and ABS 5671.0 LTM to Nov-18; ABS discontinued ABS 5671.0 in Nov-18. 2 Strong revenue growth. Key turning point reached1. • 37% revenue growth in Q1FY21 vs Q4FY20 • 358% revenue growth in Q1FY21 vs Q1FY20 • 136% revenue growth in FY20 vs FY19 • Strong revenue growth with Wisr Warehouse funding model now in effect • Wisr is set up for significant scaling and revenue growth in FY21 and beyond 1 Q1FY21 revenue results unaudited 3 Core profitability & investing for growth. FY20 P&L Waterfall. Core business cash flow profitability achieved in H2FY20, as loan volume and revenue scales under the new funding model, while delivering operational leverage R EVENU E Strong revenue growth achieved and well positioned for further growth going forward. Result achieved despite the dual funding model approach adopted in response to COVID-19 C OR E OPEX Opex related directly to the core personal loan business GR OW T H OPEX Predominantly consists of investment into the Wisr Ecosystem (WisrCredit, Wisr App & Strategic Partnerships) along with preliminary roll-out of the secured vehicle loan product. These investments are expected to build an asset of material value and deliver sustained competitive advantage and revenue growth OT HER Includes Public Company costs and one-off items NON -C A SH Share based payments: $6.1M total (one-off and upfront recognition relating to FY20, FY21 & FY22). Expected credit loss provision: $4.1M total (upfront recognition for future expected credit losses) 4 Key numbers. Delivering on milestones, keeping promises. REVENUE GROWTH UP 358% LOAN ORIGINATIONS UP 132% WISR ECOSYSTEM UP 193% BEST IN-CLASS NET PROMOTER SCORES 500%+ INCREASE IN LIFETIME REVENUE RECOGNITION PER LOAN 90+ DAY ARREARS DOWN 0.43% CONSISTENT QOQ GROWTH TREND WELL CAPITALISED The Wisr Warehouse went live in H2FY20 – a game-changing business pivot for loan funding $3 2 .1 M C A SH A T 3 0 SEP 2 02 0 Circa $300M in loans written to date 5 Business Update and Financial Performance. 6 Prime quality customer base. Attracting Australia’s most desirable creditworthy customers. $86,686 A VER A GE I NC OM E 714 A VER A GE C U S T OM ER C R ED I T SC OR E + 75 C U ST OMER NET PR OM OT ER SC OR E The customer service is efficient and friendly, and in many ways a 100 times better than the Big 4 banks. I highly recommend Wisr. DEAN | TRUSTPILOT Wisr were brilliant with helping me get a personal loan. Smooth sailing all the way through from start to finish. Excellent staff with great experience, more than helpful guiding me through e-signing documents. Wisr personal loan applications in FY20 as a share of estimated total personal loan applications1. HEATHER | TRUSTPILOT Source: 1 Equifax Credit Pulse 2019 (published August 2019), Wisr data as at 30 June 2020 7 Consistent growth of high-quality loan book. Loan originations ($M). Loan book ($M). 8 Improving credit quality. Credit quality of Wisr’s loan book remains strong. LOAN ARREARS 90+ DAY ARREARS Arrears remained low. In line with APRA’s regulatory approach and Wisr COVID-19 arrears policy, loans deferred as part of our COVID-19 support packages are not included in arrears, where the loans were otherwise performing (defined as <90 days). 9 COVID-19 Impact. Shift to full-digital services and products benefits Wisr. COVID-19 has brought unprecedented macroeconomic change for Australia. Our purpose-led, fully digital and agile fintech business-model ensured we could rapidly respond to COVID-19 conditions and adjust our models instantly. Total loan originations reached $306.7M in Q1FY21 As Australians have become more conscious of their own financial situation, Wisr witnessed a shift to our business from the incumbents, delivering record growth across Q4FY20, as did many other e-commerce and digital-first players across every industry in Australia. 10 COVID-19 Impact. Rapid response delivers low exposure. • As at 30 June 2020, $10.3M or 6.12% of total portfolio loan balances were on COVID-19 specific payment assistance, this approximately halved to this approximately halved to $5.6m (3.09%) by 31 July 2020 and reduced further to $4.6M (2.2%) by 30 Sep 2020 PORTFOLIO BALANCES UNDER ASSISTANCE • The average Equifax CCS score for this group was 678 compared to portfolio average of 728 2.2% of total portfolio 11 COVID-19 Impact. Company back to pre-COVID-19 hardship levels. • 90% of cases have now come to the end of the initial 3 month payment assistance period and 89% of these have either been remedied or resumed regular payments • Wisr continues to proactively reach out to customers on COVID-19 payment assistance via proactive customer checks-ins • Of the remaining 11% that requires further assistance and can’t resume repayment, this represents 48 accounts which is 0.53% of the total portfolio, and 0.39% for the Wisr Warehouse • Due to the tightened credit policy since March 2020, zero COVID-19 payment assistance has been requested by customers originated after this date DAILY REQUESTS VS HARDSHIPS GRANTED CUSTOMERS UNDER INITIAL COVID-19 PAYMENT ASSISTANCE 89% of customers resumed payments as at Sep 2020 12 Low funding costs with significant runway. Dual funding model in response to COVID-19 with majority to Wisr Warehouse. LOAN FUNDING COMMENTARY • $212.1M total loan book at 30 Sep 2020 • Dual funding model adopted in response to COVID-19 with majority to the Wisr Warehouse • The off-balance sheet facility will continue to generate revenue as the book runs off • The Wisr Warehouse is the go forward funding source with vastly improved loan unit economics and a 3.5% p.a. funding cost. • Wisr Warehouse – 4 classes of notes: • Class 1 NAB • Class 2 & 3 Blue Chip Australian Financial Institution and Australian Office of Financial Management • Class 4 Wisr (5% of capital structure) • $164.3M committed funding for the Wisr Warehouse, expandable to $200M • Secured vehicle loans are funded via the Wisr Warehouse with potential for dedicated facility at scale 13 Growth and Outlook. 14 Business evolution. Model proven - now scaling. “BREAKTHROUGH YEAR, SET UP FOR GROWTH” FY20 FY19 FY18 “FOUNDATIONS” • Build market leading proprietary technology to manage end-toend customer experience • Utilise a low margin, capital light off balance sheet funding model to scale • Demonstrate we can write $100M+ in personal loans, with strong credit performance “CREATING THE NEOLENDER MODEL” • Create a strong brand that resonates in market and building blocks of the Wisr Financial Wellness Ecosystem • Demonstrate we can attract tens of thousands of Australians into the Wisr Ecosystem at effective acquisition cost levels FY20 “PIVOTAL MILESTONES ACHIEVED” • Delivery of Wisr Warehouse, a diversified funding structure, that significantly increases margins • Raise significant capital to fund growth plans • Activate B2B2C channels with strategic partners to reach millions of Australians • Aggressively build the Wisr Ecosystem platforms to scale • Continue to aggressively grow market share of unsecured personal loan • Launch secured vehicle product into $33B market opportunity • Opportunity to re-adjust credit model, driving growth and expansion • Deliver more innovation, features and experiences in the Wisr Ecosystem • Full effects and revenue from the Wisr Warehouse will become apparent • Expand the team and culture while continuing to achieve highperformance outcomes • Expand the team and culture to build the high-performance outcomes required 15 FY21 Execution priorities 1 CORE LENDING AND REVENUE GROWTH 2 E X PA N S I O N V I A T H E W I S R E C O S Y S T E M 3 OMNI-CHANNEL PRODUCT DISTRIBUTION 16 16 Core lending products driving strong revenue growth in FY21. WISR PRODUCT FEATURES UNIQUE SELLING POINT MARKET OPPORTUNITY WISR APPROACH IN FY21 UNSECURED PERSONAL LOAN • Great low rates based on borrowers’ strong credit history • Borrow between $5,000 and $60,000 SECURED VEHICLE LOAN • Loan terms of 3, 5 and 7 years Access to Wisr Ecosystem providing a deep, data enriched experience, going on the journey with the borrower to help them stay on track with repayments and make extra repayments through round-up transactions $39B1 Consumer unsecured lending OR Over 3 million personal loan applications expected per annum $80B+2 of annual vehicle sales and $33B+3 annual market for consumer vehicle financing • • • Lead the market in operational and customer experience excellence Take significant market share • UNIT ECONOMICS AND REVENUE • No ongoing or early repayment fees • • Launching in Q1FY21 with super competitive secured lending product with market leading flexibility Omni-channel distribution including Wisr Ecosystem, direct to consumer, partnerships and broker channel A near tripling of loan unit economics compared to previous funding structure, with full revenue recognition delivering 136% revenue growth in FY20 vs FY19 – just 8 months under the new funding model Company set up for continued strong revenue growth and scale in FY21 and beyond Source: 1 Equifax Credit Pulse 2019 (published August 2019) 2 Royal commission into misconduct in the banking, superannuation and financial services industry: Report - Some Features of Car Financing in Australia 3 Includes consumer and commercial lending segments. ABS 5601.0 LTM to Dec-19, and ABS 5671.0 LTM to Nov-18; ABS discontinued ABS 5671.0 in Nov-18. 17 Wisr Ecosystem. Key differentiator and competitive advantage. Over the past 2 years, Wisr delivered on the preliminary roll-out of the Wisr Ecosystem, introducing over 297,000 Australians as at 30 September 2020. The Wisr Ecosystem includes a number of individually powerful and collectively unique products, aligned to financial wellness. Ecosystem highlights include: Customers introduced through the Wisr Ecosystem are 2.5x more likely to settle a loan Deep, data-driven relationships with customers Over $1M in consumer debt repaid through Wisr App 18 The Wisr Profile. Wisr Ecosystem matures from a channel building phase into a unified experience in FY21 via the Wisr Profile. The Wisr Profile is the gateway into lending, credit score and round-up products, and enables the opportunity to build a deep, data-driven understanding of the customer. WISR CUSTOMER PROFILES WISR PROFILES INCLUDE CUSTOMERS WHO: • Receive a personal loan estimate • Take out a loan • Access their credit scores • Set up a profile on Wisr App Source: Wisr data Oct 2020 19 Omni-channel distribution. Broker Channel Wisr Ecosystem channels Introducers and Aggregators are supported through our online broker portal, and assisted by a dedicated team Cultivating strong, data-driven customer relationships while lowering costs WISR APP WISRCREDIT DIRECT Strategic Partnerships Helping companies create financial wellness programs for employees, and opening up new revenue streams through branded lending products Other external channels Further extending Wisr’s reach to Australian consumers through trusted third-party brands 20 Building a great place to work. Through FY20, our already market-leading ENPS scores skyrocketed as our incredible culture was tested by COVID-19. At Wisr, we don’t just want to lead the industry, we want to be Australia’s #1 place to work. And we’re delivering! Constant innovation of our high-performance culture ensures we deliver phenomenal results through: • Being customer obsessed • Helping each other to be amazing • Taking responsibility and accountability • Asking the hard questions for continuous improvement and innovation • Championing inclusion, diversity and social responsibility • Attracting and retaining the very best talent • Bringing your authentic self to work every day and enjoying the success that hard work brings 21 Industry recognition for reinventing consumer lending. 22 Summary. A HIGH-GROWTH COMPANY SIGNIFICANT MARKET OPPORTUNITY Opportunity to take considerable market share in current products over coming years, and launch more credit products UNIQUE STRATEGY DELIVERING CLEAR COMPETITIVE ADVANTAGE Wisr Ecosystem comprising over 297K profiles and delivering 2.5x higher likelihood of loan settlement versus other channels along with significant cost advantages through continuing scale MARKET LEADING TECHNOLOGY Proprietary end-to-end platform delivering agile, market leading, fully digital customer outcomes WELL CAPITALISED AND PROFITABLE CORE MULTIPLE LEVERS FOR GROWTH AVAILABLE 1 Delivering significant growth across key metrics in FY20; 358% revenue growth, 132% loan origination growth and 193% Wisr Ecosystem growth $34.7M of cash ($32.1M) and liquid loans assets ($2.6M) as at 30 September 2020 provides a strong balance sheet for growth and with core operational profitability1 Secured Vehicle launch on the back of a proven track record scaling the personal loan product along with historical channel investment allowing for rapid go to market and scale Core business profitability excludes growth opex, Public Company and one-off costs and non-cash items - refer to slide 4 23 Disclaimer. NO INVESTMENT ADVICE OR OFFER OF SHARES NON-GAAP FINANCIAL MEASURES This presentation does not constitute investment advice, or an inducement or recommendation to acquire or dispose in any shares of Wisr, in any jurisdiction. A number of non-GAAP financial measures are used in this presentation. You should not consider any of these in isolation from, or as a substitute for, the information provided in the audited consolidated financial statements, which are available at: www.wisr.com.au RISKS AND ASSUMPTIONS This presentation contains statements (including forward-looking statements), opinions, projections, forecasts and other material, based on various assumptions. Whilst this presentation was prepared with care and attention, those assumptions may or may not prove to be correct. All forward-looking statements, whilst considered reasonable by Wisr at the date of this presentation, involve known and unknown risks, assumptions and uncertainties, many of which are beyond Wisr’s control. There can be no assurance that actual outcomes will not differ materially from those stated or implied by these forwardlooking statements, and readers are cautioned not to place undue weight on such forwardlooking statements. To understand more about the risks and uncertainties faced by Wisr refer to the 2019 Annual Report. Dollar estimates All references to dollars, cents or $ in this presentation are to Australian currency, unless otherwise stated. Statements about past performance are not necessarily indicative of future performance. To the extent required by law, neither Wisr of any of its directors, officers, employees and agents give any warranty, representation or guarantee as to the accuracy or likelihood of fulfillment of any forward-looking statement in this presentation or assumption upon which any part of this presentation is based or the accuracy, completeness or reliability of the information contained in this presentation. ABN 80 004 661 205 24