Announcement PDF COMPANY UPDATE Q3FY23 28 April 2023 1 WISR HAS A UNIQUE AND DIFFERENTIATED STRATEGY Our tech, data, analytics and purpose are genuine competitive advantages Loan Origination of $140M in Q3FY23: DIGITAL LENDING PLATFORM WISR’S UNIQUE COMPETITIVE ADVANTAGE FINANCIAL WELLNESS PLATFORM FOR YOUR SMART PART ● Down 11% on Q3FY22 given tempered growth and focus on profitability ● $1.6B loans written since inception (Q1FY17) ● Operating revenue of $24.1M (up 55% pcp) ● Loan book of $968M (up 46% pcp) ● 90+ day arrears of 1.16% (pcp: 0.92%) Significant room for growth is evident in the current business: ● With more room to win in competitive channels ● Our ability to further optimise risk for more growth and profitability The success of the Financial Wellness Platform can be leveraged, without compromising our drive to profitability: ● The data is highly valuable ● It is delivering tangible benefits for customers that engage with it ● Demonstrated effectiveness of the Wisr Financial Wellness Platform as our most cost effective channel ● Launched new technology product, Wisr Today, a psychology-led money coaching app for greater market-share 2 Q3FY23 UPDATE $140M $1.6B $24.1M1 $968M in new loan originations Total loan originations in operating revenue Wisr loan book With the uncertainty in the macro environment, we have continued to deliver: 11% on pcp 60% on pcp ($1.0B as at 31 March 2022) ($15.5M in Q3FY22) ($663M as at 31 March 2022) 743K+ 1.16% Wisr Financial Wellness Platform profiles On-balance sheet 90+ day arrears Wisr well capitalised with cash balance of $200M $21.8M ABS transaction, Wisr Independence Trust 2023-1, 2.58% over one-month BBSW (602K as at 31 March 2022) Revenue audit-reviewed 46% on pcp ($158M in Q3FY22) as at 31 March 2023 23% on pcp 1 55% on pcp (0.92% as at 31 March 2022) Includes $18.3M unrestricted cash and $3.5M loans for sale. Refer to slide 11 for full detail (Settled 20 February 2023) 3 EXECUTIVE SUMMARY A FOCUS ON SCALING PROFITABLY WITH NIM EXPANSION After 12 months of Net Interest Margin (NIM) compression, we are now entering a period of NIM expansion. The NIM run DELIVERING NIM EXPANSION AFTER rate is currently circa 5% (for loans originated in March 2023) and positioned for medium-term delivery of NIM of over 12 MONTHS OF CONTRACTION 6%1, to deliver a highly profitable Company at scale. PRUDENT GROWTH TO FOCUS ON PROFITABILITY $140M in new loan originations (11% decrease on Q3FY22 $158M), prime $968M loan book heading to $1B, Q3FY23 operating revenue up 55%2, growth rate has been tempered to prioritise near-term profitability. FURTHER COST REDUCTION INITIATIVES DELIVERED IN Q3FY23 Quarter end saw the Company further reduce opex across the business with a circa 30% headcount reduction and additional cost reduction initiatives underway with a laser focus on profitability. $4M POSITIVE CASH FLOW IN Q3, WITH FOCUS ON PROFITABILITY^ Q3FY23 positive operating cash flow of $3.9M. UNIQUE STRATEGY Over 743K Australians in proprietary Financial Wellness Platform, reduces customer acquisition cost, drives loan conversion, improves customer financial wellbeing and opens up new revenue models. New technology product, Wisr Today, launched in Q2FY23 with over 28K downloads and offers revenue opportunity. ^Profitability is on a run-rate Cash EBTDA basis and is subject to broader market conditions, including any significant volatility events, the level of global inflation and interest rates, and the impact of any geopolitical events. 1 Subject to a relatively stable cost of funds over the same period. Rapid changes in cost of funds would alter this materially 2 Revenue audit-reviewed and percentage increase is previous corresponding period (PCP) 4 FOCUSSED ON SUSTAINABLE LONG-TERM GROWTH Operating cash flow1 $3.9M of operating cash flow delivered in Q3FY23. We responded to changing macroeconomic conditions in H1FY23 with a series of opex reductions in Q1FY23. At the end of the Q3FY23 quarter, Wisr undertook further material reductions in operating costs to prioritise efficiency and maintain a strong balance sheet for long-term growth. 1 Operating cash flow is on a cash basis per the 4C versus Cash EBTDA which is a profit and loss statement metric. Source: Q3FY23 (Appendix and Financials) 5 WISR LOAN UNIT ECONOMICS AND NIM EXPANSION Wisr is well positioned in the medium term to deliver a business with a NIM of circa 6% 1, which would deliver strong profitability. PRE NIM COMPRESSION (2021) WISR CURRENT BUSINESS WISR MARCH 2023 RUN-RATE SHORT TERM TARGET RUN-RATE MEDIUM TERM TARGET (Example for $1B loan Book) (Example for $1B loan Book) (Example for $1B loan Book) (Example for $1B loan Book) (Example for a $2B loan Book) 10% 10% 12% 13% 13.5% - Annualised net losses 1.25% 1.5% 1.5% 1.75% 2% - Cost of Funds 2.5% 5% 5.5% 5.5% 5.5% = NIM 6.25% 3.5% 5% 5.75% 6% $62.5M $35M $50M $57.5M $120M $40M $35M $35M $37.5M $55M $22.5M 0 $15M $20M $65M Yield Example NIM = - Opex Example EBTDA 1 Subject to a relatively stable cost of funds over the same period. Rapid changes in cost of funds would alter this materially Disclaimer: This is not a forecast. The data represents an indicative scenario of the economics of the Wisr Loan Book. Indicative economics are illustrative only and may vary due to a range of assumptions and variables. Data is subject to broader market conditions, including (but not limited to) movement in interest rates, macroeconomic conditions, and/or significant market volatility events. 6 NET WRITE-OFFS ● Increase in net loan write-offs driven by a larger loan book, H2 seasonality with a similar trend observed in H2FY22, higher yielding loan origination albeit still prime and maturing loan cohort vintages. ● Q3FY23 is seasonally a higher period of write-offs, as the graph shows, with significant movements between Q2FY22 and Q3FY22 and between Q2FY23 and Q3FY23. ● ● The Q3FY23 write-off figure represents 1.47% annualised. The lower relative loan book growth influences this, e.g. when applying loan book growth consistent with pcp (which was higher versus current moderated growth), the figure would be lower. Q4FY23 is expected to be broadly in line with Q3FY23. FOR YOUR SMART PART Annualised rolling net write-offs Quarter Average Outstanding Balances Net Write-offs Quarterly Net Write-offs % Annualised Rolling Net Write-offs % QoQ Book Growth Q1FY22 $442.7M $0.9M 0.22% 0.87% Q2FY22 $535.6M $0.7M 0.13% 0.68% 20.99% Q3FY22 $622.7M $2.6M 0.43% 1.09% 16.25% Q4FY22 $735.9M $2.4M 0.34% 1.17% 18.19% Q1FY23 $857.4M $2.6M 0.30% 1.22% 16.51% Q2FY23 $907.7M $2.8M 0.31% 1.24% 5.86% Q3FY23 $949.0M $4.5M 0.48% 1.47% 4.55% 7 DUAL PLATFORM STRATEGY HAS DELIVERED CONSISTENT GROWTH Lending platform growth Financial Wellness Platform profile balance 8 WISR’S LENDING PLATFORM IS DELIVERING SCALE Wisr quarterly loan book balance1 1 Wisr quarterly revenue growth Loan Book includes all loans in WH1, WH2, Freedom Trust 2021-1, Freedom Trust 2022-1 and balance sheet, excludes off-balance sheet of $11.5M as at 31 March 2023 9 STRONG FUNDING PLATFORM ● WH1 has $450M of committed funding and an undrawn capacity of $85M, while WH2 has committed funding of $300M and an undrawn capacity of $126M (total $211M available). H1FY23 saw both warehouses renewed for the customary 12 month period ● Wisr has now delivered two personal loan ABS transactions Freedom21 and Freedom22 ● An inaugural $200M SVL ABS transaction was completed in February 2023, creating additional funding capacity within WH2 ● A new debt facility (Head Co) was established with $20M drawn initially and a further $5M drawn in Q3FY23. Wisr used part of the proceeds to repay its existing $6.5M debt facility, which was due to mature in May 2023 ● Work is continuing on a third warehouse with a new senior funder and ability to fund both PL and SVL (senior funder credit approval received) ● Credit approval was received for an intraday overdraft facility for working capital requirements FOR YOUR SMART PART Funding as at 31 March 2023 10 CAPITAL POSITION CAPITAL ASSETS DESCRIPTION Restricted cash $61.2M Cash held in the Wisr Warehouses consists of customer loan repayments (principal and interest) and unutilised funds from note subscriptions (predominantly third-party debt). Use of these funds is restricted to the purposes of funding loans and operating the Wisr Warehouses e.g. Trustee fees. Unrestricted cash $18.3M Cash on hand available to be used for any purpose of the business. Loans available for sale $3.5M Loans held on the balance sheet as at the reporting date are available to sell to the Wisr Warehouses, thereby effectively being a cash equivalent. Equity notes balance in Warehouses $51.8M Wisr’s equity investment in the Warehouses: Cash per balance sheet $79.5M Cash and cash equivalents $21.8M Current Wisr equity holding in Wisr Warehouses $51.8M 1 Call dates are forecasted based on expected prepayment rates and actual dates may vary. ● ● ● ● ● Freedom21 ($7.2M, call date1 April 2024) Freedom22 ($11.3M, call date1 September 2025) WH1 ($19.4M) WH2 ($5.5M) Independence23 ($8.4M, call date1 December 2026) 11 MONEY IS STILL THE TOP CAUSE OF STRESS FOR AUSTRALIANS FINANCIAL WELLNESS IS MORE IMPORTANT THAN EVER Wisr is a purpose-led company committed to a strategy of improving our customers' financial health and wellbeing 15% My job Through strategic investment, Wisr continues to build a financial wellness platform experienced by over 743,000 Australians. 12% Relationships 59% Financial or money matters/ challenges ● 10% Health concerns 4% Other Source: PwC’s 8th annual Employee Financial Wellness Survey, PwC US, 2019 ● ● Over $1.6B in fairly priced and responsibly lent credit Credit scores and insights accessed by hundreds of thousands of Australians Over $5M transferred through round-ups (paying off debt faster and saving) In the current economic climate, the purpose of Wisr is more relevant than ever. In October 2022, Wisr further strengthened its commitment to solving holistic financial health by launching a psychology-based, daily money coaching app, Wisr Today. 12 ADDRESSING FINANCIAL WELLNESS THROUGH DAILY HABIT COACHING AND BEHAVIOUR CHANGE Clear customer demand with 28K Focused on savings on common daily spending habits Helping to alleviate rising cost of living pressures Top habits Wisr Today users are working on: Initial results have shown users could save $3K-$11K from a single habit change1 DOWNLOADS "The app brought to light that I was shopping to make myself feel better. I was just purchasing things to fill a gap." PAULA WISR TODAY USER 1 $3K (median) and $11K (mode) yearly savings from a single habit change (based on daily logged results). The average yearly savings (mode) number is significantly higher than median savings numbers, due to outlier users (who logged big resists - BNPL and Clothes) 13 THANK YOU ASX: WZR ABN 80 004 661 205 Level 4, 55 Harrington St, The Rocks, NSW 2000 1300 992 007 14 DISCLAIMER No investment advice or offer of shares This presentation does not constitute investment advice, or an inducement or recommendation to acquire or dispose in any shares of Wisr, in any jurisdiction. presentation is based or the accuracy, completeness or reliability of the information contained in this presentation. Non-GAAP financial measures 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 forward-looking statements, and readers are cautioned not to place undue weight on such forward-looking statements. To understand more about the risks and uncertainties faced by Wisr refer to the 2022 Annual Report. 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 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 ABN 80 004 661 205 15