results presentation h1 fy19...results presentation h1 fy19 disclaimer the material in this...

RESULTS PRESENTATIONH1 FY19

DISCLAIMER

The material in this presentation is general background information about Afterpay Touch Group Limited (APT) and is current at the date of the presentation, 26 February 2019. The information in

the presentation is given for informational purposes only, is in summary form and does not purport to be complete. It is intended to be read by a professional analyst audience in conjunction with

APT’s other announcements to ASX, including the H1 FY19 Half Year Results announcement. It is not intended to be relied upon as advice to current shareholders, investors or potential investors

and does not take into account the investment objectives, financial situation or needs of any particular shareholder or investor. No representation is made as to the accuracy, completeness or

reliability of the presentation. APT is not obliged to, and does not represent that it will, update the presentation for future developments.

All currency figures are in Australian dollars unless otherwise stated. Totals may not add up precisely due to rounding.

This presentation contains statements that are, or may be deemed to be, forward looking statements. These forward-looking statements may be identified by the use of forward-looking

terminology, including the terms “believe”, “estimate”, “plan”, “target”, “project”, “anticipate”, “expect”, “intend”, “likely”, “may”, “will”, “could” or “should” or similar expressions, or by discussions of

strategy, plans, objectives, targets, goals, future events or intentions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.

You are cautioned not to place undue reliance on such forward-looking statements. Such forward looking statements are not guarantees of future performance and involve known and unknown

risks, uncertainties and other factors, many of which are beyond the control of APT or any of its related entities which may cause actual results to differ materially from those expressed or implied

in such statements. There can be no assurance that actual outcomes will not differ materially from these statements.

2

AFTERPAY IS SCALING…

AFTERPAY

UNDERLYING SALES/GMV

AFTERPAY

TOTAL INCOME2

(PRO FORMA)3

AFTERPAY

ACTIVE CUSTOMERS

1

AFTERPAY

GROSS LOSSES4 (PRO FORMA)

3

AFTERPAY

ACTIVE MERCHANTS

1

AFTERPAY

NET TRANSACTION MARGIN (PRO FORMA)

3

147% 124%

118% 32%

101%

0.9b 47.8m

1.4m

11.5k

2.3%

1.6%

H1 FY18 H1 FY18

H1 FY18 H1 FY18

H1 FY18 H1 FY18

H1 FY19 H1 FY19

H1 FY19 H1 FY19

H1 FY19 H1 FY19

2.3b 107.1m

3.1m

23.2k 2.3%

1.1%

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. AS AT 31 DECEMBER 2018, DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 2. AFTERPAY TOTAL INCOME INCLUDES AFTERPAY INCOME AND OTHER INCOME

(LATE FEES) 3. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS

WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 4. GROSS LOSSES ARE DEFINED AS THE AFTERPAY RECEIVABLES IMPAIRMENT EXPENSE AS A PERCENTAGE OF UNDERLYING SALES

UP UP

IMPROVEDUP

UP

$$

$ $

3

KEY HIGHLIGHTS - H1 FY19

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE

WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL

PLATFORM GROWTH

• Afterpay underlying sales +147% over pcp

• Significant growth in ANZ continues

• US scale-up above expectations

• UK preparing for launch in H2 FY19

REDUCED LOSSES

• Gross losses significantly reduced (1.6% to 1.1% pro forma1)

• >30% improvement over pcp

• Improvement notwithstanding contribution of higher US (early lifecycle) losses

FINANCIAL PERFORMANCE

• Group total income +91% (pro forma1) over pcp

• Transaction margins maintained notwithstanding rapid scaling in US

• Significant investment in international expansion

REDUCED LATE FEES

• Significantly reduced from 1.2% of underlying sales to 0.8% (a 32% improvement)

• Capped late fees from 1 July 2018

• Improved customer tiering and scoring

STRONG BALANCE SHEET

• Significant growth headroom

• Equity capital raising completed September 2018 ($142m before costs)

INNOVATION

• Continue to invest significantly in platform growth

• Customer engagement spend and ‘lifetime value’ increasing

• Major lead referrer to merchant partners

CAPITAL MANAGEMENT

• Increased AU facilities ($500m) and extended term

• Stand-alone US facility (US$300m) in progress; similar terms to AU

REGULATION

• Strongly supportive of regulatory development

• Support proposed ASIC product intervention powers (PIP)

• Senate Committee supportive of PIP and Afterpay supports other recommendations

4

OUR MISSION AND PROGRESS

5

THE POWER HAS SHIFTED TO THE MILLENNIAL CONSUMER

BY 2025, MILLENNIALS WILL

CONTRIBUTE ALMOST HALF OF ALL SALARY

EARNED INCOME IN THE U.S.

3

MILLENNIALS MAKE UP 27% OF

THE ENTIRE GLOBAL POPULATION

1

BY 2020, MILLENNIALS WILL HAVE THE HIGHEST SPENDING POWER

AT ALMOST $15 TRILLION WORLDWIDE

2

SOURCE: 1. A.T. KEARNEY (2016) 2. FINANCIAL TIMES (2018) 3. VISA (2015) 6

OUR MISSION

We are empowering a generational movement

away from traditional credit products

The power has shifted to the millennial consumer and we are building a long-term relationship with them today

TO BE THE WORLD’S

MOST LOVED WAY TO PAY

GEN XMILLENNIALS BABY BOOMER

71%

7%

22%39%

36%

25%

AFTERPAY AUSTRALIA

AUSTRALIA18+2

AFTERPAY DEMOGRAPHICS

CREDIT CARDS

DEBIT CARDS

1994 2018

500

0

AUSTRALIAN CARD TRANSACTIONS1

MONTHLY, BY VOLUME, ‘000

SOURCE: 1. RESERVE BANK OF AUSTRALIA (2018) 2. AUSTRALIAN BUREAU OF STATISTICS (2018). NOTE: “MILLENNIALS” ARE DEFINED AS PEOPLE BORN AFTER 1981 AND OLDER THAN 18; “GEN X” ARE DEFINED AS PEOPLE BORN BETWEEN 1960-1981; “BABY BOOMERS” ARE DEFINED AS PEOPLE BORN BEFORE 1959

7

PURPOSEFULLY DIFFERENT

MAJORITY OF INCOME EARNED FROM RETAILER NOT CUSTOMER

FREEZE ACCOUNTS IF A SINGLE PAYMENT IS LATE

TEST EVERY SINGLE TRANSACTION IN REAL-TIME (REJECT ~30%)

NOT A LINE OF CREDIT – ONLY FOR DISCRETE PURCHASES

LATE FEES CAPPED AND DON’T ACCUMULATE

FREE SERVICE TO CUSTOMERS WHO PAY ON TIME

LOW TRANSACTION VALUES WITH STRICT CAPS

MUST BUY TO OWN; NOT RENT – PAY OFF IN FULL IN SHORT TIME FRAMES

NO INTEREST AND NO HIDDEN FEES (SIGN-ON, ADMIN, MONTHLY, ETC.)

LOWER FIRST-TIME LIMITS - ONLY EXPANDS FROM GOOD BEHAVIOUR

1

3

5

2

4

7

9

8

10

6

...TO TRADITIONAL CREDIT AND OTHER BNPL1

PRODUCTS

NOTE 1. BUY NOW PAY LATER 8

BUILDING TRUST BECAUSE WE ARE DIFFERENT

43.2

35.4

48.3

30.1

24.4

30.4

42.3 42.0

31.5

46.4

32.4

16.6

33.1

61.1

37.5

30.3

0

10

20

30

40

50

60

70

BILLPAY MASTERCARD PAY TAP & PAY PAY

NE

T P

RO

MO

TE

R S

CO

RE

BANKS’ OWN MOBILE PAYMENTS OTHER CONTACTLESS/CARDLESSMOBILE PAYMENTS

BILL PAYMENT SERVICES ONLINE PAYMENT PLATFORMS BUY NOW PAY LATER PAYMENTS 2

DIGITAL PAYMENTS NTS - ROY MORGAN1 NET TRUST SCORE

PROPORTION OF NON-INTEREST INCOME TO TOTAL INCOME

RIS

K A

DJU

ST

ED

RE

TU

RN

5

LISTED SMALL CASH LOANS/EQUIPMENT RENTAL COMPANY

NOT DRAWN TO SCALE

BUBBLE SIZE REFLECTS AVERAGE REVENUE

GENERATING ASSETS / RECEIVABLES

LISTED DOMESTIC NON-BANK CONSUMER/COMMERCIAL RENTAL AND LEASING COMPANIES6

11

REGIONAL BANKS

AVERAGE8

MAJOR BANKS AVERAGE7

PUBLISHED BNPL COMPARATOR10

020%10% 30% 40% 50% 60% 70% 80% 100%90%

30%

40%

20%

10%

OFFSHORE CONSUMER

BANKS9

SOURCE: 1. ROY MORGAN RESEARCH BASE: AUSTRALIANS 14+; JULY 17 – JUNE 18 NPSSM AND NET TRUST SCORE IS A SERVICE MARK OF BAIN & COMPANY, INC., SATMETRIX SYSTEMS, INC., AND MR. FREDERICK REICHHELD. 2. BUY NOW PAY LATER PAYMENTS (AFTERPAY,

ZIPPAY, ZIPMONEY) FROM OCT 2017 3. ROY MORGAN ARTICLE (14 FEB 2019) 4. CITIBANK: COMPANY FILINGS. CALCULATIONS BASED ON LAST REPORTED OR LAST TWELVE MONTHS (FY18 UNLESS OTHERWISE INDICATED) 5. RISK ADJUSTED RETURN IS CALCULATED

BASED ON TOTAL INCOME LESS IMPAIRMENT EXPENSE AS A PERCENTAGE OF AVERAGE INTEREST EARNING ASSETS; 6. INCLUDES FLEXIGROUP AND THORN (LTM 31 DEC 2018); 7. INCLUDES CBA (LTM 31 DEC 2018), NAB, WBC AND ANZ. INCLUDES INCOME FROM ASSETS

ANNOUNCED FOR DIVESTMENT BUT WHICH HAVE NOT YET BEEN DIVESTED; 8. INCLUDES BOQ AND BEN (LTM 31 DEC 2018); 9. INCLUDES SYNCHRONY, CEMBRA (LTM 30 JUN 2018) AND MONETA; 10. BASED ON REPORTED PROPORTION OF NON-CUSTOMER BASED

INCOME IN FY16 OF ~58% 11. BUBBLE SIZE BASED ON H1 FY19 UNDERLYING SALES ANNUALISED

MAJORITY OF AFTERPAY REVENUE FROM MERCHANT (NOT CUSTOMER)4

BANKS NTS3

NEGATIVE

9

AFTERPAY HIGHEST NTS SCORE

(ROY MORGAN)

BUT MORE IMPORTANTLY...

OUR CUSTOMERS TRUST US AND ARE ‘STICKY’

OUR CUSTOMERS ARE GROWING WITH US

NOTE: 1. AUSTRALIAN CONSUMERS DEFINED AS HAVING TRANSACTED AT LEAST ONCE SINCE INCEPTION 2. PERCENTAGE OF ACTIVE CUSTOMERS THAT TRANSACTED EACH MONTH

STRONG GROWTH...

0JAN 16 JAN 16 JAN 16DEC 18 DEC 18 DEC 18

2.5 50

0 0

$400

CUSTOMER BASE GROWING STRONGLYTREND LINE

GROWING CUSTOMER ENGAGEMENT2

TREND LINE

GROWING CUSTOMER SPENDTREND LINE

Illustrates that Customer Lifetime Value should be our core focus to maximise long-term shareholder value. Our business is more about customers than transactions

AU

AU

AU

TO

TA

L A

CT

IVE

1 CU

ST

OM

ER

S (

MIL

LIO

NS

)

PE

RC

EN

TA

GE

CU

ST

OM

ER

S T

RA

NS

AC

TIN

G P

ER

MO

NT

H

AV

ER

AG

E C

US

TO

ME

R S

PE

ND

PE

R M

ON

TH

($

)

10

A U S T R A L I A

LARGEST PORTFOLIO OF LEADING BRANDS IN ANZ

11

WE ARE A PLATFORM

BRANDS

CUSTOMERS

25,000+MERCHANTS

>10%2 ALLE-COMMERCE

>95% GMV FROM

RETURNING CUSTOMERS IN

AUSTRALIA4

AFTERPAY HAS BECOME A LIFESTYLE

MULTI-CHANNEL

3.5 MILLIONCUSTOMERS

EFFECTIVE NEW CUSTOMER CHANNEL BASED ON DEEP RETAIL

INSIGHTS7m shop directory

leads in December 2018

ONE OF THE LARGEST RETAILER LEAD REFERRERS IN

ANZ2.7+ MILLION AFTERPAY

APP DOWNLOADS

(TODAY1 AND GROWING)

(TODAY1 AND GROWING)

RETAIL

SERVICES

(and ~13% of Australian 18+ population)3

Expanding strongly into Health, Wellness and Entertainment

~15% ANZ GMV from In-store

in Australia is processed through Afterpay

SOURCE: 1. AS AT 22 FEBRUARY 2019, DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 2. NAB ONLINE RETAIL SALES INDEX DECEMBER 2018 3. AUSTRALIAN BUREAU OF STATISTICS. NOTE: “MILLENNIALS” ARE DEFINED AS PEOPLE BORN AFTER 1981 AND OLDER THAN 18; “GEN X” ARE DEFINED AS PEOPLE BORN BETWEEN 1960-1981; “BABY BOOMERS” ARE DEFINED AS PEOPLE BORN BEFORE 1959 4. DURING JANUARY AND FEBRUARY 2019

~24% OF AUSTRALIAN MILLENNIALS3

12

AFTERPAY HAS BECOME A LIFESTYLEWITH DIVERSIFIED PARTNERS THAT GO BEYOND FASHION AND BEAUTY AND HAS EXPANDED TO HOME, HEALTHCARE, TRAVEL AND MORE

WE EMPOWER CUSTOMERS TO LIVE

THEIR LIFE THEIR WAY

WE ARE DESIGNED AROUND WHO OUR CUSTOMERS ARE

AND WHO THEY WANT TO BE

FASHION HEALTH AND WELLBEINGBEAUTY EXPERIENCES

A U S T R A L I A

NOTE: 1. ASOS AND NIKE ARE LIVE IN AUSTRALIA AND NEW ZEALAND

1

1

13

DEMONSTRATED IMPROVING PERFORMANCE AS WE HAVE SCALED

H1 FY16 H1 FY19H1 FY18H1 FY17

2,000

1,000

0

UNDERLYING SALES/ GMV GROWTH

TRENDLINE

MERCHANT MARGIN 3.7% 3.9% 20 bpts

GROSS LOSS 1.7% 1.1% 60 bpts

NTL 0.8% 0.5% 30 bpts

NTM 2.1% 2.3% 20 bpts

FY16 CURRENTPRO FORMA1

IMPROVEMENT

NOTE 1. CURRENT REFLECTS PRO FORMA H1 FY19. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND NET TRANSACTION LOSS. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL

A$

M

14

US CONTRIBUTION IN THE FIRST 6 MONTHS

FIRST SIX MONTH PERIOD

US CONTRIBUTION TO GROUP

IN H1 FY19

BUILDING SUCCESS IN THE USIN THE LAST SIX MONTHS THE US BUSINESS HAS ACHIEVED A$260 MILLION GMV

BY COMPARISON IT TOOK 28 MONTHS TO ACHIEVE THIS NUMBER IN THE AUSTRALIAN BUSINESS

RETAIL PARTNERS

(TODAY)1

CUSTOMERS (TODAY)2

(~650K AS AT 31 DEC)

SHOP DIRECTORY

LEADS

(IN DEC 18)

2,800 900K 2M

GMV11.6%

ACTIVE

CUSTOMERS

26.3%

ACTIVE

MERCHANTS

7.5%

NOTE 1. INCLUDES ACTIVE AND INTEGRATING MERCHANTS AS AT 22 FEBRUARY 2019 2. AS AT 22 FEBRUARY 2019, DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS

TODAY2

TODAY2

15

RESONATING WITH KEY US RETAILERSTHE FREEDOM THAT AFTERPAY PROVIDES TRANSLATES INTO LOYAL CUSTOMERS, HIGHER CONVERSIONS, AND BIGGER CARTS. WITH AFTERPAY, RETAILERS GET PAID UPFRONT WHILE CUSTOMERS GET TO PAY OVER TIME

We couldn’t be happier

with our Afterpay

partnership. Our customers

have absolutely loved the

service. Afterpay has been

incredibly easy to work

with and a tremendous

partner for our business.

MIKE KARANIKOLAS, CO-CEO & CO-FOUNDER REVOLVE

Afterpay has been a strong

partner for URBN. Their

team has been responsive

and the integration was

straightforward, but more

importantly, customers of our

multiple brands have embraced

Afterpay very favorably, so we

are excited to expand to new

markets in the future.

DAVE HAYNE, CHIEF DIGITAL OFFICER URBN GROUP

16

POSITIVE REGULATORY DEVELOPMENT

Senate Inquiry was an important process for Parliament to better understand our business and how it’s different to traditional credit. It was clear during the Senate process that Afterpay’s model is unique in the industry for not leaning on the consumer for income

The Government, the Opposition, ASIC, the Senate Committee and Afterpay support Product Intervention Powers as an appropriate way to regulate the BNPL1 industry

We’re proud of the progress we have made in capping late fees - now under 20% of Afterpay total income (the inverse is true for credit cards)

Significantly lower percentage of income earned from customers than any other traditional credit or published BNPL1 provider

Afterpay supports further minimum standards for the industry, including compulsory membership of AFCA, genuine hardship policies and an industry code of practice

We look forward to continued engagement and self-improvement

AFTERPAY’S MODEL UNIQUE

LATE FEES LESS THAN 20% AFTERPAY TOTAL INCOME

ON THE PATH TO REGULATION

CONTINUED ENGAGEMENT AND SELF-IMPROVEMENT

<20%

NOTE: 1. BUY NOW PAY LATER 17

OUR STRATEGY

18

?

OUR ADDRESSABLE OPPORTUNITY IS SUBSTANTIALOur immediate markets where Afterpay is present represents a A$6 trillion opportunity

The online contribution in these three markets is A$780 billion

Our Australian success has shown the applicability of our product across the majority of retail categories

AUSTRALIA

ONLINE $30B1

ONLINE $130B2

RETAIL $320B1

RETAIL $720B2

RETAIL $5T3

ONLINE $620B3

UNITED KINGDOM

REST OF WORLDUNITED

STATES

SOURCE: 1. NAB ONLINE RETAIL INDEX DECEMBER 2018 2. UK HOUSE OF COMMONS (2018) 3.NATIONAL RETAIL FEDERATION (2019), FTI CONSULTING (2017) 19

GREATEST OPPORTUNITY IS AHEAD

CONTINUE TO GROW IN EXISTING AND NEW VERTICALS IN ANZ

• In-store remains a significant untapped opportunity

UK LAUNCH IN H2 FY19

• Technical set up and in-market team development well progressed. Retail based engagement also in progress

• Welcome commitments from Urban Outfitters who have agreed to be our launch partner merchant for the UK

US OPPORTUNITY IS CLEAR AND NOW

• Merchant and customer growth beyond expectations for first six months

• Pipeline of integrating merchants is significant

• Co-marketing with Enterprise retailers yielding strong results

CUSTOMER LIFETIME VALUE IS GROWING AND ENHANCED THROUGH PLATFORM INNOVATION

• Continue to invest and build on strong existing engagement and create new income opportunities

1

JUN-15

49

DEC-18

0

200

400

100

US SCALING

US EARLY IN LIFECYCLE

FIRST TIME

RETURNING

57%

43%

95%

5%

RETURNING CUSTOMER SPEND % MONTHLY ORDERS

MONTHLY UNDERLYING SALES, TRENDLINE, A$M

MONTHS AFTER LAUNCH

ANZ RETURNING CUSTOMER SPEND (% H1 FY19 ORDERS)

US RETURNING CUSTOMER SPEND (% H1 FY19 ORDERS)

959491

86

75

66

54

38

60

80

40

20

61

27

US

ANZ

AU

US

20

RESULTS SUPPORT ACCELERATING GROWTHTHE BOARD AND MANAGEMENT BELIEVE SHAREHOLDER VALUE WILL BE MAXIMISED BY ADOPTING A MORE WEIGHTED APPROACH TO MERCHANT AND CUSTOMER GROWTH

ACCELERATE GMV GROWTH

(PARTICULARLY US AND INTERNATIONAL)

INVEST IN ENTERPRISE

KEY BRAND RELATIONSHIPS

INVEST FURTHER IN

PLATFORM INNOVATION

SCALE SMB GROW INTERNATIONAL EXECUTION CAPABILITY AHEAD OF THE CURVE

BROADEN BASE

CAPABILITIES APPROPRIATELY

US SCALE-UP OPPORTUNITY IS

APPARENT AND REAL

UK LAUNCH IN H2 FY19

ST

RA

TE

GY

RA

TIO

NA

LE CO-MARKETING

INVESTMENT HAS HIGH ROI

EFFICIENT DRIVER OF CUSTOMER BASE

AND PLATFORM VALUE

STRONG MARGINS

DEEP POOL

MIX TAKES SOME TIME TO BLEND MARGIN HIGHER

CUSTOMER LIFETIME VALUE FOCUS

SOLIDIFY ALREADY ‘STICKY’ CUSTOMER

ENGAGEMENT

GLOBAL SUPPORT AND

INFRASTRUCTURE

RISK AND COMPLIANCE

21

MAINTAINING A STRONG MID-TERM MARGIN FOCUS

SHORT-TERM (H2 FY19-FY21) MID-TERM (FY22)

GMV MIX

MARKETING

OTHER VARIABLE COSTS

EBITDA

Higher proportion of ‘first time’ customers and higher blended losses

GMV skew to lower margin Enterprise

Higher returning customer mix from larger base and lower losses

Higher SMB contribution (catch-up) and higher blended merchant margin

Higher fixed cost marketing

Variable Enterprise co-marketing

Variable Enterprise co-marketing is front ended and rolls off quickly

Lower fixed cost marketing

Lower cost profile as current ‘step-change’ initiatives completed and take hold

Increased margins and fixed cost base leverage as GMV scales and merchant and customer mix matures

Current cost profile

Maintain positive performance despite short term margin mix impact, marketing and fixed cost investment (at least additional A$10 million investment in H2 FY19)

AN ACCELERATED INTERNATIONAL GROWTH STRATEGY GLIDEPATH

22

MID-TERM STRATEGY

OUR EXECUTION PATH AND EXPANSION PLAN IS BASED

ON MAXIMISING LONG TERM SHAREHOLDER VALUE

FY20 FOCUSED

INTERNATIONAL EXPANSION

STRONG MERCHANT AND CUSTOMER EXPANSION

EBITDA GROWTH

FY22 OPERATING LEVERAGE

FY21 CONTINUED PLATFORM GROWTH

INVESTMENT IN GROWTH AND

CUSTOMER LIFETIME VALUE

TARGET $20B++ GMV

AND c. 2% NTM

(POST ACCOUNTING CHANGES) (END FY22)

23

H1 FY19 FINANCIAL RESULTS

OVERVIEW AND ANALYSIS

24

GROUP FINANCIAL SNAPSHOT

A$M (UNLESS OTHERWISE STATED) H1 FY19

H1 FY19 PRO FORMA1

(EXCL ACC. CHANGES) H1 FY18 CHANGE2 %

GROUP - KEY FINANCIAL METRICS

TOTAL INCOME 112.3 116.1 60.7 91%

AFTERPAY3 103.4 107.1 47.8 124%

PAY NOW 8.9 8.9 12.9 (31)%

NET TRANSACTION MARGIN4 51.6 57.1 28.0 104%

AFTERPAY 46.7 52.2 21.2 146%

PAY NOW 4.8 4.8 6.8 (28)%

EBITDA (EXCLUDING SIGNIFICANT ITEMS) 11.5 17.0 14.3 19%

INTEREST (4.9) (4.9) (2.2) 125%

EBTDA (EXCLUDING SIGNIFICANT ITEMS) 6.6 12.1 12.1 0%

LOSS FOR THE PERIOD - STATUTORY (22.2) N/A (0.7) N/A

8%

8%

21%

25%

92%

92%

79%

75%

AFTERPAY

AFTERPAY

AFTERPAY

AFTERPAY

PAY NOW

PAY NOW

PAY NOW

PAY NOW

H1 FY18

H1 FY19

H1 FY18

H1 FY19

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR

PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 2. CHANGE PERCENTAGE IS BASED ON H1 FY19 PRO FORMA COMPARED TO H1 FY18

3. AFTERPAY INCLUDES AFTERPAY INCOME AND OTHER INCOME (LATE FEES) 4. NET TRANSACTION MARGIN IS EQUAL TO AFTERPAY NET TRANSACTION MARGIN AND PAY NOW GROSS MARGIN

TOTAL INCOME CONTRIBUTION1

NET TRANSACTION MARGIN MIX1

25

PRO FORMA ACCOUNTING CHANGE ADJUSTMENTS

PRO FORMA2 IMPACT

Income – Afterpay income recognised

over the life of receivable (income

deferred by approximately 1 month)

Net Transaction Loss – Receivables impairment expense increased but does not reflect any change in actual cash loss experience

EBITDA – Combined impact of the above

103.413.6

11.5

H1

FY

19

H1

FY

19

H1

FY

19

3.7 (1.8) 5.5

IMPA

CT

OF

A

CC

OU

NT

ING

S

TA

ND

AR

D

CH

AN

GE

S

AFTERPAY TOTAL INCOME1

A$M

NET TRANSACTION LOSS

A$M

EBITDA (EXCL SIGNIFICANT ITEMS)

A$M

IMPA

CT

OF

A

CC

OU

NT

ING

S

TA

ND

AR

D

CH

AN

GE

S

IMPA

CT

OF

A

CC

OU

NT

ING

S

TA

ND

AR

D

CH

AN

GE

S

107.1

CHANGE +124%

CHANGE +19%

11.8

17.0

H1

FY

19

PR

O F

OR

MA

2

H1

FY

19

PR

O F

OR

MA

2

H1

FY

19

PR

O F

OR

MA

2

47.86.6

14.3

H1

FY

18

H1

FY

18

H1

FY

18

NO IMPACT ON INCOME RECEIVED IN CASH OR ACTUAL LOSS EXPERIENCE

NTL % (0.6%) (0.5%) (0.7%)

A B BA +

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. AFTERPAY TOTAL INCOME INCLUDES AFTERPAY INCOME AND OTHER INCOME (LATE FEES) 2. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND

RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES26

GROUP STATUTORY RESULTS

A$M (UNLESS OTHERWISE STATED) H1 FY19 H1 FY18

AFTERPAY INCOME 85.2 37.1

PAY NOW REVENUE 8.9 12.9

OTHER INCOME 18.2 10.8

TOTAL INCOME 112.3 60.7

COST OF SALES (25.9) (13.0)

GROSS PROFIT 86.4 47.7

DEPRECIATION AND AMORTISATION (11.2) (4.8)

SHARE-BASED PAYMENTS (SBP) (18.1) (5.3)

SALARIES, WAGES AND ON-COSTS (21.0) (9.2)

RECEIVABLES IMPAIRMENT EXPENSES (27.4) (15.1)

OPERATING EXPENSES (25.4) (10.4)

OPERATING (LOSS)/PROFIT (16.6) 2.9

FINANCE INCOME 0.2 0.2

FINANCE COST (5.1) (2.4)

(LOSS)/PROFIT BEFORE TAX (21.5) 0.7

INCOME TAX EXPENSE (0.7) (1.5)

LOSS FOR THE PERIOD (22.2) (0.7)

SIGNIFICANT ITEMS

Share-Based Payments ($18.1m) – Predominantly non-cash

One-Off Costs ($1.1m) – International business formation costs ($2.4m) partially offset by a one-off net gain of $1.3m for sale of European e-Services business

Foreign Currency Gain ($2.3m) – Relates to favourable FX movement on USD denominated balances

ACCOUNTING CHANGES

AASB 9 ($5.5m) - Negative impact on (Loss)/Profit Before Tax as described previously

27

AFTERPAY KEY FINANCIAL METRICS

A$M (UNLESS OTHERWISE STATED) H1 FY19AASB9

ACC. IMPACTH1 FY19

PRO FORMA2 H1 FY18 CHANGE3 %

UNDERLYING SALES 2,272.6 - 2,272.6 918.3 147%

ANZ 2,009.0 - 2,009.0 918.3 119%

US 263.7 - 263.7 - -

AFTERPAY INCOME1 85.2 3.7 88.9 37.1 140%

% OF UNDERLYING MERCHANT SALES 3.7% 0.2% 3.9% 4.0% -

NET TRANSACTION LOSS (NTL) (13.6) 1.8 (11.8) (6.6) 79%

% OF UNDERLYING MERCHANT SALES (0.6%) 0.1% (0.5%) (0.7%) -

OTHER VARIABLE TRANSACTION COSTS (INCL. FINANCE COSTS) (24.8) - (24.8) (9.2) 170%

% OF UNDERLYING MERCHANT SALES (1.1%) - (1.1%) (1.0%) -

NET TRANSACTION MARGIN (NTM) 46.7 5.5 52.2 21.3 145%

% OF UNDERLYING MERCHANT SALES 2.1% 0.2% 2.3% 2.3% -

EBTDA CONTRIBUTION 22.3 5.5 27.8 14.5 92%

EBITDA CONTRIBUTION 25.3 5.5 30.8 16.9 82%

TOTAL ACTIVE CUSTOMERS (M) - 31 DEC4 3.1 - 3.1 1.4 118%

ANZ 2.5 - 2.5 1.4 72%

US 0.7 - 0.7 - -

TOTAL ACTIVE MERCHANTS ('000) - 31 DEC4 23.2 - 23.2 11.5 101%

ANZ 21.8 - 21.8 11.5 89%

US 1.4 - 1.4 - -

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. AFTERPAY INCOME IS INCOME FROM MERCHANT FEES 2. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO

ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 3. CHANGE PERCENTAGE IS BASED ON H1 FY19

PRO FORMA COMPARED TO H1 FY18 4. AS AT 31 DECEMBER 2018, DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS

28

AFTERPAY PLATFORM GROWTHSTRONG GROWTH ACROSS ALL REGIONS AND CHANNELS

Increased acceptance and penetration

Strong US contribution in first six

months ($263.7m) with strong

pipeline in-train with key millennial

brands

December largest GMV month ever

Over 23k merchants globally at end

of December (over 25k today)

Today the US already has over 1.9k

active merchants and an additional

~0.9k merchants in the process of

integrating

Over 3.1m active customers

at end of December globally

(approximately 3.5m today)

Over 650k US active customers

at end December increasing to

over 900k today

Over 17k shop fronts in ANZ at end

of December (over 19k today)

12k more shop fronts

(228% increase) since pcp

In-store now ~15% of total ANZ

GMV – driven by Enterprise

merchants (SMB to come)

UNDERLYING SALES/GMV A$M

ACTIVE MERCHANTS1

THOUSANDS

ACTIVE CUSTOMERS1

MILLIONS

IN-STORE SHOP FRONTS3

THOUSANDS

+147%

+101%

+118%

+228%

918.3

11.5

1.4

5.4

2,272.6

23.225.3

3.1

17.819.5

3.5

263.7

1.41.9

0.7 0.9

2,009.0

21.8 23.4

2.5 2.6

H1 FY18

H1 FY18

H1 FY18

H1 FY18

H1 FY19

H1 FY19

H1 FY19

H1 FY19 TODAY2TODAY2

TODAY2

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. DEFINED AS HAVING TRANSACTED AT LEAST ONCE IN THE LAST 12 MONTHS 2. AS AT 22 FEBRUARY 2019 3. DEFINED AS NUMBER OF PHYSICAL IN-STORE LOCATIONS THAT HAVE TRANSACTED

WITH AFTERPAY AT LEAST ONCE SINCE INCEPTION

ANZ

ANZ ANZ

US

US US

ANZ

29

AFTERPAY MERCHANT INCOME MARGINSSTRONG PERFORMANCE IN LIGHT OF INCREASED SKEW TO ENTERPRISE MERCHANTS

REGIONAL MERCHANT TIER MIXPERCENT OF UNDERLYING SALES

GROUP MERCHANT TIER MIXPERCENT OF UNDERLYING SALES

AFTERPAY MERCHANT INCOME MARGIN

ONLINE VS IN-STORE CHANNEL MIXPERCENT OF UNDERLYING SALES

32%37%

6%14%

68%63%

94%86%

H1 FY19 ANZ

45%

55%

H1 FY18

H1 FY19 US

36%

64%

H1 FY19

H1 FY19 H1 FY18

ENTERPRISE

OTHER

ENTERPRISE

OTHER

ONLINE

IN-STORE

DRIVEN BY:

• Strong Enterprise performance in Christmas period

• ANZ In-store currently dominated by Enterprise brands and sales

• US has higher Enterprise mix given early stage of lifecycle

EXPECT LONGER TERM NORMALISATION AS:

• The ANZ and US SMB online pool builds (higher margin) consistently over time (currently on-boarding over 1k SMBs per month)

• ANZ In-store gets progressively rolled out to SMBs (early stages)

0.2%3.7%

3.9% 4.0%

IMPACT OF ACCOUNTING

STANDARD CHANGES

H1 FY19 PRO FORMA1

H1 FY18H1 FY19

PERCENT OF UNDERLYING SALES

NOTE: 1. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH

REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL30

REDUCED LOSSES AND LATE FEESNET TRANSACTION LOSS (NTL) PERFORMANCE DRIVEN BY LOWER GROSS LOSSES AND LOWER CONTRIBUTION OF LATE FEES

1.6% 1.2% 0.7%

H1 FY18 H1 FY18 H1 FY18

GROSS LOSSPERCENTAGE1

LATE FEESPERCENTAGE1

NTL2

PERCENTAGE1

1.2%

0.8%

0.6%

AASB 9 IMPACT

IMPROVEMENT (PRO FORMA)

IMPROVEMENT (PRO FORMA)IMPROVEMENT

AASB 9 IMPACT

H1 FY19 H1 FY19 H1 FY19

1.1%PRO FORMA

0.5%PRO FORMA

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. GROSS LOSS, LATE FEES & NTL ARE SHOWN AS A % OF UNDERLYING SALES OR GMV IN THE PERIOD 2. NTL CALCULATION ALSO INCLUDES OTHER ADJUSTMENTS (CHARGEBACKS AND DEBT

RECOVERY COSTS WHICH WERE 0.2% IN H1 FY19 AND 0.3% IN H1 FY18)

32% 28%32%

31

DRIVING LOSSES LOWER WHILE SCALING

COMMENTARY

Continued improvement achieved in H1 FY19 which was especially pleasing given:

• Continuing to rapidly scale

• US contribution of higher losses early in its lifecycle (as previously flagged)

• New vertical expansion in ANZ

• Lower contribution of late fees

UNDERLYING SALES VS NTL H1 FY16 TO H1 FY19

H1 FY16 H1 FY17 H1 FY18 H1 FY19

1.4%

0%

$3.0B

0

Pro forma NTL represents like for like comparison to prior year (i.e. pre AASB 9 impact)

UNDERLYING SALES

NET TRANSACTION LOSS

PRO FORMA1 NET TRANSACTION LOSS


REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 32

NET TRANSACTION MARGIN (NTM)

NET TRANSACTION MARGIN CALCULATION

AFTERPAY INCOME

OTHER VARIABLE TRANSACTION

COSTS

NET TRANSACTION

LOSS (NTL)

NET TRANSACTION MARGIN (NTM)

Finance, processing and other variable costs

NET TRANSACTION MARGINPERCENT OF UNDERLYING SALES

• Maintained with pcp on a pro forma basis (i.e. pre AASB 9 impact)

• Incorporates contribution of lower NTM in US, which will increase in proportionate terms as US continues to scale rapidly in H2 FY19

H1 FY18 H1 FY19 PRO FORMA1

AASB 9 IMPACT

H1 FY19

2.3% 2.3% (0.2%)

2.1%


REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL 33

PAY NOW SEGMENTREDUCED CONTRIBUTION FROM E-SERVICES AS ITS EUROPEAN BUSINESS WAS DIVESTED IN OCTOBER 2018 FOR A $1.3M GAIN ON SALE

A$M (UNLESS OTHERWISE STATED) H1 FY19 H1 FY18 CHANGE %

REVENUE

MOBILITY 5.4 7.7 (30%)

E-SERVICES 2.0 3.9 (48%)

HEALTH 1.5 1.2 23%

TOTAL REVENUE1 8.9 12.9 (31%)

COST OF SALES1 (4.1) (6.1) (33%)

GROSS MARGIN 4.8 6.8 (28%)

OTHER EXPENSES (2.3) (2.2) 4%

EBITDA CONTRIBUTION 2.5 4.5 (44%)

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. PAY NOW REVENUE WAS ADVERSELY IMPACTED IN H1 FY19 BY CHANGES IN ACCOUNTING STANDARDS ($2.2M), HOWEVER AS THE CHANGES HAD A CORRESPONDING POSITIVE ADJUSTMENT TO

COST OF SALES AND NIL IMPACT ON EBITDA THEY HAVE BEEN EXCLUDED FROM THE PRESENTATION OF PRO FORMA FINANCIALS. REFER TO NOTE 13 IN THE HALF YEAR REPORT FOR FURTHER DETAILS.34

CASH FLOW STATEMENT

H1 FY19 OPERATING CASH FLOW RECONCILIATION1

A$M

COMMENTARY

Positive underlying operating cash flow after adjusting for the change in receivables (funding of receivables)

Significant investment to set up and expand operations in US and UK reflected in H1 FY19 adjusted operating cash flow

Proceeds from equity includes $142.0m related to the equity capital raising completed September 2018

(21.5)

11.2

18.14.9 (2.3) (5.8)

29.5 33.5 (191.3)

(157.8)

OP

ER

AT

ING

C

AS

H F

LO

W

AD

JU

ST

ED

O

PE

RA

TIN

G

CA

SH

FLO

W

NE

T F

INA

NC

E

CO

ST

INC

RE

AS

E IN

P

RE

PA

YM

EN

TS

A

ND

OT

HE

R

AS

SE

TS

DE

PR

EC

IAT

ION

A

ND

A

MO

RT

ISA

TIO

N

INC

RE

AS

E IN

R

EC

EIV

AB

LE

S

INC

RE

AS

E IN

T

RA

DE

AN

D

OT

HE

R

PA

YA

BL

ES

SH

AR

E-B

AS

ED

PA

YM

EN

T

EX

PE

NS

E

FX

GA

IN

LO

SS

B

EF

OR

E

TA

X


RECEIPTS FROM CUSTOMERS 2,039.2 928.0

PAYMENTS TO MERCHANTS AND SUPPLIERS (2,175.6) (1,000.9)

PAYMENTS TO EMPLOYEES AND OTHER (21.3) (8.3)

OPERATING CASH FLOW (157.8) (81.2)

INCREASE IN RECEIVABLES2 191.3 95.3

ADJUSTED OPERATING CASH FLOW 33.5 14.1

PAYMENTS FOR INTANGIBLES (9.8) (5.0)

PROCEEDS FROM SALE OF BUSINESS 4.0 ~

OTHER (0.5) (0.6)

INVESTING CASH FLOW (6.3) (5.6)

PROCEEDS FROM BORROWING 43.5 82.8

PROCEEDS FROM EQUITY 147.5 1.6

INTEREST AND BANK FEES (5.7) (2.3)

OTHER (4.7) ~

FINANCING CASH FLOW 180.6 82.1

NET INCREASE / (DECREASE) IN CASH 16.5 (4.6)

FX ON CASH BALANCE 0.4 ~

STARTING CASH 25.5 29.6

ENDING CASH 42.3 25.0

NOTE: 1. AMOUNTS MAY NOT SUM DUE TO ROUNDING 2. MOVEMENT EXCLUDES ALLOWANCE FOR DOUBTFUL DEBTS AND IMPACT OF ACCOUNTING STANDARD CHANGES 35

COMMENTARY

71% or $169.6m increase in receivables reflecting the continued growth in Afterpay underlying sales

Growth in debt is less than the growth in receivables as net proceeds from equity raise ($137.4m3) were used to repay debt and partially fund receivables

STRONG GROUP BALANCE SHEET

NOTE: 1. RELATES TO CASH HELD IN TRUST UNDER THE AUSTRALIAN RECEIVABLES WAREHOUSE FACILITY DISCLOSED AS OTHER FINANCIAL ASSET 2. THE CHANGE IN RECEIVABLES RECOGNISED ON THE BALANCE SHEET DIFFERS FROM THE CASHFLOW STATEMENT

DUE TO THE ALLOWANCE FOR DOUBTFUL DEBTS AND THE IMPACT OF ACCOUNTING STANDARD CHANGES 3. COMPRISED OF THE $117.0 MILLION INSTITUTIONAL PLACEMENT AND THE $25.0M SHARE PURCHASE PLAN TOTALLING $142.0 MILLION LESS TRANSACTION

COSTS OF $4.7M. THIS FIGURE EXCLUDES THE $5.5M PROCEEDS RECEIVED FOR EXERCISE OF SHARE OPTIONS

A$M (UNLESS OTHERWISE STATED) 31 DECEMBER 2018 30 JUNE 2018

CASH 42.3 25.5

RESTRICTED CASH1 2.2 23.7

RECEIVABLES2 408.7 239.1

OTHER CURRENT AND NON-CURRENT ASSETS 132.8 104.0

TOTAL ASSETS 585.9 392.2

PAYABLES 50.9 42.9

DEBT 182.2 161.6

OTHER LIABILITIES 12.0 4.2

TOTAL LIABILITIES 245.1 208.7

EQUITY 340.8 183.6

RECEIVABLESBY BUSINESS UNIT

FY18

H1 FY19

233.9

404.2

5.2

4.5

AFTERPAY

PAY NOW

36

SIGNIFICANT CAPACITY FOR CONTINUED GROWTH IN AU AND INTERNATIONAL

GMV GROWTH CAPACITY

AU

A$500m total receivables funding facility; only $133.6m4 drawn

Can sustain well over $5b of annualised GMV in AU

Average life of debt is 1.9 years which is consistent with pcp

INTERNATIONAL

Excess liquidity (over $200m) in current balance sheet can sustain over $2b annualised GMV outside of AU (without restricting AU growth)

Will be substantially enhanced by planned US dedicated receivables facility of US$300m

Term sheets signed with two major international investment banks5

Expected completion in H2 FY19

NOTE: 1. REPRESENTS THE AMOUNT DRAWN. THIS DIFFERS TO THE REPORTED DRAWN AMOUNT OF $49.7M DUE TO ACCOUNTING ADJUSTMENTS FOR CAPITALISED BORROWING COSTS AND ACCRUED INTEREST 2. THE AUSTRALIAN FACILITY IS COMPRISED OF THE $300M

NAB FACILITY RECENTLY EXTENDED AND NOW DUE TO MATURE IN NOVEMBER 2020 AND THE $200M CITIGROUP FACILITY DUE TO MATURE IN AUGUST 2020 3. TOTAL BORROWING CAPACITY BASED ON THE RECEIVABLES BALANCE AS AT 31 DECEMBER 2018 4. COMPRISED

OF DRAWN DEBT UNDER THE SECURED RECEIVABLES WAREHOUSE FACILITY OF $133.6M WHICH IS UNADJUSTED FOR CAPITALISED BORROWING COSTS AND ACCRUED INTEREST. REFER TO NOTE 7 OF THE HALF YEAR REPORT FOR FURTHER DETAILS 5. THE GROUP HAS

YET TO ENTER FORMAL DOCUMENTATION IN RELATION TO THE U.S. FUNDING FACILITY

FUNDING FACILITY POSITION

A$M

FUNDING FACILITY MATURITY PROFILE

A$M

TOTAL FACILITIES

TOTAL RECEIVABLES WAREHOUSE

CAPACITY

FY20UNUSED RECEIVABLES WAREHOUSE CAPACITY

FY21

UNRESTRICTED CASH

LIQUIDITY

DRAWN4

UNDRAWN

FY22

50.01569.0

19.0

500.02

303.73

19

170.1

170.1

133.6

500

200

300

42.3 212.4

50

AUSTRALIA FACILITY

NAB (AU FACILITY)

CITI (AU FACILITY)

ASB (NZ FACILITY)

CORPORATE BONDNEW ZEALAND FACILITY CORPORATE BOND

37

APPENDIX

38

GROUP STATUTORY FINANCIAL RESULTS – EBITDA RECONCILIATION

(22.2)

1.1

LO

SS

FO

R T

HE

P

ER

IOD

-

STA

TU

TO

RY

ON

E-O

FF

C

OS

TS

0.7

(2.3)

11.5IN

CO

ME

TA

X

EX

PE

NS

E

RECONCILIATION - LOSS FOR THE PERIOD TO EBITDA

A$M

FO

RE

IGN

C

UR

RE

NC

Y

GA

IN

SIGNIFICANT ITEMS

EB

ITD

A (

EX

CL

S

IGN

IFIC

AN

T

ITE

MS

)

(21.5)

18.1

5.5

LO

SS

B

EF

OR

E T

AX

NE

T F

INA

NC

E

CO

ST

SH

AR

E-

BA

SE

D

PA

YM

EN

TS

IMPA

CT

OF

A

CC

OU

NT

ING

S

TA

ND

AR

D

CH

AN

GE

S

11.2

4.9

(5.4)

17.0

DE

PR

EC

IAT

ION

AN

D

AM

OR

TIS

AT

ION

EB

ITD

A

(UN

AD

JU

ST

ED

)

PR

O F

OR

MA

1 EB

ITD

A

(EX

CL

SIG

NIF

ICA

NT

IT

EM

S)


REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL39

NET TRANSACTION LOSS RECONCILIATION

NOTE: 1. ‘PROVISION FOR DOUBTFUL DEBTS’ IS REFERRED TO AS THE ‘TOTAL ALLOWANCE FOR DOUBTFUL DEBTS’ IN THE FINANCIAL STATEMENTS 2. OPENING PROVISION IS ADJUSTED FOR AASB 9 IMPACT ON BALANCES PROVIDED FOR AS AT 1 JULY 2018. FOR MORE

DETAIL PLEASE REFER TO NOTE 13 IN THE HALF YEAR REPORT 3. ‘BAD AND DOUBTFUL DEBTS (BDD) EXPENSE’ IS REFERRED TO AS THE ‘RECEIVABLES IMPAIRMENT EXPENSE’ IN THE FINANCIAL STATEMENTS 4. LATE FEES AS A PERCENTAGE OF AFTERPAY TOTAL INCOME

H1 FY19 H1 FY18

LATE FEES AS PERCENTAGE OF UNDERLYING SALES 0.8% 1.2%

LATE FEES AS PERCENTAGE OF AFTERPAY INCOME4 17.6% 22.5%

27.4

(17.3)

17.3

27.4

OP

EN

ING

P

RO

VIS

ION

2

BD

D E

XP

EN

SE

3

H1

FY

19

NE

T W

RIT

E-O

FF

H

1 F

Y19

(18.2)28.2

(1.8)

STATUTORY0.6% OF

UNDERLYING SALES

1.2% OF UNDERLYING

SALES

PRO FORMA0.5% OF

UNDERLYING SALES

BD

D E

XP

EN

SE

H

1 F

Y19

BALANCE SHEET PROVISION FOR BAD AND DOUBTFUL DEBTS1

INCOME STATEMENTPROFIT AND LOSS NTL BRIDGE

LA

TE

FE

ES

NE

T

TR

AN

SA

CT

ION

LO

SS

4.5 13.6

11.8

NE

T W

RIT

E-O

FF

H

1 F

Y19

PA

YM

EN

T

RE

CO

VE

RY

C

OS

TS

AN

D B

AN

K

CH

AR

GE

S

IMPA

CT

OF

A

CC

OU

NT

ING

S

TA

ND

AR

D

CH

AN

GE

S

NE

T

TR

AN

SA

CT

ION

LO

SS

(P

RO

F

OR

MA

)

10.1

18.1

CLO

SIN

G

PR

OV

ISIO

N

NE

T IN

CR

EA

SE

IN

PR

OV

ISIO

N

A$M

40

CORPORATE COSTS

H1 FY19 PRO FORMA EBITDA

(EXCLUDING SIGNIFICANT ITEMS)A$M

H1 FY18 PRO FORMA EBITDA

(EXCLUDING SIGNIFICANT ITEMS)A$M

AFTERPAY1,2 AFTERPAY1,2PAY NOW

PAY NOW

CORPORATE CORPORATEPRO FORMA2

EBITDA (EXCL

SIGNIFICANT ITEMS)

PRO FORMA2 EBITDA (EXCL

SIGNIFICANT ITEMS)

30.8

16.9

2.5

4.5

(16.3)

(7.2)17.0

14.3

COMMENTARY

Corporate cost increase primarily due to:

• Investments in business systems and processes to plan for and execute international expansion (as previously flagged)

• Continued investment in our people to enhance capabilities in technology, finance and operations to support global growth

NOTE: 1. AFTERPAY INCLUDES AFTERPAY AU, AFTERPAY US AND OTHER 2. NEW ACCOUNTING STANDARDS ADOPTED FROM 1 JULY 2018 IMPACTED AFTERPAY INCOME AND RECEIVABLES IMPAIRMENT EXPENSE. TO ENABLE COMPARABILITY TO PRIOR YEAR

PERFORMANCE WE HAVE PRESENTED PRO FORMA FINANCIALS WHICH REMOVE THE IMPACT OF THESE ACCOUNTING STANDARD CHANGES. SEE PAGE 26 FOR FURTHER DETAIL41

SIGNIFICANT ITEMS AND DEPRECIATION AND AMORTISATIONCOMMENTARY

International expansion costs comprised one-off set up costs for the UK business

Net gain on sale of business related to sale of e-Services EU business

Foreign currency gains relate to favourable FX movement on US denominated receivables and cash

COMMENTARY

Depreciation and amortisation of $11.2m resulting primarily from amortisation of acquired intangibles (Touchcorp merger & ClearPay at approx. $3.8m) and amortisation of internally generated technology (approximately $6.5m)


ONE-OFF COSTS

INTERNATIONAL EXPANSION COSTS (1.5) (0.5)

NET GAIN ON SALE OF BUSINESS 1.3 ~

BUSINESS COMBINATION & OTHER COSTS (0.9) (0.7)

FACILITY ESTABLISHMENT COSTS ~ (0.1)

SUBTOTAL (1.1) (1.3)

FOREIGN CURRENCY GAINS/(LOSSES) 2.3 ~

TOTAL 1.2 (1.3)


DEPRECIATION (0.9) (0.9)

AMORTISATION (10.3) (3.9)

TOTAL (11.2) (4.8)


GROUP HEAD OPTIONS1 (10.7) (3.8)

OTHER (7.4) (1.5)

TOTAL SHARE-BASED PAYMENTS (18.1) (5.3)

SIGNIFICANT ITEMS

DEPRECIATION AND AMORTISATION

SHARE-BASED PAYMENTS EXPENSE

NOTE: 1. IN H1 FY18, EXPENSE RELATED TO THE PROPOSED GRANT OF 2M LOAN SHARES TO DAVID HANCOCK, GROUP HEAD. AS AT 31 DEC 2018, THIS IS REPLACED BY THE AWARD OF ~2.7M SHARE OPTIONS 42

BALANCE SHEET – MOVEMENT IN CASH, DEBT AND LIQUIDITY

A$M 31 DECEMBER 2018 30 JUNE 2018 CHANGE

CASH1 44.5 49.2 (4.7)

DEBT2 182.2 161.6 20.6

NET DEBT 137.7 112.4 25.3

LIQUIDITY 212.4 124.6 87.8

CASH, DEBT AND LIQUIDITY SUMMARY

NET DEBT MOVEMENTJUN-18 TO DEC-18

COMMENTARY

Balance sheet and liquidity position as at 31 December 2018:

• Cash of $44.5m, reflecting a similar position to pcp

• Net debt of $137.7m as at 31 December 2018, $25.3m higher than the pcp

• Capital raising proceeds of $137.4m ($142.0m issue proceeds less capital raising costs of $4.7m) used to repay debt and fund growth in underlying sales

• Significant increase in liquidity to $212.4m as at 31 December 2018 due to using capital raising proceeds to repay debt and partly fund growth in receivables (creating borrowing capacity)

NOTE: 1. COMPRISED OF CASH AND CASH EQUIVALENTS OF $42.3M AND $2.2M CASH HELD IN TRUST DISCLOSED AS OTHER FINANCIAL ASSET 2. PRIMARILY COMPRISED OF $50.0M FULLY DRAWN CORPORATE BOND AND $133.6M OF DRAWN DEBT IN THE RECEIVABLES

WAREHOUSE FACILITY ADJUSTED FOR CAPITALISED BORROWING COSTS AND ACCRUED INTEREST 3. COMPRISED OF THE $117.0 MILLION INSTITUTIONAL PLACEMENT AND THE $25.0M SHARE PURCHASE PLAN TOTALLING $142.0 MILLION LESS TRANSACTION COSTS OF

$4.7M. THIS FIGURE EXCLUDES THE $5.5M PROCEEDS RECEIVED FOR EXERCISE OF SHARE OPTIONS

(25.0)

(137.4)

PRO FORMA NET CASH 30 JUN 18

CAPITAL RAISING

PROCEEDS3

191.3

MOVEMENT IN NET DEBT TOTALLING $162.7M

CASH TO FUND

RECEIVABLES GROWTH

OTHER

(33.5)

4.9 137.7

UNDERLYING OPERATING CASH FLOW

NET DEBT 31 DEC 18

112.4

NET DEBT 30 JUN 18

43

COMMENTARY

Strong balance sheet position with $44.5m of cash and $212.4 of total liquidity (cash available for funding)

Significant increase in liquidity reflecting the capital raising completed in September 2018

Relatively ungeared with the % of bank debt to receivables at only 32.3%

Increase of $130.2m of undrawn committed facilities represents an increase in the ability to fund future growth

BALANCE SHEET – DEBT METRICS

A$M (UNLESS OTHERWISE STATED) 31 DECEMBER 2018 30 JUNE 2018 CHANGE $ CHANGE %

CASH1 44.5 49.2 (4.7) (9.6)%

SECURED INTEREST BEARING BORROWINGS 132.0 111.6 20.4 18.3%

SENIOR UNSECURED NOTES 49.7 49.5 0.2 0.4%

OTHER 0.5 0.5 (0.0) (2.9)%

TOTAL DEBT 182.2 161.6 20.6 12.8%

NET DEBT2 137.7 112.4 25.3 22.5%

A$M (UNLESS OTHERWISE STATED) 31 DECEMBER 2018 30 JUNE 2018 CHANGE $ CHANGE %

INTEREST COVER RATIO3 4.4x 5.5x (0.9)x (16.9)%

TOTAL LIQUIDITY4 212.4 124.6 87.8 70.5%

BANK DEBT/RECEIVABLES5 32.3% 46.7% ~ (14.4)%

UNDRAWN COMMITTED FACILITIES6 387.0 256.8 130.2 50.7%

FIXED INTEREST RATE DEBT7 27.3% 30.6% ~ (3.3)%

BALANCE SHEET

DEBT PROFILE

NOTE: CHANGE CALCULATIONS MAY NOT EQUATE DUE TO ROUNDING 1. CASH COMPRISED OF CASH IN BANK OF $42.3M AND CASH HELD IN TRUST OF $2.2M DISCLOSED AS OTHER FINANCIAL ASSET 2. COMPRISED OF $182.2M OF DEBT LESS $44.5M OF CASH ACROSS

THE GROUP 3. INTEREST COVER RATIO BASED ON LTM EBITDA AND NET INTEREST EXPENSE AND STATED AS “TIMES” (“X”) 4. COMPRISED OF UNDRAWN BORROWING CAPACITY OF $170.1M IN THE AUSTRALIAN RECEIVABLES FACILITY AND $42.3M OF CASH ACROSS THE

GROUP, EXCLUDES CASH HELD IN TRUST 5. COMPRISED OF $132.0M OF SECURED INTEREST BEARING BORROWINGS AND $408.7M OF RECEIVABLES ACROSS THE GROUP 6. COMPRISED OF $519.0M OF BANK FUNDING FACILITY LIMITS LESS $132.0M OF SECURED INTEREST

BEARING BORROWINGS DRAWN AGAINST THESE FACILITIES, WHICH INCLUDES THE AUSTRALIAN RECEIVABLES FACILITY AND THE NEW ZEALAND CASH ADVANCE FACILITY 7. AS A PROPORTION OF TOTAL DEBT

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