Afterpay Limited (AFTPY) 25 Aug 212021 Q4 Earnings call transcript

Thank you all for standing by, and welcome to Afterpay's Full Year Results for FY '21. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. I'd now like to hand the conference over to your first speaker, Mr. Co-CEO. Eisen, Anthony Thank you. ahead. go Please

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to you Nick, joining of today. Thanks, you thank us and all

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of operating million. our impact the items, Excluding these X.X other [indiscernible]

in the new now Eisen create, consider open product Thank ahead look to to to this back and the continue call to for revenue, opportunities and technology questions. to hand I’ll will us available and we to invest us you. we business. As back

Thanks any be very much. We'll the are questions, any. to operator, there take pleased to extent

you. Thank

now will session. Instructions]. [Operator question-and-answer We the begin

Minnett. Our question first from comes Ord go Phil at Chippindale ahead. Please

Thanks question Nick Hi. and Rebecca. this first is offering for in card just Good morning, virtual Anthony, your U.S. around My time.

words, us all early far? maybe so it In what offered the you but outside days, the usage of integrated through talk I to other actually ratio XX% of You know perhaps non-integrated? into said can of your about uptake? the U.S. talk utilized you can customers. it’s of Thanks. And it's consumers proportion those have partners

this to up? do Thanks, pick one you Phil. want Nick,

perfect. Yes, Thanks, Phil.

and of single I that card definitely in percentage this can't lead expectation. is specifics that conversion network. out all we So out occurring we've conversion rates the would our give but transaction say from The in users, also a exceeded to seen usage was terms of what of use a

even ability expectations. So we say optimize sure scale with our through these of the appropriately would business our homepage, make be, well exceeded to aren't aren't for Phil, wanted by it, as the searching for to that that organically, when audience having just deliver, just demand of our base definitely efficiently. I we as the and the that captive app product we're or Naturally XX% search to GMV retails browse lot people to platform. that our brands coming to it’s our we're at goal test scaling and that customer retailers get product, But case very ramp looking will we consumers currently that capture a that live. beyond XX%. able access in to well this to The on naturally to And naturally come much

feel to proposition the expanding consumers. pre-holiday certainly and course few the all we're now place of in reasonable I over like a that So next to continue weeks

Thanks, Nick.

pivoting a that is again, revenue the for example? party things does model Can us through directory, for include offering? advertising product, you And Just Afterpay like the the store to it product recent another what development. in ranking talk

Yes.

model the be an So will look, primary affiliate-led the revenue primary initial platform. --

definitely engagement. time assets focus platform ability broaden ad more the to of app as on campaign of be to can and be opportunities market ability this trigger our to can to to subsequently certainly to course, come income back platform via And There consumers. monetize exposure, to platform the that application stream displayed us. will can we'll exposure is the products for then quickly there's new into be retailers a to the ad to new over that lot an an affiliate these iQ via their a with insight between incremental very you able due deliver we relevant they is the great linkage access off with these But can live great that get interconnectivity So to ecosystem, more the path incremental ultimately where where our reflect launch someone traditional offer retailers Afterpay drive In forward. proposition. a

on Westpac the the money. can in been you timeframe feedback the Final of to Afterpay the the post has regards Can clarify just confirm of that what Square question just from And Thanks. from term long announcement Okay. product? just me you broader transaction?

to It's about. this have power is could Yes, that, very what excited ahead. perhaps we're about full Thanks, well together. or Phil. illustrate partnership teams been actually quite working take Nick. steam is I The What

something track core will look very present different is steam been what is it's on and We're that of will we've the perspective. So to and and our its way about. full app Everything excited terms Afterpay the to that ahead the DNA right of unique in from the go building features.

really, we strong As contribution really and Westpac’s alignment it being see there. to strategy, either relates there

as we assets, it ability think symbolize and also not world. the power transpire a future, which innovation will a different definitely of parts indicate way product that to things in connection their of just to translate in back customers other will have form but will Australia, with the joint in on customers sheet new and connect of Our to to banking service balance the through Westpac’s

and have this So prove team of both I model. we alignment excited sides very strong the out think to fence are

Thank you.

comes ahead. Our Brendler Chris Davidson. next D.A. at question from Please go

credit card, Hi. Thanks. But provision this little like to is low. essentially there's if rate half virtual U.S. loss or -- bit up just wondering to the I relatively loss Good in market? also morning. the ask a my just a less product? that questions. guess Thanks of a for it a form higher shape quarter the maybe question is was or is a taking provision you. bit there. higher of Thank I’m on I'd pandemic, ticked this has bit. little mature to any And anything or the out growth in is the little is and normalization a call it [indiscernible] way, Is which post just sort

don't we seasonality that question, comment that the there any on see, The mind? the you whatsoever. no in line was the profile of But with particular methodology pretty in Yes. of previous was loss year in more and Rebecca, the applied changes and might you part much the if we that second

Yes, sure.

more it's So as Eisen probably seasonality. said,

half. the an do mix between see impact. got regions happen the the the shift regions, mature we newer does as and of end you So at which have also know more We've second the that

rather And we last well. couple it really it to those continue expect we the specific out points. see months of unfold would there's way So to than to as call for the nothing

nothing So other there's than that. really specific

question Do you mind on the repeating one? second your

virtual the card? On

Yes.

card? your on Sorry, repeating you question do mind the virtual

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to once training, our cetera? kind of difficult and end now these in go October, for We’re staff get roll feel strongly big really merchandising, live to rolling are very of out The mentioned. the into it's been started train the much say isn't more through. pre-holiday you conversations end to half, shift in happy feel particularly very have towards time I between the through et retail as would operationally that engaged confident in still reopen But the virtual U.S. pipeline that the from the and enterprise a how retailers if it's do that given and basically as strongly. November, to see second months that strategic consuming of great. with take integration did largely really okay. we the It's component, visual I'm Yes. you card, successfully because What offline many, that we to online roll many is

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our way you and to because in engage we're the right. being store this get out the to right to roll key one So, partners, really rep it get chance conscious with really

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Thank you.

MS. go comes Please ahead. Our Andrei next from from question Stadnik

Good morning. that extend to that Can the stream? your this revenue thinking ask how around slides mortgages. and of to Afterpay questions suggest the In Money, mortgage What I please? is monetize will terms referral two

Andrei. It’s here. Thanks, Anthony

unique marketplace a that we suit the can we our though to help for no that that's knowing future. we customer, insight for things deeply What the introduce And a have think is exist conduit that of the things that. and into We do discern from we can today. traditional product intention different there's in One recognize to Afterpay products important offers customer. can of really type services that by our lots decipher into is manufacture we think different think and we of be

some So of opportunity. slide connect relate doesn't It case we there's to financial will that manufacturing and illustrators wanted think to the in product. But aspect. help make Afterpay that of a we is where it traditional our can customers we how that not just this be

Money Afterpay ways millennial will investment. and sharing Z to Z features paying It talks to You'll from and and by see that that have of emerged millennial talk and connecting. Gen Gen

we for be type think conduit activity. So can across the board, a of we this

XXX gross question, Anthony. year-on-year ask merchant you, was points. my to margin, which I And around wanted second stable at about Thank basis the

was year-on-year the was You’re U.S. you managing regional the the on stronger any competition concerns region, the color very a since by on merchant softer. Australia Can margin? give well. going bit a But bit more and dynamics

Yes.

mature Part in in points I differences effect business that though, between As particular you and less of different were small But Part can to seasonal. time, medium particularly enterprise quite they say What mid-tier in before of relates merchants have it not shift you're the is and UK Rebecca step a mix at relates the this generally. that to when that is It when will dynamics ones around. some actually growth in Andrei, does we be as regions, just blended convincingly, any period. similar. see said does impacts Australia, dynamic seeing margins board, fast enterprise the we're impact timing to large growth a on basis. more which between undergoing come and change on highlighted, Obviously, U.S. or of that rates. particularly

underlying. it's than So anything more those dynamics

Thank you.

Our next at question comes from Tom UBS. go ahead. Please Beadle

opportunity for Hi, the guys. to ask questions. Thanks three had just I please.

on generating I Just, firstly, you're the X just about leads. day. million know per

back talk Just yes, last to X%. X% time wondering conversion I you're could about -- rate? if that you solve the or we converting think could

to be deal. Square your that? thoughts on on hear I’d So Second the question interested

a before a it back to net subsequently on engagement And been. to feedback reported recall hear transaction you've question net was, a provisions number I did down. has when you with up a year interested that could you've you if I raised was just transaction loss your and what be just their this had Just that wondering U.S. you revised third share? I'd at last regulators any that year in you what there. July think follow loss, similar level

number have July you in your checks a the thought and when a higher when recoveries think you and Thanks. what much extent capital this you large what normal last in were received have So year's been year, Australia might U.S. reason could is why do raised than that stimulus finalized your number in and given consumers to quite between you accounts? more

much Nick, point higher Thanks. than to what mentioned. It's was take you Yes. the do on first the want conversions?

it you but I certainly we've seen yet consistent that recent prior be don't think higher periods We've the referred specifics and periods. the released number before, it's the been Yes. to. than consistent over with

Nick. Thanks,

when whole Square more In we we will question comment on process of your our issue the terms on regulators, fully U.S. and booklet. scheme

from us of So be to transaction, those the we've to when since inappropriate announced But from or across red perceptions board aspects of terms prior our in we've our flags seen the we any would perspective, no announced. about talk our it for that positioning particular disclosure.

In NTL referenced of the amount of was in a you've there last quite the provisions, change a year terms where obviously, market. period considerable

But normalized a we'll want feel don't there provisioning our said methodology I we stated see. might is our to pattern, this extent As before, that anything To represent I to no as procedures. or there's before. at at difference the that? we Rebecca, know the in more -- all in you confident year answered policies this add moment.

our No. loss note I think remained as sales to important underlying do gross has a that it's quite of consistent. actually percentage

So, obviously, pretty it's up that, [indiscernible] growth. other I much than think covered. has with gone But

Thanks. great. Okay,

ahead. Our comes Wai [ph] Sim from question Macquarie. next go at Please

Thanks taking questions. my for guys. Hi,

up The bit. on regards first is a half a basis. did part kind We just to pick half in gross loss by see of that

it come which through what in able Was have loss been increasing many different percentage are wondering Just driving if number? any Europe, our that established give expansion and might the that gross [indiscernible] by into saw color we regions, that? regions you're to more of or

would you address to Yes. that? like Rebecca,

Yes, sure.

gross the from from region is So seasonality. loss a it perspective, by different

higher that So go the And where will losses we over somewhat, have timing, of the just because consumers the of just our you the you about because down the newer will maturity of the platform. gross regions if the those on Australia, think are nature goes in then year at of end gross time. tax purely see down losses of

U.S. things their as with the well. got interesting people also other an up stage at and of opening shopping doing You've

that if of you where about of those region nothing whole play, region would different a think that the go each there's there's but a are lifecycle into things to So indicate of at. significant bunch difference

they're will the would following region, have over starting, again, time. just time. So be as will gross And over a Europe when trajectory mature same still expect matures will higher that And we they and obviously it losses. newer

recorded unique other this or nothing that compared was periods there's on. different year to any really So

initial got to from right trends expectations or now? had the income affiliate to any that's able another program that Are the give regards the Okay, in it. seeing the maybe previous that how then color for we're we question merchant versus expectation just And you to as tracking that?

Yes. Nick, would take you like that? to

I a got Sorry. missed I’ve bad line. one. that

just Okay. you. repeating mind Nick? for Do Thank you

Yes.

from trends the income program? we're the that Just seeing affiliate

Yes.

at would broader is that blends that there's you would lower that board you given bigger it our income So XX%. use smaller average be affiliate what complemented I the than from big we there's up. would if are card that there a achieved by a speaking, be can naturally But actual affiliate for the enterprise across to average affiliate income the many stream able of you'd our say is X%. a are that platforms, should conservatively many card looked so than more single that then see also to retailer income income affiliate as you portfolio. use the interchange across -- programs probably of Generally see from was But different business, enterprise compared X%, a achieve the difference affiliate retailers, the streams for single in garner

we where program, So of participate that. Naturally we greater. to into affiliates would and are for but in begin we will programs obviously, that to as build be ease a right resource now retailers the upside derived properly lot see from beyond

Thank you.

at Please go next comes Roger Jefferies. from Samuel Our question ahead.

I've guys. Good a morning, got questions. few

just foreign expect higher business on the we can pay margin this have to transactions, a be or one cross first border the currency to away So do you margin to of some providers?

it’s border margin. Yes, equation. from the And Anthony -- settling both higher benefit is cross FX it’s here. a on margin transaction of A sides the higher we

it’s improvement. So And normal material a transaction can margin above and is our vary, additional net that but over margin. that

slide question on Okay. that saying around presentation And your your in you're is second expanding Shanghai.

in So Asia? what's ambition your

and initiatives well of group which and that we people our lot of about have utilizing. of contributing terms regions are China. the an for is What tools risk dynamics Yes. engineering in number they’re a the the in and developed we now periods flagged all talented improvement of some risk We've of a team incredibly of in as our across have as we and our part that today globe, spoken

has a that of development terms our developed in and at go We're significantly small region opportune have a global concentrate FY most strategy But to It we've business as priority in FYI of presently. based of we less the looking merchants. our we of forward core position region 'XX of in terms into on of that Union. We been will the in 'XX tying and terms which ourselves Singapore with expand ways European expansion, following out beyond.

Okay. Thank you.

that's have okay. for more We probably time one if question just

Certainly.

Please Matthew question Wilson Our go from final come at ahead. will E&P.

team. morning, Good Yes.

talk UK Money and global? you. what you Thank Does Europe? your take got by Just the about in plans would U.S.? the give in on that by offering question replicate understand Afterpay Square’s to sort Afterpay, And you to of license of Utah. banking Andrei’s Square you can do in Money need the that a I opportunity platform to sort to

much their The is active in aligned what XX Yes. very U.S. Money delivering you to when thesis App is million, XX-month the customers around core Afterpay by Cash look at customers;

entry So Money really not point by present that is things with in canvas engaged some a to of the excellent Afterpay an is extremely prosecuting regard very U.S. Square App the for and Square at Australia on customers and the in with effectively moment deliver Cash that is

to think you developing good very apparent see some we to what at on as of well look become come very fore. in just developed and synergy as aspects import look America some try in what those Money as savings concentration parts the will Afterpay, budgetings by to dynamics the done And internationally. exportable particular well. When North of this Square might we'll some Money and So Australia, with from of there will the bring be terms and versa I that features we're really has by to vice Afterpay is that probably of being opportunity of in

you. Thank

again gentlemen. we'll a great the today, focus time day. number attention for time. to speaking your coming ladies to Have a your for speak the forward you look you thank of and you Delighted And much in the the Thank very and But and appreciate really questions. months. to We soon.

you. Thank

today's much. Thank joining. Thank does you This all call. you for so conclude

now may disconnect. You