Announcement PDF QUICKFEE Q3 FY24 BUSINESS UPDATE 24 April 2024 President, North America, Jennifer Warawa Chief Financial Officer, Simon Yeandle Strong revenue growth continues, up 36% on pcp Strong revenue growth: + Driven by successful execution of core Finance product strategies + US Finance revenue up 54% on pcp: Total Transaction Volume (TTV) up 36% and revenue yield up 120 bps + Australia Finance revenue up 50% on pcp: TTV up 20% and revenue yield up 310 bps + Total Finance revenue now 63% of total group revenue 200% increase in new US firms utilising Finance in Q3 FY24 on pcp + Improved firm onboarding process launched last year are delivering tangible results Completed transition to ‘direct to bank’ model + Provides internal control for ACH processing and full redundancy via multiple banks + Reduced third party processing costs Continue tracking towards operating profitability + March EBTDA at break-even + Q4 FY24 expected to be stronger than Q3 FY24 + H2 FY24 expected to be stronger than H1 FY24 www.quickfee.com 24 April 2024 1 Key metrics in Q3 FY24 Q3 FY24 PERFORMANCE1 Q3 FY24 Q3 FY23 YEAR-ON-YEAR MOVEMENT REVENUE US Finance (Pay Over Time) US Pay Now (ACH & Card) AU Finance (Pay Over Time) US$ 709k US$ 1,051k A$ 2,014k US$ 459k US$ 916k A$ 1,343k +54% +15% +50% A$ 4.9M A$ 3.6M +36% US$ 6.8m US$ 307m A$ 13.1m US$ 5.0m US$ 263m A$ 10.9m +36% +17% +20% GROUP REVENUE INCLUDING ANCILLARY PRODUCTS TOTAL TRANSACTION VALUES (TTV) US Finance (Pay Over Time) US Pay Now AU Finance (Pay Over Time) 1 Figures shown are unaudited, from management accounts www.quickfee.com 24 April 2024 2 QuickFee Pay Over Time (Finance) AU FINANCE TTV A$M AU FINANCE REVENUE YIELD % AU FINANCE REVENUE A$M Revenue growth driven by both volume and yield 0.4 + In both markets, revenue growth has come 0.3 from both TTV growth and yield improvements 10.9 13.1 12.3% + Yield improvements are driven primarily by YIELD 15.4% TTV 1.3 Q3 FY23 increases in interest rates charged to clients of firms Q3 FY23 + Interest rate increases were made in October 2022 and July 2023 Q3 FY24 US FINANCE TTV US$M Q3 FY23 Q3 FY24 US FINANCE REVENUE YIELD % REVENUE US FINANCE REVENUE US$M 0.10 + Interest revenue on loans is recognised over 0.10 the life of the loans, so the effect of recent rate increases will be seen well into FY24 6.8 5.0 Q3 FY23 www.quickfee.com Q3 FY24 9.2% Q3 FY23 YIELD 10.4% 0.50 Q3 FY24 TTV Q3 FY23 REVENUE 24 April 2024 3 Strong revenue growth expected to continue 'LAST 12 MONTHS' ROLLING GROUP REVENUE (A$M) GROUP REVENUE BY QUARTER (A$M) 5.1 4.3 3.7 3.6 Q2 FY23 Q3 FY23 3.2 Q1 FY23 Q4 FY23 4.9 4.2 Q1 FY24 11.9 Q2 FY24 Q3 FY24 Q1 FY23 13.0 Q2 FY23 14.0 14.8 Q3 FY23 Q4 FY23 15.8 Q1 FY24 18.5 17.2 Q2 FY24 Q3 FY24 Seasonality + Revenue stronger in Q2 and Q4, due to Pay Now seasonal volumes; Q4 traditionally stronger than Q2 + Q1: US northern hemisphere summer, AU start of financial year + Q2: US lead-up to 1 January tax season start, AU lead up to summer break + Q3: US tax season runs 1 January – 15 April, AU summer break + Q4: US out of tax season and billing backlog, AU lead up to EOFY www.quickfee.com 24 April 2024 4 WHAT WE DO Unique product and payments portfolio Our customers benefit from increased revenue, improved cashflow, reduction in accounts receivable, improved operational efficiency and reduced cost base. PAY NOW | ACH/EFT + CARD PAY OVER TIME | FINANCE QUICKFEE CONNECT | AUTOMATION Traditional digital payment methods. + One payment link to securely accept online credit card, debit card, or ACH/eCheck + No caps on ACH processing or maximums on invoicing + Credit card surcharge paid by the client Invoice and fee financing for clients of professional services firms. + Get paid in full every time and give extra breathing room for good clients who fall behind + Generate client payment plans with 3, 6, 9, or 12month terms + No cost to the Firm + No credit checks or lengthy applications for clients An easy way to automate the entire bill-to-cash workflow. + Save hours of unbillable time and make the switch to e-invoicing + Set automated email reminders to help clients pay on time + Clients get personalised invoice links so they can pay in 1 click + Integrations with leading practice management solutions www.quickfee.com 24 April 2024 6 Winning with a unique customer value proposition Traditional ACH and card processors No integration with practice management solutions, manual workflow for firms Credit card surcharges are not able to be passed on to their clients Other ‘Pay Over Time’ Finance providers Other A/R automation platforms Consumer focused, low invoice maximum (typically $17,500) Only serve top tier, very large firms, and are too highly priced for most of the market Hard credit check required for every customer Designed specifically for professional service firms No invoice maximum for QuickFee Finance No hard credit checks for clients of firms Integration with the leading practice management solutions Pricing that works for all sizes of firms www.quickfee.com 24 April 2024 7 EXECUTING ON THE US GROWTH STRATEGY Unlocking transformational growth in the US QuickFee Finance Drive Cost Effective Growth Through Automation Revenue yields on the Finance product are approximately 25x those of Pay Now. Leverage automation across all functional areas to ensure we are driving growth in the most efficient, cost-effective, scalable way possible. 01 05 02 04 Strategic Alliances + Partnerships Leverage strategic partnerships to bring new customers to QuickFee at scale. www.quickfee.com Connect Adoption Early results show that firms that adopt Connect can see double transaction volume over pcp. 03 Differentiated Technology Shift Product Development from a cost center to a difference maker, delivering world-class solutions that provide a significant competitive advantage. 24 April 2024 9 US Finance revenue up 54% in Q3 FY24 on pcp US FINANCE 'LAST 12 MONTHS ROLLING' TTV (US$M) QuickFee Finance is a key differentiator in competitive payments market Revenue yields on the Finance product are approximately 25x those of Pay Now 26.2 24.4 17.8 18.7 19.3 Q2FY23 Q3FY23 20.9 22.0 200% increase in new US firms utilising Finance in Q3 FY24 on pcp + Improved onboarding processes for new firms + Focus on onboarding larger firms with higher revenue + Strategies to capture more of our customer’s payment flow Q1FY23 Strategic partnership with IRIS is progressing well Q4FY23 646 gold sponsor in May + Provides QuickFee customers with best-in-class engagement Q2 FY24 US FINANCE REVENUE (US$000) + QuickFee to attend, and present at, IRIS User Conference as a New integration partnership with Knuula Q1 FY24 347 409 459 515 Q3 FY24 709 561 letter functionality Completed transition to 'direct to bank’ ACH model Q1 FY23 www.quickfee.com Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 24 April 2024 Q3 FY24 10 Q3 FY24 Operational metrics in the US + US Active Customers up 14% to 97,000 and US Active Firms up 3% to 689 on pcp + The strategic decision to focus on the core, higher-margin Finance product, in conjunction with a refreshed sales strategy with incentive alignment on commissions, has driven stronger Finance TTV, up 36% on pcp to $6.8 million + Continued negligible credit losses US FINANCE TTV (US$M) US PAY NOW TTV (US$M) +36% US ACTIVE FIRMS US ACTIVE CUSTOMERS (000s) +3% +14% +17% 6.8 307 667 Q3 FY24 Q3 FY23 689 85 263 97 5.0 Q3 FY23 www.quickfee.com Q3 FY24 Q3 FY23 Q3 FY24 Q3 FY23 Q3 FY24 24 April 2024 11 AUSTRALIA: CONTINUED STRONG ORGANIC GROWTH Australia: Continued strong organic growth AU FINANCE 'LAST 12 MONTHS' ROLLING TTV (A$M) QuickFee well established as a market leader, with ~40% of the AU market for fee funding + AU Finance revenue up 50% on pcp 39.1 41.5 44.5 46.4 48.5 51.2 53.4 + Strong organic growth through existing firms + In a mature market, favourable economic conditions continue to drive demand + Low credit losses Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1 FY24 Q2 FY24 AU FINANCE REVENUE (A$000) 1,914 1,096 Q1 FY23 www.quickfee.com 1,232 Q2 FY23 1,343 Q3 FY23 1,555 Q4 FY23 Q3 FY24 2,014 1,693 Q1 FY24 Q2 FY24 24 April 2024 Q3 FY24 13 Q3 FY24 Operational metrics in Australia + AU Finance TTV up 20% on pcp to $13.1 million + AU Active Customers up 25% on pcp to 15,000, AU Active Firms stable on pcp at 411 + Legal disbursement funding TTV (included within Finance TTV) continues to be a growing component of the AU business AU FINANCE TTV (A$M) AU PAY NOW TTV (A$M) AU ACTIVE FIRMS AU ACTIVE CUSTOMERS (000s) +20% +14% -% +25% 13.1 10.9 Q3 FY23 www.quickfee.com Q3 FY24 16 14 Q3 FY23 409 15 411 12 Q3 FY24 Q3 FY23 Q3 FY24 Q3 FY23 Q3 FY24 24 April 2024 14 OUTLOOK On the path to profitability Path to profitability 9.3 + Track record of revenue growth 7.9 6.9 6.1 + Track record of gross profit growth 4.5 4.7 4.3 3.2 3.1 4.5 4.2 3.4 5.7 4.9 + Cost base stable -2.6 + Year-on-year EBTDA growth -5.2 expected to continue for H2 FY24 -2.7 H2 FY23 H1 FY24 -5.5 -7.1 H1 FY21 H2 FY21 H1 FY22 Revenue A$M www.quickfee.com -2.7 -3.7 H2 FY22 H1 FY23 Gross profit A$M EBTDA A$M 24 April 2024 16 Fixed cost leverage effect Variable costs: + Mainly comprise AU card processing and US ACH processing costs and interest. + Are approximately 30% - 35% of revenue. + Are 30% - 40% of total costs (which include cost of sales and interest). Indicative impact of fixed cost leverage on hypothetical future half-yearly year-on-year revenue growth of 30-40% Fixed cost leverage effect (A$M) 16 14 12 Fixed costs are expected to grow at a slower rate than variable costs. 1.3 10 0.9 8 6 4 2 1.7 1.8 2.5 8.8 8.1 3.2 1.0 8.6 10.5 9.9 6.1 8.8 H1 FY21 H2 FY21 H1 FY22 H2 FY22 H1 FY23 H2 FY23 H1 FY24 Fixed costs www.quickfee.com Variable costs Revenue 24 April 2024 17 Cash and loan book growth funding Cash and liquidity + A$3.2 million cash on hand, with borrowing capacity of a further A$23.2 million from existing facilities available to fund future loan book growth, as at 31 March 2024 + QuickFee has adequate headroom to achieve sustainable profitability within its existing cash and borrowings facilities QuickFee loan book growth funding + QuickFee funds 10-15% of loan book growth from cash reserves + Rate of loan book growth determines the capital required to fund loan book growth in both markets www.quickfee.com 24 April 2024 18 Outlook Focus on reaching profitability + Positive momentum in key metrics + Continue to manage cost base carefully + Focus on fastest path to profit: QuickFee Finance and Connect solutions + Expect stronger H2 FY24 than H1 FY24 Focus on unlocking transformational growth in the US + Experienced team executing on the growth strategy + Engaging with firms outside of key verticals in accounting and legal + Building scalable technology foundation with enhanced systems redundancy + Build and execute strategic partnerships to enable exponential growth + Focus on Connect product development and firm adoption in Q4 FY24, and additional integrations with practice management systems continue to be executed www.quickfee.com 24 April 2024 19 QUESTIONS CONTACT DETAILS Simon Yeandle, CFO p: +61 2 8090 7700 e: simon.yeandle@quickfee.com Katie Mackenzie, Investor Relations p: +61 455 502 197 e: kmackenzie@belleviewir.com.au Disclaimer The material contained in this document has been prepared by QuickFee Limited ACN 624 448 693 (‘company’) and contains general information about the company’s activities current as at the date of this presentation (24 April 2024). By accepting this document, you agree to be bound by the below terms and conditions. This presentation is provided in summary and does not purport to be complete and is intended to be read in conjunction with the company’s other announcements to ASX. The information contained in this presentation is not intended to be relied upon as advice to current shareholders or investors as it does not take into account the investment objectives, financial position or needs of any particular shareholder or investor. Shareholders and investors should assess their own individual financial circumstances and consider talking to a financial adviser or consultant before making any investment decision. This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to the company’s businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Such statements involve known and unknown risks, uncertainties, assumptions, and readers are cautioned not to place undue reliance on these forward-looking statements. No representation is made as to the accuracy, completeness or reliability of the presentation QuickFee does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. None of the company, its subsidiaries, nor their respective directors, officers, employees, contractors or agents accepts responsibility for any loss or damage resulting from the use of or reliance on this presentation by any person. While due care has been used in the preparation of forecast information, actual results, performance or achievements may vary in a materially positive or negative manner from those expressed or implied by such statements. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside QuickFee’s control. Past performance is not a reliable indication of future performance and no guarantee of future returns is implied or given. Some of the information in this presentation is based on unaudited financial data which may be subject to change. Glossary ACH Automated Clearing House Active customer Any customer who has transacted with QuickFee in the relevant period Active firm Any firm that has had a transaction with QuickFee in the relevant period APR Annual percentage rate The annual rate of interest on payment plans or loans BNPL or Q Pay Plan BNPL powered by QuickFee QuickFee’s ‘Buy Now, Pay Later’ product to enable a customer to pay their invoice in 3-12 instalments using the unused balance of their credit card CC Credit card Connect QuickFee’s product name for its point-of-payment integration, e-invoicing, automated collections and receivables management product Customer The customer of a merchant, who will use one of QuickFee’s payment options to pay their invoice EFT Electronic funds transfer Firm Typically used to describe a professional services firm (e.g. an accounting or law firm) Gross Trading Margin (GTM) Gross Trading Margin is calculated as Gross Profit per QuickFee’s audited financial statements, less bad debt write-offs (which are included in general and administrative expenses) KYC Know your customer Merchant A firm. Net Transaction Margin (NTM) Net Transaction Margin is a non-IFRS measure that is not audited but is derived from audited figures and is a financial metric used by management to track QuickFee’s unit economics of processing individual transactions, after deducting any bad debt write-offs. It excludes fixed platform and staff costs and any interest on funding facilities, as these costs are not incurred as a result of processing individual transactions. QuickFee Financing/ Finance/ Lending/ Pay Over Time QuickFee’s traditional merchant-guaranteed fee funding product that enable customers to take out a payment plan to pay their invoice, while QuickFee settle to the merchant immediately QuickFee Pay Now QuickFee’s payment gateway that enables customers to pay their invoice in full to the merchant with or without taking out a payment plan Revenue yield Revenue recognised in accordance with QuickFee’s accounting standards, divided by TTV, for the relevant product(s) Total Liquidity Cash and cash equivalents held, plus undrawn borrowings that are available to be drawn from QuickFee’s asset-backed credit facility based on the quantum of eligible loan receivables. TTV Total transaction value The total value of all transactions for the relevant product(s) pcp Previous corresponding period For example, the pcp for the December 2022 quarter is the December 2021 quarter www.quickfee.com A type of electronic bank-to-bank payment in the US, equivalent to EFT in Australia An Australian domestic payments network that facilitates the transfer of funds electronically Practice to verify the identity of customers in compliance with laws and regulations 24 April 2024 23