Announcement PDF QuickFee Limited Appendix 4E For the year ended 30 June 2024 Results for announcement to the market Previous corresponding period: year ended 30 June 2023 $’000 Up/down Movement % Revenue from ordinary activities 20,295 Up 37.4% Loss from ordinary activities after tax attributable to members (4,666) Down –42.2% Net loss for the period attributable to members (4,666) Down –42.2% The group has reported a loss for the period of A$4,666,000 (2023: $8,076,000), with net assets amounting to A$8,508,000 as at 30 June 2024 (2023: A$8,945,000), including cash and cash equivalents of A$13,551,000 (2023: A$3,387,000). Please refer to the ‘review of operations and activities’ on pages 6 to 15 for further explanation of the results. Additional information supporting the Appendix 4E disclosure requirements can be found in the review of operations and activities and the financial statements for the year ended 30 June 2024. Dividends No dividends have been paid, recommended, reinvested or declared by QuickFee Limited for the current financial year. No dividends of QuickFee Limited were paid for the previous financial year. The group does not operate a dividend reinvestment plan. Net tangible assets per ordinary share 30 June 2024 30 June 2023 Cents Cents 2.47 3.27 Net tangible assets per ordinary share Changes in controlled entities The following controlled entities were registered in the year ended 30 June 2024: • QuickFee WG Financing Pty Ltd, a special purpose entity for borrowings facility purposes, registered on 3 November 2023. There have been no other changes in controlled entities during the year ended 30 June 2024. Foreign entities All foreign entities have adopted the same accounting standards as the Australian parent entity. Audit The financial statements have been audited by the group’s independent auditor without any modified conclusion, disclaimer or emphasis of matter. QuickFee Limited / Appendix·4E 2024 Building on the Foundations for Transformational Growth QuickFee Helps Professional Services firms Automate and Accelerate Accounts Receivable and Grow Their Business QuickFee Annual Report 2024 QuickFee helps professionals automate and accelerate Accounts Receivable and grow their business. CONTENTS 1. Letter from the Chair 2. Our winning strategy 6. Review of operations and activities 16. Directors’ report 41. Auditor’s independence declaration QuickFee is a market-leading payments, financing and Accounts Receivable (A/R) automation provider for professional services firms, including 40% of the INSIDE Public Accounting (IPA) Top 300 in the US. With multiple payment options and powerful integrations that automate the engagement-to-cash workflow, QuickFee accelerates getting invoices paid in full, resulting in increased client spend, improved cash flow and reduced costs. Through the QuickFee payment portal, clients can pay their professional service provider with a credit or debit card, ACH/EFT transfer, or leverage QuickFee’s exclusive client financing solution to set up a payment plan over 3, 6, 9, or 12 months. With QuickFee Finance, the client can set their own pace for payments – and the firm gets paid in full, without incurring any costs. QuickFee operates in the United States and Australia and focuses on serving professional services firms with affordable and scalable solutions, backed by world-class customer service. 42. Corporate governance statement 43. + QuickFee is a leading B2B payments and automated engagement-tocash workflow solution for professional services firms, with a focus on accounting and legal. Financial statements 94. Consolidated entity disclosure statement as at 30 June 2024 95. Directors’ declaration 96. Independent auditor’s report 101. Shareholder information Back Cover. Corporate directory + QuickFee operates in Australia and the US, with a low credit-loss business model. QuickFee has a unique product portfolio made up of flexible payment options and engagement-to-cash workflow automation. + QuickFee has a strong and experienced management team and an engaged and aligned Board. + With the US market representing the largest opportunity for growth, QuickFee aims to unlock transformational growth in the US by focusing on five key levers: QuickFee Finance, QuickFee Connect, Differentiated Technology, Strategic Alliances and Partnerships and Automation. We will go into more detail on these levers in the Review of Operations and Activities section. Letter from the Chair Dear shareholders, On behalf of the Board, I have pleasure in presenting QuickFee’s FY24 Annual Report. Over the past year, I am pleased to report that we delivered strong revenue growth on a stable cost base, with improved profitability and a strengthened balance sheet. Total revenue was up 37% on pcp to A$20.3 million, revenue from our core Finance product was up 53% on pcp to A$11.9 million and the loan book grew 28% to A$55 million at 30 June 2024. Our operating expenses decreased by 1% to A$15.8 million and our net loss after tax improved substantially to $4.7 million, up from a net loss of $8.1 million in FY23. Importantly, the business recorded its first positive EBTDA result in Q4 FY24. These strong results reflect both increased total transaction volumes (TTV) across all products and improved revenue yields. We continue to benefit from a higher interest rate environment and strong demand for our solutions, which help our clients protect and preserve their cash. We have a low credit risk business model and we continue to have minimal bad debts across the business. In FY24, we successfully completed a series of important operational milestones, which will underpin future revenue growth and the scalability of our model. We refined the sales strategy to drive growth in our core higher-margin QuickFee Finance product, finalised new strategic partnerships and improved internal processes with an ‘automate everything’ mindset. Our US leadership team further strengthened in FY24 with the addition of Dave Moore as our Chief Technology Officer to drive product innovation and efficiency in our development function. We continue to build a highly scalable technology platform, which easily integrates with a broad range of strategic partners and leading practice management systems. QuickFee Limited ABN 93 624 448 693 With a high performing and experienced management team in place, we remain optimistic about the potential for transformational growth in the US over the years ahead. The market opportunity in the US remains significant and QuickFee is well positioned to take advantage of the industry tailwinds driving increased adoption of e-invoicing. We continued to strengthen our balance sheet through the finalisation of a A$10m facility to support growth in the Australian legal disbursement funding product and the successful completion of a wellsupported A$4.4 million capital raise to fund further loan book growth, reflecting a strong endorsement of the significant growth opportunity ahead for QuickFee. I would like to thank our funding partners for their continued support, together with our new and existing retail and institutional shareholders. This additional funding provides the business with increased lending capacity as the company continues to expand in both Australia and the US. I would also like to thank the entire QuickFee team across Australia and the US for their ongoing commitment and hard work through the year. We enter FY25 with positive momentum across all metrics in the business and we are focused on the delivery of a profitable FY25 and continued growth in shareholder value. Yours sincerely, Dale Smorgon Non-Executive Chairman QuickFee Limited / Annual Report 2024 1 Commercial strategy Accounts Receivable Accelerator & Revenue Generator QuickFee has a differentiated value proposition that covers the entire engagement-to-cash workflow and offers flexible payment options for firms and their clients. Why firms work with QuickFee: 1. Reduce A/R – A/R typically runs high for firms and we can help turn that A/R into cash. 2. Grow the Business - There are many priorities competing for cash and we can help find more of it for firms and their clients. TRUSTED FOR PAYMENTS AND FINANCING SOLUTIONS SINCE 2009: 3. Automate Processes - We increase efficiency while improving the client and employee experience. SERVICE PROVIDERS WORLDWIDE 4. Save Money – Firms in the US can stop spending money on credit card fees by reducing or eliminating merchant fees. QuickFee’s commercial strategy is based on three main pillars: USERS OF QUICKFEE FINANCE LIKELY TO USE A PAYMENT PLAN OPTION AGAIN1 1. Being the accounting segment market leader for automating the engagement-to-cash workflow for firms over $1M in annual revenue 2. Expanding strategically and efficiently through partnerships and alliances 3. Creating a scalable commercial foundation + QuickFee has established strong partnerships in the US with industry leaders such as BDO Alliance, Allinial Global, IRIS and Knuula and is exploring opportunities to embed its Finance solution into other payments and invoicing platforms. LOANS ORIGINATED SINCE INCEPTION + QuickFee has invested in technology and automation to enhance its sales and marketing effectiveness, improve the customer experience and reduce costs. 1 2 QuickFee Payment Plan User Survey Product strategy Comprehensive digital payment solutions, powered by intelligent automation. QuickFee’s solutions provide a modern alternative to the outdated, time-consuming invoicing and Accounts Receivable processes at many professional service firms. QuickFee offers payments, financing and accounts receivable (A/R) automation for professional service firms. We help firms get paid faster, improve cash flow and automate the engagement-to-cash workflow. + Consolidate data, documents and delivery systems across the entire “engagement-to-cash” workflow. + Direct, purpose-built integrations with leading practice management solutions and innovative engagement letter provider. Our Solutions PAY NOW: Seamless ACH/EFT and Card Payment Processing + Includes all the digital payment options you need, with transparent fees. + One payment link to securely accept online credit card, debit card, or ACH/EFT/e-Check. + Simple to use recurring payment schedules (US only). + Credit card surcharge paid by the client. PAY OVER TIME: Enhance Cash Flow with QuickFee Finance + Client financing solution exclusive to QuickFee. + Get paid in full every time while clients get flexibility to pay over time (and manage their cash flow). + Generate client payment plans with 3, 6, 9, or 12-month terms. + No cost to the firm. + With more access to funding, clients are more likely to buy all the services they need. CONNECT (US only): Effective Way to Automate the Entire Engagement-to-Cash Workflow + Automate your invoicing and save hours of unbillable time. + Set automated email reminders to help clients pay on time. + Clients get personalised invoice links so they can pay in one click. QuickFee’s US product strategy is centred on three main initiatives: 1. modernising the customer’s tech stack 2. Optimising the engagement-to-cash workflow 3. Expanding the ability to capture more share of the customer’s payments + QuickFee meets the customer where they are by providing the latest innovations and products that can complement their existing practice management systems without completely replacing them. + QuickFee excels at automating the engagement-to-cash workflow with Connect, which integrates with the leading practice management solutions (used by approximately 90% of target market) and delivers game-changing value at a competitive price point. It also integrates with Knuula, the leading engagement letter automation platform – giving firms an elevated end-to-end experience with personalised payment links on engagement letters and invoice reminders. QuickFee Limited / Annual Report 2024 3 US technology strategy Purpose-built integrations with an ‘automate everything’ mindset. Building our platform to enable easier, more scalable integrations with new strategic partners. QuickFee connect rolls out new integrations in FY24. QuickFee Connect is our cloud-based A/R automation platform that integrates with leading practice management solutions and automates the entire engagement-to-cash workflow for accounting firms, streamlining each step in the process from invoice delivery to payment processing and reconciliation. Unlike other Accounts Receivable (A/R) automation platforms that primarily serve enterprise-size firms, QuickFee Connect offers a scalable A/R solution that is designed specifically for accounting firms starting at $1M in annual revenue, with a competitive subscription pricing model for firms of all sizes that is truly a disrupter in the market. QuickFee Connect also delivers an intuitive user experience on a consolidated platform that allows firms to manage all their digital payments and access meaningful insights to drive decisions. Now accounting firms in the US using Thomson Reuters Practice CS, Wolters Kluwer CCH Axcess Practice and CCH ProSystem fx Practice Management along with IRIS Practice Engine can leverage QuickFee Connect’s direct, purpose-built integrations that demonstrate our deep expertise in the accounting space. With QuickFee Connect, firms can modernise and automate their billing and payment processes, save hours of unbillable time and admin work and get paid faster by their clients. QuickFee Connect integration with Knuula expands our footprint to include the entire engagement-to-cash workflow. Teaming up with Knuula (the leader in customisable engagement letters at scale) created significant market and media attention at AICPA Engage in June 2024, the largest national accounting conference. It also expanded QuickFee’s footprint beyond just ‘bill-to-cash’ processes and into more areas of the ‘engagement-to-cash’ workflow. Many accounting firms are spending hours of unbillable time on tasks like engagement letters, invoices and payments, all while using multiple systems and tools to manage these important processes. The simple yet powerful combination of QuickFee and Knuula helps firms significantly reduce manual effort, get paid faster and focus on the most important parts of their client work. The integration saves precious time by automating processes across the engagement-to-cash workflow: firstly from engagement to payment and then from payment to reconciliation within the practice management system. This means that firms can automate almost every major client touchpoint and see cash in their accounts right from the engagement letter stage. These are the types of integrations that are purposebuilt to solve real customer pain points, while leveraging our deep expertise in our core areas and partnering with other experienced providers. HERE’S WHAT OUR CUSTOMERS SAY: One client used to take up to 8 months to pay... but when they used QuickFee I received payment within 1 day. We are absolutely loving the invoice platform and the payment plan options. — Michele Eaton, Former Controller / McSoley McCoy & Co 4 QuickFee’s technology strategy is based on four key areas: 1. Product development centered on customer needs 2. Accelerating delivery and building for scale 3. Protecting systems and data 4. Strengthening value through tech empowerment + QuickFee collaborates with customers on the user interface and experience of its products, tests and monitors its products rigorously and uses generative AI tools to write code faster. + QuickFee has reduced its product delivery cadence by 25%, adopted an ‘automate everything’ mindset and built software with core pillars of security, performance, resiliency, manageability and scalability. + QuickFee has focused on reducing all critical vulnerabilities in its systems, invested in market-leading tools for security and monitoring, implemented a disaster recovery plan and maintained a technology bill of materials. + QuickFee applies creative thinking to solve problems using its own technology, reduces reliance on third parties and spends intelligently on people and resources. QuickFee Limited / Annual Report 2024 5 Review of operations and activities Executing on the strategy for transformational growth In FY24, QuickFee delivered strong revenue growth and improved profitability, whilst continuing to make meaningful progress on its mission to be the market leading Accounts Receivable accelerator for professional service firms in both Australia and the US. Total revenue was up 37% on pcp to $20.3 million, the cost base stabilised and profitability improved to a net loss of A$4.7m in FY24, a significant improvement on the net loss of A$8.1 million in FY23. US Commentary In FY24, the US revenue increased by 24% to US$7.3m. This was driven by growth in the high-margin Finance product, the implementation of technology-enabled sales processes, technology differentiation, improved operational efficiency and new strategic partnerships. US REVENUE (US$M) Over the past year, the focus was on expanding the core Finance product and implementing scalable systems to deliver sustainable growth and earnings over the years ahead. 5.9 4.6 key operational highlights + Signed 103 new customers across the US and increased the average firm size of new customers + Improved and optimised the sales and success teams, including new firm onboarding processes + New strategic partnerships with Allinial Global, IRIS Software Group and Knuula + Appointment of Dave Moore as Chief Technology Officer to drive product innovation and efficiency in the development function + Completed transition to ‘direct to bank’ ACH processing model + Growing transaction volumes through QuickFee Connect + Opened a new office, now the US headquarters, in Plano, Texas (previous headquarters in California) + Finalised A$10 million facility to support growth in the Australian legal disbursement funding product + Successful completion of A$4.4m capital raise 6 7.3 3.3 2.1 FY20 FY21 FY22 FY23 FY24 The US market continued to see increased demand for QuickFee Finance, particularly given the uncertainty in the market driven by the election year and economic uncertainty. Businesses want to hold on to cash and increase cash flow, while professional service firms aim to accelerate their Accounts Receivable collection and look for ways to win new business. Finance TTV in FY24 was up 28% on pcp to $26.7 million and revenue yields for QuickFee Finance were up 160 bps over pcp. Review of operations and activities Continued US PAY NOW TTV (US$Bn) US FINANCE TTV (US$M) 1.4 26.7 1.2 20.9 1.0 0.7 13.0 15.1 16.8 0.3 FY20 FY21 FY22 FY23 FY24 QuickFee delivered continued solid growth in ACH with TTV in FY24 up 18% to US$1,128 million. QuickFee’s Card product delivered solid TTV growth in FY24, up 12% to US$237 million in FY24 while Card revenue grew at 37% over pcp to US$520,000. The implementation of a new territory-based sales model with clear sales incentives led to signing up 103 new firms in the past year. QuickFee also successfully targeted larger firms with higher transaction volumes, which gives QuickFee the potential to capture more transaction volume over time. The implementation of a ‘technology first’ strategy ensures a focus on building a scalable commercial foundation, with sales and onboarding processes that are predictable, repeatable and highly efficient and technology solutions that enable full cycle selling automation and AI assistance. In FY24, QuickFee successfully completed the ‘direct to bank’ processing model and now all ACH Pay Now transactions are processed through the new model using two separate banks for processing, which will deliver more internal control over core processes, reduced ACH processing costs and provide full ACH processing redundancy. In FY24, QuickFee announced new strategic partnerships with Allinial Global, IRIS Software Group and Knuula. FY20 FY21 FY22 FY23 FY24 + Allinial is an award-winning association of independent accounting and advisory firms focused on helping their members navigate the rapidly changing landscape as they adopt new technology, build out their advisory practices and ensure they are well positioned in the market. Allinial Global assists members with the identification, adoption and implementation of new technologies and they provide hands-on guidance to help firms leverage emerging technologies. By partnering with Allinial, QuickFee is a recommended part of a firm’s tech stack to the 260 member firms that are part of Allinial. + IRIS Software Group (‘IRIS’) is a leading global software provider of accounting and payroll solutions to over 5,000 customers in the US. The partnership with IRIS has two components. Firstly, IRIS is a QuickFee Finance customer and offers that flexible payment option to firms seeking to buy IRIS software. Secondly, QuickFee is integrating its Connect platform with IRIS Practice Engine. + Knuula is a market-leading engagement letter solutions provider. QuickFee successfully launched a strategic integration with Knuula to provide QuickFee customers with best-in-class engagement letter functionality to complement QuickFee’s best-inclass flexible payment options. The integration with Knuula extends QuickFee’s reach to the beginning of the firm’s client workflow and incorporates additional QuickFee Limited / Annual Report 2024 7 Review of operations and activities Continued payments such as retainers and on account fees by providing a payment link on the engagement letter. The integration with Knuula provides a platform for scalable future integrations based on performance, security and resiliency. QuickFee connect In Q4 FY24, QuickFee successfully completed a pilot of the new Connect subscription model, which launched in July 2024. In Q4 FY24, the number of invoices sent out through Connect was up 120% quarter-on-quarter and the total number of invoices sent through Connect in H2 FY24 was more than 10x those sent in H1 FY24. In FY24, the majority of the work was completed around an additional practice management solution, Thomson Reuters Practice CS, which joins the three existing integrations: Wolters Kluwer CCH Axcess Practice, Wolters Kluwer CCH ProSystem fx Practice Management and IRIS Practice Engine. This final integration means that we now have integrations with the practice management solutions used by 90% of accounting firms in our target market. Connect delivers a compelling value proposition for both CPA firms and their clients. CPA firms can easily present clients with QuickFee’s full suite of Pay Now and Pay Over Time solutions while automating the engagement-to-cash workflow. For customers that have adopted Connect, we have seen an increase of up to 60% in payment volume year-over-year, which further validates the importance of Connect in accelerating our transaction volume from both existing and new customers. US Growth Strategy QuickFee’s strategy to unlock transformational growth in the US market is centered around five key areas, which are as follows: + QuickFee Finance. QuickFee Finance has revenue yields that are approximately 25 times those of our Pay Now offerings, all while delivering a solution to the market unmatched by any other company in the US. QuickFee Finance is instrumental in delivering transformational growth. + QuickFee connect. QuickFee Connect is a key part of our growth strategy. By integrating QuickFee Connect with the most widely used practice management solutions in the US, firms are able to unlock automation capabilities that do not exist in the practice management solution itself. Connect is the key to unlocking firm revenue not captured by QuickFee today. + Differentiated technology. While the benefits we bring to firms are incredibly compelling, those alone won’t drive transformational growth. Our goal is to turn product and development from being only a cost centre into a difference maker delivering world-class solutions, which will be critical to our strategy moving forward. + Strategic alliances and partnerships. If we want to grow QuickFee at a faster rate than ever before, acquiring firms one by one simply won’t be fast enough. By building strong partnerships with other leaders in the industry and having customer champions who are excited evangelists, we can rapidly expand our reach, drive increased awareness and acquire new customers at scale on a one-tomany basis. + Accelerate automation. Given our goal is to drive cost-effective growth, we are automating every single functional area, including sales, customer success, finance, operations and product and development. 8 Review of operations and activities Continued AU Commentary is making small but growing positive contributions to revenue and EBTDA. In FY24, the AU revenue increased by 49% to A$9.1m, driven by continued growth in the high-margin Finance product and increased revenue yield. Active customers grew 31% to 51,000 (FY23: 39,000) on a stable portfolio of active firms (FY24: 530, FY23: 525), showing that while the market is mature, there is plenty of growth capacity within the existing firm base as challenging economic conditions persist. The Australian Buy Now Pay Later product ‘Q Pay Plan’, which provides finance to the homeowner services market and includes the Jim’s Group Franchise agreement, grew strongly with FY24 TTV up 100% to A$3.4 million on pcp (FY23: A$1.7 million). This product AU FINANCE TTV (A$M) 49.3 The success of the QuickFee brand in the Australian market is built upon a reputation for excellent customer service and ongoing vigorous relationship management activities, which positions the business extremely well to continue its growth. In December 2023, QuickFee finalised the agreement with Wingate Corporate Investments for a A$10 million funding facility to support growth of the Australian legal disbursements funding product (‘DF’) at an advance rate of 85%. The DF business continues to grow and now comprises approximately one third of the Australian loan book at 30 June 2024. AU REVENUE (A$M) 55.5 9.1 46.4 38.1 5.3 30.8 FY20 FY21 FY22 FY23 FY24 FY20 6.1 4.3 4.5 FY21 FY22 FY23 QuickFee Limited / Annual Report 2024 FY24 9 Financial performance Record Finance and Pay Now Total Transaction Volumes (TTV) in both the US and Australia drove revenue growth of 37% to A$20.3 million for FY24 (FY23: A$14.8 million), with revenue from the Finance product up 57% to AU$4.01 million in the US (FY23: AU$2.56 million) and up 51% to A$7.90 million in Australia (FY23: A$5.23 million). QuickFee is tracking towards operating profitability, with EBTDA for H2 FY24 close to break-even at A$(0.5m) (H2 FY23: A$(2.8) million) and EBTDA for FY24 of A$(3.2) million (FY23: A$(6.6) million). QuickFee’s lending activities are funded by 85%-90% borrowings and 10%-15% own funds. A combination of growth in the loan books and the higher interest rate environment resulted in interest expense increasing to A$4.7 million in FY24 from A$2.6 million in FY23. The effects of increases in the interest rates charged to clients of professional firms made during the year will continue to be reflected in interest revenue growth. Detailed analysis of the profitability of each product, including revenue yield, Net Transaction Margins and Gross Margins are shown in the tables on pages 14 and 15. A breakdown of operating expense is shown on the following page. The decrease of 1% to A$15.8 million (FY23 A$16.0 million) is a combination of further removal of nonessential costs from the business and a non-recurring lift in investment in product and technology: general and administrative costs decreased by A$0.7 million and product development expenditure increased by A$0.3 million. Other cost of sales increased to A$3.0 million (FY23: A$2.8 million), lower than the 17% increase in US Pay Now volumes due to reduced ACH processing costs. In H1 FY24 the business engaged IT consultancy Growth Acceleration Partners for a review of our technology infrastructure, strategy and product roadmap and after completion of the review, their Chief Innovation Officer Dave Moore joined QuickFee as Chief Technology Officer. In Q2 FY24 QuickFee planned a restructure of the technology team that has resulted in reduced product development costs from January 2024. Product development costs reduced from H1 FY24 to H2 FY24 by A$0.5 million, being the cost of the IT review and other non-recurring product development costs in H1 FY24. REVENUE SUMMARY PROFIT AND LOSS A$’000 FY24 FY23 YEAR-ON-YEAR MOVEMENT 19% GROUP REVENUE 20,295 14,766 +37% 564 41% GROSS PROFIT 12,627 9,361 +35% 4,011 2,558 57% GROSS MARGIN % 62% 63% -2% - 230 -100% 11,188 8,697 29% OTHER INCOME 5 151 -97% OPERATING EXPENSES (15,811) (16,042) -1% EBTDA (3,179) (6,530) -51% DEPRECIATION AND AMORTISATION (1,118) (1,127) -1% NET FINANCE COSTS (369) (419) -12% LOSS FOR THE PERIOD (4,666) (8,076) -42% A$’000 FY24 FY23 YEAR-ON-YEAR MOVEMENT US ACH (PAY NOW) 6,382 5,345 US CARD (PAY NOW) 795 US FINANCE (PAY LATER) US BNPL US REVENUE AU FINANCE (PAY LATER) 7,895 5,226 51% AU PAY NOW 864 764 13% AU BNPL 348 79 341% AU REVENUE 9,107 6,069 50% GROUP REVENUE 10 20,295 14,766 37% Financial performance Continued Other key results comprised: Sales and marketing costs remained stable in FY24. Investment in sales productivity technology and improving the onboarding process for new firms has accelerated the ‘time to value’ and the changes to sales commission plans are designed to increase QuickFee Finance volumes without impacting remuneration cost levels. Customer acquisition costs (which include overheads from sales management, new business sales staff, direct