Beforepay : H1 FY22 Results Announcement

Beforepay Half-YearResults to 31 December 2021

Beforepay Group Limited

onlyASX Announcement (ASX: B4P) 28 February 2022

(All currency figures in Australian dollars. Certain financial metrics and information included throughout this presentation are not recognised under the Australian Accounting Standards and are classified as 'non-IFRS financial information'. See Glossary at the end of this document for definitions. Non-IFRS

usefigures are unaudited. Change percentages are calculated using unrounded figures and may differ slightly from a number calculated using rounded figures.)

Beforepay Group Limited (Beforepay or the Company) (ASX: B4P) has released its results for the half year ended 31 December 2021 (H1 FY22).

Beforepay improved across all key metrics in H1 FY22. Highlights include:

personal	• Growth momentum continues with Pay advances of $132.0m up 563% relative to the half year
IPO proceeds equalling $37.6m of cash.
	ended 31 December 2020 ("prior corresponding period" or "pcp").
	• Net transaction loss % declined to 2.9% from 7.4% in pcp, driven by improvements in our
	proprietary, real time approval algorithms and enhanced limit management.
	• Net transaction margin % turned positive at 6.0% from -103.6%. This was achieved within 18
	months of launch and proves the profitability of the model at the Net transaction margin line.
	• Strong adjusted balance sheet position to support continued growth with a cash position plus net

Strong top line momentum and the achievement of positive Net transaction margin in H1 FY22 provide support for continued investment in growth and steadily improving economics.

Beforepay CEO, Jamie Twiss, said, "Beforepay has delivered a strong performance for the first half of the year across all key metrics. In particular, I'm very pleased with our strong customer growth, our sharp

For
$ (unless otherwise stated)	H1 FY22	H1 FY21	Change
		Platform metrics
		Pay advances ($m)	132.0	19.9	563.3%
		Average pay advance ($)	241	124	94.3%
		Active users (no. users)	139,071	46,486	199.2%
		Platform metrics

decline in defaults relative to our half year in the 2021 fiscal year, and our positive unit economics." Overview

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		Beforepay income	5,954,893	973,806	511.5%
		Gross transaction loss % (of Pay advances inclusive of fees)	(3.3%)	(7.4%)	(56.0%)
		Net transaction loss % (of Pay advances inclusive of fees)	(2.9%)	(7.4%)	(61.3%)
only	Net transaction margin ($)	360,169	(1,008,537)	N/A
Net transaction margin % (of revenue)	6.0%	(103.6%)	N/A
		EBITDA (excluding one-off and significant items) ($)	(11,191,439)	(3,165,350)	(253.6%)

			31 Dec 2021 plus impact of IPO1	31 Dec 2020	Change
	Balance sheet
	Cash position	$37,628,915	$5,507,787	583.2%
	Equity position	$41,878,987	$2,007,774	1985.8%
	Financial performance
use	• Pay advances increased by 563% to $132.0m in H1 FY22 from $19.9m in H1 FY21 driven by new
personal	customer acquisition and continued usage by existing customers.
• Growth in Pay advances accelerated during H1 FY22 with $55m Pay advances in Q1 FY22 and
$77m in Q2 FY22.
• Active users up by 199% from pcp to 139,071 in H1 FY22 as the platform continues to appeal to a
growing customer base.
• Strong growth in Beforepay income, from $1.0m to $6.0m in H1 FY22, reflecting top-line Pay
advance growth.
• Net transaction loss % declined sharply to 2.9% from 7.4%, reflecting continued investment in,
and improvement of, Beforepay's risk decision engine and Pay advance limit management, as well
as a higher proportion of customers who had previously repaid their Pay advance(s).
• Direct service costs as a percentage of Pay advances declined from 2.2% to 0.7% in H1 FY22 as a
result of renegotiated vendor rates, volume discounts and a shift to lower cost vendors.
• Net transaction margin% turned positive to 6.0%, up from (103.6%), reflecting the
abovementioned improvement in losses and direct service costs. Turning the Net transaction
For	margin positive is a significant milestone for the business and shows positive unit economics.
• Excluding One off and/or significant items, total Operating expenses were $12.8m in H1 FY22
from $2.2m in H1 FY21. Within these numbers, advertising and marketing expense to drive
customer acquisition was $6.8m in H1 FY22 from $0.6m in H1 FY21. The much faster rate of
revenue growth than underlying cost growth shows the operating leverage of the business.
• EBITDA excluding One-off and/or significant items was ($11.2m) in H1 FY22 from ($3.2m) H1 FY22

due to the investment in fixed costs to support long-term, sustainable growth.

• Our customer base shows continued high levels of loyalty, with 95% of customers who have successfully repaid their first Pay advance having taken out a second Pay advance.2

1. See explanation of how this is derived in the Glossary.
2. Unaudited figure

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Suite 2, Level 6, 50 Carrington Street, Sydney NSW 2000

• Our customer base also shows continued excellent advocacy for our service, with an average 4.8- star rating (out of 5) across the Google Play Store and Apple App Store.3
• Strong top-line momentum and the achievement of positive Net transaction margin in H1 FY22 provides support for continued growth.

only
Balance sheet
	• When incorporating the post balance date impact of funds raised via IPO, the Group's balance
	sheet and liquidity position are significantly strengthened. Accordingly, had the IPO occurred on
use	31 December 2021, the Group's adjusted cash position would have been $37.6m as of 31
December 2021, incorporating the impact of net cash proceeds raised in the IPO. This proforma
	cash position includes $35m of IPO gross proceeds received on 10 January 2022, reduced by IPO
	costs paid subsequent to 31 December 2021 of $3.4m.
	• As at 31 December 2021, Beforepay had drawn $13.7m under its third-party debt facility. Third-
	party debt-facility capacity increases to $45.0m by December 2022.
	• Beforepay has a highly capital efficient model with an average Duration of less than 20 days4. As a
	result, the third-party funding cost of the Average pay advance is c. 0.52% of the amount
	advanced, based on a 20-day loan duration. A 1% increase in interest rates would increase this to
	c. 0.56%.5
	• Beforepay had an equity position of $41.9m when the impact of the IPO is added to the 31
	December 2021 position.
Growth strategy
personal	• Beforepay's top line revenue momentum, the achievement of a positive Net transaction margin
	and high levels of customer engagement in H1 FY22 provide increased confidence in the market
	opportunity and investment strategy outlined in the Beforepay prospectus.
	• It is intended that H2 FY22 will be primarily directed to customer growth (including through
	marketing, referrals, partnerships and potential new products) as well as increased platform
For	capacity needed to support that growth, whilst striving to improve Net transaction margin.
• Beforepay is actively exploring international expansion opportunities, particularly in the United

States, consistent with the growth strategy outlined in the prospectus.

• Trading momentum into 2022 is good. January 2022 Pay advances totaled $26.9m, down slightly in December 2021 due to seasonal effects, a COVID-19-related decline in consumer spending, and a less favorable days-of-week pattern. Pay advances in February 2022 month-to-date are at significantly higher run rate than any previous month, at $24.7m from 1 to 24 February 2022, the first time the Company has averaged more than $1m in Pay advances per day. New-user trends in January and February 2022 have been consistent with those in November and December 2021.6

1. Unaudited figure
2. Unaudited figures
3. Unaudited figures
4. Unaudited figures

ACN 633 925 505

Suite 2, Level 6, 50 Carrington Street, Sydney NSW 2000

	People
		• Our Board and executive team were strengthened with the appointment of a new Chair (Brian
		Hartzer)7, a new Non-Executive Director (Luke Bortoli8), as well as a new Chief Product Officer,
only	Chief Technology Officer, and Chief Risk Officer and General Counsel.
• Beforepay continues to attract high quality talent, with several new hires across areas such as
engineering, data science, risk, compliance and legal.
• The Company has supported employees through COVID-19 disruption during H1 FY22, including
through the use of remote and hybrid working arrangements.
	Our model
use	• Beforepay strives to be an ethical, customer-friendly way of helping working Australians manage
their cashflow for unforeseen challenges and opportunities. The Company supports individuals in
		managing their monthly cashflow by providing immediate access to upcoming pay.
		• The Beforepay product is designed to provide customers with transparency over their costs. It
		charges a fixed fee of $5 for every $100 advanced with no additional interest or fees. Average pay
		advances are small (average of ~$260 in Q2 FY229) and once a repayment is overdue the service
		is suspended.
		• Beforepay is committed to providing its product in a responsible manner, with ongoing
		enhancements to eligibility criteria and risk assessments.
		• The Company's service is being received positively with an average 4.8-star rating (out of 5)10
personal	across the Google Play Store and Apple App Store.
	This announcement has been authorised for release to the ASX by the Board.
	For more information, please contact:
	Investors		Media
	Andrew Keys		Caroline Shawyer
	Investor Relations, Beforepay	Co-founder and CEO, The PR Group
For	Ph: 0400 400 380		Ph: 0401 496 334
[e-mail]	[e-mail]
	Glossary of non-IFRS terms
		Terms		Definitions
		Active Users	Customers of Beforepay who have taken out an advance in the previous 12
				months from the relevant date. This includes customers who have not repaid
				their most recent Cash Out, and are not eligible to re-borrow until they have

1. Appointment effective 5 July 2021
2. Appointment effective 1 February 2022
3. Unaudited figure
4. Unaudited figure

ACN 633 925 505

Suite 2, Level 6, 50 Carrington Street, Sydney NSW 2000

For personal use only

Average pay advance

Cash position or adjusted cash position

31 Dec 2021 plus impact of

IPO

Duration

EBITDA, excluding One- off and/or significant items

Equity position or adjusted equity position

Gross transaction loss

Gross transaction loss

%

Net transaction

done so.

Total dollar volume of Pay advances in a period divided by the number of Pay advances in that period.

"Cash at bank" from the half-year statutory financial statements, which may be adjusted to account for the IPO as may be indicated on the relevant slide. When adjusted to account for the IPO, it includes IPO proceeds ($35.0m), less IPO costs paid subsequent to 31 December 2021 ($3.4m).

The statutory balance sheet figures for 31 December 2021, with cash balances increased by the net proceeds of the IPO, and liabilities reduced to reflect the conversion of convertible notes resulting from the IPO.

The average across all Pay advances of the time required to repay the Pay advance, weighted by the dollar size of each Pay advance. A Pay advance that is not repaid within 62 days is assumed to have a duration of 62 days.

Earnings before interest, tax, and depreciation and amortisation expense (adjusted), less One-off and/or significant items. Depreciation and amortisation expense is adjusted to remove $182,307 cost related to lease liabilities that the Company considers effectively to be a part of occupancy costs. "One-off and/or significant items" are IPO related expenses, Fair value loss on convertible notes, Convertible note issuance expenses, Settlement expense, and the portion of the Share-based payment expense ($402,389) for the half year ended 31 December 2021 that relates to accelerated vesting of options linked to the IPO of the Group.

"Total liabilities" from the half-year statutory financial statements minus "Total assets" from the half-year statutory financial statements, which may be adjusted to account for the IPO as may be indicated on the relevant slide. When adjusted to account for the IPO, it includes the adjustments to Cash position, as well as a decrease in liabilities driven by a reduction in convertible notes balance ($41.4m), other liabilities ($1.5m), and a decrease in other assets ($0.4m).

"Expected credit losses expense" from the half-year statutory financial statements, excluding Recoveries.

Gross transaction loss (inclusive of fees) divided by Pay advances (inclusive of fees).

"Expected credit losses expense" from the half-year statutory financial

ACN 633 925 505

Suite 2, Level 6, 50 Carrington Street, Sydney NSW 2000