QuickFee : Q2 FY22 business update

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ASX Release | 21 January 2022
	QuickFee Limited
	Q2 FY22 quarterly business update

For personal use only

ASX Release | 21 January 2022

QuickFee Limited

Q2 FY22 quarterly business update

QuickFee Limited (ASX:QFE) ("QuickFee") today announces a business update for the quarter ended 31 December 2021 (Q2 FY22).

Highlights

Total transaction values	Q2 FY22	Q2 FY21	Movement
Professional services
US ACH (Pay Now)	US$196.3m	US$126.7m	+55%
US CC (Pay Now)	US$46.2m	US$30.7m	+50%
Total US Pay Now	US$242.5m	US$157.4m	+54%
US Financing (Pay Later)	US$4.4m	US$3.7m	+19%
AU Financing (Pay Later)	A$9.3m	A$6.9m	+35%
BNPL
Cumulative ISO sign-ups - US	136	-	N/A
Cumulative merchants signed up - global	1,241	-	N/A
BNPL total transaction volume - US	US$0.6m	-	N/A
BNPL total transaction volume - AU	AU$0.2m	-	N/A

• Another record quarter in the US for both Pay Now and Financing:
• • Pay Now total transaction values (TTV) up 54% to US$242.5 million (Q2 FY21: US$157.4 million)
  • Financing up 19% to US$4.4 million (Q2 FY21: US$3.7 million)
• Further recovery in lending in Australia, up 35% on pcp to A$9.3 million
• Strong growth in BNPL go-to-market:
• • Independent Sales Organisations (ISOs) sign-ups up 139% from 30 September 2021 to 136
  • Run-ratebacklog growth for global volume to A$6.1 million, up 13% on 30 September 2021; global revenue backlog of A$0.6 million, up 50% on 30 September 2021
• Jim's Group 20-year franchise agreement signed, providing access to ~4,400 franchise merchants in Australian home services to offer payment plans
• Northleaf Capital Partners funding deal delivers US$70 million-equivalentmulti-currency receivables facility to fund future growth in lending

QuickFee Limited (ACN: 624 448 693)

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Commenting on the quarter, Eric Lookhoff, QuickFee's CEO said:

• The second quarter of FY22 was a very strong performance by QuickFee, with growth achieved across all key parts of the business. The professional services segment produced a record quarter in the US for our Pay Now payments products (ACH and CC) and our Pay Later (Financing) solutions, up 54% and 19%, respectively over the comparative period. Lending in Australia is continuing to recover, growing 36% over the comparative period. Our Q2 FY22 performance reflects the beginning of a return to pre-COVID-19 lending levels, but with accelerated payments volume and larger average transaction sizes which further scales our operating cost basis.

Momentum in the roll-out of our BNPL offering continued, with strong growth in our ISO distribution channels and a growing backlog of lending volume and associated processing and platform income. We anticipate this momentum to accelerate into the back half of FY22 and well into FY23.

We were very excited to announce the agreement with Jim's Group, which provides QuickFee access to 4,400+ franchise merchants and their customers for our proprietary Buy Now, Pay Later solution, with a full launch beginning in Q3. "

Professional services

The professional services industry remains QuickFee's primary growth engine in both Australia and the US. QuickFee has seen exceptional year-over-year growth in payments (EFT/ACH and CC) as well as the beginnings of a robust rebound in QuickFee Financing.

United States

QuickFee saw record results in its traditional core markets of accounting and legal during the December 2021 quarter in its Financing, ACH, and CC products, with Pay Now TTV up 54% for the quarter to US$242.5 million, and 48% up for the half-year ended 31 December 2021 to US$422.6 million. Financing also saw a record quarter of US$4.4 million (up 19% vs Q2 FY21) and record half- year of US$8.2 million (up 4% vs H1 FY21).

Active customers in the quarter grew 44% to 69,000, and 38% to 116,000 in the six months ended 31 December 2021. 550 merchants were transacted with in the quarter, up 99 (22%) from Q2 FY21, and 564 merchants transacted during the half-year ended 31 December 2021, up 108 (24%) from H1 FY21.

QuickFee's strategy to continue dominating the professional services space remains threefold, validated by its performance in Q2 FY22:

• Increase US market share through further penetration of accounting firm alliances and associations made possible through a return to conference event travel in the US;
• Increase share of total firm volume through deeper practice management system integrations with the Connect product; and
• Facilitate and benefit from the industry-wide shift toward digital invoicing.

QuickFee Limited (ACN: 624 448 693)

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US quarterly total transaction volumes and trading metrics

US Financing (US$'M)

US Pay Now (US$'M)

US active customers

US active merchants

Australia

Lending in the Australian market continued the growth seen in the September 2021 quarter, with lending for Q2 FY22 up 35% to A$9.3 million (Q2 FY21: A$6.9 million). Lending for the half-year ended 31 December 2021 was A$17.3 million, up 30% from H1 FY21.

While QuickFee is not yet back to pre-COVID levels of lending, active customers for Q2 FY22 were 11,700, up 7% on Q2 FY21 (10,900) and up 11% on Q2 FY20 (10,700). Active merchants in the quarter were 394, up 9% from 360 in Q2 FY21, and close to the record high of 398 in a single quarter (in Q4 FY20). Similarly, active merchants in the half-year ended 31 December 2021 were 21,400 which was a record for any half-year, an encouraging sign that demand for lending is broadening across QuickFee's merchant base and the company's increased marketing and customer service focus on the Australian accounting and law market is delivering more engaged merchants.

QuickFee Limited (ACN: 624 448 693)

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Australia quarterly total transaction volumes and trading metrics

AU Financing (A$'M)

AU Pay Now (A$'M)

AU active customers

AU active merchants

Buy Now, Pay Later segment

QuickFee's BNPL offering continues to gain traction, underpinned by the use of Independent Sales Organisations (ISO) to grow the serviceable addressable market for BNPL merchants. In Q2 FY22, 79 ISOs were signed up, taking the total to 136, giving QuickFee access to over 150,000 total potential US merchant locations. Merchant applications for BNPL typically begin flowing three to six months after an ISO signing and training are complete.

946 merchants have now signed up in the US, an increase of 210 since 30 September 2021 and together with 295 in Australia takes the total to 1,241.

The key measure of the global BNPL portfolio valuation - how success is assessed internally - is the "run-rate volume backlog", which grew 13% in the quarter to A$6.1 million (30 September 2021 was A$5.4 million). Global revenue backlog grew 50% to A$0.6 million (30 September 2021 was A$0.4 million). As shown in annualised backlog diagram below, QuickFee is showing steady backlog growth in each quarter. While there is a lag between ISO sign-ups and merchant conversion coming from the ISO program, this is steadily increasing as the backlog grows.

Total transaction volume (TTV) for Q2 FY22 was US$0.6 million and A$0.2 million in the US and Australia, respectively.

QuickFee's strategy of providing ISOs with a unique BNPL product to increase merchant acquisition and take market share, is unique among BNPL providers in the verticals QuickFee operates in. This strategy increases distribution quickly without the need for increasing direct sales staff and leverages specific vertically targeted, third-party sales organisations to increase scale at a lower cost of merchant acquisition.

QuickFee Limited (ACN: 624 448 693)

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