Openpay Q4 Results

Openpay delivers continued strong growth in core business whilst setting the strategic foundations for step-change growth in the US and UK

Q4 FY21 Key highlights:

  • Strong growth delivered across the following leading indicators in Q4 FY21:
    • Active Plans hit 2.0m, up 141%, vs pcp (prior comparable period: June 20)
    • Active Customers of 541k up 69% relative to pcp with 51% of Active Customers from UK, even before anticipated customer injection from Payment Assist acquisition
    • Highest-ever 84% of new plans from Repeat Customers, 53% of Active Customers with multiple plans
    • Active Merchants of 3.8k up 77% relative to pcp – the highest increase of new Active Merchants number on record
    • Maintained strong volume growth dynamic, with an increase in TTV, up 46% vs pcp to $92m, even before adding significant Payment Assist transaction volumes
  • Opy USA going live in the world’s largest developed BNPL market in early October 2021, anchored by integration with large wholesale merchant aggregators and key strategic partnerships in our preferred core verticals of Healthcare, Automotive and Home Improvement
  • Payment Assist acquisition will further accelerate UK growth and entrench Openpay’s position as a global leader in the BNPL Automotive vertical
  • Significant platform partnerships signed with global and local ecommerce providers, including Adobe, Quest Payment Systems, One Step Checkout, Shopwired, Aero Commerce and Apparel 21 to drive future growth at scale across all key verticals
  • Significant funding package approved by shareholders, raising $37.5m equity via an oversubscribed institutional placement, $25m debt facility, and an $8.7m share purchase plan, providing a strong cash position into FY22
  • Key C-Suite promotions in Australia coupled with further recruitment of highly experienced US executive team members in readiness for US launch
  • Online investor briefing webinar be held today at 2:30pm AEST.

MELBOURNE Australia, 28 July 2021: ‘Buy now. Pay smarter.’ company, Openpay Group Ltd (ASX: OPY) (Openpay or the Company) is pleased to release its quarterly business update for the period ended 30 June 2021 (Q4 FY21).


Openpay CEO, Michael Eidel commented: “The June quarter was perhaps the most pivotal for Openpay since we announced our US launch in December. Headlining the quarter was our acquisition of leading UK BNPL Auto provider, Payment Assist. The combination of their strong, profitable franchise in Auto with our organic launch in Healthcare in June creates a formidable player in the UK BNPL market with significant growth synergies.


We are putting the finishing touches on our launch into the US market, targeting go-live in our key Healthcare vertical in early October 2021. This will present another major step forward for Openpay and the first of many very significant commercial opportunities for Opy USA. These landmark organic and inorganic achievements provide the market with even more clarity into Openpay’s strategic focus on specialised verticals and highlight our strong global growth and path to profitability.”

Steady growth across all leading indicators, UK Active Customers overtake Australia

Active Plans increased 141% vs pcp and 16% QoQ – reaching 2.0m, driven by the continued recovery of bricks and mortar growth rates in Openpay’s specialised verticals (particularly Healthcare and Automotive). Openpay’s plan mix is comparatively longer-term and higher value with 90% of TTV from plans three months or longer during Q4 FY21.

An Active Customer growth rate of 69% vs pcp was achieved at an aggregate level across all merchant verticals, and Openpay finished the quarter with 541k Active Customers. 51% of Active Customers were from the UK. Strong customer engagement and awareness led to the highest-ever percentage of plans being held by repeat customers at 84%, with more than every second customer holding multiple concurrent plans.

Overall, Active Merchants grew by 77% vs pcp to 3.8k as at Q4 FY21 and by 11% QoQ, helped by Openpay’s automated Merchant onboarding system. New integrations with eCommerce platforms and point of sale provider partnerships also contributed to the strongest y-o-y growth in number of Active Merchants on record.

Crystalising our global strategy: ‘Think global. Act local.’

With the strong progress in the UK and USA, Openpay’s first two overseas markets, the Company is consolidating in its strategy to truly focus on verticals where its longer, larger and customised plans make a true difference and provide a significantly differentiated offering from most providers who predominantly focus on ‘pay-in-4’.

Team changes to drive strategy on global and local levels

A catalyst for success is having the organisational structure in place to deliver with strong local teams on Openpay’s global strategy. Several team moves have been put in place to support Openpay’s strong continued business growth and advance its global mission of ‘changing the way people pay, for the better’.


Michael Eidel remains the company’s Group CEO, leading on global strategic execution as the Company continues to expand in Australia/New Zealand and push into UK and US.

Dion Appel has been appointed CEO ANZ, stepping up from Chief Commercial Officer to assume the responsibility for the Australia and New Zealand business, driving growth, innovation and partnerships within the region.

Ed Bunting has been appointed new Group Chief Operating Officer (and will also continue as General Counsel and Company Secretary), and Theresa Abela has been appointed Chief Risk & Compliance Officer.

Strong customer engagement and awareness led to continued repeat usage of Openpay plans. Whilst the share of repeat customers remained stable at a high 77% due to the significant increase of new customers in Q2, close to every second customer had multiple concurrent plans with Openpay at the end of the quarter. 32% of Active Customers finished the quarter with an Active Plan at more than one Merchant, up 88% on the pcp level, while there was a total of 3.1 Active Plans per Active Customer, up 94% on pcp.

Global partnership with Adobe Exchange enables merchant acquisition at scale

Openpay has been accredited as a global Accelerate partner in the Adobe Exchange Partner Program. As an Accelerate partner, Openpay’s offering will be marketed directly to Adobe Commerce and Magento Open-Source customers around the world. These platforms are currently servicing thousands of merchants in Openpay’s key markets.

Adobe Exchange is a robust eCommerce platform that blends digital commerce, order management, and predictive intelligence to enable online shopping across a wide array of industries and business models (B2C, B2B and hybrid). Adobe offers an enterprise-level, cloud-hosted application, Adobe Commerce, and a free ecommerce solution, Magento Open Source, that services the needs of companies of all sizes with flexible, digital commerce solutions to successfully enable transactions across channels.

Openpay’s instalment payment platform is available now in Australia, UK and US for merchants to register for the new digital payment capabilities.

Openpay AU: Achieving scale through platform partnerships across all verticals

Going live with Quest Payment Systems and Apparel 21 through Payment terminals and POS

Through the quarter, Openpay continued to sign and integrate with major platform and aggregator partners to enable merchants to simply “switch on” Openpay as a payment type. This strategy is designed to deliver transaction volume and merchant growth at scale (rather than signing up merchants one-by-one).

An Australian partnership was signed with Quest Payment Systems, enabling Openpay to become a tender type (alternative payment option) on the payment terminals throughout Quest’s merchant base which is aligned to Retail, Healthcare and Home Improvement verticals.

Openpay will partner with Apparel 21, the leading POS vendor in Australia and New Zealand in retail and fashion. Apparel 21 provides payment solutions to over 120 brands, representing more than AUD $6b in annual turnover. Under the agreement, Openpay will be made available as an opt-in payment solution to Apparel 21 merchant customers.

Openpay further strengthens its leadership position in the Australian Automotive vertical

The exclusive integration of Openpay’s product offering into Pentana Solutions’ leading Car Dealer Management System, eraPower has been completed for car servicing at dealerships. This now provides unparalleled access to the more than 2,600 car dealerships for car repairs, services and accessories many of which operate on the eraPower platform (representing approximately 60% of the total Australian dealership market.) This rollout delivers mutual benefits to Openpay and the dealership market. In Q4, Openpay’s average plan size in the dealerships segment of Automotive was $859, a 91% uplift compared with other (non BNPL) payment options, enabling safer cars to be back on the road sooner.

More significant partnerships in other verticals

Healthcare

Our Healthcare vertical remains a core strategic focus. During the quarter this was further strengthened as follows:

• Following the recent announcement of Openpay’s entry into the hospital segment with St John of God Healthcare, Openpay has been gaining strong momentum in the hospital sector, having recently signed an agreement with Self Pay Surgery who are backed by one of the largest healthcare providers in Australia, Healthe Care. Strong engagement continues with several other key hospital groups.
• Openpay has been selected to become VetPartners’ preferred BNPL provider and will be rolling out to their network of over 240 practices in FY22.
• Openpay signed an agreement with Optical Growth Partners to be utilised by their expanding network; the buying group and managed services offering for all independent optometry practices in Australia.
• A partnership was signed with Australian Medical Association (WA) to support Openpay’s growth in hospitals and with medical specialists.

Retail

Openpay continues to increase its growth in Retail with significant retail vertical merchant partnership signings through the June quarter including major retailers, Samsung, Mountain Designs, Harris Scarfe, City Beach and Associated Retailer Limited (ARL), which owns Toyworld and Sportspower; as well as Nourished Life, Oz Hair and Beauty and AMR Beauty.

Memberships

In Memberships, Openpay continued its growth, particularly in sports, through additional signed merchants including AFL clubs, Richmond, St Kilda, Fremantle Dockers and Brisbane Lions.

Education

In the Education vertical, Connect Skills (Real Estate training), Inspirited Solutions (Wellbeing Education), and Maintraining (Course Creation Specialists) all signed on in the June quarter. In addition to the cash flow benefits, education providers find Openpay’s BNPL services help convert sales and deliver a large reduction in payment collections administration.

OpyPro B2B SaaS platform update

OpyPro, Openpay’s differentiated B2B SaaS platform continued to deliver strong growth with Woolworths Group. Transactions have grown substantially month on month whilst we continue to onboard their trade business customers to the platform which is now functioning instore and online.

In partnership with Lumi, Openpay is now also able to offer a funded B2B solution, OpyPro + Credit. This partnership enables the platform to deliver end-to-end payment experiences, including funding for the merchant’s B2B customer should they want to include this in the offering beyond Openpay’s core B2B SaaS solution.

The OpyPro pipeline of new partnerships is maturing with new B2B partnerships expected to be announced early in Q1 FY22.

Openpay UK outstrips AU in total Active Customers

During Q4 FY21, Active Plans increased 21% QoQ to 0.8m and 329% vs pcp. UK Active Plans represented 40% of all Active Plans for the quarter.
Active Customers were up 10% to 276k QoQ, making up 51% of overall global Active Customers for the quarter.

New UK partnerships place Openpay in front of thousands of new merchants

The UK strengthened its Retail offering during the June quarter, going live with well-known brands including Monsoon and Accessorize, Maplin, Dartington Crystal, The Hut and Glossybox as well as bigger ticket retail brands including Snug sofas and Decorating Centre Online where our longer length, higher value plans provide UK consumers with a budgeting tool to manage their cashflow for home improvement. Sport continues to be a winning formula for the UK, with team additions including Oldham Athletic, Charlton Athletic FC, Northampton Town FC, Coventry City FC and RedBull E-sports.

The UK’s move into Healthcare, through its integration with ezyVet veterinary software platform, continues strong momentum with its ‘Buy now. Pay smarter.’ payment plans being made available in store to consumers from early FY22 through a recent signing with Pennard Vets veterinary group.

Openpay UK has also signed key partnerships and integrations with a number of ecommerce platform providers:
One Step Checkout, the leading Magento extension that simplifies checkout to reduce cart abandonment and improve checkout conversion and works with over 20,000 global Magento 1&2 Merchants, facilitating more than $8b in annual transaction volume. Openpay AU and UK are now fully integrated as part of the One Step Checkout system.

Openpay has signed an integration partnership with Shopwired, one of the UK’s fastest growing and best-rated ecommerce platforms. Shopwired provides ecommerce services to over 8,500 UK SME merchants. Under the agreement, Openpay will be the exclusive recommended BNPL partner. Integration is due to complete in early August, with potential to expand to other markets in future.

Openpay is also now fully integrated with Aero Commerce, a fast-growing open-code ecommerce platform. Via this channel, Openpay is being offered to the multiple merchants using the Aero ecommerce platform.
These partnerships add to Openpay’s strong and growing list of agreements with ecommerce platforms and payment processors. Integration has either been deployed or is expected to be completed across all agreements during the current quarter, Q1 FY22.

For a full strategic update, please view Openpay’s updated investor presentation provided to the ASX in conjunction with this announcement.

View our ASX announcements here.

For further information, please contact:

Investors
Ed Bunting
Company Secretary
Mobile: +61 401 555 333
Email: investors@openpay.com.au

Media
Jane Lowe
IR Department
Mobile: +61 411 117 774
Email: jane.lowe@irdepartment.com.au

About Openpay

Openpay Group Ltd (ASX: OPY) is a fast-growing and highly differentiated player in the global ‘Buy now pay later’ (BNPL) payment solutions market. The Company’s strong platform enables it to deliver the most flexible plans in the market with durations of 2–24 months and values of up to $20,000.

Openpay focuses on industries where it can make a true difference: Automotive, Healthcare, Home Improvement, Memberships and Education; and its target customers are finance-savvy and of an older demographic who use Openpay plans as a cashflow management tool.

Openpay also has a unique B2B offering, OpyPro (formerly Openpay for Business), a SaaS-based platform that allows companies to manage trade accounts end-to-end, including applications, credit checks, approvals and account management in the one system.

Openpay provides services to Customers and Merchants in Australia, New Zealand, the UK and entered the US market, under the brand name Opy, in December 2020.

Openpay enters hospitals segment with St John of God; scales up with 1st Group.

  • Openpay, first BNPL to enter the hospital segment of Healthcare vertical via partnership with St John of God Health Care, one of Australia’s largest Catholic providers of healthcare services
  • First mover partnership between Openpay and 1st Group (who owns the MyHealth1st healthcare and PetYeti veterinary platforms) moves from initial roll out into full scale production, ahead of schedule, following excellent early outcomes for merchants and patients
  • Openpay and 1st Group invite investors to a special briefing on Tuesday, 23 March to discuss the partnership and strong results to date

Highly differentiated: these partnerships further demonstrate Openpay’s ability to service specialist requirements for a variety of healthcare partners, including large aggregators and hospitals, delivering higher-value plans to help patients split payments for important needs – like elective surgery – over longer terms.

Openpay enters hospitals via St John of God Health Care partnership

Openpay is the first BNPL to enter into the hospital segment of the Healthcare vertical via a partnership with St John of God Health Care, one of Australia’s largest Catholic providers of healthcare services, with hospitals in Victoria, New South Wales and Western Australia.

A six-month initial launch has now commenced at three St John of God Health Care hospitals, allowing patients to spread their hospital costs for elective surgery procedures across plans ranging from two to 12 months. The hospitals participating in the initial launch are St John of God Murdoch and Mt Lawley Hospitals in Perth and St John of God Berwick Hospital in south-east Melbourne. At the conclusion of the trial, both parties will decide if a full rollout should proceed.

St John of God Health Care’s Chief Operating Officer Hospitals, Bryan Pyne said St John of God Health Care strongly supports and encourages people to invest in private health insurance but recognised there are some that choose not to be covered by insurance and this represented an alternative for these individuals.

“There has always been a portion of patients who choose to self-fund their health care costs. Research conducted with these patients indicated an appetite for greater flexibility and availability of payment options, including the ability to smooth costs”, said Mr Pyne.

“This partnership expands choice for these individuals and will provide a flexible alternative to self-funding procedures while minimising the burden of a lump sum payment for the cohort of patients that elect not to take out private health insurance. It provides these patients with more options to access private health care when they want it, allows them to choose their doctor and hospital, and to avoid long delays in accessing specialist care”, he concluded.

Openpay CEO, Michael Eidel further supported this natural extension in healthcare: “This agreement with St John of God Health Care positions Openpay as the first Australian BNPL provider to partner with a major private hospital group – it is a proud moment for us.

We have seen in other areas of healthcare how important it is to provide a flexible budgeting tool to enable patients to access the care they need at the time they need it. This partnership also provides patients the option to pay for elective surgery with the support of Openpay’s flexible plans. It is a natural extension of our work in areas such as optometry, dentistry and audiology, and it demonstrates our growing prominence in the healthcare vertical.”

This partnership expands choice for these individuals and will provide a flexible alternative to self-funding procedures while minimising the burden of a lump sum payment.

Bryan Pyne, St John of God Health Care’s Chief Operating Officer Hospitals

Excellent results from initial roll out with MyHealth1st.com.au drive the relationship to full scale, ahead of schedule

In June 2020, Openpay announced that it had signed a key strategic partnership and revenue share agreement with digital health group, 1st Group (ASX: 1ST). The partnership is built around creating a positive user experience for healthcare practices and their patients across every touchpoint of the patient experience from booking to payment. Together, the two companies help patients to find, book and pay for the care they need today with more time to pay via 1st Group’s MyHealth1st.com.au platform and Openpay.

Following excellent results generated for all parties during an initial launch period, where Openpay plans were made available at more than 60 participating dental and allied health practices, the partnership will now move to full scale, three months ahead of schedule. As part of the next phase, Openpay and 1st Group will offer plans to thousands more healthcare practices across the Openpay and 1st Group networks. In addition, the integration will be extended into 1st Group’s veterinary platform, PetYeti.

Openpay CEO, Michael Eidel said, “Having worked with the 1st Group team for many months now, we have built a strong partnership and each party is deeply committed to delivering a positive experience for patients and merchants. We’ve seen excellent results from our initial work – patients have had the opportunity to spread payments across a longer term for important services and procedures, and practices have attracted more patients.

This partnership also highlights a core part of our strategy – the power of working with platform owners and aggregators to drive customer acquisition via a one-to-many approach. While Openpay was already arguably the leading BNPL provider in the Healthcare vertical, this relationship sees us offered at up to thousands more practices frequented by patients daily, now also extending into Veterinary.”

While Openpay was already arguably the leading BNPL provider in the Healthcare vertical, this relationship sees us offered at up to thousands more practices frequented by patients daily, now also extending into Veterinary.

Michael Eidel, Openpay CEO

Given the initial success of the partnership, both businesses will invest in co-marketing activities, aimed at increasing adoption of 1st Group’s services and Openpay plans moving into the next phase of rollout, which is expected to ramp up from Q4 FY21.

Investor conference call with Openpay and 1st Group (ASX: 1ST)

Investors are invited to attend a conference call next Tuesday, 23 March 2021 at 11:00 am AEDT (Sydney time) to hear more about the future of the partnership between Openpay and 1st Group in more detail. To attend, please register ahead of time, using the following link: https://us02web.zoom.us/webinar/register/WN_F2yaz-ncSp6ESSW0kyBo1g.

Openpay looks forward to making regular market updates regarding its substantial growth plans.

For further information, please contact:

Investors
Ed Bunting
Company Secretary
Mobile: +61 401 555 333
Email: investors@openpay.com.au

Media
Jane Lowe
IR Department
Mobile: +61 411 117 774
Email: jane.lowe@irdepartment.com.au

About Openpay

Openpay Group Ltd (ASX: OPY) is a fast-growing and highly differentiated player in the global ‘Buy now pay later’ (BNPL) payment solutions market. The Company’s strong platform enables it to deliver the most flexible plans in the market with durations of 2–24 months and values of up to $20,000.

Openpay focuses on industries where it can make a true difference: Automotive, Healthcare, Home Improvement, Memberships and Education; and its target customers are finance-savvy and of an older demographic who use Openpay plans as a cashflow management tool.

Openpay also has a unique B2B offering, OpyPro (formerly Openpay for Business), a SaaS-based platform that allows companies to manage trade accounts end-to-end, including applications, credit checks, approvals and account management in the one system.

Openpay provides services to Customers and Merchants in Australia, New Zealand, the UK and entered the US market, under the brand name Opy, in December 2020.

About St John of God Health Care

St John of God Health Care is a leading provider of high-quality health and community services across Australia, New Zealand and the wider Asia-Pacific region.

We are an experienced hospital operator with 14 private hospitals in Western Australia, Victoria and New South Wales. Most of our hospitals are acute and we are particularly well-known for our maternity, oncology and orthopaedic services.

We are one of Australia’s largest Catholic health care providers, employing more than 14,500 people and were established more than 30 years ago by the Sisters of St John of God, who first arrived in Western Australia and commenced caring for the community in 1895.

As a not for profit group, we return all surpluses to the communities we serve by updating and expanding our facilities and technology, developing new services, investing in people and providing our social outreach services to those experiencing disadvantage.

About 1st Group Limited

1st Group is an ASX listed digital health group building Australia’s leading health services marketplace, myhealth1st.com.au, Australia’s online pet service marketplace, PetYeti.com.au and corporate and government solutions platform GoBookings.com. These integrated platforms provide an easy to use online search and appointment booking service and offer a range of value-added apps and services that facilitate digital patient and customer engagement. We improve lives by connecting consumers to a variety of healthcare services and information anytime, anywhere, so they can get well sooner and stay well longer. To find out more visit 1stGrp.com, MyHealth1st.com.au, PetYeti.com.au and GoBookings.com.

Openpay signs partnership with Ford Australia as key Auto customer.

Q2 FY21 Key highlights:

  • Openpay’s BNPL solution to be rolled out in partnership with Ford Motor Company of Australia to its dealership network to support customer car servicing needs
  • Strengthens Openpay’s leadership in Automotive sector and fits with strategy of focusing on specialist verticals beyond Retail: Automotive, Healthcare, Home Improvement, Education and Memberships
  • Continued delivery on objective to drive growth at scale in the Automotive vertical, where pushing upstream into automotive Original Equipment Manufacturers (OEMs) enables strong incremental utilisation amongst dealership groups
  • The agreement with Ford adds to Openpay’s portfolio of Merchant agreements with major Australian automotive organisations including ASX-listed Eagers Automotive Limited (ASX: APE) and Pentana Solutions which went live in February 2021.

MELBOURNE Australia, 23 February 2021: ‘Buy now. Pay smarter.’ company, Openpay Group Ltd (ASX: OPY) (Openpay or the Company) is pleased to announce that it has signed a partnership agreement with Ford Motor Company of Australia Limited (Ford Australia), a subsidiary of the global Ford Motor Company, which designs, engineers, and imports award-winning and iconic cars, SUVs and trucks.

Under the partnership, Ford Australia will offer the Openpay Buy Now, Pay Later (BNPL) solution to its dealership network across Australia to support customer car servicing needs (repairs, parts, and accessories). Openpay can now be introduced and available to Ford Australia customers at every point on the customer journey via booking engines, online and instore visibility.

Michael Eidel, Managing Director and CEO of Openpay, commented: “We are proud to have signed with a brand as iconic as Ford Australia. Through this partnership we will be working together to help Ford’s customers ‘go further’ – making greater payment flexibility available for all their car servicing needs. We have previously partnered with many dealership groups but partnering at the OEM level strongly cements our leadership position in the automotive vertical.”

The agreement with Ford Australia is a major milestone in addition to Openpay’s exclusive partnership with Pentana Solutions Pty Ltd, the leading provider of Dealer Management Software (DMS) in Australia, which went live in February 2021. Roughly 2,500 new car franchise dealerships across Australia – or 60% of Australia’s new car franchise dealerships such as Eagers Automotive, Inchcape, and Peter Warren use Pentana’s eraPower DMS which gives dealerships a seamless platform to manage their entire operations.

Openpay will continue to focus on further partnerships with leading OEMs, distributors, and importers in the automotive sector to further entrench itself as a market leading Buy Now, Pay Later provider in the Automotive vertical.

For further information, please contact:

Investors
Ed Bunting
Company Secretary
Mobile: +61 401 555 333
Email: investors@openpay.com.au

Media
Jane Lowe
IR Department
Mobile: +61 411 117 774
Email: jane.lowe@irdepartment.com.au

About Openpay

Openpay Group Ltd (ASX: OPY) is a fast-growing and highly differentiated player in the global ‘Buy now pay later’ (BNPL) payment solutions market. The Company’s strong platform enables it to deliver the most flexible plans in the market with durations of 2–24 months and values of up to $20,000.

Openpay focuses on industries where it can make a true difference: Automotive, Healthcare, Home Improvement, Memberships and Education; and its target customers are finance-savvy and of an older demographic who use Openpay plans as a cashflow management tool.

Openpay also has a unique B2B offering, OpyPro (formerly Openpay for Business), a SaaS-based platform that allows companies to manage trade accounts end-to-end, including applications, credit checks, approvals and account management in the one system.

Openpay provides services to Customers and Merchants in Australia, New Zealand, the UK and entered the US market, under the brand name Opy, in December 2020.

Openpay launches partnership with leading Australian retailer, Officeworks.

Key highlights:

  • New partnership goes live with leading retailer Officeworks, with Openpay plans to be rolled out across Officeworks online and in-store Australia-wide in February and March, respectively
  • Partnership underlines Openpay’s mission to provide customers with a smart budgeting tool for life’s important purchases
  • Further delivers on strategy of building Openpay’s portfolio of high-growth Merchant businesses at scale

MELBOURNE Australia, 17 February 2021: ‘Buy now. Pay smarter.’ company, Openpay Group Ltd (ASX: OPY) (Openpay or the Company) is pleased to announce that it has launched a partnership with leading Australian office supplies, furniture, technology and student supplies retailer Officeworks.

Under the partnership, Openpay’s ‘Buy now. Pay smarter.’ plans will be rolled out across Officeworks online and in-store Australia-wide in February and March, respectively.

The deal underlines Openpay’s mission to provide customers with a smart budgeting tool for life’s important purchases, such as school supplies, office needs and technology, above and beyond already providing its customers with a smarter way to pay for their health, automotive, home improvement, education and memberships needs.

The Officeworks partnership adds to Openpay’s robust portfolio of Merchant agreements with major Australian brands recently signed and live including: ASX-listed online retail giant, Kogan.com (ASX: KGN), Surfstitch Group, Dick Smith and furniture and homewares group, Matt Blatt.

Michael Eidel, Managing Director and CEO of Openpay, said: “We are delighted to have launched this agreement with Officeworks. By partnering, we can provide a great budgeting tool to help families get their school and work needs sorted, while supporting Officeworks to ‘help make bigger things happen’ for their customers. This approach fits nicely with the higher-value, longer-term plans that we can offer to customers and responds to the growing trend for interest-free instalment payments.”

Officeworks Managing Director Sarah Hunter commented: “We are excited to be partnering with Openpay. The flexibility of its BNPL solution will provide our customers with more time to pay for all their computing, technology, furniture and stationery needs to help them make bigger things happen.”

Openpay looks forward to updating the market further as it continues to deliver on its strategic growth plans.

For further information, please contact:

Investors
Ed Bunting
Company Secretary
Mobile: +61 401 555 333
Email: investors@openpay.com.au

Media
Jane Lowe
IR Department
Mobile: +61 411 117 774
Email: jane.lowe@irdepartment.com.au

About Openpay

Openpay Group Ltd (ASX: OPY) is a fast-growing and highly differentiated player in the global ‘Buy now pay later’ (BNPL) payment solutions market. The Company’s strong platform enables it to deliver the most flexible plans in the market with durations of 2–24 months and values of up to $20,000.

Openpay focuses on industries where it can make a true difference: Automotive, Healthcare, Home Improvement, Memberships and Education; and its target customers are finance-savvy and of an older demographic who use Openpay plans as a cashflow management tool.

Openpay also has a unique B2B offering, OpyPro (formerly Openpay for Business), a SaaS-based platform that allows companies to manage trade accounts end-to-end, including applications, credit checks, approvals and account management in the one system.

Openpay provides services to Customers and Merchants in Australia, New Zealand, the UK and entered the US market, under the brand name Opy, in December 2020.

Openpay embraces appropriate UK regulatory oversight of ‘BNPL’ and looks forward to further engaging on consumer protection with the FCA.

Key highlights:

  • Openpay has been working with the UK’s Financial Conduct Authority (FCA) to help ensure that any further regulatory measures for the BNPL sector help ensure consumer choice, product innovation and strong consumer protections
  • Openpay is pleased to see recognition that BNPL can be a helpful way for consumers to manage their finances
  • Openpay designs its products to be fair for consumers providing flexible plans with no hidden catches.

MELBOURNE Australia, 3 February 2021: ‘Buy now. Pay smarter.’ company, Openpay Group Ltd (ASX: OPY) (Openpay or the Company) welcomes the publication of the UK’s Financial Conduct Authority (FCA) Woolard Review and confirms that Openpay embraces modern and proportionate regulation in all markets. As outlined by Openpay prior to the FCA Woolard Review, Openpay is seeking to become authorised by the FCA to support Openpay’s growth ambitions, irrespective of whether regulations change. Accordingly, Openpay does not anticipate that any regulatory changes in the UK will have an adverse impact on Openpay’s financial performance.

As is the case in both Australia and NZ, Openpay has been at the forefront of efforts with its peers in the UK to help ensure products are designed to be suitable for customers (and merchants alike). Openpay has been (and will continue to be) working with the FCA to help ensure that any further regulatory changes help ensure consumer choice, product innovation and strong consumer protections.

Responsibility is at Openpay’s core.

Customer centricity and responsibility are core to Openpay’s business, and we ensure our products are designed to be beneficial and fair for consumers providing flexible plans with no hidden catches.

  • Openpay’s UK plans are the most flexible in the market typically ranging from 2 – 6 months.
  • Credit checks are performed for every customer in the UK.
  • An initial deposit is taken at the time of purchase.
  • Customers can re-/schedule payments in line with their pay cycle.
  • Payment reminders are sent ahead of payment due dates.
  • We never charge interest, and in the UK, Openpay plans are completely free for consumers when paid on time.
  • Our late fees are capped, and we provide a late payment grace period.
  • Openpay freezes accounts and no new plans can be taken out if an existing plan cannot be repaid.
  • Openpay has a financial hardship program in place.

Openpay is one of the highest rated BNPL providers on Trustpilot in the UK*, and our target customers are typically finance-savvy and of an older demographic, using Openpay plans as a cashflow management tool.

CEO and Managing Director of Openpay, Michael Eidel commented, “Consumers and merchants are at the heart of what we do, and Openpay is committed to ensuring a fair and transparent playing field for all. We embrace appropriate regulatory oversight in all markets and look forward to further engaging with legislators and the FCA to ensure that the regulation protects consumers and fosters innovation and consumer choice. Openpay is pleased to see recognition that BNPL can be a helpful way for consumers to manage their finances.”

Openpay’s UK business continues to see strong momentum, with the Company recently reporting that Active Plans had increased by 70% QoQ to 506k and Active Customers were up 45% to 216k QoQ, for Q2 FY21. Currently operating predominantly across the Retail channel in the UK, Openpay is preparing for its next phase of growth via rollout in Automotive and Healthcare specialist verticals, areas where it can make a true difference, providing a smarter way for consumers to manage their spending over traditional credit products.

* Data correct to 2 February 2021 www.trustpilot.co.uk

For further information, please contact:

Investors
Ed Bunting
Company Secretary
Mobile: +61 401 555 333
Email: investors@openpay.com.au

Media
Jane Lowe
IR Department
Mobile: +61 411 117 774
Email: jane.lowe@irdepartment.com.au

About Openpay

Openpay Group Ltd (ASX: OPY) is a fast-growing and highly differentiated player in the global ‘Buy now pay later’ (BNPL) payment solutions market. The Company’s strong platform enables it to deliver the most flexible plans in the market with durations of 2–24 months and values of up to $20,000.

Openpay focuses on industries where it can make a true difference: Automotive, Healthcare, Home Improvement, Memberships and Education; and its target customers are finance-savvy and of an older demographic who use Openpay plans as a cashflow management tool.

Openpay also has a unique B2B offering, OpyPro (formerly Openpay for Business), a SaaS-based platform that allows companies to manage trade accounts end-to-end, including applications, credit checks, approvals and account management in the one system.

Openpay provides services to Customers and Merchants in Australia, New Zealand, the UK and entered the US market, under the brand name Opy, in December 2020.

Openpay reports TTV inflection point; well positioned for further international growth.

Q2 FY21 Key highlights:

  • Very strong uplift in all leading indicators in Q2 FY21, driven by marketing and technology:
    • Active Plans of 1,447k up 213% relative to pcp1: largest quarterly growth performance on record
    • Active Customers of 461k up 123% relative to pcp, with 77% of new plans generated from Repeat Customers and 49% of Active Customers with more than one plan
    • Record Merchant wins lead to Active Merchants of 2,766 up 46% (from +35% in Q1) relative to pcp
  • New inflection point in Total Transaction Value (TTV): strongest quarter on record, up 96% in Q2 FY21 vs pcp, to $97.1m. Highest QoQ growth rate on record, up 43% versus Q1
  • Openpay UK business gathered further momentum: UK Active Plans up 70% to 506k and UK Active Customers up 45% to 219k over prior quarter
  • Openpay for Business – capital light, SaaS based B2B product records initial revenue growth, with step-change growth to be expected in the course of FY21 as Woolworths Group commenced transitioning all trade accounts in September 2020; significant new merchant pipeline for Openpay for Business
  • Openpay’s robust funding runway strengthened with the availability of a further tranche of £35m in debt facilities with UK funder, GGC
  • Well positioned for further international growth:
    • US BNPL product launch imminent; discussions at advanced stages with foundational merchants in core verticals, payments processors and strategic funding partners; US CFO Efrat Yellin joins team and US office established
    • UK prepares for next phase of growth via rollout in Automotive and Healthcare specialist verticals, with FCA credit authorisation work in progress

MELBOURNE Australia, 28 January 2021: ‘Buy now. Pay smarter.’ company, Openpay Group Ltd (ASX: OPY) (Openpay or the Company) is pleased to release its quarterly business update for the period ended 31 December 2020 (Q2 FY21) which saw the Company grow at a continued, impressive rate across all its operating and financial key metrics in existing Australian and UK markets, with new quarterly records set for TTV and repeat BNPL product use. Openpay enters calendar year 2021 well positioned for significant international growth, with strong expected demand for its consumer BNPL product in the US market and the near-term launch into new UK BNPL specialist verticals.

Openpay CEO, Michael Eidel commented: “Openpay finished the December quarter positioned strongly to drive the next phase of its international growth strategy. Our rollout in the US – the world’s largest consumer payments market – and diversification across new verticals in the UK, heralds what we expect will be a step change in our growth profile. The US and UK are sizeable addressable markets, and our strategy has prepared us to seize near-term opportunities, enabling growth over and above our current volumes. The US market especially, represents a core opportunity for Openpay as the payments market, for both BNPL and B2B, is less developed than in other geographies. There is significant demand from consumers and merchants for more transparent, fair, flexible, and valuable payment and consumer finance alternatives, like our model.

Our further expansion comes in parallel with continued robust growth in our existing markets. In the December quarter, we achieved record quarterly total transaction volume, whilst new records in Active Merchants and Active Plans illustrate the success of our self-service program and our strategy to build a critical mass of customers in the Retail sector to cross-pollinate into our specialised verticals. Our resilient business model has led to continued repeat use of our longer-term and higher-value plans. This and our focus on differentiated verticals put us in an excellent position to become profitable over time as we create operating leverage through scale.”

Longer-term, higher-value plans drive growth in Active Plans across differentiated verticals

Notably, Active Plans increased 213% vs pcp to 1,447k, representing the largest quarterly growth performance on record, a 37% increase QoQ. The main drivers of growth were the peak season in Retail, with the largest trading day and week in November around Black Friday, and the recovery of growth rates in Openpay’s specialised verticals in bricks and mortar plan originations sites, particularly in Automotive and Health, after the end of sustained lockdowns across Australia.

Openpay’s plan mix continues to be strongly skewed to comparatively longer-term and higher-value plans with three to five-month plans accounting for 73.7% of TTV as at end Q2 FY21. Plans of three months and longer, where competition is less pronounced than in the heavily contested short-term pay-in-4 plan range (where customers often break plans down into 4 equal payments spread across two months or less), were the most prevalent plan structure.

While Retail still accounts for the majority of Active Plans, with 142% plan growth in Q2 FY21 versus pcp, Openpay is experiencing strong growth in its core verticals, with a 40% uplift in Active Plans in Automotive versus pcp and a corresponding 58% increase in Active Plans in Healthcare.

Active customer engagement across key verticals

An Active Customer growth rate of 123% (vs pcp) was achieved at an aggregate level across all merchant verticals, and Openpay finished the quarter with 461k Active Customers.

Number of active plans
Number of Active Plans
Number of active customers
Number of Active Customers

Strong customer engagement and awareness led to continued repeat usage of Openpay plans. Whilst the share of repeat customers remained stable at a high 77% due to the significant increase of new customers in Q2, close to every second customer had multiple concurrent plans with Openpay at the end of the quarter. 32% of Active Customers finished the quarter with an Active Plan at more than one Merchant, up 88% on the pcp level, while there was a total of 3.1 Active Plans per Active Customer, up 94% on pcp.

Percentage of New Plans
Percentage of New Plans from Repeat Customers & Customers with concurrent plans

Strong Merchant growth in November leads to a record month for new agreements

Overall, Active Merchants grew 46% versus pcp to 2,766 as at end Q2 FY21. This strong increase in Active Merchants is due to the successful launch of Openpay’s automated self-service program which significantly shortens and simplifies the sign-up and onboarding, particularly of small- and mid-sized merchants, complementing the strong sales focus on enterprise merchants and aggregators.

November was also a record month for new Merchant agreements such as Kogan and its brands Dick Smith and Matt Blatt, as well as Intersport, Tarocash, Rockwear, Y.D, St Ali and Barbeques Galore. Other notable Retail launches in Australia during Q2 included Kookai, Glue Store, Sportsmans Warehouse, Lego, Ginger and Smart, Hipkids and Sleeping Duck.

In Automotive, Openpay launched with Northstar Autogroup and integrated with Co Star Automotive & Tyre Software, the leading POS provider in the tyre market. Agreements were signed with Bunbury Motor Group dealerships as well as online parts retailers including Superior Engineering, Goroo Car Mats, Canyon Off-road, Wolf 4×4 and Express Tools Direct.

Notably in the Healthcare vertical, following an initial 9-month pilot period, Openpay and Hearing Australia executed a national contract that saw Openpay’s BNPL product available at all of Hearing Australia’s permanent locations from December 2020. Petstock Vet was welcomed as a Merchant partner and referral partnerships were signed with The Invisible Orthodontist, (100 orthodontic locations), and United Health Services (150 allied health businesses), both of whom will promote Openpay to members from January.

In Home improvement, the most significant new merchant agreement signed was with Bureau Booths.

In the Memberships vertical, a contract was signed with Capital Football, who will use Openpay for all their representative teams in the ACT.

In Education, deals were closed with Logitrain, Advanced Training and Stay Tooned.

Number of Active Merchants
Number of Active Merchants
Total Transaction Value
Total Transaction Value as at end Q2 FY21

Quarterly TTV growth reaches new inflection point in Q2 FY21

In Q2 FY21, Openpay recorded a new TTV inflection point, with a 43% QoQ uplift to $97.1m and sustained accelerated growth, with 96% uplift on a pcp basis. This growth was driven by Black Friday trading and recent brand launches with major Australian retailers such as ASX-listed online retailer, Kogan (ASX: KGN) and Surfstitch.

A daily TTV record of >$1m was achieved following on from Black Friday trading, and more than $5 million TTV was achieved during that trading week. Openpay continued to record additional >$1 million TTV days during the remainder of Q2 FY21, as a result of increased awareness and availability of Openpay, and a growing merchant base.

Growth accelerates in the UK, with next UK growth to be supported by rollout in specialised verticals

Building on its significant growth in UK Retail, Openpay is now in the process of entering into a roll-out phase within the core verticals of Automotive and Healthcare. This delivers on the strategy of building a critical mass of customers in Retail, then cross-pollinating into specialised verticals to develop Openpay’s differentiated proposition at scale in the UK.

Vertical expansion follows continued strong momentum in Openpay’s UK business during Q2 FY21, with Active Plans increasing 70% QoQ to 506k and UK Active Customers up 45% to 216k QoQ, contributing 54% and 75% of all growth in Active plans and Active Customers respectively for the quarter.

Growth in Active Plans
Growth in Active Plans – UK
Growth in Active Customers
Growth in Active Customers – UK

In the UK, The Hut Group (THG) launched with nine brands during the quarter including lookfantastic.com, myprotein.com, Zavvi.com and Probikekit.com. Openpay’s beauty offering expanded with the addition of fragrance brands Fragrance House, Scent Store and Perfume Direct. JD Sports continued to deliver a high number of plans and volume with its sports and outdoor brands.

Rapid adoption of Openpay in the sporting sector continued, with Hull Kingston Rovers and Elite Pro Sports launching in Q2 and the signing of Brentford FC. Meanwhile, luxury brand The Rug Company and children’s educational toys brand Nexus, further diversified the UK retail offering.

Significant post Q2 signings include established fashion brand Monsoon which is well aligned to the Openpay target demographic and an integration partnership deal with Apexx payment gateway. Apexx work with numerous enterprise retail and travel brands.

Openpay for Business revenue and sales pipeline building

Openpay for Business, the capital light, SaaS based B2B product, recorded continued revenue growth through Q2 FY21. The main contributor to this growth is Woolworths Group, who continues to transition business customers onto the Openpay platform, exclusively. During H2 FY21, Openpay expects roll-out across all stores to be complete, enabling all trade customers the ability to transact at Woolworths Group banners, including Woolworths Supermarkets and Big W, instore and online.

Openpay continues to work closely with Austrade to explore global opportunities, whilst in Australia the pipeline is building and maturing with further announcements expected in the course of 2021.

Continued strong financial performance throughout peak retail season

Openpay continues to display disciplined financial performance through healthy margins, while continuously supporting growth strategy, through peak retail season and its strongest ever portfolio growth metrics.

Healthy margins

Gross revenue yield as a percentage of TTV was 7.5% for Q2 FY21, down from 9.1% in Q1 FY21 and down 180bps relative to pcp. Revenue yield for the first half of FY21 remains at a strong 8.1%, despite a significant seasonal volume shift toward the relatively lower margin mass Retail vertical. As part of its growth strategy, Openpay applied explicit effort toward accelerating customer acquisition in Q2, through marketing with existing Retail merchant relationships and onboarding of new large enterprise merchants like Kogan and The Hut Group. This was followed by the well-proven approach of cross-pollinating customers proactively into higher margin specialised verticals.

The net transaction margin (NTM) for the quarter followed a similar pattern to the gross revenue margin, recording 1.1% for the quarter and 1.6% for the current half. Pleasingly, the Q2 FY21 performance also noted a marked reduction in funding costs, driven by the implementation of the 255 funding facility, at more favourable rates, translating into an overall 60bps funding cost rate reduction.

The rolling three month Net Bad Debt ratio as a percentage of TTV as at Q2 FY21 remains stable, and within expected healthy levels, at 2.3% as compared to the prior comparative period (2.2%), with performance for the half maintained at a level of 2.0%.

Strong funding

Openpay’s funding position comfortably supported its strongest TTV growth performance yet, throughout the traditional peak retail trading season, and is positioned to further support ongoing accelerated volume growth. Cash as at 30 December totalled $39.3m (30 September 2020: $64.7m), reflecting anticipated seasonally high disbursements made to merchants, relating to seasonally heightened trade. As repayments related to peak season trade are received from customers during the current quarter (Q3 FY21: Jan – Mar 21), the Group’s cash balance will revert to normalised levels (in excess of $50m), as the Group effectively generates positive cash flow.

Combined with current, and expected, cash positions, the Group is pleased to report a robust runway that is further strengthened by the availability of a further £35m tranche in the UK (through current funder GGC). The increased headroom was confirmed through meeting all required portfolio performance requirements as at 31 Dec 2020. Overall, thus, in addition to its cash position, as at H1 FY21 Openpay has available to it $45m in undrawn Australian debt facilities and £50m in UK undrawn facilities, translating into a total funding runway of $173m to support further portfolio growth.

Imminent rollout in the US with key strategic partners

Openpay or Opy, our new US name inspired by our ASX ticker, is positioned for potential significant growth in the US following the commencement of its market launch in December. The Company expects to roll-out its consumer BNPL product, OpyPay, in the near term, with discussions now at advanced stages with strategic partners such as funding partners, payments processors and foundational merchants in its core verticals.

The US market represents a significant growth opportunity for Opy, with more modernised and cost-effective payments options required, given the payments market is in many ways far behind that of other developed countries. There is a significant demand by both consumers and merchants for Opy’s smarter way to pay, given the need for more transparent, fair, flexible and valuable payment alternatives to traditional credit cards and BNPL options that lack transparency and charge high fees. Providing an optimal solution to merchants and consumers is important considering the sheer size of the $5t US retail market and the significant US opportunity in BNPL.

In addition, there is a substantial opportunity in Opy’s key verticals of Automotive, Healthcare, Home Improvement, Sports Memberships and Education due to a lack of penetration of BNPL players in those core verticals in the US.

Brian Shniderman, Openpay US CEO and Global Chief Strategy Officer said: “The US is the key market for Openpay with growth potential and relevance for our Company significantly greater than even that seen in Australasia and Europe to-date. Merchants and retailers currently lack control or significant influence on pricing, operational requirements, rule setting, payment solution design and liability. For consumers, OpyPay our flagship BNPL product has flexible payment terms matching the unique time periods specific to their lifestyle needs. For example, a parent or patient faced with paying for an orthodontic procedure that needs to spread out a $5,000 cost, requiring 12 visits across 18 months, can be easily supported by OpyPay, where most others offer only inflexible ‘pay in 4’ instalments and/or only a 6-month maximum duration.”

In the US, Opy envisions a true partnership with merchants and retailers to allow them to reclaim the payments component of their relationship with their customers in order to achieve four objectives for merchants/retailers which are to drive top-line sales, enhance customer lifetime value, optimise the cost/value of using BNPL as a ‘better than card’ payment acceptance method, and significantly enhance consumer loyalty by directing rewards to the merchant/retailer.

Appointment of US Chief Financial Officer and establishment of US office

Opy has also strengthened its US management team with the appoint of finance executive Efrat Yellin as US Chief Financial Officer (CFO).

Mrs Yellin has over 20 years of corporate finance experience. She joins Opy from AppCard, a loyalty rewards start-up, where she was the financial officer for the last 5 years. Prior to AppCard, she was an investment banker at Deloitte Corporate Finance LLC & Merrill Lynch & Co, serving a wide range of clients in the fintech, banking and private equity industries. In addition, she has assigned ratings of over $7b asset-backed securities while at Moody’s Investor Services.

Openpay has also established its Opy USA head office in San Diego, California.

Outlook – a new period of growth

Openpay is now positioned to scale its robust business model via international expansion. The Company’s extension into core verticals in the UK and imminent rollout in the strategic payments market of the US sets the foundation for significant long-term growth, with BNPL usage expected to increase rapidly in those relatively nascent markets into the future.

In the US, a inaugural significant step has been made by hiring highly respected, well-known leaders in the US payments, merchant and banking markets. The experienced leadership team has commenced implementing Openpay’s US wholesale merchant strategy and distribution model, progressing strategic partnership coversations with aggregators and organisations which represent large merchant groups in the industry verticals where Openpay excels: Healthcare, Automotive, Home Improvement, Education, before expanding into other large ticket areas of Retail. In parallel, the US leaders have started creating large scale partnerships with payment processors, banks and large online market places, to derisk and accelerate the market entry into these industries.

As in AU and envisaged for the UK, Openpay’s US BNPL offering, OpyPay, will differentiate from that of its competitors offerings by providing a regulated product and putting emphasis on larger transaction values in markets ripe for disruption, with transparent payment options that help consumers have control over their spending and budget for life’s purchases.

Openpay will update the market on the progress of executing on our US strategy.

For a full strategic update, please view Openpay’s updated investor presentation provided to the ASX in conjunction with this announcement.

View our ASX announcements here.

View our Investor presentation here.

For further information, please contact:

Investors
Ed Bunting
Company Secretary
Mobile: +61 401 555 333
Email: investors@openpay.com.au

Media
Jane Lowe
IR Department
Mobile: +61 411 117 774
Email: jane.lowe@irdepartment.com.au

About Openpay

Openpay Group Ltd (ASX: OPY) is a fast-growing and highly differentiated player in the global ‘Buy now pay later’ (BNPL) payment solutions market. The Company’s strong platform enables it to deliver the most flexible plans in the market with durations of 2–24 months and values of up to $20,000.

Openpay focuses on industries where it can make a true difference: Automotive, Healthcare, Home Improvement, Memberships and Education; and its target customers are finance-savvy and of an older demographic who use Openpay plans as a cashflow management tool.

Openpay also has a unique B2B offering, OpyPro (formerly Openpay for Business), a SaaS-based platform that allows companies to manage trade accounts end-to-end, including applications, credit checks, approvals and account management in the one system.

Openpay provides services to Customers and Merchants in Australia, New Zealand, the UK and entered the US market, under the brand name Opy, in December 2020.