Harmoney Corp Limited (HMY) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Harmoney Corp. Limited First Half '24 Results Webinar. [Operator Instructions] I would now like to hand the conference over to Mr. David Stevens, CEO and Managing Director. Please go ahead.

Thank you. Hello, and welcome to Harmoney's Half year '24 Results Presentation. I'm David Stevens, the CEO and Managing Director of Harmoney. With me today is Simon Ward, our Chief Financial Officer. Now turning to Slide 2. We bring it to your attention important information relating to the disclosures in today's presentation. We'll leave this to review at your leisure. Now turning to Slide 3. Before starting today's presentation, I want to introduce our new investor hub, which is available at harmoney.com.au/invest. We've created this to provide shareholders and potential investors with a centralized place for all Harmoney investment resources. You'll find updates, announcements, reports, videos and more. Plus shareholders can ask questions or share comments directly with the Harmoney team. Please join our investor hub harmoney.com.au/invest. Now turning to Slide 4. Today, I'll begin with highlighting our results for the half year 2024. I'll then go into an overview of our business model. Many of these things will be familiar to you if you have -- if you followed our progress, but it's useful to keep these top of mind as we go over what this model is delivering today, and we'll continue to do so into the future. I'll then hand over to Simon, who will take you through our financial results. Finally, I'll discuss our strategy and outlook before responding to your questions. Now turning to Slide 5 and then on to Slide 6. To highlight our key achievements for first half '24. This was our fourth consecutive half year of cash NPAT profitability. We also experienced loan book growth despite significantly higher interest rates. We successfully completed New Zealand's first-ever unsecured personal loan backed ABS. We created a new $140 million warehouse with a Big 4 bank and a new global mezzanine funder and extended 3 existing facilities for a further 2 years each, creating growth capacity of $250 million. We launched our brand-new platform, Stellar 2.0, which was developed in-house and incorporate state-of-the-art cloud-native core banking system, which is used by global Tier 1 banks. This already showing a 25x faster release cadence in Stellar 1.0. The remaining retail Peter P. lenders have been repaid, enabling the retirement of legacy peer-to-peer infrastructure. Our automation drive continued efficiency gains with our cost-to-income ratio down to a market-leading 24% and further gains from the new platform now being realized. We also refinanced our corporate debt and increased the limit by a further 50% providing junior note capacity of up to additional $200 million in additional loan book growth. Now turning to Slide 7. This slide presents our key performance metrics. For first half '24, our loan book experienced growth of 8%, bringing it to $756 million. We also grew our revenue by 21% to $60.4 million. We delivered a net interest margin of 9.2% in a period of significantly increasing interest rates, which was very pleasing and through that the Harmoney Consumer Direct business model can effectively pass on increases in interest rates without impacting demand for its product. Our credit losses were 4.2%, slightly above our target of 4%. However, this was due to an early version of our Australian scorecard, which was replaced over 18 months ago and is largely washed through the portfolio now. A real highlight was our market-leading cost-to-income ratio of 24%. Note this includes all operating costs below operating income. This also resulted in a cash impact for the half year of $0.5 million. We remain committed and now a lot closer to our target of achieving a 20% cash return on equity run rate during financial year '25. Now turning to Slide 8. There are 9 key points broken up into financial customer value and risk management. Think of it this way, if you remember anything from today's presentation, these are the key points I'd like you to remember. In terms of financial, we reported a cash NPAT of $0.5 million for the half year with a cost-to-income ratio of 24% and unrestricted cash of $21 million and $250 million in undrawn warehouse capacity. There's a significant endorsement of Harmoney's 100% consumer direct model and our execution of it through technology and automation. Our net interest margin of 9.2% is testament to the power of Harmoney's customer acquisition and credit assessment models, key components of our stellar technology platform. It's also important to know that a 100% direct model allows us to more easily adjust rates. This is not something easily done in traditional broker models. And we're targeting a 20% cash return on equity run rate during financial year '25. In terms of customer value, our customer satisfaction record remains high with an average score of 4.8 out of 5 on over 55,000 reviews across both Google and shopper approved. Of course, keeping customers happy is why many return to Harmoney for their future borrowing needs as they do so at minimal customer acquisition cost to Harmoney. Our Australian expansion continues at pace with the Australian loan book larger than our New Zealand loan book. We feel this is an outstanding result considering our ASX listing was just over 3 years ago. In terms of risk management, our net interest margin is achievable with a quality portfolio with 40% of borrowers owning their own home and when combined with our lower arrears rate reflects quality throughout the entire book. We have highly diversified funding with warehouse facilities from 3 of the big 4 banks, 3 mezzanine funders and our own securitization programs in both Australia and New Zealand. And finally, 89% of our floating rate borrowings are hedged to mitigate any impact from interest rate market movements. Now turning to Slide 9 and then to Slide 10. Just a quick reminder of our customer value proposition. Our loans are personalized to the customer, meaning interest rate and term options are matched to each person based on the individual credit characteristics. Our technology plays a big role here. We offer loans up to $70,000 of loan terms of 3, 5 or 7 years. Our average new loan size is $20,000. Our processes are fast and are potentially designed to be simple for customers to use and understand. Again, our technology plays a key role here, enabling us to make a lending decision within minutes for most applications and funds arriving in bank accounts within minutes of a customer accepting a loan. Carrying on the theme of keeping it simple for customers, we have just one fee, a loan establishment fee. All loans are fully compliant with applicable laws and regulations. We offer loans to help customers start or achieve just about anything. The examples listed that are most common starting from renovation loans and debt consolidation through helping people with life events such as travel, education and weddings. Now turning to Slide 11. To profitably build scale, it's clear that you need automation. For that, you need advanced automation and AI capability. And to do that successfully, you need more than just tech. It needs massive amounts of quality first-party data. We consistently attract over 10,000 new customer accounts each month. All of this data is used to continually train our AI models. This is a huge number of new customers for any business. This high volume of consumer financial data combined with over 9 years of historic data, effectively supercharges training of our AI learning so we can optimize for sophisticated, highly efficient marketing with platforms such as Google, giving us the right customers at low cost and risk adjusted income of 5% gained through more accurate risk assessment of customers. This combination of data, AI and automation, building our technology platform, Stellar, has been a core feature of Harmoney since our inception. Now turning to Slide 12. The power of Stellar machine learning goes far beyond assessing customers at the point of their loan application. It plays a significant role through their entire lifetime of the relationship with the customer. Harmoney is highly selective when it comes to audience targeting. We have important responsibilities as a lender, and we also need to ensure our marketing spend is efficient and effective. This is where sophisticated customer acquisition models play a key role. And again, where huge amounts of first-party data, consumer data is key. When these models are used with powerful digital marketing platforms like Google, Microsoft ads and Facebook, the result is highly targeted and cost-effective customer acquisition. What this means is in practice is that we can acquire the right customers for the right price at scale. And critically, we can forecast this with a high level of reliability. We can then use our direct relationship with the customer to tailor existing products to their needs and to buy new services to offer. Proof of our ability to target the right customer with the right product is reflected in our Google reviews and Chopper approved scores with over 55,000 reviews of Maverick score of 4.8 out of 5. Moving to the second column. Naturally, we work hard to ensure we deliver a great customer experience so we can create annuity revenue as satisfied customers return with minimal customer acquisition cost. This experience is underpinned by our automated simple and streamlined 100% online process. And in the third column, our ability to scale remains an important factor in the Harmoney model, and our continued investment in technology remains a key enabler. Already in this half year, we've achieved a cost-to-income ratio of 24%, which is exceptional. The diagram bottom right of the page shows all these factors combined to support the lifetime value of the customer. Our customer acquisition model helps us to attract the right customers, our application and loan experience is highly tuned to customer satisfaction, so customers return to Harmoney for their future needs. Based on our New Zealand experience, this cycle is expected to lead to 140% in additional originations to the same customers over the next 6 years at minimal customer acquisition costs. Turning to Slide 13. I'll now hand over to our Chief Financial Officer, Simon Ward, who will take you through our financial results in more detail.

Thanks, David, and hello, everybody. Please turn to Slide 14, which summarizes our key financial performance metrics for the half year. I'll begin by going through each of these items briefly now before going into more detail on the following slides. Beginning with the loan book. As David mentioned earlier, Harmoney's loan book reached $756 million, which was up 8% on first half financial year '23. While revenue grew to $60 million, up 21% on first half financial year '23, with revenue growth driven by both loan book growth and a higher average portfolio interest rate. Net interest income percentage contracted 60 basis points to 9.2%, with the average funding rate increasing slightly faster than the average portfolio interest rate in the half. Risk adjusted income, which is our interest income after funding costs and incurred credit losses, contracted 170 basis points from first half financial year '23 to 5% on a combination of the reduced NIM that I just mentioned and slightly higher incurred credit loss rate, which I'll talk about in more detail on a later slide. Offsetting this, acquisition costs were down 17% to $5.4 million as we moderated growth while consumers adjusted to rising market interest rates. Our cost-to-income ratio also continued to improve, down from 29% from first half financial year '23 to 24% this half. Importantly, our cost-to-income ratio accounts all operating expenses, including share-based payment, depreciation and amortization. But this ratio continues to fall as testament to Harmoney's high levels of automation, which enable us to scale our loan book without having dissimilarly scale operating costs. These components combined enabled Harmoney to deliver a statutory net loss after tax of $600,000, which is a $2.8 million improvement from first half financial year '23 and a cash NPAT of $0.5 million, down $2.3 million from first half financial year '23. Cash NPAT is our preferred measure of underlying performance. And it simply adds back the noncash expense items of movement in our expected credit loss provision, share-based payment expenses and depreciation and amortization. The reconciliation is included in the appendix to the presentation. Finally, of note, this is Harmoney's fourth consecutive half of both loan book growth and cash NPAT profitability, which we believe sets us apart and is particularly pleasing during this rising phase of the interest rate cycle. Now turning to Slide 15 to look at the loan book and revenue in a bit more detail. As mentioned earlier, the loan book grew 8% to $756 million, with growth in both the Australian and New Zealand loan books and Australia now growing to 52% of the total loan portfolio. Originations were lower than first half financial year '23 with increasing market interest rates constraining both appetite and capacity for consumer borrowing. Revenue however continued to grow, up 21% on first half financial year '23 to $60 million. This was driven by a combination of book growth and a higher average portfolio interest rate. As interest rate increases on pass-through on new lending since calendar year '22 grew to a higher proportion of the portfolio. The average interest rate this half was 16.1%, up from 15.4% first half financial year '23. Now turning to Slide 16, providing more detail on our acquisition costs. Increasing market interest rates, driven by sustained central bank rate increases and have constrained both appetite and capacity for consumer borrowing as consumers adjust to the higher cost of borrowing. As with earlier changes to market conditions, Harmoney's consumer direct model has once again proven to be flexible and responsive with acquisition costs reducing 17% on first half financial year '23 as we've been able to moderate and target our marketing activity, continuing to use a data-driven approach to seek desirable high-intent customers. The Harmoney's Consumer Direct model, one of our key metrics is our cost to acquisition ratio shown in the chart on the right. You'll see historically the trend has been improvement is represented by the downward [indiscernible] section of the line. In part, that's driven by a key feature of Harmoney's consumer direct model, being the direct relationship we have with our customers and the great experience we provide to them means that our customers return to us the next time they want to start something new, and those originations have near 0 cost due to that existing direct relationship. Because higher market interest rates have impacted borrowing appetite and capacity for existing as well as new customers, originations to existing customers have also slowed in this half. However, because those originations tipped near 0 acquisition cost anyway, there's not been a proportionate acquisition cost reduction for those, which has led to the small uptick this half, shown on the chart on the right. We expect a historical downward trend in the cost to acquisition ratio to resume once origination growth, particularly to existing customers, resumes. Now turning to Slide 17, focusing on credit performance. The deep consumer data provided by our consumer direct model powers our AI credit models. This has enabled us to build a prime loan book of resilient borrowers with 74% employed in either professional office or trade rolls and 87% aged over 30. Further demographic detail on the loan book is provided in the appendix to this presentation. This half, the lower originations and resulting slower loan book growth just discussed, has also resulted in an increase in the average seasoning of loans in the portfolio. Seasoning is the term used for months elapsed since loan origination. This increased average seasoning or age of loans in the portfolio has meant that this half, a higher proportion of loans have transitioned through the peak hazard period for loss, which for personal loans is typically 12 to 18 months after origination. That has included the final cohorts of a less accurate earlier Australian scorecard that was replaced over 18 months ago. Both factors have driven an uptick in our incurred credit loss rate to 4.2% this half from 3.6% reported for financial year '23. The top left chart compares the static performance of that earlier Australian scorecard to the rest of the portfolio over the initial 24 months of seasoning showing the rest of the portfolio performing significantly better. The top right chart shows that the early Australian scorecard now comprises around 10% of the loan portfolio, with all of that 10% now aged past the 18-month end of the peak hazard period for loss. The uptick in the incurred credit loss rate, together with the increase in the average funding rate have reduced our risk-adjusted income percentage from 6% for financial year '23 to 5% this half. While 5% is below our internal target, this level of after credit loss margin remains enviable in the consumer lending market. As shown on the chart on the bottom right, 90-plus day arrears have ticked up slightly from the lows of early financial year '23 but they still remain very low at 0.65 basis points within the range of the past 2 financial years and less than half of the current Australian personal loan market average. Now turning to Slide 18, providing more detail on our funding. It's been a busy 6 months on the funding front, having renewed and added to our Big 4 bank warehouse facilities, issued New Zealand's first public personal loan asset-backed securitization and having successfully refinanced and upsized our corporate debt facility. Harmoney is now extremely well capitalized for loan book expansion. At 31 December, we had $250 million unused warehouse capacity, $7.5 million undrawn corporate debt capacity and $20.6 million unrestricted cash on hand. Our balance sheet remained very capital efficient with borrowings equal to 95% of the loan book and undeployed restricted cash. Our average funding rate increased to 7.2% on further funding market interest rate increases, up 150 basis points from first half financial year '23. Hedging coverage at 31 December was 89%, providing more certainty going forward on funding costs for the existing book. Now turning to Slide 19, looking at our operating expenses. One of the key features of Harmoney Stellare platform is its high levels of automation. This has enabled Harmoney to once again continue to scale its loan book much faster than its operating expenses. This is shown on the chart on the right, with the loan book growing from $701 million in the first half of financial year '23 to $756 million this half, while the cost-to-income ratio has fallen further from 29% to 24%. We fully expect the scale effect to continue in future periods as we continue to grow our loan book. The ability of the Stellare effect form to scale underpins delivery of our fourth consecutive half of cash NPAT profit achieved while continuing to grow our loan book even during this tightening phase of the interest rate cycle. Billy scalability also underpins our confidence in achieving our 20% cash return on equity run rate in FY '25. And with that, turning to Slide 20, I'll hand you back to David to take you through our strategy and outlook.

Thanks, Simon. Continuing now to strategy and outlook, please turn to Slide 21. Australia continues to be a significant growth opportunity for Harmoney. On the left-hand side of the page, we have our customer annuity chart. We can see that we're achieving in Australia a similar impressive annuity growth trend we saw in New Zealand, but now in a market 9x the size. This presents huge potential in the $145 billion market in Australia. The time series graph on the right-hand side shows a large and stable Australian personal lending market in red and illustrates the enormous growth opportunity for Harmoney as consumers continue to gravitate online for financial products. While the vast majority of personal lending is still provided by banks and traditional lenders, Harmoney continues to make positive inroads. Harmoney's new customer lending in Australia grew to $177 million in financial year '23. And with Harmoney's progressed in Australia following the same trends as New Zealand's performance, we're on track for these customers to add approximately 140% in repeat lending over the next 6 years with minimal customer acquisition cost. Now turning to Slide 22. Stellar 2.0 represents a significant leap forward in our technology from our previous Peter P. platform to a new cloud-native banking solution used by globally recognized banks in Europe and the U.S. Based on a modern cloud stack through our relationship with Google Cloud, it's more secure with native horizontal scaling, continuous development and high availability -- excuse me deployment, sorry, and high availability. Importantly, we've delivered a new core banking system together with our internally developed 100% process automation across business and technology teams. This makes it easy for us to fully automate complex process flows across people and systems. We're launching Stellare 2.0 using a small fraction of its capabilities. However, it is designed to seamlessly accommodate a spectrum of financial products ranging from deposits to home loans. Stellare 2.0 has been designed for enterprise performance, availability and security at scale while retaining the flexibility to help us to deliver new, innovative products and services in the future. Now turning to Slide 23. Stellare 2.0 is more than a technology replacement project. We've built the entire application process to provide a better customer experience. By automating the credit approval process, we give all customers an instant credit decision and then they have the cash in their bank account within minutes. Stellare 2.0 has reduced the time from starting an application to getting the cash in the customer's bank account by 20x. Over the next 6 months, we will replicate this Australian experience in our New Zealand business and focus on increasing conversion and margin. This will help us move the red arrow in the chart on the right further into the green area, growing our loan book through higher conversion without having to spend more money on marketing. Now turning to Slide 24. The modernization of our technology stack allows us to innovate faster than ever before while delivering further efficiency and scalability. This includes releasing daily updates to the Stellare 2.0 platform, allowing us to respond to customers' needs quicker than ever before. The underlying technology of Stellare 2.0 is much more efficient and less reliant on third-party vendors. And this means Stellare 2.0 has reduced our forecast spend for financial year '25 by 12% and further savings to come as we decommission Stellare 1.0 completely. Through smarter ways of working and more efficient approaches, we're running Stellare 2.0 with less people and realizing significant savings. In summary, we now have the platform to reach any financial product quickly, automate processes for customer onboarding and to serve new channels. This reduces the risk and complexity of new channel and product launches, which creates further market opportunity. We have an unsecured personal loan and a secured car loan, but there are many more financial products that we can now reach and quickly with our new platform. However, in the next 6 months, we will enhance our core offering and launch Stellare 2.0 across the Australian and New Zealand businesses, which will enable future growth and innovation. Now turning to Slide 25. In terms of our overall outlook, we have split this into 3 areas being interest rates and asset quality, growth outlook and specifically, financial year '24 and financial year '25 outlook. With respect to interest rates and asset quality, a reminder, Harmoney has the ability to pass through targeted interest rate increases for our sophisticated risk-based pricing model to maintain a 9% to 10% net interest margin. Funding costs are managed with a diversified tunnel of 3 of the big 4 banks and 3 mezzanine funders together with an ABS program in Australia and New Zealand, whilst 89% of our borrowings are hedged. A high-quality diversified loan book, of which 74% are employed in either professional office or trade rolls together with a low 65 basis point 90-day-plus arrears level. With respect to the growth outlook, we expect to remain strong due to a large total addressable market. Harmoney's consumer direct model is taking market share from banks with plenty of room to grow in the $145 billion market. Harmoney has been and continues to work with Google to implement further AI technology to enhance customer experience, lowering customer acquisition costs and to further reduce our cost-to-income ratio. The rollout of Stellare 2.0 across the entire business set is yet to increase revenue, lower costs and drive higher profitability. Now specifically, in terms of financial year '24 outlook, it looks to us that the interest rate cycle is nearing or reach its peak in both markets, and Harmoney has now proven that its business model is highly resilient through all phases of the interest rate cycle. Therefore, we can -- we expect to see continued loan book growth, a net interest margin of 9% and positive cash NPAT. And then in terms of financial year '25 outlook, we're targeting a 20% cash return on equity run rate, which is in the next 16 months. Now turning to Slide 26. As I just said, a key focus for us is targeting a 20% cash return on equity run rate in financial year '25. So I want to try and show you this as simply as possible and why we have conviction in achieving this target. The table on the right shows at our current equity of $45 million, we require a cash NPAT of $9 million to generate a 20% cash return on equity. To achieve that $9 million cash NPAT, we need to generate sufficient risk-adjusted income to cover both our customer acquisition expenses and our operating expenses plus the $9 million cash impact surplus. As a reminder, risk-adjusted income is our income after deduction of funding costs and incurred credit losses. Due to our consumer direct model and high levels of automation, our expectation is that growth in customer acquisition expenses and our operating expenses will be driven by inflation, not by growth in the underlying book. In the illustrative table on the right, we've assumed 5% growth on our first half 24 costs for each of our customer acquisition and operating expenses. Historically, we've actually managed to reduce these or hold these flat. Despite high inflation, therefore, we believe this is very achievable. So assuming 5% growth -- cost growth in the table on the right shows a requirement for risk-adjusted income of $47 million. This half, we've delivered a 5% risk-adjusted income return on our average loan book. This was compressed by higher funding costs and higher credit losses, as Simon explained earlier, maintaining a 5% risk-adjusted income return to achieve $47 million risk-adjusted income, our average loan book needs to grow to $940 million, being 24% higher than the loan book was at the end of this half. To give some context to how achievable that is, over the last 2 years, our average annual loan book growth has been 33%. While this half, our risk-adjusted income percentage was 5% in financial year '23, it was 6%. At a 6% risk-adjusted income, our average loan book only needs to grow to $783 million to generate 47% -- sorry, $47 million risk-adjusted income. The $783 million is only 4% higher than the loan book was at the end of the half. At the midpoint of a 5.5% risk-adjusted return on the loan book, the average loan book would need to grow by 13% to $855 million. You can rest assured that we are all laser-focused on expanding our risk-adjusted income through initiatives on all 3 fronts of pricing, funding costs and credit performance whilst also continuing to grow our loan book, supported by the tailwinds of a rate cycle that looks to be nearing its peak. That concludes today's presentation, and now we will turn to answering your questions. [Operator Instructions]

Okay. One question to start with was does the Stellare platform have the ability to be used in other jurisdictions such as the U.K. or the U.S.A? Technically, absolutely, it could. But just to be clear, our focus remains on Australia and New Zealand in the short to medium term. We have enormous growth opportunity in the total addressable market in Australia and New Zealand. And you can see that with the new technology that we've implemented and progressively rolling out into New Zealand, where we've got a lot of opportunity ahead of us. So yes, absolutely, it is a global platform. We could do that, but it's not in the near-term strategy. Congrats on the -- just going through the questions that we've got online. I'll read them out and then even myself or Simon will answer them. Congrats on the cost-to-income ratio declines how far through the journey do you see the 24% in first half '24? Look, we will continue to drive that number down. I think the good -- as we said in that illustrative example, we really only see our costs increasing by inflation. We've got the right-sized team now of 75 full-time resources in Australia and New Zealand. And obviously, we continue to grow our book and grow our revenue. So we'd expect that number to continue to decline in future financial years. Next question. How far away is targeting new segments? Or are you ensuring Stellare 2.0 is rolled out across Australia and New Zealand first, hopefully, just answered that one. Yes, absolutely, making sure the products are Stellare 2.0 is rolled out across Australia, New Zealand first, and that will be in the next 6 months and then starting to look at new segments beyond that, now that we have the technology capability to do that. Can you talk through how you see your take advantage versus competitors in terms of loan processing times, credit assessment and customer experience? Look, I think the key to us is we are a B2C business. We go direct to consumer. So we need to have a very, very slick process. Customers don't have a lot of patience these days. So we don't have to think to. We need to make sure that, that decision is done quickly and the customer has the gray experience. Hopefully, you can see that through our Google reviews and shopper approved scores of 4.8 out of 5 on 55,000 reviews. Look, I don't really want to comment on competitors' processes. All I can say is you can see the time that we're doing ours in, and I think that would pretty be one of the fastest in market, particularly since the launch of Stellare 2.0. Next question. Can you talk about how the ABS securitization deal has helped your diversified funding model? Should we expect at least one of these deals across New Zealand, Australia each year? Or is it more dependent on book growth? Look, securitization is a big part of our funding model. We did a New Zealand deal in August. And we'll look to always have a mix of warehouses and securitizations. But yes, look, it largely will be dependent on book growth. It's obviously important we keep a decent percentage of warehouse, but it's also important we turn those warehouses out at times when it's suitable. But I guess the key point for me there is we can afford to be selective when we do these. The ABS market can move quite a bit from time to time and so on pricing and appetite. So the good thing for us is we have $250 million in undrawn capacity in our warehouses, which gives us enormous flexibility to really do an ABS deal at the most opportune time and that's what we'll continue to do. With the development of the Stellare system, any chance of licensing this out to other operators? Look, there is obviously the potential to do that. We don't see that. This is our IT largely. So we would -- there has to be some pretty serious consideration to doing that. But yes, technically, we could look at doing that. But again, not in our short- to medium-term strategy. Our key metrics continue to improve cost of acquiring customers, cost of income, are these levels sustainable or reflective of a point in time? No, we absolutely believe these are sustainable. As I mentioned earlier, around costs, we don't expect that to grow by inflation. Cost of acquiring customers, while I think you continue -- you can see there that we are with the Stellare 2.0 platform. We're able to get much better insight of customers. We're able to do the [indiscernible] to list through the benefits of the -- of what we're seeing in this new platform in terms of customer -- the visibility of the customers through the process, the data that we're capturing and the ability to dissect that data all at great speed is significantly greater. So we'd expect to get more customers on board for the same amount of marketing costs today. So no, we believe it's very sustainable. Okay. I know you're suggesting the interest rate cycle has played out. How does this affect your expectation for growth going forward? Look, we believe that the rate cycle is largely done or certainly nearing its peak. We sort of feel that once people's expectations of where interest rates are going to be more in the medium term, people adjust their -- get used to that new way of life. I think people did get accustomed to very, very low interest rates. And that's not really reflective of the last decades of interest rates. But people already are starting to adjust their spending and their lifestyle habits around having a more take neutral level of OCR rates. And I think that actually helps. For us, the market is still huge. It's still $145 billion market. So there's significant growth for us. I'm going to ask Andrew -- Simon to do the next question, why your payments lower compared to your expectations to your peers and why?

Yes. Well, I think that comes back to what I was saying earlier around AI-driven credit models. We put a lot of data through the model from the years that we've been operating to assess credit. And that's just bearing fruit and that we were able to maintain Lowe's -- a low rate. So I talked about earlier how that earlier Australian scorecard hadn't performed as well and it comes back to the same point in that when we launched in Australia after the IPO particular model hadn't had the opportunity to be trained on quite as much data. And then as we gathered more data, we refined the model. And hence, we're able to replace that over 18 months ago.

Okay. And the last question we have online is how far is Stellare 2.0 rollout way station rollout in New Zealand? I assume it's to happen once you bed down in AU. Yes, that's correct. Look, we'd be aiming to launch New Zealand in the next 6 months. But to your point, it's important we get Australia working exactly right across everywhere, but that's certainly the plan. And that's it. Sorry, one last question has just popped in. If there's a banking crash, how secure are your funding facilities? Look, as I said in the presentation, we just extended 3 of our warehouses for another 2 years. In the last half, we generally run pretty long availability periods. So not forecasted I'm not expecting a banking crash, but we -- and then the other thing to probably note is none of our warehouse facilities are bullet repayments. They all amortized in line with the underlying customer receivable. So there's not really a position where on our warehouses where we have to repay the money when we haven't received the funds from the customer. They will fully amortize as in line with the customer repayments. So yes, so look, I think we -- and we're very diversified as well, which does help. I think we're the most diversified in the space with different big 4 banks and 3 mezzanine funders. So yes, I think for our size business, we're very well diversified from a funding perspective, and it's a very conservative funding model the way we operate. It does cost us a little bit more to take longer terms. But having run a similar business through the global financial crisis, which is -- it seems like a lifetime ago, but it was about 15 years ago. I do -- the funding lines are critical, and we pay more for term rather than try and sort of run riskier programs that are short term to pop our margins that create sort of undue risk on a business that's unnecessary. There's no other questions like in the call there. So on behalf of Simon and myself, we thank everyone for listening to the call today, and we look forward to catching up with many of you in the coming weeks. Have a great day.