MoneyMe Limited (MME) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 2021 Annual General Meeting of MoneyMe Limited. I'm Peter Coad, the Chair of the Board. I would like to thank you all for attending our online AGM this morning. We are pleased to be able to provide our shareholders with the opportunity to participate in our AGM in a way that is safe and responsible in light of the ongoing pandemic. We're very hopeful that the recent easing of restrictions will continue and that we're able to host our shareholders in person at next year's AGM. As this meeting is being held virtually with shareholders present in many locations, I'd like to acknowledge the Traditional Owners of the country on which we are each present and recognize their continuing connection to land, waters and culture. We pay our respects to Elders past, present and emerging. It's 11 a.m. Sydney Time, the nominated time for the meeting. As a quorum is present, I'm pleased to declare the meeting open. The Notice of the Meeting was made available to shareholders and lodged with the ASX on the 20th of October 2021. I propose to take this notice as read. Shareholders were also sent a proxy form to the meeting. Virtual online meeting guide providing instructions on how to ask questions and vote at this meeting through the online platform and how to ask questions via a telephone line was also made available to shareholders. I'll remind shareholders of the arrangements for questions and voting when we get to the formal business of the meeting. If you lose connection to the meeting at any time, you can log back into the AGM online platform by returning to the log-in page and following the prompts. You will then receive an automated e-mail with a recovery link for you to click on to reconnect to the AGM. Alternatively, please call our share registry provider, Link Market Services, on 1 300-554-474 for assistance. If we experience any technical issues today, a short recess or an adjournment may be required to resolve those issues. If this occurs, I will advise you accordingly. Joining me here in Sydney today are Clayton Howes, our Managing Director and Chief Executive Officer; Neal Hawkins, our Chief Financial Officer; and Jonathan Swain, our Company Secretary. My fellow nonexecutive directors, Susan Wynne, Scott Emery and Jon Lechte are joining the meeting via teleconference, and you will hear from each of Susan and Scott later in the meeting. Mark Stretton, the audit partner from our auditor, Deloitte, is also online and will be available to answer questions from shareholders at the appropriate time during the meeting. The agenda for the formal part of today's meeting is set out in the Notice of Meeting. Before we proceed to the formal part of the meeting, I'll give a short address, and then you'll hear from Clayton Howes, our Managing Director and CEO. I'll now make some brief comments about the company's mission, strategy and corporate government framework before handing over to Clayton, who will take you through the Group's recent performance, its products and outlook for accelerating growth and returns. MoneyMe is a digital credit business, leveraging technology and analytics to deliver highly automated and innovative products to customers who are seeking simplicity, convenience, flexibility and fair credit in a digital world. The business is well on its way towards achieving its mission to be the favorite credit partner for Generation Now, with full year '21 being another successful period for the company. The growth and efficiency outcomes from the year are remarkable with robust underlying profitable growth alongside rapid expansion. The group issued its inaugural sustainability statement as part of the FY '21 annual report, which provided an opportunity to formally recognize our success in these areas and communicate our plans to further progress our ESG agenda with focus and purpose. I strongly encourage all shareholders to review the report in detail. MoneyMe is proud of its environmental, social and governance approach and the achievements to date with a strong commitment from the Board and the management team to continue with a focus on building profit with purpose. The Group's digital approach enabled by its proprietary technology platform, Horizon, has ensured that it has been close to business as usual throughout the COVID-19 pandemic. The group has been able to continue to seamlessly deliver market-leading customer satisfaction and service levels with credit settings calibrated to the environment. Our digital operating model and proprietary technology platform, the combination of current and planned new products, expanding distribution opportunities, and lower cost of funds, and proactive credit risk management will enable the business to continue to achieve strong financial performance from an increasingly diversified customer base. The group is set to maintain its current focus on the opportunities for growth. A summary biography of each of the MoneyMe Board of Directors is set out on Page 5. I would like to take this opportunity to recognize and thank my fellow Board members for the commitment and expertise they provided to the business in second year since listing in December 2019. On behalf of the Board of Directors, I would also thank management and the broader MoneyMe team, for their ongoing focus on customer service an unwavering commitment and passion for achieving results and groundbreaking digital experiences. Most MoneyMe investors will be familiar with our investor website. The website includes a significant number of key corporate governance-related documents for investor review, including our August 2021 Corporate Governance Statement that completes an assessment against the ASX fourth edition recommendations, charters, policies and equity incentive plan rules, and our 2021 annual report and ASX announcements. MoneyMe's August 2021 ASX Governance Statement outlines how the corporate governance practices of the group comply with the recommendations made by the ASX Corporate Governance Council and its fourth edition of the council's Corporate Governance Principles and Recommendations. The statement also outlines MoneyMe's current governance framework, which reflects a formal review and update completed during the 2021 financial year. As we look ahead to the continued growth and success of the company, I want to thank all shareholders for your trust and ongoing support for the growth of MoneyMe. I'll now hand over to Clay, who will provide a further update on the company's performance and plans.

Thank you, Peter, and good morning, everyone. I'm delighted to provide you with an update on the company's performance for the financial year '21, our first quarter into FY '22 and our plans ahead. Please follow me on Page 8. We had a tremendous year, with the team performing incredibly well against the challenging backdrop of COVID-19. We grew the business, creating operating leverage through increasing revenue, reduced costs relative to our asset growth, while launching new product innovations and expanding into new and exciting verticals. The key highlights for the year included record customer receivables of $333 million, up 149% year-on-year, record revenue of $58 million. That's up 21% year-on-year. Record future contracted cash interest of $98 million. That's up 240% year-on-year. Cash NPAT of $12 million, that's up 16% year-on-year; establishing a major bank warehouse which lowered funding costs by 55% year-on-year, delivering a strong credit performance at 5% charge-offs at 25% year-on-year and the launch of 2 big sector products, MoneyMe+ and Autopay. Clicking to Page 9. The bigger business with breakthrough products opening new categories, exceptional customer experiences, big new funding structures and market beating is a continuation of the team's exceptional rate of performance over the last 3 years. Our focus has been on high receivables and revenue growth, accelerating operating cost leverage and robust growing cash NPAT. These results stem from MoneyMe's agile business model with low fixed costs, strong asset diversification and appropriately set risk-based pricing and margins. And into the new financial year on Page 10, I was delighted to announce in October that MoneyMe passed the $1 billion originations milestone in quarter 1 FY '22. This reflects our consistent focus over time to invest and develop the digital capabilities of our Horizon technology platform and unrelenting focus on the generation of our customer and our persistence in innovation. The quarter 1 FY '22 record revenue originations and customer receivables demonstrates our business' continuation to accelerate even during the extended lockdown period. At the same time, credit quality was maintained, and we saw a diversified product and distribution strategy really paying off. The quarter 1 FY '22 results demonstrate Autopay is gaining significant traction with dealerships and brokers signing up to the new platform at serious pace. By clicking on Page 11, the company has been building a framework to unlock incredible opportunity. Beyond being a personal loan provider, we're accessing the credit card market with Freestyle, the secured finance market with Autopay, property sector lending with List ready and Rent ready and retail point-of-sale lending with MoneyMe+. We are so proud that each of these products reflect significant innovation to meet customers' diverse borrowing needs and deliver exceptional tech-driven customer experiences. Our passion for innovation will not stop there as we plan to roll out further new products and further enhance existing products for Generation Now customers. Now clicking on Page 12. MoneyMe continued to broaden its distribution strategy in FY '21, with the launch of the MoneyMe+ and Autopay products using the business-to-business to customer channel strategy. This is an important development of the group that further expands our reach to new customers and areas, while we also maintain a robust direct-to-customer focus. I'm also pleased with the group's continuing ability to successfully tailor on marketing to particular segments. These initiatives have all been executed to support low-cost acquisition models while expanding distribution and increasing operating leverage to deliver scale and growth with profit. Now clicking to Page 13. The highly spirited performance culture at MoneyMe is creating incredible customer experiences. Customer satisfaction service levels continue to be remarkable with the high Net Promoter Score of 78. We expanded our risk-adjusted pricing model in FY '21, leveraging our major bank funding to increase our personal offer to $50,000 and Freestyle offer to $20,000. This is delivering increased customer lifetime value to the business and allowing us to attract a new customer group in a higher credit quality environment. The average book Equifax score increased to 650, reflecting all this change. Clicking to Page 14. Autopay launched in April 2021, our first secured finance product and significantly increased MoneyMe's total addressable market. It achieved an impressive $6 million in originations to the 30th of June, and the take-up from dealerships has been accelerating. Autopay is tech-led finance at its best. It increases dealer sales with settlement within 60 minutes, 7 days a week. Autopay's high-power technology engine is built on our proprietary platform, Horizon, automating several touch points from the customer application process, underwriting decisions and even real-time funding to the dealer's bank accounts. It has fixed everything that was broken about existing auto finance models and has provided a real solution to the problems faced by the industry that put the brakes on the dealers and car buyers. Clicking to Page 15. The macroeconomic outlook is positive and creating significant opportunities. Our highly driven and capable team remained focused on achieving growth opportunities in the year ahead. We are incredibly excited as we continue to execute on our strategy, that's increasing our market presence and share across more categories, increasing our sales to existing customers, which deliver very attractive economics and leveraging automation through our AI platform Alden, that's driving unbeatable customer experiences and value without the costs. Our dynamic and digital operating model, strong cash position, diversified receivables book, modern product suite and online distribution positions us well for the current and post COVID-19 environment. To our MoneyMe shareholders, we are very grateful for your support, and I'm incredibly excited for MoneyMe and its progress to be the favorite credit provider for the digital generation. We're creating customer value and exceptional experiences that deliver shareholder returns.

Thank you. The microphone is now open for the Chairman.

Thank you. Ladies and gentlemen, we'll now move to the formal part of the meeting. I'll start by explaining the arrangements for asking questions and voting on the formal items of business. As set out in the Notice of the Meeting, there are 2 ways that shareholders can raise questions at this year's AGM via the online platform or via telephone. [Operator Instructions] you can submit questions now or at any time during the meeting when we're considering the item of business, which your question relates. They'll be dealt with at the appropriate time. If you have a question already prepared, I encourage you to submit it now. So there's many questions as possible can be answered. Would ask that you keep your question short and to the point, so those many shareholders as possible can have a chance to ask a question. All questions submitted via the online platform will go to our Company Secretary, Jonathan Swain, as moderator for the meeting. Jonathan will identify each person to ask the question and read out the question. I'll then need to answer the question or pass it on to the most appropriate person to answer. We have questions relating from an item of business that have been received before the meeting, we'll deal with these in the same way. [Operator Instructions] Shareholders wishing to access the meeting, will needed to use a unique pin provided by Link Market Services in accordance with the instructions set out in the Notice of the Meeting and the virtual meeting online guide. If you don't have a pin and would like to ask a question via the phone, please contact Link on 1 (800) 990-363 to get your pin. When you're dialing to the meeting, you'll be asked to mute your online sound and listen to the meeting by phone. [Operator Instructions] In order to ensure that all shareholders have a reasonable opportunity to comment and ask questions. We'd ask the shareholders do not ask more than 2 questions at a time. We reserve the right to rule out questions that do not relate to the business of the meeting. Also want to answer questions of the same or substantially similar to questions that have already been answered. Otherwise, we'll endeavor to answer all -- as many questions as possible during the meeting. For each time of business, we'll take the telephone questions first and then respond to questions raised via the online platform. As Chairperson, I've determined that voting on each of the resolutions can be considered at this meeting will be conducted by a poll. Shareholders were given the opportunity to appoint a proxy to vote on their behalf at this meeting by lodging the proxy form that accompanied the Notice of Meeting. As set out in the Notice of Meeting as Chair, I'll vote all directed proxies in accordance with the directions provided by shareholders and will vote all undirected proxies in favor of all resolutions. Shareholders who have not appointed a proxy to vote on their behalf may cast a direct vote during this meeting using the electronic voting card that you received when you registered via the online platform. Those shareholders may cast a direct vote at any time from now until 5 minutes after the close of the meeting. If you have any questions about casting your vote online, please refer to the virtual online meeting guide. This can be accessed via the download section at the bottom right-hand side of your screen. The first item of formal business is to receive and consider the company's financial statements and reports for the financial year ended 30th of June 2021 as set out in the FY '21 annual report. This item of business does not require shareholders to vote on a resolution or to formally adopt the reports. Shareholders or their proxies may comment or ask questions about the financial statements and reports or about the management of the company. Shareholders may also ask questions to the company's auditor, Deloitte, in relation to the conduct of the audit, the preparation and content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit. I'll now address any questions relating to this item of business or any general business questions. Are there any telephone questions from shareholders on this item of business?

Chair, there are no telephone questions at this time.

Thank you. Jonathan, are there any questions via the online platform?

Chair, there are no questions via the online platform at this time.

Okay. Thank you. As there are no questions on this, I'll now move on to consideration of the resolutions to which shareholder approval is sought at this meeting. Shareholders are asked to consider the 6 resolutions set out in the Notice of the Meeting dated 20th of October 2021. For each proposed resolution, I'll introduce the resolution and there will be an opportunity for shareholders to ask questions on the resolutions in line with the process I've just described. Once there are no further questions on that resolution, we will display a slide showing the total proxy votes received on the resolution prior to the meeting. I'll now formally open the poll for each resolution. Results of the poll will be released on the ASX company announcements platform and made available on the company's website after the close of the meeting. Resolution 1. We now consider resolution 1, which is the binding -- nonbinding advisory vote on the company's remuneration report for the year ended 30th of June 2021. The remuneration report is set out on Pages 38 to 49 and the full year '21 annual report. After the resolution has been moved, there will be time for comments and questions. I now move that the company's remuneration report for the financial year ended 30th of June 2021 be adopted. I'll answer any questions relating to this resolution. Are there any telephone questions from shareholders?

Chair, there are no telephone questions for this resolution.

Thank you, operator. I'll now take any questions submitted on this resolution via the online platform.

Chair, there are no questions submitted by the online platform.

Okay. As there are no questions, I'll now put the resolution for the meeting. The proxy votes received for this resolution are now shown on the slide. If you wish to vote on resolution 1 using your electronic voting card, please vote now. [Voting]

We'll now move on to resolution 2, which is for the reelection of Scott Emery as Director. Scott is required to retire at this meeting in accordance with the company's constitution and being eligible, offers himself for reelection. Information relevant to Scott's proposed reelection is set out in the explanatory memorandum that accompanied the Notice of Meeting. Now note that each of the other directors supports Scott's reelection. I'll now invite Scott to address the meeting in relation to his reelection.

Thank you, Peter. Good morning, ladies and gentlemen. Very pleased to be speaking to you today as I stand for reelection of the MoneyMe Board. I'm a co-founder of MoneyMe and has been a Non-Executive Director of the company from its inception. I'm a member of the Board's Audit, Risk Management Committee, Remuneration and Nomination Committee. I have over 30 years' experience in establishing and running property development companies across Australia. And I'm the Founder and Managing Director of a commercial building company, Yarra Valley Commercial, which was established in 1986 and has grown to be a national shopfitting and building company. My long association with MoneyMe means I have an excellent understanding of the business and how it has evolved over the last 8 years. And I believe my other professional skills and experience have enabled me to make valuable contribution to the company in my role as a Director and Board committee member. It is both a privilege and a responsibility to serve you as a Director of this company, and I look forward to continuing to do so in the future. Thanks, Pete.

Thank you, Scott. I have pleasure moving that Mr. Scott Emery who retires in accordance with Rule 6.1 FI, the company's constitution and being eligible, offers himself for reelection to be reelected as a director of the company. I'll now address any questions relating to this resolution. Are there any telephone questions from shareholders?

Chair, there are no telephone questions for this resolution.

Thank you, operator. I'll now take any questions submitted via the online platform.

There are no questions have been submitted via the online platform for this resolution.

Thanks, Jonathan. Thank you. As there are no further questions or no questions on this resolution. I'll put the resolution to the meeting. The proxy votes received for this resolution are shown on the slide. If you wish to vote on resolution 2 using the online electronic voting card, please do so now. [Voting]

I'll now move on to resolution 3, which is for the reelection of Susan Wynne as a Director. Susan is also required to retire at this meeting in accordance with the company's constitution and being eligible, offers herself for reelection. Information relevant to Susan's proposed reelection is set out in the explanatory memorandum that accompanied the Notice of the Meeting, and note that each of the other directors supports Susan's reelection. I'll now invite Susan to address the meeting in relation to her reelection.

Thanks so much, Peter, and good morning, ladies and gentlemen. So like Scott, I am very pleased to be speaking to you today as I stand for reelection to the MoneyMe Board. I joined MoneyMe as an independent non-Executive Director in October 2019 just before our listing on the ASX, and I am a member of the Board's Remuneration and Nomination Committee. I have more than 30 years' corporate and government experience, specializing in strategy development, stakeholder management, corporate affairs and public relations. I've served in local government on the Woollahra Council since 2008, including terms as both Deputy mayor and Mayor and was select as the Mayor of Woollahra in September 2019 have been previously served in this role in 2011 and 2012. I have a strong focus on corporate social responsibility and I'm National Chair of the Australian Red Cross Society of Women Leaders. I'm a graduate of the Australian Institute of Company Directors and an affiliates of the Governance Institute of Australia. I was also recently appointed as a Non-Executive Director of ASX-listed client investment management. I believe my wide ranging experience enables me to add value to the company both as a director and as a member of the Remuneration and Nominations Committee. I have thoroughly enjoyed working with my fellow Board members and the excellent management team and look forward to continuing this work and helping the company to continue its strong growth trajectory. Thanks, Peter.

Thank you, Susan. I have pleasure of moving that Susan Wynne, who retires in accordance with Rule 6.1 FI of the company's constitution being eligible, offers herself for reelection, be reelected as a director of the company. I'll now address any questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

Chair, there are no telephone questions for this resolution.

Thank you, operator. I'll now take any questions submitted on this resolution via the online platform.

Chair, there are no questions by the online platform on this resolution.

Thank you, Jonathan. I will now put the resolution to the meeting. The proxy votes received through this resolution as shown on the slide. If you wish to vote on resolution 3 online using your electronic voting card, can you please do so now? [Voting]

We'll now move to Resolution 4, which is to seek approval for the issue of up to 5 million securities under the MoneyMe employee equity incentive plan, issuant per exception 13 in ASX Listing Rule 7.2. If that approval is given, securities issued under the plan during the 3-year period following the passing of Resolution 4 will be treated as have been issued under exception through ASX Listing Rule 7.1 provided that the 5 million cap is not exceeded, provided that there's no material change to the terms of the plan. This would mean that equity securities can be issued under the plan without using up any of the company's 15% limit on issuing equity securities without shareholder approval set out under Listing Rule 7.1. Detailed information about the plan, including a summary of the terms of the plan is set out in the explanatory notes to the Notice of Meeting. I'll now address any questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

Chair, there are no telephone questions for this resolution.

Thank you. I'll now take any questions submitted on this resolution via the online platform.

There are no questions via the online platform for this resolution.

Thank you. I'll now put the resolution to the meeting. The proxy votes received for this resolution as shown on the slide. If you wish to vote on resolution 4 online using your electronic voting card, can you please do so now? [Voting]

We'll now move to Resolution 5, which is for the approval. We issued 181,347 performance rights Clayton Howes, the company's Managing Director and CEO and the company's employee equity incentive plan. Details of Mr. Howes' remuneration package as Managing Director and CEO and the basis upon which the remuneration was determined, are set out in the remuneration report, which can be found in the company's FY '21 annual report. The directors consider the proposed issue of performance rights an integral part of effectively rewarding and incentivizing executive management in a manner that aligns the interest of management with shareholders, and it is a key component of an appropriately structured remuneration package for Mr. Howes. Further details about this resolution are contained in the explanatory notes to the notice of this meeting. The directors, with Mr. Howes abstaining, unanimously recommend shareholders to vote in favor of this resolution. I now move that the purposes of ASX Listing Rule 10.14 and for all other purposes, shareholders approve the issue of 181,347 performance rights, the Clayton Howes under the MoneyMe Employee Equity Incentive Plan and otherwise on the terms set out in the expenditure notes, which form part of the notice of meeting. I'll now address any questions relating to this resolution. Are there any telephone questions from shareholders?

Chair, there are no telephone questions for this resolution.

Thank you. I'll now take any questions submitted on this resolution via the online platform.

There are no questions for this resolution from shareholders participating via the online platform.

Thank you. I'll now put the resolution to the meeting. The proxy votes received for this resolution are shown on the slide. If you wish to vote on Resolution 5 online using your electronic voting card, can you please vote now? [Voting]

We now move on to our final resolution, Resolution 6. This resolution is for the ratification of the issue of certain shares and performance rights issued by the company in connection with the MoneyMe employee incentive plan as detailed in the explanatory notes to the Notice of Meeting. ASX Listing Rule 7.4 allows the shareholders of the company to approve an issue of equity securities after it has been made or agreed to be made. If they do, the issue has taken to been approved under Listing Rule 7.1 and so does not reduce the company's capacity to issue further equity securities without shareholder approval under that rule. If shareholders approve Resolution 6, the company will have greater flexibility to make future issues of the company's shares and other equity securities to raise funds to meet future needs. I'll now address any questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

Chair, there are no telephone questions for this resolution.

Thank you, operator. I'll now take any questions submitted via this -- for this resolution via the online platform.

Chair, there are no questions on this resolution via the online platform.

Thank you, Jonathan. I'll now put the resolution to the meeting. The proxy votes received for this resolution are shown on the slide. If you wish to vote on Resolution 6 using your online electronic voting card, can you please vote now? [Voting]

That ends the formal part of the Annual General Meeting, and I'll now declare the meeting closed. As I said earlier, the poll will remain open for a further 5 minutes. Shareholders have not already voted, they lodge their online votes during that time. The results of the meeting will be announced on our ASX company announcements platform and will be available on the company's website as soon as possible after the close of the meeting. Thank you all for participating in our online meeting today. We look forward to your continuing support in the coming year.