QuickFee Limited (QFE) Earnings Call Transcript & Summary

Okay. I think we'll make a start. So good morning to everyone, and good evening to those in the U.S. or from wherever it is that you're joining us. Delighted that you could all join us for the QuickFee Limited 2021 Investor Day. Delighted to have the senior management team here with us presenting about the transformation and developments that have been taking place over the last 12 months or so. The idea is that we will get through a bunch of presentations today. We have 2 hours. And the idea is to allow some time for Q&A at the end of the presentations. [Operator Instructions] If we do miss anything, don't get to your question or ran out of time, we'll be sure to come back to you offline. So without any further ado, I'll hand over to Eric Lookhoff, CEO and Managing Director of QuickFee.

Thank you, Eric. So -- and thank you, everyone, for joining us today. We're excited to share the story of QuickFee. And certainly, the last 12 months or so, there's been a tremendous amount of transformation that's been happening in the organization and looking forward to sharing and breaking that all down with you here today. So we'll dive right in. For those of you who I haven't met on the investor side, Eric Lookhoff, I'm the new Managing Director and Chief Executive Officer of QuickFee. Joined the organization in February of this past year as President of the North American business and then moved in to succeed our founder, Bruce, in July. I've been in the payment space here in the U.S. for 2 decades, and it's really seeing that space transform. I've been a part of a number of successful scale-ups and payment turnarounds over the last 2 decades with a number of successful exits both PE backed and IPO. As well, I've really been a part of driving this space forward across the entire scope of the payments landscape. So if you think of how payments are distributed from a funds flow standpoint, there's issuers that are issuing credit. There's acquirers that are allowing and selling merchant services to merchants who accept that at the point of sale. And then you have processors and networks. And so I've been a part of all those organizations over the last 2 decades as well. So excited to share the story here of the last 12 months. The agenda for today is we're really going to tell this in a couple of acts. So the first is I want to give you a sense of the time line since Bruce founded the organization in 2009 and all the successes that existed for all the years forward and really building a foundation that we're really grateful to have that allows us to take the organization into the future. So I'm going to give you a sense of the time line and how we've evolved from a loan originator to a full loan payments company. And then we're going to get into the payment lines of business for QuickFee. And there's really 2 of those. So we're going to talk about professional services. And then we're going to also then separately talk about our buy now, pay later line of business that we've been referencing as installments, but really our BNPL line of business. And we're going to tell those very separately because in the past year or so through trading updates in our annual report and other communications with investors, we've tended to blend those 2 lines of business together. And that may have made it a little tougher to understand the business, to understand how to value the business. So we're going to really tell that in 2 separate stories. And then we're going to come back and talk about operations, risk and how this journey from loan originator, particularly in the professional service space, to full-blown payments company has required an evolution of our risk management capabilities as well as our platform. And then we'll talk through financials, as well as give you some outlook and the priorities that we're focused on for the coming year and 2. So we'll jump in. So I love telling the story, and Bruce is on with us, and I've done this a number of times, and I feel like I've gotten it right. I'm going to try to do this justice. Look, our founder is on -- Bruce Coombes. And with a tremendous amount of skill and grace and entrepreneurship founded QuickFee in 2009 on a single premise. And his history in having success in the CPA space, the accounting space, in Australia, really gave him a sense of appreciation for something that professional service firms, whether it's law, whether it's accounting, have in common, right? They're wonderfully giving advice and not so great at getting paid for, right? And so it's a space that tends to have longer days sales outstanding, which is a pain point. And Bruce really endeavored to solve that pain and did so with the launch of the first payment solution for QuickFee, which was the merchant-backed fee-funding solution that allowed for customers, clients of accounting firms and law firms to have a little extra time to pay the fees to their firms while the firm themselves are able to receive what they've worked very hard for upfront and without having to wait. And the merchant-backed solution there allowed us to mitigate certain risks and really develop a very low-risk profile portfolio. Along the way, over the next 7 years. You've got a strong demand for other additional payment options, right? And that's choice, payment choice that's being driven by the clients of firms, being driven by the firms themselves. And that resulted in the addition of bank transfer capabilities with EFT payments and then also a demand for debit and credit card acceptance. And so those were added on to the product portfolio. And I'll talk about the differences between bank payments, bank transfer payments in Australia and the U.S. market as well as card payments in the Australia and the U.S. market when we move in a little further into the presentation. So in 2016, the event that brought QuickFee to the U.S. out of the Los Angeles area in California, really aim to replicate and mirror that approach, where it was a direct sales approach to the enterprise professional services space in the U.S. And again, not surprising, quite a bit of success that happened over the next couple of years, allowing us to reach a place where now 29% of the top 100 accounting firms in the United States and 34% of the top 400 accounting firms in the United States are all on our platform, and they accept payments on their invoices through QuickFee. And we're very excited about that, and that's allowed us to really leverage that market share in a dominant position in the enterprise side of the market, and help really accelerate the business forward. And I'll talk about that really over the next 2 years that happened in 2019, the IPO, many of you are familiar with and you participated in. And that really allowed us to consolidate the Australia business and the U.S. business into a single entity and began to initiate the design of the proprietary technology stack. And when you move into 2020, I'll give you a sense of the COVID impacts and how this accelerated the business and accelerated our shift to becoming a payments organization. So a couple of things have happened. So one, in the United States, with the accounting space, particularly the enterprise space, they're well behind the curve in other more developed countries from a digital invoicing perspective, and we'll talk about that, Aubrey will get into some of that as well, in setting their invoices electronically, right? So lots of paper-based invoicing and when you have a paper-based invoicing process, you have a paper-based payments process. And so checks that come out of that. So with COVID, you have operations within these professional service spaces and the enterprise accounting space that couldn't come in and push those invoices out. So they had to force themselves to shift to digital invoicing. That accelerated the growth of the payments business, particularly ACH and card and our lending as well up to a point. The other effect of COVID was the government responses around the world, particularly in Australia and in the U.S. where we serve, in a flood of stimulus into the market. Now that stimulus resulted in some depression of the lending space, some of which that we're beginning to see return, and I'll talk about that further in the presentation. But also, again, a shift of payment method from borrowing a loan to pay invoices to just simply paying them with a bank transfer or a credit card. Now again, in the U.S., bank transfers, what we call an ACH payment, an automated clearing house payment, in AU, we call it an electronic funds transfer, an EFT payment, in the U.S., it's a nice margin business. And we'll talk about that when we get into sort of how we make money. Whereas, in AU, there's not much money to be made in bank transfers. In the U.S., it's quite a nice business as you build scale and we're doing that with the acceleration. And credit card payments, again, there's a nice yield that we can benefit from there. And so the effects of COVID, you'll hear this throughout the presentation, shift to digital invoicing and acceleration of payment activity. The culmination of that and, if you've started your business as a loan originator and you've added payment capabilities onto that over time, you sort of have the perfect ingredients to develop a buy now, pay later solution that requires a bit of both, right? It requires the ability to originate lending. It requires credit facilities. It requires equity capital headroom. And then it also requires the ability to process payment transactions, particularly the initial version of buy now, pay later for QuickFee, which is a card-based version with our partnership with Splitit. So Splitit announcement named at the end of 2020 and we launched that solution. So as we move into this calendar year, in 2021, I think very quickly between the inability for Bruce to come back to the U.S. because of COVID travel restrictions, the acceleration of the payments volume really highlighted a few things for QuickFee. And the biggest one was we really needed to uplift our U.S. payments expertise from a leadership standpoint and that really began with the search for the North American President. And I was really grateful to join the organization. I think it has a tremendous amount of room ahead of us and was very excited to do that. Concurrent with my joining the organization, Jay Alsup, our Chief Marketing Officer, also joined. And he'll be able to give a little bit of his bio at the same time. And really, that kind of led to a number of things over the course of 2021. James Drummond, our Chief Operating Officer, already with the organization, really understood the history and the legacy and the things that we needed to improve upon to be a full payments company. And up to our Chief Technology Officer, not on the call with us today, Francesco Fabbrocino, who has really been focused on building out that platform capability to our most recent addition and improvement on the sales side, and that's Aubrey Amatelli who joined us from JPMorgan Chase we just this past month. So a number of quick bullets on 2021, and we'll keep moving forward here. Talked about the team and the additions there. We've added on a processing partnership with BlueSnap, and that was initially for our buy now, pay later solution. And then we are expanding that onto our ACH solution and our card platforms as well. And then ability to automate onboarding. You have to have that as a payments organization as you bring on merchant acquisition and merchant volume. James will talk to that later on. And then a number of integrations that are going to drive our penetration of our total merchants revenues that are moving online here in the last quarter. Aubrey will discuss that. And down to the really 2 exciting, very exciting announcements, both of which were released to the ASX this morning. The first being the expansion of our credit facility with Northleaf. So very excited about that, and Simon will take us through particulars around that towards the end of the session. And then we'll talk about Jim's Group and our partnership there and the exciting things that we're going to be able to do to accelerate buy now, pay later in the Australia region, and Bruce will take us through that as well. So I've talked about the team here. Just that we're fully filled in, in terms of the executive leadership team. Of note, that we are adding on additional strategic advisory capabilities, and we've done that with a couple of individuals not shown here in the presentation, but also previously announced as part of our Q1 update. And that is Sharat Shankar and Don Singer, both veterans here in the U.S. in terms of payment. The ability have been very helpful in guiding our strategy, and I'll talk about some of that strategy as we move forward. So it really begins with our core shared values. And one of the exercises as we've matured as an organization in 2021 was to develop our core values, and it really begins from the bottom and works its way up, right? It's not an exercise that can be top-down with a couple of people on this call in a room that says this is how we're going to behave. It really is understanding from every single individual that is an employee of the organization; hearing from our clients, hearing from our partners, hearing from our investors and really consolidating all of that into a set of core values that we all believe in; and it really begins with our humanity that we bring to every conversation that we're in, to caring deeply for our employees, for the people that we serve, our clients and the communities, serving with a full heart; and we're doing a lot more with charitable activities and things where we can give back locally in the places that we do business; and then solving very quickly, as a growth stage, rapidly growing organization, there's a lot to be solved for, and I'll talk about some of the product evolutions here; and then really evolving, right, and that's where we fail, learning quickly and rapidly improving and moving forward together. So I talked about a little of the core lines of business earlier in the agenda. So the first being our professional services space, and the second, our buy now, pay later. And I'm going to talk about those very distinctly separate because they serve very different markets in some very different ways. The unit economics are different. The growth trends will be different and our go-to-market strategies as well will be different. So we're going to unpack those separately. We're either going to begin with professional services. And at a very high level, before I turn it over to Bruce here to help us walk through professional services in the AU space, talking about the core payment options that we offer there. First is the lending that was our original product, and that gives clients 3 to 12 months to pay invoices with their firm and that is backed by recourse by the firm. So if there's any loan defaults that happen, then the service firm makes QuickFee hold for any unpaid principal balance. It's essentially how that works, provides us the ability to have a very low risk profile portfolio of clients, which is very important as we continue to grow and scale the business. The PayNow products, the payment products, which is again the ACH/EFT in both markets, is the lowest cost option to customers, right? It's the one that they're able to use essentially without cost. It is priced in terms of percentages or a fixed flat fee to the merchant, and we'll talk about that in a moment as well as the credit card payments which is really the lowest cost option to the merchants because we're surcharging that cost of payment acceptance to the customer. So lending in both regions, clients are paying a flat, typically, 2.95% to 10.95% interest charge depending on the term of the loan. What is really nice with this product is because we have underwritten the merchants, we essentially aren't needing to underwrite the borrower. And what that allows us to do is from a payment checkout experience, right, the client can go very quickly through, select the term that makes the most sense for them, agree to the interest and the terms and conditions and essentially just check out. And then we manage concentration risk, we manage a number of those things at the merchant level, and James will take us through some of that later on. It is free to the professional service firm. The firm receives 100% of the invoice upfront from QuickFee. And to give you a sense to the APRs around that, it's roughly 19% in AU, 16.5% here in the U.S. And with the newly announced this morning, Northleaf credit facility and the expansion of that, our borrowings moving forward will blend to roughly a 6.5% per annum. Again, very high-quality portfolio and massive growth opportunities that Aubrey will take us through in terms of the size of the total U.S. accounting space and how we continue to grow within that. PayNow is breaking down the features functionality around that. Again, here, we call it ACH versus EFT from a bank transfer standpoint. The blend of merchants who are paying either a fixed flat fee or a percentage of the volume lends to around 37 basis points. So as you're modeling out the business, you look at the ACH/EFT volume, 37 basis points is typically your top line. And then credit cards, again, the consumer here is paying a 3% surcharge, which covers the cost of payment acceptance to the merchant and then provides us some margin. And so we provide that product currently as an ISO referral relationship. As an independent sales organization, we refer our merchants to a third party for their credit card processing and we receive, as a result of that, a residual commission stream, and that is roughly around 18 basis points of the card volume. So as we move forward, into future trading updates, right, we'll be splitting out the PayNow volume so it becomes a little easier to model between ACH and card. And again, significant growth there. You're going to hear a lot about, again, digital invoicing shift as well as integrations. So with that, I'll turn it over to Bruce to walk us through the AU overview. Thanks, Bruce.

Fantastic. Thanks, Eric. Great. It's -- for many of you, you've probably heard me speak a couple of times before. It is an absolute delight to be back to running the Australian business with Eric as our Global CEO. You can see my background on the screen there. I was a chartered accountant once upon a time. And been around this industry my whole working life. So when I was a CA, I did a bit of litigation support. And that's actually why, as Eric said, why we have a focus on professional services firms. So I'll just roll forward and just share a little bit around our customer base. We are unbelievably fortunate to have firms in the quality of those you can see on this slide. About 30% or so of the Australian business is lawyers. The remaining -- or 68% is accountants, it's a couple of percent. We've got a few marketing agencies, recruiters, et cetera. Now as you can see, we've got relationships with the Law Institute of Victoria, The New South Wales Law Society (sic) [ The Law Society of New South Wales ]. We're fortunate to have firms the quality of Coleman and Greg (sic) [ Coleman Greig Lawyers ], [ Sladen Group ], Pitcher Partners. And in Australia, a little bit different to the U.S., we also have a disbursement funding products. We have firms like Carbone Lawyers that uses with disbursement funding for personal injury matters. We've got a family law product, the largest use of our payment gateway that Eric was referring to before is RSM, a national top 10 accounting firm here in Australia. So that is our business in Australia. Australia, by its nature, can never be the size of the opportunity we have in the United States. As Eric said, what happened with COVID? We didn't lose customers, we lost lending. What we saw was the sheer volume of money. I think any Australian would know that the Australian government threw at the economy, certainly put a bit of a damper on our lending. It wasn't that our merchants left us, it wasn't that transaction stopped. If you look on the right-hand side charts here, you can see that actually our PayNow business stayed absolutely where it was. But our lending business went down because of the sheer weight of money thrown around by way of stimulus, particularly in the Australian market. You can see the APR on the loans in the second last line on the bottom there. This is a good business, a 12% NIM, 18% APR, 6% cost of funds, 12% NIM all merchant backed. So I wanted to just say that our Australian business has validated what we're doing in the United States. We've basically used what we've learned in Australia. We went to the states. We've got an amazing team in the states to take us through the opportunity to be so much bigger in the States because it's such a much bigger opportunity, much bigger economy than we're ever going to see in Australia. I'm spending my time here. It's a delight to have some of the amazing firms that we work with and see them growing their usage again now as the stimulus winds back. So that's our Australian business, great profitable business. We're fortunate to have great customers that we serve here, and I'll just hand back now.

Thanks, Bruce. And as he mentioned, we actually saw customers move up a couple of points over the fiscal year change as well as active merchants, right, so net growth there and this -- that you weighed down by the sheer amount of money that was into the market. So we'll talk about the U.S. overview here. Again, similarly, we're blessed to have the loyalty and the patronage of the enterprise EPA space here in the U.S. as well. So similarly, the approach that was successful and has been successful in AU in creating a dominant portfolio, bringing the U.S. worked quite well. And so BDO and Sikich and Whitley Penn, Withum, there's a number of very large mature enterprise accounting firms here in the U.S. that we're very excited and fortunate to have on our platform. I mentioned 29% of the top 400 firms. And we've, historically, really only focused in that space and Aubrey is going to kind of break down that market here in just a moment. We really only have one competitor here in the U.S. And there's an organization in Austin, Texas called AffiniPay. They focus almost entirely on the lower side of the CPA space. So we don't really run into them and -- from a head-to-head competition standpoint. And as well, they don't have as mature of a payment solution as QuickFee does, no lending product. And so we're -- we don't really kind of run into them as competition. They're primarily a credit card processor, an acquirer at the low end of the CPA market. Again, sizable growth opportunities. Again, we'll talk about the digital shift and then changes in the go-to-market strategy. So just giving you a sense of organic growth that is really what is a large part of what is fueling the payments acceleration here in the U.S. over the last fiscal year, and in the Q1, and into Q2 as well, and we're seeing that accelerate into Q2 is merchants, the longer merchants' with us, right, we tend to see more organic growth from them. So this chart just really gives you a sense of for each year that a firm has joined us from a cohort standpoint, the kind of volume that we're still seeing from them a year later, 2 years later, 3 and 4 years later. And so we're really excited to continue to have a base of customers like that. And what is driving that acceleration, right, really is, again, there's the shift to digital invoicing and we believe we can accelerate that even further. And just kind of give you a sense of despite the COVID stimulus, the U.S. business from a lending perspective, they grow. We brought that from $13 million to $15 million over FY '21. And we're beginning to see a return in lending for our enterprise CPA space, certainly in the AU region into Q1 and into Q2, and now begin to see that year-over-year return in the U.S. business as well. And again, here, you can really get a sense of the dramatic shift in payment acceleration that I mentioned earlier. Here, again, just to give a sense of our active customers, very much accelerated over the course of 2021. So seeing customers grow by 114%, seeing our merchants grow by 50%. And what's great about this is that when you have customers that are growing faster than your merchants, right, you're generating greater scale for every merchant that you bring on. And that is really because in the enterprise CPA space, it's a very sticky, high-retention clientele. They come back every year. And so the longer a merchant firm is with us, the more of that full year of return traffic that we see in the payments volume. So with that, I'm going to turn it over to Aubrey, and she's going to take us through really a little bit more of the U.S. space for enterprise accounting and how we are going to win them. Thanks, Aubrey.

Thank you, and hello, everyone. I'm thrilled to join you today as the newest leader in the QuickFee organization. So before diving into our go-to-market strategy, I've been asked to talk a little bit about my background. My career began in the startup environment working with a fast-growing fintech company that was acquired by JPMorgan. The new leadership direction awarded me the opportunity to be completely immersed in the payment space for over a decade, leading enterprise sales and account management teams for half of the United States. Next, an opportunity availed itself to enter JPMorgan's commercial banking space as an integral member of their highly coveted technology banking group, where I helped fintechs grow from seed to IPO. My recent decision to accept the opportunity at QuickFee was predicated on the company's past successes that Eric's mentioned and Bruce, the ability to help expand on current initiatives and the opportunity to dominate the payment space and our leading buy now, pay later technology and to further dominate the enterprise accounting space. So to the next slide, in 2022, our go-to-market strategy will include a tightened focus on increasing market share and expanding volume with our existing clients. Within this $120 billion accounting market, we have historically focused on the top 1/3. And of that top 1/3, we hold about 16% market share. And our goal is to grow that and we will this year. The serviceable addressable market, S-A-M or SAM, of $31.9 billion is where we're going to uncover this growth. And the serviceable obtainable market, the SOM of $6.1 billion is where we're going to grow volume within our existing client base. I see 2 major opportunities to go to market strong. The first is to have our most senior account executives be laser-focused on expanding our market share with the addressable market by getting out in the field and meeting with prospects again. The next is growing our 13% penetration of our current portfolio, and we'll achieve this by -- this goal with top technology integrations and innovative product addition. So as Eric mentioned a few times, QuickFee is already in a strong position with 29% of the top 100 accounting firms in the U.S. and 34% of the top 400 accounting firms. I see these stats as an excellent launching pad for what's next. The way to increase the serviceable addressable market that I mentioned is to increase our share within each of the affiliation groups. Examples of these -- the top affiliations in the U.S. are listed in the pie charts below. Thomson Reuters is a global -- as an example, and it's a global provider of tax and accounting software, and there are over 600 firms that utilize this technology. 21% of those firms are our client. To build our market share within Thomson Reuters and other top affiliates, we need to increase our presence at their many events and webinars throughout the year. And speaking of Thomson Reuters, I'm glad to report that I was able to join a senior account executive and an account manager, and Eric as well, this past month, at their annual event. Yes, for all the Australians, you heard me right. We actually were in person at an event. We were able to shake hands, hand out koalas, and it was really great. And it was an absolute game changer. At this 2-day event, we spoke to over 50 prospects and received really encouraging feedback from dozens of clients that were there. I'm confident that this go-to-market strategy plan will continue to prove successful in the strategically selected conferences where QuickFee will have a presence in 2022. So our investment in technology is another significant factor in our go-to-market strategy. We are highly focused on increasing that 13% penetration I spoke about within our current client base, and we will do this through technology enhancements and integrations we have. We have strong partnerships with leading practice management firms in the U.S., Xero, GreatSoft, SafeSend, to name a few. And we also have a very exciting announcement, our newest soon-to-be partnership with an online banking platform, BillGO, who will enable us to increase our organic growth in ACH with our current clients. QuickFee also has a newly launched technology called Connect. Connect is QuickFee's foundational product, which will really help us increase our processing volume within our current merchant base by integrating into the various practice management softwares. This directly results in a greater share of invoices with this integration. Our first integration with Connect will give us access to 65% of the enterprise accounting market. Connect, I think, is really a game changer. I'm super excited about it, and we'd like to show you a demo. So if you want to follow along in your own device, feel free, scan the barcode here. But with that, Eric, take the demo away. [Presentation]

Now wasn't that slick? As you can see, our excitement for this is warranted. Connect is our answer to the buzz phrase we're hearing throughout the accounting industry, digital transformation. You may be shocked to learn, and Bruce told me this stat yesterday, and I was shocked, that in the U.S., 18 billion paper checks are still issued every year. As we convert paper to digital payments with Connect, we see an increase in volumes across all product lines, across credit card, ACH and lending. So in summary, we have 2 primary objectives in our go-to-market strategy. Number one is to increase the share of addressable market by increasing penetration of affiliation groups; and number two, increasing our share of firm processing volume through integrations and leading technology, accelerating the shift, as Eric mentioned, to digital invoicing. It has been a pleasure to share our go-to-market strategy with you, and I look forward to continuing the conversations as we press ahead with these exciting initiatives. Thank you again for the warm welcome to QuickFee. Back to you, Eric.

All right. Thanks, Aubrey. I appreciate that. The -- we're going to take it over to Jay Alsup, our Chief Marketing Officer, and really give you a sense of strategic marketing that is underpinning the efforts and the approach that Aubrey just talked about earlier in terms of increasing serviceable addressable market as well as the obtainable market and the percentage of the invoice that we see today. So Jay?

Thanks, Eric. Thanks, Aubrey. Hello, everyone. Good to be here tonight. I appreciate everyone in attendance. Just a quick little background on myself. As Eric said, we concurrently joined around February of last year. We're kind of the stepbrothers of the company that joined on the same day. So it was good to join together. I personally have about 20 years' experience in strategic integrated marketing, what we consider tech stack market, which you'll hear a little bit about here in just a bit; digital strategy and branding; a real deep track record in demand-generation architectures, the building of those; building out marketing road maps and how we apply those to solution selling methodologies. I've got about 13 years senior leadership, not only in fintech, but in B2B software as a service, developing and leading dynamic marketing teams. And also a background and just growth among SMBs. I worked for a fintech called Forte Payment Systems, it was [indiscernible] partners called CSG that we grew from around 20 employees to over 160 employees and revenues of around $15 million to $20 million to over $100 million. So very versed in ISV strategies, account-based strategies within the fintech space, within the SMB space and how we're going to apply those here at QuickFee. And then just a little tidbit, that Aubrey and I already uses it as [ competition ]. We have a little college baseball background as well, just to add that competitive piece for sales and marketing that continue to drive us forward. So as we hit this slide, something came to mind about 10 minutes ago. There's a movie that came out years ago, I won't date myself, but it's a movie called Apollo 13. So Apollo 13 is a great flick with Tom Hanks, Kevin Bacon and Gary Sinise about -- it's the story of what should have been the Apollo 13 landing, which turned into the Apollo 13 recovery to get it back to earth. One of the most -- what they consider one of the most successful events in NASA's history. So my wife says it's a movie that she knows. Once we put it on, puts her to sleep immediately. But I've always been intrigued by the engineers behind the scene and there's a scene in that movie. There's a scene where they are stuck. They're about halfway between earth and the moon, and they haven't got to the moon yet, and they've spotted an oxygen leak, and they needed -- the filtration system has gone out, and they draw an X on the board. They're like, here's where we could have got with current situations, here's where we are now. Well, that X showed them about halfway back to earth. And so what the engineers did is they gathered everything that was on the space module and they threw it on the table. They said, here's everything we have to filter the bad air to get them back to here and the X is back to earth. So what we're seeing right now is the X, halfway between earth and the moon, is we look at that 13% penetration level. And what we're doing right now at QuickFee is we're trying to say what gets us all the way back to earth. And the most exciting part is that X all the way back to earth could turn into 18% to 20% next year, 24% to 28% next year. But what we're doing is we're looking at all the elements on the table, and I've even [ lay ] that with my team to something we call account-based marketing and how do we use this strategic go-to-market initiative, which, in the marketing space, is a way that we take a specified group of accounts or a subset of accounts and we go through synchronized continuous sets of marketing and sales activities. And what you're seeing out there, there's a lot of reports that are coming out shows that companies that actually implement ABM strategies credit 80% of opportunities and 73% of total revenue to ABM efforts. So when you literally roll all those items that we have in our purview right now, talent within the company, automation tools, things within our tech stack that we're able to roll on the table right now and apply to get us back to that X, that's going to increase that 13% penetration to higher levels moving forward. And how we're going to do that, Eric, if you move on to the next slide, we're going to apply that to a few things. So when I walk through this with my team, we start looking at account-based marketing, what it truly means, and you see the 2 traditional funnels. So you've got the traditional lead generation funnel, what a lot of people see as the proverbial fishing with nets. You do database targeting, you do mass paid search campaigns, you do campaigns that include anything from content syndication and content creation to really get a wide net, what I consider sometimes too wide of a net. What we try to do with account-based marketing is more fishing with spears. We're basically going in and doing something we call flipping the funnel. So we're going to take that funnel, we're going to flip it upside down. And as you look at engaging these kind of special buying groups within these accounts and what we look at it, you almost want to picture account-based marketing as creating a universe of one. I guess pun completely intended for my Apollo 13 story as well. You're creating a universe as one to where we can go and create multiple, concerted interactions that identify key stakeholders that drive them into nurturing, that push them into account conversion. You're literally looking to basically engage accounts that have higher rates of conversion. We want to flip the funnel. Cast, take the wider net, decrease that net, fish with spears, identify accounts that we can have very specific stakeholders that we're selling stories to. In the professional service, particularly in the CPA space and accounting space, you have multiple personas whether it's a managing partner, a tax partner, an audit partner and advisory partner. We can go and do spearfishing with them, create content that resonates, that drives them into funnel, that we can nurture with automation with our tech stack, that we can create account conversion with. Try to apply simple concept, it gets back to the X. So what you see here is it's kind of a simple walk-through of what we consider kind of a target account buying journey. Just a little bit of a tactical application to where we go. We had a problem identification. We're going to do display ads that we spark exploration and problem exploration. That could be anything from LinkedIn post that promotes a very targeted content to even a paid campaign that's more targeted, smaller ad for that paid campaign. That moves us down the journey into solution exploration, direct mail pieces that we want to share, look alike stories, case studies, success stories. We know the goals of these firms. We know the problems they face. We're going to capture what those are, tell the stories over and over again and get it in front of the people and the decision makers and the stakeholders that we know, look at themselves and go, that's me. I need to solve those same problems. It could be e-mail campaigns that also tell stories of those stakeholders using our automation and our tech stack to accomplish that. And then just verticalizing some of the web content that we put out there. I have a great content team behind the scenes that understands the value of creating organic content that drives conversion costs down using web application within Google to get stories and case studies out there that are searchable that we don't pay for. And then that moves into requirement building. LinkedIn messaging as well. We're really going to be leveraging a lot of social because when you go through spearfishing, we know who these accounts are, we know who the stakeholders are, so we're going to leverage a lot of the social measures that we can use to reach that audience and create awareness, not only create pipeline, but create awareness on the other side as well that leads to invitations that we can create and use our thought leaders. Many, many experts, even some of the faces that you're looking at right now on the screen that are thought leader with this company, that can help us speak to solving those problems and selling to solution, solving and business problems that they have right now. That moves all the way across the journey of stakeholder selection back to that overall spearfishing mentality. How we're leveraging event going forward? You're already seeing, Aubrey and team, talk about the difference that we've seen. I mean, we've even had our on a panel session in Fort Worth, Texas, speaking to the ISO distribution model that you're going to hear a little bit about later in the BNPL model and the excitement that we got out of that, even from 1 event. It's about approaching events in a different way, approaching events with problem-solving mentalities, creating that awareness to drive funnel. And then that can lead all the way down to sales rep calling cadences and then programmatic advertising. So what you see on the screen now is even deeper tactical applications. We're going to have a share of voice that us as a marketing team is -- as you look at how the marketing team is built from the top-down where you start with the mentality of brand, then you go into product marketing and our solution sets. And then you take that into demand generation, the architectures that we build, all the way through data analytics and ops. We're building campaigns to support those pieces within the account-based play. Anything from paid organic search that we're doing within Google and Bing, all the search engine marketing and search optimization pieces, our paid inorganic -- social campaigns that we're doing on LinkedIn and Twitter and Facebook, possibly even going to revamp some of our things on Instagram, do a better job of getting some videos like the one you just saw up on YouTube, partnering with companies like AccountingWEB to do content syndication. We have a voice. The content syndication companies can help amplify that voice even further. We've identified anywhere from 10 to 15 of those that are going to help us amplify that voice and really dig deeper to those stakeholders. E-mail and nurture that we use. The tech stack that we have, we have a tool called [ Par Up ], built within Salesforce that really does a good job of building trigger campaigns, automated campaigns that when we start building the stakeholder database, our sales team can create call cadences. But in the background, what's going on is brand awareness campaigns that are getting very specifically triggered based on activities that the sales team is performing. That leads to other direct advertising we're putting out there, whether it's digital, whether it's print, whether it's items that we want to build. There are some things we talked about with Bruce about towing what's an out-of-home advertising. There's a lot of creative ways that we can continue to push the awareness and really do some of the spearfishing. We talked about the event play a little while ago. And then also, you're going to continue to see us evolve the brand, position our content, position our thought leaders, position the problem-solving solutions that we have that will really amplify the voice out there. So thanks for a few minutes. Right now, I'm going to pass it back over to Eric, and he's going to dig a little bit deeper into buy now, pay later. Appreciate everybody on tonight.

Thanks, Jay. So just to kind of put a seal on professional service firms, we're now going to take the story into buy now, pay later, and I'll be speaking to this section of it. You've heard of the size and the scope of the market where we've historically focused and how we've historically focused there. And if you think of it before and after, from what Aubrey mentioned and what Jay mentioned as well, we really began our successes in professional services in the U.S. through a very simple direct sales model, a couple of people on the phone, right, getting on to some conferences, right? And that generated a lot of success. And we -- that gave us a platform that we can grow beyond. You get a sense of all the volume that comes out of having merchants that are moving from a digital invoice transformation standpoint. When you take the before and now you look at the after, you get a sense of just the sheer level of marketing technology, the sheer level of precision that is being created here over the past year. And you think of the sophistication that, that brings, right, as we return from COVID, as we now have the ability to return to conferences. As those open back up, we can now be much more targeted, much more prepared, much more productive in merchant acquisition on the -- really, the back half of FY '22 when we get out of the tax season here in the U.S.. It ends roughly middle of April and then it's really into the early part of FY '23. So now I'm going to talk about buy now, pay later and really give you a sense of our key strategy here and how we're going to win there. The first is to give you a sense of how payments are distributed in the U.S. It's a very different landscape than many other countries in the world, particularly in Australia. And so if you're a merchant that is opening up a business and you're in Australia or certain other countries, you may just simply pick up the phone, call your local bank, get some ability to process and accept payments, maybe get a terminal and you're on the way, right? And maybe you're calling one of half a dozen banks, right? If you're in the U.S. and there's 6,000 banks, right? We just don't distribute payment merchant processing that way in the U.S., right? The way that those banks then distribute payment acceptance to the millions of merchants in the U.S. is they do that through a certain type of entity, and that entity is called an independent sales organization. You'll hear us use the word ISO quite a bit through the back half of this presentation. And that's very critical because ISOs can range anywhere from having thousands of merchants to having hundreds of thousands of merchants to having millions of merchants, right? And they can be very, very massive. So roughly 4 months ago, as part of our shift here during 2021, we began to bring on resources in the organization that understood how to acquire ISO partnerships, right? The way to scale the BNPL business for us as a card-based buy now, pay later solution, that's pre-authorization-based. I'll unpack the features of that in a moment, right, is to distribute it to those merchants through the independent sales organizations. The ISO is an extremely competitive space in the U.S. It's very mature, right? Credit card acceptance in the U.S. is ubiquitous. And so essentially, what is happening now is that one independent sales organization essentially just goes and tries to sell to the merchant of another independent sales organization. And they do that essentially by driving down and offering them a lower rate on their credit card process. And the other ISOs are doing that to them, and it becomes a race to the bottom, right? And margins are okay in credit cards. They're actually a little better in ACH, right, at volume. However, what we've done with our buy now, pay later solution, and Jay mentioned the events in Texas last month that we participated in, is we're going to market in a very, very disruptive way. So our buy now, pay later solution does not require a merchant to have to change their credit card acceptance in order to use it. So as we develop that solution, the ISO can now take our buy now, pay later solution, sell it to a merchant, maybe their own merchant, they're probably going to sell it to their own merchants first before someone else does, right, or can sell it to another merchant. And what's going to happen when that event takes place, and we saw this happen when Apple Pay launched in 2014 because this was the last time this actually -- it was a product like this, it had the same disruptive effect with Apple Pay in 2014, is that an ISO will begin to see their card processing volume decline without any change in their merchant attrition. Think about that for a moment, right? And so if you're an acquirer, right, that is making money off of the transaction volume of your merchants and, all of a sudden, your merchant can now move volume to another product. In this case, our buy now, pay later solution it becomes volume that we see, right? And in exchange for that, there is a commission stream that we pay to the ISO. But your merchant didn't leave, right? And the volume that you're going to see leaving your network is your highest ticket volume because that's the volume that's most applicable to a buy now, pay later, right? That's a nightmare solution for the ISOs. And the way that the ISOs are organized in the United States, there's -- they're very geographic, in the Western State Association, Northeast, Southeast and Midwestern states. The Western States Acquirers Association event was in Texas last month, that's what Jay mentioned, I spoke at the general session on a 3-person panel describing buy now, pay later. I let off, I was followed by Cross River Bank and it was followed by Openpay. And what's interesting about that day is that when you describe what's required to create your own buy now, pay later solution, right, you can buy it, you can build it or you can partner with someone for it. And we had a sense of what it takes to buy it. If you're Afterpay, it's about $45 million, right? You get a sense of what it takes to build it. We know we've done it, we've done it over the last year, you need a credit facility to do a loan, you need equity headroom, right, because you can't borrow 100% of what you lend out, right? You need to build your process payments as well. And all the risk manager capabilities that James will talk to us in a moment. ISOs don't have that, right? And they don't want to have that. They love the idea of adding more volume, love the idea of making commissions to doing so. And so when you touch that market with that kind of product as we did in Dallas last month, we were rewarded with a significant overwhelming response. And to put some metrics to that, 162 acquirers at that conference, 81 of them were prospects for us. We've signed over 30 of those 81 prospects in the first 4 weeks since that event, and we'll talk about here in a moment some of the scope of merchant potential that those ISOs represent for us. So a very different strategy in how we approach buy now, pay later moving forward. It was launched. We started with a similar use of direct sales that we do from how we acquired CPA firms on the professional services space. And we've now evolved that into a winnable strategy in ISOs. Just to give you some quick breakdown here. The way the product works is the merchant pays anywhere from 5% to 7% depending on their risk profile. They receive 100% upfront. The consumer pays a 3% surcharge, which essentially covers our cost of processing, right, with BlueSnap, our processing partner. And that can vary in Australia with a slightly lower surcharge. And that does leave us with a margin as well, and I'll talk about that in a moment. The consumer then has 4 installments to make those payments. Essentially, we are taking a pre-authorization of the full amount upfront, and that secures our credit risk. And then 25% of that is captured at the point of sale. The merchant is then funded for the 100%. And then the second 25% is captured 30 days later, and the next 30 days after that and then 30 days after that. And because the pre-authorization is refreshed along the way, our credit risk is greatly eliminated. We do have some merchant risk that is part of that. In credit card processing, there's such an event as a chargeback. And if there are chargebacks, then we have to pull those back as essentially recourse from our merchant, which requires a different type of merchant underwriting. Then we would have use for very large enterprise professional services. There are a couple of things to keep in mind with our buy now, pay later solution. The very first, there is no credit application. We are not underwriting the cardholder. And the reason we don't have to underwrite a cardholder is because the card issuing bank that gave them that credit line already did. That allows for a very quick checkout. Number two, there is no impact to the consumer's credit score whatsoever. There are no late fees because there are no late payments, right? And that's a wonderful aspect to have in a product like this. We leverage the available card line that the cardholder has, and it allows us to recycle capital at a much faster velocity, right? The average term of our lending product to enterprise EPA in the U.S. is roughly 10 months, right? That means you can turn that cost of capital roughly 2.67x per unit. With the BNPL solution, we're turning that capital 8x a year. So we're getting a 3x faster velocity on our capital for BNPL than we do in our lending business as well as a higher APR, right, 40% to 50% range. And it's very attractive for us as well. One last differentiator here is our average order value with the average transaction. Other online e-commerce retail focus buy now, pay later solutions. If you look at in the marketplace, we're seeing $180 to $300 average transaction. We're seeing an average transaction that's roughly anywhere from $2,500 to $3,000 on the average. I'll give you a sense of how we win there, right? And the first thing you have to do when you launch a new product like buy now, pay later is you have to create an addressable market, right? That's very important. You can't just start on the phone calling merchants and asking them if they want to use this, right? You need to create an addressable market. Aubrey talked about the serviceable addressable market in CPA earlier. And we've been doing that. So I mentioned the addition of experts in the ISO space that we brought on several months ago. To date, we have signed up 98 independent sales organizations that create distribution for our buy now, pay later solution. The collective merchant count of those 98 independent sales organizations is roughly 150,000 merchant locations in the U.S. Now we don't have 150,000 merchant locations immediately, right? But it allows us to have a distribution to focus into through ISOs. And again, that's what -- the first thing we have to do is build out that addressable market. Huntington Learning Centers, we announced in an earlier Q1 update, national chain learning in education organization, roughly 2,800 potential merchant locations, many of whom we've already built along on the platform. We'll talk about some of the merchant count numbers would be in a moment. Two new announcements. The first is we have signed a major automotive dealership management system provider here in the U.S. And the reason we can't name them at the moment is simply because we're not able to do so until after the integration is complete. We expect that to happen in Q3, represents roughly 9,000 dealership merchant locations and 40% of the new vehicle and repair market in North America. So we're very excited about that. And then secondly, we announced this morning to the ASX, was the Jim's Group, and I'll allow Bruce here in a moment to really share the great news there. It is a 20-year franchise agreement as well as represents roughly 4,400 merchant locations that, again, creates an addressable market that we can sell into. And then as you're building up that market, you have to be able to acquire and scale and underwrite and board. And so we've developed -- we announced in Q1 update as well, we've launched our own automated merchant application and underwriting platform, and James is going to take us through that in a moment. And just since we've launched that in middle of September, we've seen merchants sign for qualified leads. Those are the leads that are coming through the lead generation architectures that Jay mentioned earlier, are up 90% and the cost per merchants signed has fallen by 48%. So with that, we'll do a quick video here of the BNPL solution, and then we'll come back and wrap this up and turn it over to Bruce for a moment. [Presentation]

All right. And so just really a quick couple of snapshots on the volume to date and then a couple of areas of focus to understand as part of the business. And in future trading updates, we will be breaking down some of its volume historically, and some of this has been combined with our lending as well because, essentially, there's lending that sits on our book, although it doesn't sit on the book very long because it turns so quickly into the income statement. And so in the U.S., we're seeing some roughly $0.5 million that we saw here in the first quarter. And as we move into Q2, already eclipsing those ranges. Transaction velocity, this is the average number of transactions we may see from a merchant. This is going to grow over time, right? And again, it's very small numbers, but we're seeing this move in the proper direction here in the U.S. as well as signed merchant counts continue to grow. Very excited about that. And again, taking into account, none of this has really been with the existence of the ISO channels because it's really just started to get a sense of the ISOs that we've signed up. And to get here, roughly 54 were already at 98, so you get a sense of what the activity looks like so far in the first half of Q2. And then lastly here, to give you a sense from a modeling perspective, the way to think about the business for BNPL is you build out the portfolio, right? And so just seeing a merchant count number, it's difficult to kind of put some quantification around. So the way to think about that is you begin with the signed merchants, you layer into that an activation rate that improves over time. You layer along that an engagement rate, which is how often a merchant who is using your service uses it in any given month. You apply your transaction velocity to that, your average transaction value, and it gives you essentially a run rate of volume. Once you have a run rate of volume, you can then apply a weighted merchant yield, which is that 5% to 7% range that merchants pay for the service, right? In the U.S., we're roughly around 5.8%. That gives you a run rate of interest revenue. Take the same volume backlog that you're creating, add your 3% surcharge, and now you have a run rate of processing revenue, out of which our cost of processing come out. And then with your merchants that aren't processing, there is a monthly minimum that is assessed and so you generate some platform revenue as well. So essentially, on -- in this example, $2.2 million of annualized run rate volume, you're seeing a little more than 10% of that come back in terms of gross income, which is a very nice unit economics. And with that, I'll turn it over to Bruce who is going to get some -- he's got some very exciting news to share with us in Australia. Bruce?

Fantastic. Thanks, Eric. Absolutely. So here in Australia, we are very, very excited to announce that the largest franchise group in the country has decided to have their Jim's Financial Services division partner with QuickFee to provide payment plans for Jim's franchisees customers. Now we think through a lot of the purchases that a homeowner might be making, if you think of something that is perhaps urgent, possibly unexpected and expensive in the eyes of the buyer. So for example, an antenna, okay? So there's a storm, Internet has come off the house. It's an urgent need to reestablish our television transmission for the benefit of the family. And therefore, that's got to be done. Now that may be highly likely to be an unexpected cost. Offering payment plans makes it easier for Jim's franchisees to deliver those services, improve their conversion rate between quote and actual customer going ahead without putting a strain on the budget of the customer buying that service. By targeting services which homeowners are accessing, so like what we've got on the third -- fourth bullet point of this slide, fences, antennas, security doors, pest control, these sorts of things, we're basically underwriting credit quality by the nature of the service the merchant is providing, i.e., if you're getting a new antenna put on a house, it's not because you're a tenant, it's because you're an owner-occupier or you're the landlord in that property, i.e., a homeowner. So what we've been able to do is roll out a product with no complex application, no need to open an account, no need to download an app, absolutely 0 friction for a Jim's franchisee to offer in the field payments via payment plan for Jim's customers. Now one thing we do know about COVID here, I might just jump to the next slide even maybe to just illustrate this, one thing we know about COVID is that QR codes have become de rigueur. Everybody knows what a QR code is now. It might have been invented a long time ago, but all of a sudden, everybody who has ever been to a cafe, restaurant or a pub knows what a QR code is. What we've done is link that familiar experience to an in-field solution. So all the Jim's customer has to do is hold their phone over a QR code unique to that merchant, the screen you can see right here comes up, they choose the term they want, they can even choose to pay in full if they wanted, and then they're done. All through their credit card, all through a familiar QR experience, all from the security of their own device. Now to put this in context, Jim's franchisees combined are $600 million of revenue across around 4,500 independent owner-operated franchises right around Australia. There's around 47-plus divisions at Jim's and whether that's antennas, pest, mowing, cleaning, whatever, they're all there. And we are absolutely delighted that Jim's has chosen to work with us through their financial services division to offer this solution for the benefit of their franchisees. I'll hand over to James Drummond, our COO. James and I worked together at a previous life as well. So it's over to James to share a bit more around operations, risk and technology.

All right. Thank you, Bruce. As Bruce mentioned, I'm the COO here at QuickFee joining back in 2016 to help assist with the launch of the U.S. operation when QuickFee first came to the United States. Quick background on myself. I'm a CPA. I've worked offshore from Australia since 2005, running a BPO tax and accounting business for MYOB which was ultimately acquired by AMP in the SMSF vertical, self-managed superannuation. And yes, I've been over here for the past 5.5 years and being very fortunate to have been involved in the journey from loan originator to full payments company, as Eric outlined earlier. If you could -- yes, thank you. Since the creation of our BNPL products, we've been heavily investing in building our own technology platform referred to, as you can see on the slide there, QuickFee Unified Business Engine, or QUBE, as we refer to it. QUBE development commenced with the build initially of our BNPL product, which just out of sheer coincidence launched 12 months to the day today. So today is our 12-month anniversary of the launch of that product. The progression of QUBE development was also to build in our ACH or EFT and card products as well and also the launch of both the merchant and admin portal enabled a centralized view for both merchants and our internal team. So moving towards consistent systems. We've also strengthened our BNPL service by adding fraud monitoring functionality with the use of certain tools, including Kount, which is an Equifax company, Forter fraud services and so on. And further, QUBE development work will continue with further integrations into leading CPA practice management systems via our Connect product together with integrations to support our ISO strategy, which previous speakers, Aubrey and Eric have touched on. Can I get you to -- yes, thank you, Eric. Also, as covered by previous presenters, the launch of our BNPL product required an evolution of our underwriting processes. Eric mentioned previously that the underwriting we conduct is on the merchant. We are not conducting underwriting on the cardholder, we're using their existing card limits. So the evolution, 2 main reasons why that's occurred, is the underwriting is now of a different type of merchant and different risk profile to what our traditional business had covered. So typically, the merchants are smaller and across a wide variety of industries versus the enterprise CPA firm customer base we've previously been working with, a lot of which were on top 400 lists. We had actually met in person at conferences. There is a longer sign-up process across multiple team members in multiple states. Whereas, our BNPL customers, we've likely never met in person and may never meet in person. The other important factor is scalability. So in the BNPL space, with the smaller customer type, the smaller merchants, we need to ensure that we can onboard larger volumes of merchants that, not only provides a seamless applicant experience, but also ensures that we're doing our due diligence to ensure that the merchant is someone that we do want to do business with. So in terms of that, there's a number of validation tools. And part of the next couple of slides, I'll be running through those. So here, just on step 1 is a bit of a welcome screen. So new applicants that are driven to the application site from Jay's account-based marketing. If you could go to the next screen, please, Eric? Cool. So then what we do, we have a very simple online application process where the merchant who is applying for our BNPL product go through and submit various pieces of information. Through this process, very simple for the applicant, entering an e-mail address, some name details, their role in a company. And then you can see on the left-hand side, we've got some examples of some of the 30-plus tools that are being used in the background to validate the merchant that is applying. Tools like Ekata enable us to see when the e-mail address was created, does the e-mail match the name of the applicant, where and when was the e-mail address created? Quite often, fraud will detect the e-mail address was created yesterday versus an e-mail address that was created 3, 4, 5 years ago. If you can continue on, Eric. Thank you. We also partnered with a company called SALIX Data who helped us build this online merchant application process. Within there, there are also some tools around -- I think Eric mentioned on a previous slide, around the pricing. The risk of each merchant, certain information feels that they enter in the online merchant application process determines ultimately the pricing that's displayed at the end of the process. So there's various things. The tax identification number, the ABN equivalent in the United States. We have validation tools that's confirming again information that's being entered for this merchant. If you can progress one more. We've also enabled tools from Google and BlueSnap in validating the street address via the use of Google Autoplaces Complete (sic) [ Google Places Autocomplete ], which just, again, reduces the typo errors from the applicant, ensures valid addresses are being utilized as well. And another major difference between the Australian market and the U.S. market that Eric touched on earlier, even the banking system for electronic payments is very different to Australia. So we do have a number of tools. Unlike Australia, the BSP number, the equivalent in the United States is a routing number. Routing numbers, there are 69,000 routing numbers in the United States. And there are also 3 different type of routing numbers. So 3 equivalent BSP numbers for every bank account in the United States. They have one for electronic payments, ACH. They have one for checks, so paper. And they have one for wires. So there is a lot of confusion for customers using the ACH network on their own banking details. So we use -- utilize a number of tools to ensure correct banking information is entered. We also do some validation on the business owner as required under the Know Your Client, KYC rules. So basically, that's the entire process for an applicant. They get a summary snapshot followed by the pricing that's ultimately determined by the risk profile, which they then agree to and sign off. And what we're -- I'm going to leave you on this slide, if you've got a mobile device, if you want to take a snapshot. This is an example of the QR code that Bruce mentioned before, where you can take a snapshot and see the client experience for yourself.

All right. Thanks so much, James. Appreciate that. And as you get a sense, there's a tremendous amount of sophistication that's been created over the last 6 months particularly with our online merchant application flow, automates the underwriting. It takes a process that was 2 hours to transact into something that's completely automated with a handful only of items that you might want to put another set of eyes on. And so very scalable, reduces our cost of acquisition, increases our conversion rates as well. And with that, I'll turn it over to Simon to take us through the financial overview.

Thank you, Eric. Good morning, everyone. I'm going to run through on how we make money on each product, but a little bit about me first. I spent about 20 years in Sydney as CFO of listed and private companies. Before that, I was a chartered accountant, but always in companies that are fast growth -- passionate about growth and have an entrepreneurial spirit. And 3P -- sorry, QuickFee is certainly one of those. So we can move to the next slide. Before we get into some of the numbers, you might have seen earlier today, we announced a major expansion to our loan book funding facilities. We will be replacing our current AUD 25 million facility with a multicurrency facility initially at USD 40 million with the option to expand it to USD 70 million. This would support a total loan book approximately 3.5x the size of today's. The facility is with Northleaf Capital who are a global investment firm headquartered in Canada and the U.S. with $18 billion under management. They have a lot of experience partnering with growth companies with asset-backed funding needs such as ourselves. One of the attractive investment qualities of the QuickFee business is its low credit risk model with professional services lending backed by firm guarantees and credit card backing for BNPL with our bad debts averaging less than 0.25% of lending over a 5-year period. So this Northleaf transaction is a defining transaction for QuickFee in the life of the company and securing the confidence of Northleaf was a great endorsement of our people, our business model and the opportunity in front of us. So we move to the next slide. A reminder, we have 3 core types of transactions over those 2 lines of business that Eric mentioned. Traditional lending, which is fee funding to accounting and law firms, where we earn interest from what clients paying us back over 3 to 12 months. We have PayNow, which is an EFT or credit card payment platform through which a client of those accounting and law firms pay their invoices. We earn fees from the receiving firms for EFT and a share of card processing fees on credit card payments. The term ACH share, as you've heard -- as mentioned, is interchangeable with EFT. It's the U.S. equivalent of an electronic funds transfer. The third type of transaction is the buy now, pay later model. We earn a fee for merchants for every services purchased made by their consumers and consumer pays QuickFee in 4 installments over those 3 months. We'll step through the transaction volumes, revenue and profit we make in each of these products. Can we just go back a slide quickly, Eric? I'll just say -- on the top left pie chart, you can see PayNow, the ACH card revenue on that top left is about 2/3 of the total revenue that we make in the U.S. with about 1/3 being from the lending product. Because on the -- and the ACH card product has very little processing costs. If you can move across to the right pie chart, you'll see it delivers a higher proportion of gross profit, approximately 75%, where lending has an interest expense component to it on those loans that we settle upfront to our accounting law firms. In the table below, the first row will show you total transaction volume, or TTV, that we processed for each product in FY '21. And below that, our numbers of active merchants and customers who used our products in FY '21. And that's -- through that, you can get the average TTV per merchant per product, which is shown underneath that. Note that, that BNPL product of 6,500 is not for a full year as we launched and [indiscernible] December 2020. The average loan term of 8.9 months for lending has decreased in recent years. Well, that's consistent with some of the suppressed demand for lending, and that's the longer loan terms that come with that, that we've seen. On an earlier slide Eric showed, there was a 5-year table that showed the average loan term declining slightly over the past 4 years. On that penultimate row here, you'll see that the BNPL product has a much higher APR, as Eric mentioned before, as the loan term is shorter and capital recycle is quicker. But the ticket size of the accounting fee loan is about 3 to 4x that of a BNPL transaction in the bottom row. So in the middle of the 9,500 is the average transaction size for lending product as opposed to the 2,800 of the BNPL product. So on the next slide, on the left-hand side, there's a table that looks at each product and how we generate revenue from $1,000 transaction. So the first column heading there, if you move across, under lending, if you move down there, on a $1,000 transaction, we would make an average of $64 in interest over the life of that loan. And after the cost of capital to fund the loan, we would net $41 as our gross profit. The next column is QuickFee buy now, pay later. We charge fees in the range 4.99% to 6.99% to merchants, and we also charge a 3% credit card surcharge to customers in most U.S. states. There are a few states where that's not committed. Our total revenue recognized is the sum of both these items. So our average revenue on this product is between $80 and $100 per $1,000. After costs of all transaction processing, interest and any Splitit technology licensing share, we make between $36 and $56 per $1,000 or roughly 3.6% to 5.6%. Our PayNow business processes both ACH and credit card transactions, where clients of accounting and law firms pay their invoices in full. In the third column, we show how we make money on ACH payments. We charge most of our merchants a percentage fee, although some of these are on a fixed or cap fee structure. We make, on average, $37 per $1,000. There are negligible costs, direct costs to process these. So the average net transaction margin is at 0.37%. The last column is credit card payments. And again, when we receive or process a credit card payment in full, we receive a share of approximately 0.18% from the credit card processing companies we use. On the right-hand side of the chart showing both the lending at the top and PayNow at the bottom, showing total transaction volume, revenue and gross profit for both FY '20 and FY '21. And you can see how revenue, the light blue and gray -- sorry, and gross profit margin in the gray, both grow with volume from FY '20 to FY '21. Moving on, we've got the same data for Australia. And you can see from the pie charts, the dark green is lending and the majority of our revenue and gross profit is from lending in Australia, at 85% of revenue and 95% of our margin comes from the lending product. There's a large volume of customers using the payment gateway to pay fees in full, as Bruce mentioned earlier. So the total transaction value is still substantial at that $44 million. We show the average total transaction value per merchant for each product there. And you can see the loan term is, on average, about 10.4 months, which is longer than the 8.9 months we saw in the U.S. And on the next slide, again, the profitability by product set out in a similar way. Because the loan term is longer in Australia, the amount we make over the life of a loan is $86 per $1,000. The buy now, pay later margin is slightly lower because we don't have a built-in credit card margin in Australia, so we make between $32 and $52 per $1,000 on the buy now, pay later product. And there's a small amount of credit card surcharge revenue that basically gets taken up in interchange costs on card. There are platform fees as well that we receive in Australia, both joining fees and monthly subscription fees which total about $200,000 a year. So I hope this provides some detail on the respective profitability of each of the products. And while accounting and law and BNPL markets are different, we do share common back-end platforms and operational teams, which means we can increase profitability as we scale. I'll pass back to Eric now.

Thanks, Simon. Look, I'll just wrap up here and then we can take some questions. And so the first is going to give you a sense of the focus, right? And so a handful of most valuable assets aside from the quality of the team that we've pulled together. And we're going to leverage that, particularly in the professional services space through the account-based marketing efforts to really grow our penetration of the affiliation groups that the accounting firms, particularly in the U.S. are associated with. And if you grow each of those smaller pies, you grow the serviceable addressable market itself. We're going to increase the penetration, as Aubrey mentioned, of our existing portfolio of merchants and do that through integrations as well as the continued shift to digital invoicing will carry us forward. We're accelerating our buy now, pay later solution through the ISO strategy that I mentioned earlier and improving unit economics as we continue to scale. There are a handful of remaining technology infrastructure migrations, as James mentioned, of launching the QUBE platform that will continue into FY '22. And then the other handful of priorities here is a steady reduction in cash burn for the remainder of FY '22 and through FY '23. It is also a sense of how our quarter 2 to date has performed. The U.S. payments are up 53%, U.S. lending up 21%. It's a very, very positive sign. As I mentioned, we began to see the return of lending growth year-over-year in Australia beginning in Q4 into Q1. And now we're seeing it in the U.S. We continue to anticipate that growing nicely. And then the Australia lending up 27%, as I mentioned. We could see OpEx increases 30% to 40% over the course of full FY '21 as we see the addition that we made towards the end of the last fiscal year carry over into the full year. And then leading with sufficient cash that we have, well funded into FY '23, provided we continue to execute on our projections. With that, a handful of items on conclusion. There's a strength in the core business model that we have, and we have a very, very sticky, high-retention professional service firm merchant. And seeing 99.4% retention of our core customers, we just simply don't lose clients. And we'll continue to see a surge in online adoption. And that's really still in its early stages, right? That chart that Aubrey mentioned of just how many of the U.S. enterprise accounting firms are still sending their invoices out in paper based. As that continues to shift, we will continue to see growth in online payments. Lending volumes, I mentioned, rebounding in both regions. We're well positioned with the talent that we have. The buy now, pay later, we believe, now has the right product market fit. We believe it has the right go-to-market strategy. We are adding in the partners that will grow and scale that business and we develop infrastructure to support that growth that's extremely scalable. Ending with integrations in practice management solutions. Connect, we've mentioned, you saw the demo earlier. We're excited to continue that path into additional practice management software that helps us grow that 13% of our existing firm's revenue and we get to see more of that as those integrations take hold. And then continuing that tailwind, we've mentioned several times around the transformation of digital invoicing. So with that, Eric Kuret, I'll hand it back to you for any questions that we may have queued up. Thank you.

Thanks, Eric, and thank you, Simon, Bruce, Jay, James and Aubrey, for the presentations. [Operator Instructions] Just while we wait for questions to come through, everyone, I'll put to you, Eric, is, obviously, you've talked a lot about the investments that you're making in the business to position QuickFee for a successful long term. How do you think about the path to profitability?

It's a pretty clear path, right? If you look at the existing base of portfolio of professional services, right? The path is really one to continue on. If you look at the growth that we've seen in payments volume, which is roughly half of the enterprise income that's coming from lending, right, that is continuing to accelerate through the shift to digital invoicing which will continue to happen. And that has really been happening in -- over FY '21 into what we're seeing in FY '22, largely without adding new merchants into that portfolio. We've added a few, right? But when you look at the way that you add professional service firms in the U.S., you do so through deeper penetration of those affiliate groups. And largely with COVID, that couldn't happen, right? And so now that we have a return to conference attending, right, we anticipate seeing continued new growth in merchants and then we -- as you saw earlier, that add-on effect of how long a merchant is, whether it's the tenure and we continue to see more volume, we'll see that over the course of FY '22 and through FY '23. The add-in factor will be the BNPL growth, right? BNPL growth and acceleration will quicken our path to profitability. It's the accelerant in the tank that allows us to achieve breakeven much faster. The AU business is essentially already there, a very good business. We like that business. We'll continue to invest in that and growing that particularly as you saw with the successes of a Jim's Group as an example. And the U.S., we anticipate continuing to grow the business the way we've seen it and benefit from the BNPL. So that's essentially executing on our strategy. It's where we see the quickest path to profitability.

Great. Thank you, Eric. And you obviously talked about buy now, pay later just then, and obviously, it was a large part of the presentation. Still at this point, it represents a fairly small part of the revenue and earnings of the business. I guess what should investors expect going forward in terms of the buy now, pay later contribution?

I think what you can expect is a period of continuing to create the addressable market, right? And so we started that roughly 4 months ago and beginning to bring on the talent that can bring on the ISO channels for distribution as an example, right? You continue to see that go in the right direction and grow in terms of ISOs over the course of FY '22, right? That market, as I mentioned, is distributed and organized geographically. Those conferences, I mentioned the one with Western States, right, our ability to go into Northeast, Southeast, Western -- Midwestern as well, really are those conferences that are lined up in April and in June, right, coming up. So we'll continue to grow that space, obviously, between now and then. But as we're able to be on-site and presenting on panels, speaking about BNPL, right, is where we'll tend to see the more ISO additions. Now as you build ISOs, then they essentially get trained and you then begin to see merchant application flow. So one of the key indicators that we should be looking for is merchant application flow from ISOs. As that starts to move, that's a prelude to very good times ahead as volume then will flow on after merchant application growth. The merchants that we've seen to date have largely come from -- almost entirely come from the direct sales that we initially launched with and then with the online merchant application flow that we mentioned before with demand generation, driving merchants to the platform to self-apply, self-install. So that's what we would anticipate kind of happening with the BNPL solution.

Thank you, Eric. The questions come through just around the reporting of numbers. So obviously, the business has given quarterly business updates in the past. Today, we've shared a bit more granularity. The question is, "Are you going to report numbers more regularly than the past, particularly the buy now, pay later numbers as they start to ramp up?"

We are. I shall let Simon field some of that question. He can give you a little sense of what's coming in terms of future.

Certainly, Eric. Certainly, as it becomes a more significant part of our business, and we'll certainly review that cadence of reporting where it makes sense to announce more frequently, we will certainly do that.

Maybe -- I mean the market has probably been used to hearing from Eric and Simon and Bruce. So I put a question to Aubrey and Jay, just around maybe what excites them most over the next 12 months in terms of what they're working on in their fields. So maybe Jay, I will start with you.

Yes. Thanks, Eric. It's actually a really great question. It started with -- you're going to start -- we're sounding like a little bit of a broken record here with some of the shows that we had in the U.S., but particularly with the interest that we had in Texas around the acquirer show. What excites me is just the sheer fact of how we were quite literally rushed after our panel discussion on the stage with Eric. Now these ISOs, as he said some numbers earlier, there were potentially, between ISOs and acquirers, about 160 to 170 at the show and the fact that we had essentially about 80 to 85 of them in the pipeline within about 1.5 days shows the sheer interest in us providing a true out-of-the-box BNPL solution for ISOs and acquirers. And we're seeing that interest happen quite quickly. So we're very interested from the marketing side and the sales side to start creating materials that really help tell that story better. And we're trying to do a better job of telling stories about how this is solving those problems, how this provides that solution for those ISOs and acquirers. So that's really exciting to see the interest leading up to that before we've even really kind of hit our stride with this. So a lot of excitement behind that kind of out-of-box solution for the acquirers and the ISOs.

Jay, maybe just quickly before Aubrey answers that question. There was a question here, and maybe it's for you or James around, how long does it take from signing an ISO to a merchant transacting?

Yes. Jay, I'm going to let you take that one. Jay, I can't hear you. If you could, James.

Sorry. So yes, we've stood up over the past few months and ISO program, this strategy is -- it's been around probably, correct me if I'm wrong, Eric, probably about June, July?

Yes. Probably about that. May or June, when we started to see the beginnings of it, right? So typically, you're seeing, right now, of all the -- of the 98 ISOs that we've signed so far, 75% of them have already been trained, right? So you tend to have about a 30-day lag before you have ISOs that have signed on, and then you're hosting webinars multiple times a week, you're training them on the product, right? Jay's team has to build certain collateral. There's -- with our version of the online merchant agreement, we'll white label that application flow, for example. So it looks like the ISO site is bringing merchants on. So there's roughly about 30 days to really kind of get an ISO set up and running, which includes some of the training time, right? And then typically, you're going to see merchant flow happen, call it another 30 to 60 days sort of beyond that, so to give you a sense of some of the timing.

Got it. All right. Aubrey, I hand over to you on what excites you for this next coming 12 months.

Great question, Eric. So what excites me, I've actually been here for about 45 days. And during that time, what excites me is that we've really focused in on 2 lanes and narrowly focused in on 2 lanes. And 1 being kind of increasing the market share in the accounting vertical, which is one that we own already, and we can continue to own. So that's our bread-and-butter and really being laser-focused with the sales team and our account-based ABM strategy for that. And the second is being hyper focused on the buy now, pay later option. So I'm really excited about buy now, pay later and really owning the professional services in that space. And we have a really unique offering that's credit card based and it's very unique in the space. So being laser focused in 2 separate lanes and kind of getting to go to market is really exciting. And I think we have a huge opportunity there.

Great. Thanks, Aubrey. A question just come through about the buy now, pay later solution and whether QuickFee is still relying on the Splitit technology.

So we are, and we're evolving right. So when you think about QuickFee's BNPL product journey, right, it began with what I'll call 1.0. So 1.0 was the original buy now, pay later solution with Splitit. We rapidly here, over the last probably 90 days or so, have evolved that to call it a 1.5 version. So there were some things that we wanted to do on the pre-authorization side, right, that created a better product market fit so we can begin to drive more utilization through that product, right? And so they're coming out of the original launch. The adoption wasn't really what it needed to be. And so we had to make some changes to evolve that product, and we did that over really the course of the first quarter of this fiscal year. That will continue to evolve over time, right? As you certainly understand more of your merchant transaction experience, right, you can then start to get a sense of how other ways that you can mitigate your credit risk beyond simply just the pre-authorization. The pre-authorization is the one that we like the best. It's -- if you're going to launch a BNPL product, that's the way to do it, right, is to mitigate your credit risk right out of the gate. You won't see the kind of just sheer volume losses, right, with our launch of a BNPL solution that you're seeing with other BNPL fintech providers that are essentially issuing credit. We began issuing credit, you start to have larger losses. You have larger losses, your borrowing costs go up, right? And now you're at a very, very high price product range. And the next thing is you have to start charging other ancillary fees, right, like late fees and other things. We don't want to be in that space, right? We're very much disassociated with that segment of the BNPL world, right? And we don't have really good appetite to want to go into that. So Splitit is our core tech on the U.S. side, particularly, if you look at what we've done with Jim's, however, it's a very different approach. We're not leaning on that pre-authorization. We're leaning still on the underwriting of the borrower in as much as they were issued a credit card, which, relative to the U.S., is much harder to come by in Australia than it is in the U.S., right? If you take a U.S. consumer, an Australian consumer with the same FICO score, the same income, right, the Australian consumer likely has a lower credit line relative to their ability to pay than someone in the U.S., right? And that's neutralizing essentially risk, right, and income. And so what we've done in Australia is a different approach, one that as we develop and understand that type of underwriting, right, will help inform additional evolutions of our BNPL strategies.

Thanks, Eric. A couple of questions coming through on the Australian business. First one being, "What's the expectation for timing for the pay later part of the business to surpass FY '20 number?" And then there's a sort of more broader question there around, "Is the Australian market worth participating in for QuickFee?"

I can just quickly comment on the second question. It absolutely is worth participating in for QuickFee. I'll allow Bruce and Simon to comment on the first.

Yes, we -- it's unlikely we'll get there -- back there in FY '22. I mean having said that, there are some promising signs too. Over the past 5 months, have been at that sort of average level that we saw in FY '20. But it's more realistic that FY '23 will get back up to that sort of $49 million. We won't be at that level for FY '22.

And Bruce, I'm not sure if you wanted to add anything around sort of the Australian market more broadly.

Yes. I'll just add that in terms of what we've just signed with Jim's just goes to the untapped opportunity for a unique BNPL solution. This is a solution tied, as Eric said, with credit quality to somebody who owns a card, somebody who owns a house and totally selected by the type of merchant service that just bought. So you look at $600 million merchant signing today, announced today, I think the Australian market is well and truly worth participating in.

Yes, I'll just add that for the traditional accounting and law lending product, I'd comment about not getting there in FY '22 was valid. But there is significant addressable market through Jim's and other franchise opportunities that could get us there quicker in total.

Absolutely, with Carbone. We've just signed Carbone Lawyers, a significant plaintiff injury firm. They haven't even transacted with us in. I mean there's plenty of upside, especially in legal in Australia.

Excellent. Eric, maybe one for you, just thinking sort of at a high level and strategic level around M&A. "What's the company's view on M&A in terms of potentially looking at acquisition opportunities? Or on the flip side, what's the" -- and it may be a question more for a Board, but how do you view corporate takeover activity in someone looking at QuickFee?

Well, I mean, on the second part of that question, we're always listening. We would certainly be at current share price, right? We like our chance of investing ourselves organically versus doing something from a corporate standpoint. I'd say from an acquisition standpoint, yes, as a payments company that we've arrived at, it's really all about scale, right? And you can get that through distribution and rapid transformation that we're seeing today in our professional service base that's driving more volume, right? Or you can go and buy portfolios, right? And that only really makes sense if it fits the niche that we're in, right? The enterprise professional space, professional space in the U.S., professional space in the AU, right, the type of credit quality that we have, the fact that we're seeing payments grow out of that quality. The fact that we're tapping only into roughly 13% of all the revenue that we see on the firms that are on our platform today, and a 16%, 17% market share of that. And that we are just coming out of a travel-restricted period of time and moving into a much more sophisticated and much more precise go-to-market strategy with account-based marketing as well. So we're much more interested in executing on our strategy today than doing something from an acquisition standpoint.

Great. I think we have time for 1, possibly 2 more questions, coming up to 1:00 our time here. Just around the ISOs again, "How self-motivated are they to maximize QuickFee's buy now, pay later transactions?"

That's a great question. They're extremely self-motivated, right? So as I mentioned, it's an incredibly competitive space. And when you look at the yields that Simon walked through on the BNPL side, right, the idea that you can offer 100 basis points of residual commission for volume coming from merchants that are brought to us from ISOs, that's anywhere from 8 to 15x what they're going to make on the credit card product that they've been selling for the last 20 years, right? And so they're extremely self-motivated. When Jay mentioned the model of people that hit us when I walked off the stage in Dallas, that's not a joke. I mean it literally was line deep. So we're excited. We think the interest is palpable. And they're very eager to onboard a type of solution that they haven't seen since Apple Pay.

Great. I think I might squeeze one last question in, it's just around the Australian market. "Can we expect more deals similar to Jim's going forward that are outside the law and accountancy firms?"

Yes. Well, the amount of work that we're getting Jim's, I need a little break first. It's a magnificent opportunity, and I really appreciate Jim's trusting us, but it's -- they're not easy. They take a lot of effort. There are some interesting opportunities for us in legal. I can certainly say that I'm very proud of the customer base, the merchant base we've got in accounting. And I'm very pleased to see the level of inquiry we get around legal, especially now we're endorsed by 3 of the state law societies. But yes, we're certainly open to things aligned to Jim's, which represent the low-risk credit quality that QuickFee was built on since we started it over a decade ago.

Thanks, Bruce. All right. I need to wrap things up. There are a couple of questions that we haven't got around to, I will come back to those investors off the back of this. So thank you to everyone that joined. Very importantly, thank you to our presenters for taking the time today. Eric, I think I'll hand back to you now to wrap things up.

Well, look, we're very pleased and honored to have the support of so many investors. It's something we take very seriously. We pride ourselves in being good stewards of the capital that we've been entrusted with. We believe that it's a wise investment. We think betting on ourselves and the strategy that we have to grow the business and the underlying dynamics that are really resulting in the payment velocity that we're seeing now are very attractive, right? And so really pleased to have an opportunity to present. I think hopefully a clearer story, hopefully, one that provides much more actionable information to help our investors understand the business and continue to support us.

All right. Thank you, everyone, for joining us.

Thank you.

Thanks, everyone.

Thank you.