Wisr Limited (WZR) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the Wisr full year results webinar. Thanks for joining us this morning. So glad to have you on board, and thanks for your continued interest in Wisr in what is, no doubt, uncertain times and challenging times. But it's yet again a great set of results from a company equipped with people who just continue to deliver safe, prudent growth and consistent growth. Having done so for 24 quarters now, we continue to build and deliver what's on track to become a company of significant size and impact in this Australian market. I'm going to jump straight through the results today and updating where we are. I'm going to spend time talking about FY '22. While we delivered significant growth, it truly was a transformational year for the company. It's a year in which we really took the company to scale. And most importantly, what we've achieved in the year, financial year '22, has put us into a position to very strongly, safely and prudently navigate this next period as the economic situation changes around us and changes rapidly, I might add. We're very, very fortunate that we put the results on the table that we did last year, that it's given us a chance to now pull so many levers that we have available to navigate this next period and come out on the other side of this period of uncertainty as a stronger company that will continue to grow and build something of real size and scale. A quick snapshot of the year. $611 million in new loan originations. In April this year, we went through the $1 billion market, actually putting over $1 billion of loans out the door. And whilst that's a significant number, it is, and it is a great number to have achieved, I think what's really important about the over $1 billion of loans that we've written as a company is now they've all been written as prime or potentially super prime loans. That's lending to some of the very best and most creditworthy customers in Australia, lending to customers who have the type of financials sitting behind them that we know from data from other markets, we know from data from markets that have been through significant economic downturns, been through recessions, been through high periods of unemployment that by lending to a really prime and, particularly, a super prime group of individuals like the $1.2 billion that we've loaned to, we know that those types of customers will continue to pay even through tougher economic times. All of the data from the U.S., from U.K. through downturns, like post GFC or that we didn't experience a similar downturn here in Australia, but all the data shows that this type of credit customer is a great credit customer to have in the books when there's uncertainty in the economic forecast. And so it's not just about putting such a big number out of the door, but the [indiscernible] to and the type of customers that we have on our books. Our loan book now sits at $780 million, approaching that $1 billion loan mark. Those results together combined to $59 million in revenue last year, which is 118% up quarter-on-quarter. That $59 million, you can fully expect to be growing at a significant rate. We were $18 million of revenue alone in quarter 4. So our exit run rate was actually more like $72 million of revenue, even though it's $59 million for the full year. As we exit FY '22, our run rate close -- it's over $70 million and heading towards that $100 million mark in the near term. Our cash EBTDA result was a slight improvement year-on-year. Yes, it's still negative. Yes, it's been negative because we've been scaling the company. The economic situation globally has been very, very different. It has been a situation in which growth was being rewarded. We were investing for growth on those terms. We're investing for growth because we had the capital to do it that was cheap. We could afford to invest for growth, and so we did. And that will actually pay dividends for us over the next couple of years. The fact that whilst there was a market condition that allowed us to invest in growth than we did, that will set us up really well for the next couple of years. As well as with our lending platform, our Financial Wellness Platform continues to improve with new features, new tools, new assets. Around 650,000 Australians now have profiles on that platform. And what that means is for most Australians, we have about 30,000 or 35,000 old borrowers on our books, maybe slightly more, I don't know that number exactly. But for the vast majority of Australians actually know us as a financial wellness company. They interact with us on that platform. That's how they get to know us. It's a proprietary channel that we've built that continues to scale. I've only touched on the very prime nature of our credit. That's reflected on our -- the arrears that we're experiencing less than 1% as at June 30. I would flag to the market, this is -- that's a significantly underperforming -- overperforming number. We would expect that to normalize. You are seeing that number increase. Our view is there's no cause for concern. You should not read too much into that number increasing slightly. As that number slightly increases, it's just normalization. It will normalize to a number that reflects the very, very prime nature of the customer base that we write loans to. And normalized figure for that number, we've always guided the market to around about 1.5% would be a normalized number, so very, very prime consumer credit. So that number might continue to lift a bit. We expect to be able to maybe slightly outperform still. But you'll see that we always model 1.5% as a general run rate because at scale, that's a normalized number. In this year as well, we delivered a $250 million ABS transaction, which we settled in June. Our second such transaction, a really great result for the company with really strong economics. I've touched on some of these points here on the right, but I'll leave the first one because I think for today's conversation and from understanding of where we are today, I think this is the most important point I might be able to take away, and that's the results that we've put on the board in FY '22, the ability to trust reviews, that period of growth in a market that was rewarding growth, the way we're invested, the way we have hyperscaled the company, scaled at a rate faster than very, very many other companies, combined with the subsequent decisions we've made in the first quarter this year, set the company up on a path through profitable within 12 months. Subject to, obviously, macro conditions, we can't predict all of those. But what we've been able to do, we have so much flex in this company. We have so many levers to pull around expenditure, around the ways we invest. With the loan book, it's very close to approaching a $1 billion loan book, an exceptionally strong new economics in the company. It's set up to deliver that profitability within 12 months. I think the evidence for that as well -- and we'll talk through the other ways we're going to do that and we can show you that, but if you actually look at the way the last year end, we delivered 2 quarters in a row, Q2 and Q3, we're actually operating cash flow-positive quarters. Now obviously, things changed rapidly, and we saw a significant and very, very rapid increase in the base -- the cash base rate. That has a direct correlation to our cost of funds and the price we pay for debt. The rapid increase that you might see just in the cash flow alone was far outstripped by the BBSW rate, the forward prediction on rate, and that significant increase in rate actually meant that in Q4, we were able to let that subsequent cash flow-positive quarter bit. Had things been equal as we're standing in the year in February, and we're paying around about 2.5% as the cost of funds or thereabouts, we were delivering an operating cash flow-positive business, and we're on a path to delivering a very, very profitable business. The market has changed rapidly. We are lucky that we have many, many levers to pull. We've pulled those levers. It will slow down that otherwise that, that path to profitability that we're on and pushed down, but we will still get there within 12 months. And we do that still on the back of, like I said, some really strong lending in that first half. The company remains really well capitalized on top of this. As you enter a period of uncertainty, it's one of the things you want to make sure that you've done. We do -- I think we've done it very, very well. We raised $55 million not so long ago at a very strong equity price delivering very, very minimal dilution for shareholders but by utilizing that share price at the time to raise significant capital. There were questions at the time around why we raised so much capital, and maybe it looked at the time given where the economic conditions were looking that maybe we didn't need that amount of capital. Our view at the time has always been -- this is the day we started building the company, that we are a capital-light company. We're a company that's not a bank. It's going to sit on a significant cash balance that we need adequate capital in order to withstand the changing economic conditions. We ran this company for almost 7 years. If you're going to be running a company and you're thinking about 10- to 15-year life cycles, you have to plan for economic downturn. You have to assume at some point in a 10-, 15-year cycle, there's going to be changes in conditions. From day 1, where we assumed that's going to happen, we assumed there would be an economic change like we're seeing at the moment. And from day 1, we set the company up to have both the capital and the flex in our control to make sure that when economic conditions changed, that the company was strong, it was robust, and we can navigate through it appropriately. That's what we've done, and that's what you'll see us do over the next few periods. In addition to some of the overall numbers there, the company continues to be recognized for its culture, multiple, multiple awards through the last year. We're recognized as -- we're one of the best places to work in Australia in multiple categories, top 10. We were recognized as the #1 overall company in Australia for diversity and inclusion. As both a finance and tech company, we have no gender pay yet in our organization, which is exceptionally rare, both in finance and in tech. There's -- We have zero gender pay gap. We've done that on purpose, delivering the results that we are able to deliver consistently. Being able to deliver such strong, consistent safe results comes from having such a high-performing team, and high performance is part of having an organization instilled with diversity of thinking to deal with diversity of capability and an organization that's geared for higher performance. I will go back to it for a second and just talk, and I know most people probably are aware of this. But whilst there are a range of nonbank lenders in the market and digital ends in the market, from day 1 why they have been building something that's quite unique and uniquely different. We have a dual platform strategy. Whilst there's been a market that's been rewarding growth and give us the ability to perhaps tap capital markets and raise capital at relatively cheap rates, we have been able to invest that in building and executing on the dual platform strategy. Our lending platform continues to go from strength to strength. It's the core at the moment of our revenue platform. We've delivered 24 consecutive quarters of growth from that platform with, like I said, $1.2 billion loans written in, an exit run rate as we exited Q4 of $744 million per annum, if we were taking that same [indiscernible]. The Financial Wellness Platform, however, is an asset -- is a strategic asset of significant value. And through tough times, through times like we're about to experience through volatility and changes in economic times, the fact that we have a captured audience base where the data is highly valuable, where we've already invested to grow and engage in that platform, we will deliver significant benefits to us through this period. As I've said, both of those platforms over the last many, many quarters have delivered nothing but growth quarter-on-quarter. And that's been the right strategy. For the last few years, growth has been the right strategy. Growth has been awarded. Capital has been cheap. We've been able to execute significant growth, fast growth, consistent growth whilst utilizing the access to capital that we're able to achieve. Our lending platform has grown at a 130% CAGR over the last few years. The Financial Wellness Platform, as we engage customers right through their life cycle, has grown at a CAGR of 380% year-on-year. And so we've really utilized that period of growth that was existing globally to really set the company up to be something and do something different. Our loan book, which follows from loan origination has grown at a 290% CAGR consistently. It's now $780 million as we exit Q4. As I mentioned earlier, a loan book of that size, in particular, if you look at sort of other nonbank lenders, there's not many of them that with a loan book that's significantly less than -- with $0.5 billion would be able to deliver cash flow-positive impact likely delivered in Q2 and Q3. And prior to a very, very rapid rise in our cost of funds, we're on track to deliver a fourth cash flow impact and a very close path of profitability. But obviously, the market and some of the conditions have changed, and we'll talk to that. That loan book continues to scale, and that -- and then revenue follows from that as well. We drive our revenue. Again, revenue growing at 195% CAGR over the last few years, $18 million of revenue in the fourth quarter alone, which means if we did not much else, we'll deliver about $72 million of revenue in the coming financial year, although our expectation is obviously higher than that. I've touched on this already at the beginning when I talked about kind of our arrears rates. We've talked about arrears, and we've consistently told the market that we're a different type of nonbank lender. Historically, nonbank lenders have existed to be the place that says yes when the banks say no. Now the big 4 banks are still right. Again, don't quote me on this exact number, but the big 4 banks still roughly 75%, 76% of all consumer credit in Australia. And so the dynamic has historically been that you go to a big 4 bank to consumer credit. If your bank said no, you go to a nonbank lender or you have riskier credit, higher-priced credit, credit that wasn't the same quality. And those nonbank lenders, where economic conditions become volatile and become uncertain, would typically struggle. Again, from day 1, we built this company to be different. We've built this company to be a company that is the #1 choice for consumers in -- when it comes to personal loan. We want a customer seen coming to us first before they go to a bank. We write bank-level credit quality. If a bank says no to a customer, we're not going to say yes. We write the same type of prime credit, and one of the really important reasons we do that and have done it consistently is through downturns, through periods of really depressed economic conditions where credit becomes under pressure, prime consumer credit performs really well. We've seen it through market started from all the other, organized through Canada, through the U.S., through U.K. Where we're seeing significant downturns, rise in unemployment, prime consumer credit continues to perform, continues to be profitable credit to write. And because we set the company up to be balance sheet-light that we have a great balance sheet today, we do want to be in a position to have to manage poor credit, risky credit. And so we've consistently gone after this type of customer base. And so again, as we look forward to the next couple of years, we can't say it's going to happen, but economic conditions are looking uncertain. Inflation's rising. Interest rates are rising. We might see increased pressure on consumers. And through that environment, if you are running a credit book, this is a type of credit book you want to have. You want to have a credit book that's built on very, very prime customers. You want doctors and lawyers and accountants and these types of people to have borrowed from you because even through time and toughened credit and economic times, these people still repay their loans. Yes, your arrears will increase a little bit, but it's still a very, very profitable business to write. So now more than ever, that $1.2 billion of loans we have put out the door, if there is a period of deflated credit and economic performance, our credit book will continue to perform very, very well. All of data tells us that. I've mentioned this 3 times. Obviously, it's going to be a topic for everybody at the moment and for all investors and for all companies managing the changes in the economic environment. There's a few things that we have done. I've touched on quite a few of them already. Building a company that's solely focused on prime credit for -- since inception has been one of our biggest benefits. There has been pressure on us over the last few years to go and take on riskier credit. It can look very, very good during periods of good economic conditions, going to take on extra risk and start writing loans to risky customers. We're refraining from doing that consistently and written a really good book. In terms of the way we've been able to flex the company, yes, our cost of fund is rising, and it's risen at the rate, to be honest, that it's exceptionally fast and much faster than what we probably would have anticipated. We always knew cost of funds would rise. We modeled and built the company to withstand a cost -- an increase in base rates and our cost of funds. We didn't probably expect it to happen in a matter of months and as fast as it has, but that's okay. We can manage it. There's 2 ways that we manage it. Our back book is fully hedged. So as we've written historically, we have hedged the forward base rates. We have a fixed cost of funds through our back book. And so there's no impact. For the loans that we've already written historically, there's no impact to us in paying in base rates and the BBSW rate. Our major lever is the ability to increase front book pricing. That is the past -- those rates on the customers. We see banks do that all the time. The RBA announces a rate increase on Tuesday, and on Tuesday night, the big 4 banks immediately put up their rates, and they pass that cost on to customers. I can't see any data of any lender, anywhere in any market historically when rates have increased, where a lender said, we'll just eat this margin compression. This lifting cost of funds get passed on to customers all the time. There might be a slight lag in it, but that's what happens. And we've continued to do that. You can see the changes in the lift in our rates from both our personal loan and our secured loan, big numbers here over the last 6 months. And so the data point on the left, the blended hedge BBS cost increase has gone up 80 basis points over this period. The front book weighted average yield that we have passed from the customers is 340 basis points between April and as we project into September. And so we've set ourselves up to make sure that we don't know where base rate is going to go. It looks like 3% by Christmas and who knows beyond that, but we have made the adjustments required. We've made them rapidly. We've made fast. We can do that with our tech platform. We've increased that yield that we expect on our book up by 340 basis points in order to protect our NIM as we go through this next period. But one of the nice things about this -- and it is a bit crystal ball, and it is looking a bit further into the future, but the most profitable time for lenders is usually after kind of rate increases when things settle and if rates start to decrease again. Whilst we're very, very fast to pass on increased rates to customers, we're typically a bit slower to pass on decreases. And so if cost of funds start to decrease, then we get to just keep that increased yield and that increase NIM. So our back book is fully hedged. We have no exposure on our back book. And as you can see on our front book, we've made the changes required. And if we need to continue to make more changes in the market, we will do that. In addition to setting the company up and having the economics, having the balance sheet required, having the revenue flow through, having a prime customer base and all the things you want if you had to have a company like our setup to withstand an economic downturn, we've done all the things you would want a company like us to be doing to make sure we can survive. And in addition to those, we've done a whole range of cost-reduction exercises in order to make sure we can deliver that profitable business within 12 months. I wanted to point before I go through these cost reduction areas that Wisr is a growth company. We will remain a growth company for the next decade. We currently have a market share of roughly 2% of the full Australian consumer finance market of $150 billion. There is a massive opportunity ahead of us. And for the next decade, we will be a significant growth company, which we're going to take market share in this space. However, whilst we are a growth company and we'll remain a growth company, it's prudent in the next 6 to 12 months to temper growth to be fiscally responsible to manage this period of uncertainty. We don't know how long it's going to last for and make sure the company is set up as well as can be to withstand not just if it's 6 months or perhaps even a longer period. That being said, we will always be a growth company, and we'll always be investable as a company that's going to be taking significant market share over the next 3- to 5-year horizon. In terms of actually making those changes, we've really pivoted the company away from just growth and using a period that was [ roaring ] growth to shorten our sights on really near-term profitability. Near-term profitability, I would add, even lowering our cost of funds has significantly increased, and just to put some rough numbers around that as we approach $1 billion loan book and in February, as we thought we're going to get to $1 billion loan book in the near term, we assumed cost of funds to the business at around about $30 million, 3% for the $1 billion loan book. And as we stand here today, over the same period achieving a $1 billion loan book, it might mean a [ $60 million ] cost of funds. So it's a $30 million swing in our budget predictions this year. But the good news is we're fully set up to manage that. We always predicted an increase. We have extensive levers to pull, and we've been able to pull them to make sure that we can still deliver on the promises that we've made on the time line that makes sense. That's going to mean a short-term reduction in our growth aspirations. This is the time to be growing. At the rates we've been growing, we will switch from high to a more moderate growth profile going forward. That will actually positively impact our cash EBTDA. As we navigate this macro environment and until we get some certainty and stability, we'll maintain a moderate growth profile. I will point out that even a moderate growth profile from new loan originations, our loan book will continue to grow and scale. And it's our loan book which has delivered this growth in revenue. So even with significantly tempered aspirations for new loans written, you should expect our loan book to continue to grow. We'll get through a $1 billion loan book in this next year. And we'll do that with a front book pricing change in yield. But as we pointed out, 340 basis points today, we might have to go more than that. But at the moment, pacing our front book yield out ahead of where our cost of funds is tracking to. In addition to that, we've always said to the market we have some very, very strong levers in cost management that we've been able to pull. We're delivering material reductions in employee expenses and headcount in this period. It's the right thing to do. We've set the company up with capacity to be a high-growth company through a high-growth market macro environment. It's no longer a high-growth macro environment, so we've rightsized the company back down to the type of company that can deliver moderate growth and shorten that path to profitability. And that also includes a material reduction in our external spend. And those 2 numbers alone are for significant multi-multi-multimillions out of our OpEx spend. In addition to those changes to OpEx, we've also made core strategic decisions to again make sure that we deliver on that near-term profitability. We've paused all new credit product expansion and go-to-market expenditure. We've always said that our medium- to long-term ambition is to be the #1 alternative to the big 4 banks in Australia. We weren't going to do that. We're not going to do that with only 2 credit products in market, a personal loan and a secured vehicle loan. We've been significantly investing in go-to-market strategies and innovations of further credit products, which drive further revenue lines. This simply isn't the times we're taking those products to market. So we've fully paused all that expense and not put those expense items into this coming budget and the go-to-market because you do have to spend significantly to take those types of products to the market. Now is not the time to do it. However, it's paused. When market conditions return, when it is the right time for us to expand our offering, we'll do that, and we're well set up to do it. We also exited any other types of ambitions. We do have investment in a company called [ AVA ] in the EU. We did have a hedging around potential short-term ambitions to expand geographically into EU via that partnership. We've fully exited all investment into that exact platform. And actually, we fully exited any near-term plans for geographic expansion. Again, the Australian market alone is a market in which we can grow significantly for the next decade. And so pulling all that investment out of this coming budget is the right thing to do. In addition to that, whilst as a medium- to long-term strategy, our Financial Wellness Platform, we believe, is a really significant asset. It is a big differentiator from what makes Wisr unique in this space. We do believe long term, it's how we're going to win. We're having our own proprietary channel, having over 1 million plus Australians who know us as more than just a lender will deliver significant benefits to us, but it is growth expenditure. And in this time, in this period, significantly reducing that spend, but we still have to maintain and support that customer base. We do have hundreds of thousands of customers using our tools and products. So we do need to maintain a support and maintenance expenditure on that. We will do that, but a significant material overall reduction in that as well. And so that combined group of initiatives that we've delivered will put us on that path to profitability in the near term. Just to give you sort of some numbers behind some of that. Most of you who have been on [indiscernible] with these waterfalls on the left is the last financial year, and the right is for the one that I'll focus us on. We have always split up what we call core OpEx, so like our lending platform spend against our growth OpEx. So growth being R&D innovation, investment into launching new credit products, into Financial Wellness Platform and other things that were growth expenditure, which was the right thing to be spending in a time it was rewarding growth. You can see from the numbers from last year that had we not been doing all of that, have we not been spending for the medium- to long-term growth aspiration, which -- by the way, I will say, is what returns true shareholder value or remain on terms having innovation and growth strategy part of your company. Have we not had it, you'll see that our revenue followed that stripped-out core OpEx, and we would have been running a profitable company if it's just a lending company last year alone. And so you can see that, that $10-odd million that we spent in FY '22 is growth OpEx. We've always called it discretionary. I can tell you that list of initiatives on the previous page is number of costs that we've put out of a company that's higher than that number. It's the right thing to do in this period of time to make sure that we protect the balance sheet and put the company in the strongest possible position. Now Andy, I want to pass it to you as our CFO to talk through just on our funding and their outcomes.

Yes. Thanks, Anthony, and good morning, everyone. So if we look at our funding platform, it's sort of less than 3 years ago, we announced to market our first $50 million warehouse back by now. Very pleased to be sitting here today with well over $1 billion. And obviously, these numbers are at 30 June of funding facilities in place and backed by some absolutely blue chip names. And so if we look at our sort of personal loan product, we have a $450 million warehouse. That's the teal box in the bottom right-hand side there. Backing that loan product, we obviously did our second term transaction, our second ABS transaction out of that warehouse in June, a fantastic outcome in these markets. That was a $250 million deal at a very healthy cost of funds. And that's opened up significant capacity in that warehouse for us as we continue to scale. In terms of our auto product, that's in the pink box there. So that's a $300 million warehouse. We did increase that to $400 million post year-end. Again, that's backing that auto product, which is relatively new versus our personal loan product. And we look to do our first ABS transaction out of that warehouse during FY '23. Again, the 2 boxes here, the orange and the yellow are 2 term deals, a great outcome to be able to deliver those as a young company. And as we continue to scale, again, we expect to do a lot more of them. Worth pointing out, Moody's obviously the credit ratings on the whole business as part of those deals, and we achieved AAA credit ratings for the top tranches, which is very pleasing. We will also look to bring a third warehouse online in FY '23. So obviously, NAB has been a fantastic supporter for the business. But again, diversification alongside that makes a lot of sense. And so we've run an extensive process, and we'll look to bring on, again, another warehouse provider in FY '23, an initial $200 million size and the ability to fund both personal loan and SEL products. And finally, just quickly, if we look at our mezzanine partners in those warehouses that sit alongside NAB, they're absolutely blue chip names. So IFM, Moelis and Revolution is our mezz funders, very deep pockets with the ability to scale with our business as we continue to grow. Next slide. If we look at our cash EBTDA obviously, this is our profitability metric for the business, and Anthony touched on this briefly earlier. 30% improvement in that metric is a very positive outcome given the headwinds that we did face, particularly in Q4. As we pointed out, Q2 and Q3 did deliver that positive operating cash flow, and we're on track to a far better result. But obviously, those headwinds were faced. And notwithstanding all of that, we are pleased with the outcome and the results that we've achieved. And so if you look at the revenue line, obviously, the 118% growth in revenue is a fantastic outcome. The operational leverage in the business is very evident. So obviously, operating expenses grew at 47%, well below the growth in our revenue line. If we look at the write-off figure, so that was at $6.9 million, that obviously grew in line with the growth in our credit, in our loan book and our loan origination. If we analyze that number a bit further, it represents sort of 1.2% of the average loan book during the year, which is well within parameters of where we'd expect that number to be, and there's a lot more information on Slide 18 in the appendix if you want to delve into that number further. Finally, the interest expense, a very topical item, obviously did grow, particularly in the back half of the financial year. A lot of that growth is attributed to the growth in loan origination volume and the growth in the loan book. However, the higher funding costs, obviously, also have quite a significant path. However, again, when you analyze that number a bit further and you look at the percentage as a percentage of the average loan book, we're at 3.2%, which is still very reasonable, particularly given the markets that we find ourselves in. Thanks, Anthony.

Thanks, Andy. So just summing up, and I talked through most of this already. But where does the company sit today? Profitability to be achieved within the next 12 months, and that's where the company is. We've always had significant levers to pull. We've talked about the years that if economic conditions change because the way we structured the company because of the levers we have, we can respond very, very fast and deliver that within a short period of time. We are a company that's delivered strong and prudent growth consistently. I said $780 million in our loan book came to $1 billion this year. Operating revenue up 118% on the back of 24 consecutive quarters of growth. Notwithstanding that now is the time to temper growth. And so we will temper growth in response to market conditions. It's the right thing to do, and we have the ability because of the way our architects set up, because of the capacity in the business, because of our unique strategy that when the time comes for high-growth to again be delivered, we will be very fast and very quick to be delivering it. We are a growth company. We will continue to be a growth company. But over the next period, our focus is on delivering profitability, controlling our balance sheet and delivering that result. We're on track to deliver that within 12 months. We can do that through a very, very prime and super prime and credit book. And all the things I talked about today allow us -- and the results that we have delivered means that this company can actually thrive through a change in domestic economic conditions. We have ability to do it. We have levers to pull. We have the assets behind us that allow us to do that. We have already made significant OpEx reduction, including in headcount, internal, external spend, and pausing and -- pausing or fully exiting other growth initiatives that -- with the market in different condition, with the global scenario different. We have other tricks up our sleeves that would allow us to grow and grow fast. Now is not the time to be delivering those. We will pause or exit those. And whilst we remain a growth company for the next 10 years, when the time is right, we'll bring those growth initiatives back to market and, again, continue to grow. Yes, the cost of funds has risen very, very rapidly, faster than what I think almost anyone expected. We've pulled the exact right levers as you would imagine a company like us has pulled. Our average weighted yield is up 340 basis points compared over the same period and the 80 basis points, actually, the base rate, although the forward curve has been higher than that. So we're set up. If we're looking at a 3% straight by Christmas, we're already well set up with our front book deal to be delivering profitable NIM, protecting our NIM. If conditions kept changing, we will rapidly respond again. The whole market is doing that as well. So by significantly lifting rates, we're not seeing ourselves being fully priced out of the market. The whole market has to move. As cost of funds go up, the whole market has to move. Customers have to pay more as rates go up. And finally, we've set the company up to manage these type situations very, very well in lots of ways, but one of them is by being -- having a differentiated and mixed strategy. The fact we have our own proprietary channel with over 640,000 Australians on it is an asset that will prove its worst through a period like this where we want to reduce external spend, where we want to more fund our existing assets and capability, spending on growth and trying to open up new initiatives. The bottom line is, from day 1, as we've gone to build this company, we predicted a scenario like this. We set the company up on the basis that there would be an economic downturn, that there will be rising interest rates, that there would be economic uncertainty that we would find ourselves because anyone doing a credit company like this, lending company like this and if you think [indiscernible] across horizons has to factor in, there's going to be a period like this. So we've always had models. We've always had scenarios. We've had the ability to make sure the company is protected through these types of periods, protected well, can focus on delivering a profitable outcome in the near term. And on the other side of it, when market conditions change, can regain our position as a high-growth company, which is what we will always be.

Thanks for your time. I have a quick look through questions here just to see if there's any I can quickly answer. I think some of these have been answered already in terms of NIM. And I think the majority of these questions are a bit of like -- they're clearly on -- they're asking about have we increased front book yield and once having dropped cost of funds, have we made cost-reduction initiatives. Yes, the answers to all of those. There's a question around securitization transactions. And do we need to provide capital to actually run securitization transactions? There's a very small and material cost. We do need to run teams, actually run transactions. But actually, securitization transactions by and large actually return capital back to the company. The equity contribution we make in ABS transactions is typically less than what we're making in the warehouse. And it's been of a double whammy. When we make a securitization transaction, not only do we use an equity contribution back to our balance sheet, but our cost of funds typically reduces as well. So we actually increase our NIM and our revenue which is far, far more material than the cost it takes to sort of run the teams to actually take that transaction to market. Look, I think most of the other questions I can see here have been answered. And I'm mindful of time. If I haven't answered your question or if there is something I [indiscernible], please always get in touch. You can e-mail us at investor@wisr.com.au. Feel free to follow up with any questions you might have. These are uncertain times. We are extremely well positioned to navigate them. We have a very short-term focus on taking the company through a path to profitability whilst remaining over a 3-, 5-, 7-year horizon investable -- highly investable as a high-growth company because that's what we are. That's what we will remain to be. Thanks again for your time this morning and again, reach out if you have any further questions. Thanks, and good morning.

Thanks.