FY2018 r es u l ts p r es e nt at i o n

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SECTION 1. OUR STORY 3

SECTION 2. FY2018 FINANCIAL OVERVIEW 9

SECTION 3. OUR CORE - OUR CUSTOMERS AND RETAILERS 28

SECTION 4. RETAILER LED INTERNATIONAL EXPANSION 42

AGENDA

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Our storySection one

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TO BE THE WORLD’S MOST LOVED WAY TO PAY.

OUR MISSION ( O U R T O D A Y )

'I LOVE AFTERPAY’

'I LOVE HOW I PAID FOR THAT ITEM’

BUT...

THEY DO SAYNO ONE SAYS

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AfterpaY has been great for my family…Afterpay has been great for

my family we are able to

buy things we want without

having to break the bank.

I found Afterpay to be very

flexible thank you Afterpay!

Josh, Trustpilot

Will always choose afterpayI’ve used them so many times. The best of all

of them. Got Supercheapauto new battery so

easy. Thank you Afterpay. Saved me. Big time.

Dane.K.2017, Trustpilot

Absolutely LOVE AfterpayAbsolutely love Afterpay. It makes

it so much easier to afford, when

it’s spread over 4 fortnightly

payments. And if something

unexpected comes up, I have

found Afterpay excellent, in moving

a payment back a few days. Also

the app is insanely easy to use!

Susan, Trustpilot

Afterpay is an amazing and wonderful…Afterpay is an amazing and

wonderful way of getting

the things you need and

want without having to pay

everything upfront. They are

understanding when you miss

a payment, just get in touch

with them and they are there

to help.

Nicole Smith, Trustpilot

Love love love Afterpay!Love love love Afterpay!! Best

thing ever!! I have been able to

buy so many items from lighting

for the house, to clothes, birthday

gifts galore and treats for myself

without having to spend hundreds

of dollars in one go!! I have 5

orders at the moment, and I

can afford to do it this way as

because [sic] I have always paid

my past orders on time, if I order

something today, Afterpay do not

charge me until another fortnight

but send my orders right away!!

It is the best thing ever - just like

layby except you just need to pay

it within 4 installments and you

get it right away!! I recommend it

to everyone! Better than a credit

card, no interest fees - I will

continue to use Afterpay forever!!

MS Latu, Trustpilot

All I have to say‘I love afterpay’Lena Fuller, Trustpilot

OUR CUSTOMERS LOVE US BECAUSE WE ARE DIFFERENT

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WE HAVE BUILT A TRUE PARTNERSHIP WITH OUR RETAILERSAfterpay transforms paying into the most pleasant part of shopping

Unlike traditional credit products, our

retailers understand that they are paying

a fee to us on behalf of the customer

because they too want to provide

the customer an amazing purchase

experience. They love their customers as

much as we do.

Consumers don’t want to take out a loan

to purchase a smaller lifestyle item, they

simply want more flexibility and a better

paying experience that aligns with their

spending preferences.

“I have been amazed at howquickly our customers haveembraced Afterpay; so much

so, that iT is now the single most popular payment method for our website”

Adore Beauty

“Afterpay is a perfect match for the M.A.C. brand

and ouR customers”M.A.C Cosmetics

“Since launching Afterpay on our online channel in 2016 we have seen consistent growth and conversion over the time”

Lorna Jane

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TEAM AND CAPABILITIES presence produc

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17.7K RETAILERSACTIVE

2.3M CUSTOMERS

21M TRANSACTIONSSINCE INCEPTION

AUSTRALIA

AUSTRALIAN BUILT

LOAD BASED, SCALABLE SYSTEM

CUSTOMER EMPOWERMENT

PAY IT IN 4

ONLINE

IN-STORE

PERSONALISATION

SOCIAL VIRALITY AND RETAIL LEAD GENERATION

HIGH ENGAGEMENT - REPEAT ACTIVITY

AFTERPAY RETAIL EVENTS

MORE TO COME... ATTRACTING AND GROWING GLOBAL TALENT

NEW ZEALAND

U.S.A. U.K.

MORE TO COME...MORE TO COME...

APP SHOPPING

BUILDING FROM OUR CORE - OUR CUSTOMERS AND RETAILERS

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financial overview

FY2018 Section TWO

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INVESTING FOR SUSTAINABLE GROWTH AND LIFETIME CUSTOMER VALUE• Global, scalable system and world class team

• Product innovation and new customer benefit features

• Retailer value added service - building partnership benefits

PLATFORM GROWTH• Over $2.18b underlying Afterpay

sales (+289%)

• Q4 2018 underlying sales annualised is approximately $3b

• Stable Pay Now revenue

STRONG FINANCIAL PERFORMANCE• Revenue and Other Income $142m

(+390%)

• EBITDA excluding significant items $34m (+468%)

• EBTDA excluding significant items $28m (+380%)

LOWERING AFTERPAY LOSSES AND LEVERAGING DATA AT SCALE Net Transaction Loss - 0.4% (FY17 0.6%) declined while:

• Growing underlying sales

• Moving into new verticals

• Expanding to new geographies

CAPITAL MANAGEMENT• Citi $200m Australian facility completed

• Complements existing NAB $300m1 Australian facility and NZ$20m ASB N.Z. facility

• $50m Australian bond completed in H2FY18

• Underwritten institutional placement (and SPP) to facilitate international expansion and cornerstone future international debt facilities

INTERNATIONAL EXPANSION• Developing a retailer-led

expansion strategy

• U.S. building momentum

• Small U.K. acquisition

• Consolidating position in N.Z.

NOTE: 1. AT AFTERPAY'S REQUEST NAB AUSTRALIAN RECEIVABLES WAREHOUSE FACILITY REDUCED FROM $350M TO $300M

FY18 - KEY HIGHLIGHTS

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AFTERPAY TOUCH AFTERPAY CHANGE1

A$M (UNLESS OTHERWISE STATED) FY18 FY17 %

GROUP - KEY FINANCIAL METRICS

REVENUE AND OTHER INCOME 142.3 29.0 390%

AFTERPAY 116.8 29.0 302%

PAY NOW 25.6 ~ ~

EBITDA (EXCLUDING SIGNIFICANT ITEMS) 33.8 6.0 468%

EBTDA (EXCLUDING SIGNIFICANT ITEMS) 27.7 5.8 380%

EBTDA 9.7 (11.7) 183%

NET PROFIT/(LOSS) AFTER TAX - STATUTORY (9.0) (9.6) 7%

AFTERPAY - KEY METRICS

UNDERLYING MERCHANT SALES 2,184.6 561.2 289%

MERCHANT REVENUE %2 4.0% 4.1% ~

NET TRANSACTION LOSS (NTL) %2 (0.4)% (0.6)% ~

NET TRANSACTION MARGIN (NTM) %2 2.6% 2.5% ~

TOTAL ACTIVE CUSTOMERS (M) - CURRENT3 2.3 0.8 176%

NUMBER OF MERCHANTS (‘000) - CURRENT3 17.7 6.0 195%

NOTE: 1. CHANGE PERCENTAGE IS BASED ON FINANCIALS PRESENTED IN THE ANNUAL REPORT 2. % OF UNDERLYING SALES 3. FY18 METRICS AS AT 31 JULY 2018 4. CALCULATION BASED ON SEGMENT EBTDA (EXCLUDING SIGNIFICANT ITEMS) WHICH IS PRE $14.5M OF CORPORATE COSTS

COMMENTS

Strong financial performance in FY18, driven by strong growth in Afterpay and a full year contribution from Pay Now.

FY18 revenue and other income of $142.3m, up 390% on FY17, with Afterpay now comprising the majority (82%) of Group revenue.

FY18 revenue and other income growth driven by significant increase in Afterpay underlying sales and a stable merchant margin.

FY18 Afterpay underlying sales of over $2.18b, up 289% on FY17 and driven by growth across all key demand drivers (new customers, repeat customer activity, new retailers, increased share of checkout).

EBTDA (excluding significant items) of $27.7m in FY18, up 380% on FY17.

EBTDA (excluding significant items) positively impacted by lower NTL% and higher NTM%.

REVENUE CONTRIBUTION

82%

18%

EBTDA CONTRIBUTION4

83%

17%

PAY NOWAFTERPAY

FY18 - GROUP FINANCIAL SNAPSHOT

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COMMENTS

D&A increased largely due to a full year contribution from Touchcorp and the amortisation of acquired intangibles from the merger of Afterpay and Touchcorp (non-cash).

Employment expenses increased largely due to a share-based payment expense (non-cash) of $16.4m in the period and a full year of Touch employment expenses.

Receivables impairment expense increased in line with the significant increase in Afterpay underlying sales.

Operating expenses increased to $27.1m in FY18 but declined as a % of sales due to operating leverage.

Tax paid in FY18 due to the profitability of Afterpay.

Statutory net loss after tax improved from $9.6m in FY17 to $9.0m in FY18 in spite of a significant increase in D&A (non-cash) and share-based payment expenses (non-cash).

AFTERPAY TOUCH AFTERPAYA$M (UNLESS OTHERWISE STATED) FY18 FY17

REVENUE FROM AFTERPAY 88.3 22.9

REVENUE FROM PAY NOW 25.6 ~

REVENUE 113.9 22.9

COST OF SALES (28.2) (5.3)

GROSS PROFIT 85.7 17.6

OTHER INCOME 28.4 6.1

DEPRECIATION AND AMORTISATION (17.3) (2.7)

EMPLOYMENT EXPENSES (38.6) (6.6)

RECEIVABLES IMPAIRMENT EXPENSE (32.6) (8.2)

OPERATING EXPENSES (27.1) (20.3)

OPERATING PROFIT/(LOSS) (1.5) (14.0)

FINANCE INCOME 0.5 0.3

FINANCE COST (6.6) (0.8)

PROFIT/(LOSS) BEFORE TAX (7.6) (14.4)

INCOME TAX (EXPENSE)/BENEFIT (1.4) 4.8

PROFIT/(LOSS) AFTER TAX (9.0) (9.6)

FY18 - GROUP STATUTORY FINANCIAL SUMMARY

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COMMENTS

EBTDA of $9.7m includes the impact of the following Significant Items:

• Accounting for share-based payments of $16.4m which is a non-cash item (refer p26); and

• One-off costs of $1.6m which includes consultancy fees and an FX gain (refer p27).

$12.5m or 76% of the total share-based payments expense of $16.4m relates to a proposed issue of loan shares for the Group Head - driven by the increase in Afterpay's share price as it remains subject to shareholder approval.

Unlike other SBP related issuances to employees that are not subject to shareholder approval, and are valued for accounting purposes at the time of the grant, the value of the Group Head’s proposed LTI grant is calculated using the closing share price at each reporting date (opposed to offer date) until such time as it is approved by shareholders (refer p26).

9.7

27.7

33.8

17.31.6

16.4

6.1

(7.6)(9.0)

1.4

Reconciliation - Statutory net profit/(loss) after tax to ebitda

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SIGNIFICANT ITEMS

A$M

FY18 - GROUP STATUTORY FINANCIAL SUMMARY (CONT’D)

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COMMENTS

Afterpay underlying sales of over $2.18b up 289% on FY17 driven by:

• New customers

• Repeat customer activity

• New retailers

• Increased share of checkout

In-store contribution increasing, ending at 12% of underlying sales in Q4 FY18.

Average merchant margin stable in FY18 at 4.0%

• Increase in sales across both Enterprise and Small to Medium Business (SMB)

• In-store mainly Enterprise in FY18, yet to benefit from higher SMB margin mix.

Increase in NTM reflecting an improvement in NTL as a % of sales

• NTL as a % of sales declined from 0.6% in FY17 to 0.4% in FY18.

Strong growth in EBTDA contribution, up 504% in FY18 reflecting both increased sales and increased NTM.

AFTERPAY CHANGE1

A$M (UNLESS OTHERWISE STATED) FY18 FY17 %

UNDERLYING MERCHANT SALES (GMV) 2,184.6 561.2 289%

AFTERPAY MERCHANT REVENUE 88.3 22.9 286%

% OF UNDERLYING MERCHANT SALES 4.0% 4.1% ~

NET TRANSACTION LOSS (NTL) (9.3) (3.1) ~

% OF UNDERLYING MERCHANT SALES (0.4)% (0.6)% ~

OTHER VARIABLE TRANSACTION COSTS (23.3) (5.8) ~

% OF UNDERLYING MERCHANT SALES (1.1)% (1.0)% ~

NET TRANSACTION MARGIN (NTM) 55.7 14.1 295%

% OF UNDERLYING MERCHANT SALES 2.6% 2.5% ~

EBTDA CONTRIBUTION2 34.9 5.8 504%

TOTAL ACTIVE CUSTOMERS (M) - CURRENT3 2.3 0.8 176%

NUMBER OF MERCHANTS (‘000) - CURRENT3 17.7 6.0 195%

NOTE: 1. CHANGE PERCENTAGE IS BASED ON FINANCIALS PRESENTED IN THE ANNUAL REPORT 2. CALCULATION BASED ON EBTDA (EXCLUDING SIGNIFICANT ITEMS) WHICH IS PRE $14.5M OF CORPORATE COSTS. 3. FY18 METRICS AS AT 31 JULY 2018

FY18 - AFTERPAY KEY FINANCIAL METRICS

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COMMENTS

Improvement in NTL while generating significant growth in customers, growth in underlying sales, entry into new geographies, new industry verticals and also new channels (In-store).

A$B %

0 0

2

FY16 FY17 FY18

0.8

1 0.4

NET TRANSACTION LOSSUNDERLYING SALES

underlying sales vs NTL - FY16 to Fy18

FY18 - DRIVING LOWER LOSSES WHILE SCALING

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COMMENTS

Provision for bad and doubtful debts of $15.1m as at 30 June 2018.

Afterpay adopts a conservative approach to bad and doubtful debt provisioning. Actual collections post balance date confirms that provisioning was appropriate.

NTL declined from 0.6% in FY17 to 0.4% in FY18 driven by declines in gross losses in H2 FY18 and the impact of late fees.

Reflects improving customer repayment profile, increasing orders from returning customers and continuous evolution of Afterpay’s transaction integrity engine.

Late fees are only recognised at 'collectable' value (not total late fees invoiced).

Late fees are now capped at the lesser of 25% (min $10) of the order value or a maximum of $68.

FY18 FY17

1.3% 1.1%

LATE FEES AS PERCENTAGE OF UNDERLYING SALES

NOTE: 1. ‘PROVISION FOR DOUBTFUL DEBTS’ IS REFERRED TO AS THE ‘TOTAL ALLOWANCE FOR DOUBTFUL DEBTS’ IN THE FINANCIAL STATEMENTS 2. 'BAD AND DOUBTFUL DEBTS (BDD) EXPENSE' IS REFERRED TO AS THE 'RECEIVABLES IMPAIRMENT EXPENSE' IN THE FINANCIAL STATEMENTS

BALANCE SHEET

5.3

9.9

32.622.8

5.1 9.3

32.6

15.1

(22.8)

(28.4)

OPENING PROVISION1

WRITE-OFF OF RECEIVABLES

NET WRITE-OFF

LATE FEES NET TRANSACTION

LOSSBDD EXPENSE2

(MVT IN PROVISIONS)

PROVISION FOR BAD AND DOUBTFUL DEBTS1 PROFIT AND LOSS NTL BRIDGE

BDD EXPENSE2 FY18

CLOSING PROVISION1

PAYMENT RECOVERY COSTS

AND BANK CHARGES

NET INCREASE IN BDD2

0.4% OF UNDERLYING

SALES

1.5% OF UNDERLYING

SALES

INCOME STATEMENT

A$M

FY18 - NET TRANSACTION LOSS ANALYSIS

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PAY NOWA$M (UNLESS OTHERWISE STATED) FY18 FY171

REVENUE

MOBILITY 15.2 15.8

E-SERVICES 7.0 7.3

HEALTH 3.4 2.3

TOTAL REVENUE 25.6 25.4

COST OF SALES 10.6 8.0

GROSS MARGIN 15.0 17.4

GROSS MARGIN 15.0

OTHER EXPENSES 7.7

EBTDA CONTRIBUTION2 7.3

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RevenueUNAUDITEDA$M12

6

10

4

8

2

0

FY17

FY18

15.2

2.6

23.0

7.0

3.4

25.6

15.8

2.8

22.6

7.3

2.3

25.4

UNAUDITEDA$M

revenue mix

NOTE: 1. FY17 IS SHOWN FOR COMPARATIVE PURPOSES ONLY AS THE FINANCIALS RELATE TO PRE-MERGER ACTIVITIES AND ARE UNAUDITED 2. CALCULATION BASED ON EBTDA (EXCLUDING SIGNIFICANT ITEMS) WHICH IS PRE $14.5M OF CORPORATE COSTS.

FY18 - PAY NOW KEY FINANCIAL METRICS

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LO

SS

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NON-CASH ITEMS

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A$M

(7.6)

35.4

(105.3)17.3

16.4 6.6 (1.6) (0.5) (4.5)9.1 (140.7)

POSITIVE UNDERLYING OPERATING CASH FLOW

AFTERPAY TOUCH

AFTERPAY

A$M (UNLESS OTHERWISE STATED) FY18 FY17

RECEIPTS FROM CUSTOMERS 2,201.5 440.9

PAYMENTS TO MERCHANTS AND SUPPLIERS (2,288.0) (516.1)

PAYMENTS TO EMPLOYEES AND OTHER (18.9) (3.7)

OPERATING CASH FLOW (105.3) (78.9)

INCREASE IN TRADE RECEIVABLES (140.7) (91.2)

ADJUSTED OPERATING CASH FLOW 35.4 12.3

PAYMENTS FOR INTANGIBLES (11.5) (0.5)

OTHER (2.7) 17.4

INVESTING CASH FLOW (14.2) 17.0

PROCEEDS FROM BORROWINGS 99.8 37.9

PROCEEDS FROM EQUITY 21.0 36.1

INTEREST (5.9) (0.5)

OTHER (1.1) (1.6)

FINANCING CASH FLOW 113.8 71.8

NET INCREASE / (DECREASE) IN CASH (5.8) 9.9

FX ON CASH BALANCE 1.6 0.0

STARTING CASH 29.6 19.7

ENDING CASH 25.5 29.6

COMMENTS

Positive underlying operating cash flow after adjusting for the change in receivables (funding of receivables).

Proceeds from borrowing reflects the drawdown of receivables funding and A$50m bond.

Proceeds from equity reflects the issue of shares to Matrix on 16 January 2018 and proceeds from employee share issuance.

OPERATING CASH FLOW ADJUSTED FOR INCREASE IN TRADE RECEIVABLES

FY18 - GROUP CASH FLOW ANALYSIS

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COMMENTS

Increase in receivables and payables due to the continued growth in Afterpay underlying sales.

Increase in debt reflects the growth in drawn debt to support Afterpay underlying sales growth and A$50m bond issuance.

CONSOLIDATED AFTERPAY TOUCH

A$M (UNLESS OTHERWISE STATED) 30 JUNE 2018 30 JUNE 2017

CASH 25.5 29.6

RESTRICTED CASH1 23.7 8.9

RECEIVABLES 239.1 98.4

OTHER CURRENT AND NON-CURRENT ASSETS 104.0 103.4

TOTAL ASSETS 392.2 240.3

PAYABLES 42.9 22.8

DEBT 161.6 46.7

OTHER LIABILITIES 4.2 10.7

TOTAL LIABILITIES 208.7 80.2

EQUITY 183.6 160.1

JUN 18 5.2

6.3

233.9

92.1JUN 17

PAY NOW

RECEIVABLES - SPLIT BY BUSINESS UNIT

AFTERPAY

NOTE: 1. RESTRICTED CASH RELATES TO CASH HELD IN TRUST

A$M

FY18 - GROUP BALANCE SHEET

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EXPANSION OF AUSTRALIAN AND NEW ZEALAND WAREHOUSE FACILITIESA$M 30 JUNE 2018

TOTAL BORROWING

CAPACITY2

FACILITY LIMIT

DRAWN DEBT

UNUSED CAPACITY

CAPACITY TO FUND RECEIVABLES GROWTH

99

112

211

300

200

18

5181

1. COMPLETED $200M COMMITTED RECEIVABLES WAREHOUSE FACILITY WITH CITI IN AUGUST 2018. IN NOVEMBER 2017, AFTERPAY INCREASED THE NAB FACILITY FROM $200M TO $350M AND EXTENDED THE TERM TO NOVEMBER 2019 AND SUBSEQUENTLY, AFTERPAY REQUESTED A REDUCTION IN THE TOTAL FACILITY LIMIT FROM $350M TO $300M IN AUGUST 2018 2. TOTAL BORROWING CAPACITY BASED ON RECEIVABLES BALANCE AS AT 30 JUNE 2018 3. NET OF ESTIMATED TRANSACTION COSTS

COMMENTS

Cash position will facilitate accelerated global expansion and cornerstone international receivables funding facilities in due course.

COMMENTS

Significant capacity in Australia – Recently completed A$200m Australian receivables warehouse facility with Citi, increasing total available facilities to A$500m.

CASH FOR INTERNATIONAL EXPANSION AND FUNDING BUFFER

• Total cash of $49.2m as at 30 June 2018 incorporating $50m bond issue in April 2018

• Fully underwritten institutional placement to raise at least $104.2m3

• Pro forma cash of $129.7m including institutional placement and excluding restricted cash

1. build ing capacity to fund growth

A B

NEW ZEALAND FACILITYAUSTRALIAN FACILITY

Significant capacity in N.Z. – Committed NZ$20m corporate facility with ASB in N.Z. completed in December 2017.

FY18 - CAPITAL MANAGEMENT UPDATE

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FUNDING FACILITY MATURITY PROFILEA$M, 30 JUNE 2018

LIQUIDITY POSITIONA$M, 30 JUNE 2018

FY20FY19 FY21 FY22

50

200

NABCITI

318

0

NEW ZEALAND FACILITY

A$ BOND

AUSTRALIAN FACILITY CITI FACILITY AND A$ BOND EXTENDS AVERAGE LIFE OF LOAN FACILITIES FROM 1.6 TO 1.9 YEARS

UNUSED BORROWING

CAPACITY IN AU/NZ

CASH ON HAND

TOTAL LIQUIDITY

1251041

1041

99

229

26

UNDERWRITTEN INSTITUTIONAL PLACEMENT

Diversification of providers: NAB, Citi, ASB and A$ bond investors

Diversification of sources: Receivables facilities, corporate facilities, A$ bond

• Focused capital management effort

• Commenced U.S. receivables funding facility process

• Extension of NAB Australian warehouse facility term

2. funding diversification 3. extension of maturity profile 4 . improved l iqu id ity pos it ion 5. ongoing in it iatives

(BASED ON CURRENT RECEIVABLES)

1. NET OF ESTIMATED TRANSACTION COSTS

FY18 - CAPITAL MANAGEMENT UPDATE (CONT'D)

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BALANCE SHEET CONSOLIDATED

AFTERPAY TOUCH

A$M (UNLESS OTHERWISE STATED) 30 JUNE 2018

CASH1 49.2

SECURED INTEREST BEARING BORROWINGS 111.6

SENIOR UNSECURED NOTES 49.5

OTHER 0.5

TOTAL DEBT 161.6

NET DEBT2 112.4

DEBT PROFILE CONSOLIDATED

AFTERPAY TOUCH

A$M (UNLESS OTHERWISE STATED) 30 JUNE 2018

INTEREST COVER RATIO3 5.5x

TOTAL LIQUIDITY4 124.6

BANK DEBT/RECEIVABLES5 46.7%

UNDRAWN COMMITTED FACILITIES6 256.8

FIXED/FLOATING INTEREST RATE RATIO 30.6%

NOTES

1. Cash includes cash in bank of $25.5m as well as cash held in trust of $23.7m.

2. Comprised of $161.6m of debt and $49.2m of cash across the Group.

3. Comprised of $33.8m EBITDA and $6.1m of Net Interest Expense, stated as “times” (“x”).

4. Comprised of undrawn borrowing capacity of $98.0m in the Australian receivables facility, $1.1m of undrawn borrowing capacity in the New Zealand cash advance facility and $25.5m of cash across the Group.

5. Comprised of $111.6m of debt and $239.1m of receivables across the Group.

6. Comprised of $418.4m of facility limit less $161.6m of debt drawn across the Group which includes the Australian receivables facility (excluding Citi), the N.Z. cash advance facility and the A$ bond.

FY18 - BALANCE SHEET AND DEBT PROFILE

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ACCOUNTING ITEMS - FURTHER DETAIL

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IntroductionThe Group has undertaken a review of the

impact of AASB 9 and AASB 15 with input

from accounting advisers and a review by

its auditors.

The Group will adopt AASB 9 for the

FY19 reporting period. In line with ASIC

guidelines, the Group has estimated the

pro forma impact of adopting AASB 9

in FY18.

Further work will be undertaken on the

impact of adopting the standards during

FY19, however, the Group’s current

assessment is that AASB 9 will impact on

Afterpay's receivables impairment and

revenue recognition methodology.

ImpairmentThe pro forma impact of AASB 9 on the Group’s FY18

closing provision for bad and doubtful debts (i.e.

total allowance for doubtful debts) is an increase of

$2.9m to $18.0m, resulting from the application of the

forward looking ‘expected loss’ impairment model

under AASB 9.

As a result of a pro forma adjustment of both the

opening and closing balances for the provision for bad

and doubtful debts in FY18, Afterpay's FY18 bad and

doubtful debts expense (i.e. receivables impairment

expense) increases by $1.6m to $34.2m. This results in

a reduction in FY18 pro forma EBITDA of $1.6m.

Based on the short term nature of Afterpay’s

receivables, we have confidence that our provision

methodology is currently conservative (prior to

the application of AASB 9) and will be even more

conservative with the adoption of AASB 9.

Revenue RecognitionThe adoption of AASB 9 will require Afterpay merchant

fee revenue to be recognised over the life of the

associated consumer receivable.

This results in merchant fee revenue being deferred over

the average time its takes for the collection of the receivable

to occur.

Assuming an average receivables duration of 30 days, the

FY18 pro forma impact of AASB 9 on revenue due to the

deferral of merchant fees is a reduction in revenue of $3.0m

from $113.9m to $110.9m.

This analysis assumes that 100% of merchant fee revenue

is deferred. Further work is required to determine the actual

percentage of merchant fee revenue that may be deferred.

A deferral of merchant fee revenue in this manner is a

timing difference only and does not effect the receipt in

cash when an order is processed.

AASB 9 - ILLUSTRATIVE FY18 IMPACTS

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COMMENTS

FY18 pro forma impact of adopting AASB 9 for the 12 months ending 30 June 2018.

Increase in Bad and Doubtful Debts Provision and NTL calculation resulting from transition from incurred loss provisioning under AASB 139 to a forward-looking ‘expected loss’ impairment model under AASB 9.

Based on the short term nature of Afterpay’s receivables, we have confidence that our provision methodology was conservative based on historical performance prior to the adoption of AASB 9 and will be even more conservative with the adoption of AASB 9.

This is an accounting impact only and does not affect the Group’s cash position.

FY18 PRO FORMA - AASB 9 ADJUSTMENT

FY18 PRO FORMA - UNADJUSTED

NOTE: . 1. ‘PROVISION FOR DOUBTFUL DEBTS’ IS REFERRED TO AS THE ‘TOTAL ALLOWANCE FOR DOUBTFUL DEBTS’ IN THE FINANCIAL STATEMENTS 2. 'BAD AND DOUBTFUL DEBTS (BDD) EXPENSE' IS REFERRED TO AS THE 'RECEIVABLES IMPAIRMENT EXPENSE' IN THE FINANCIAL STATEMENTS

ILLUSTRATIVE FY18 PRO FORMA IMPACT OF AASB 9

BALANCE SHEET

6.6

5.3

1.3

1.6

9.9

1.611.5

34.2

32.6

22.8

5.1

9.3

1.6

1.6

10.9

32.6

34.2

18.0

15.1

(22.8)

(28.4)

OPENING PROVISION1

NET WRITE-OFFNET WRITE-OFF

LATE FEES NET TRANSACTION

LOSSBDD EXPENSE2

(MVT IN PROVISIONS)

PROVISION FOR BAD AND DOUBTFUL DEBTS1 PROFIT AND LOSS NTL BRIDGE

BDD EXPENSE2 FY18

CLOSING PROVISION1

PAYMENT RECOVERY COSTS

AND BANK CHARGES

NET INCREASE IN BDD2

INCOME STATEMENT

2.9

INCREASES FROM 0.4% OF

UNDERLYING SALES TO 0.5% PRO FORMA

A$M

AASB 9 FY18 PRO FORMA IMPACT – BAD AND DOUBTFUL DEBTS

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COMMENTS

FY18 pro forma impact of adoption of AASB 9 on receivables and revenue based on certain assumptions.

The adoption of AASB 9 will require merchant fee revenue (received upfront in cash) to be recognised over the life of the associated consumer receivable under AASB 9.

Analysis assumes:

• 4% Merchant margin

• Average 30 day repayment cycle

• 100% of merchant fee revenue is deferred.

FY18 pro forma revenue is reduced by $3.0M by the adoption of AASB 9 in this manner.

This is a timing difference only with the deferred revenue recognised over time.

This is also an accounting impact only and does not effect the receipt of merchant fee revenue.

An average 30 day repayment cycle implies that it is only merchant fee revenue on orders made in June that will be subject to deferral as at 30 June.

NOTE: ILLUSTRATIVE ANALYSIS ONLY AND SUBJECT TO CHANGE IN FY19 DEPENDING ON FURTHER REVIEW

239.1

FY18 FY18

NET IMPACT$3.0m

STEP UP FROM FY17 DEFERRAL

STEP DOWN FROM FY18 DEFERRAL

STEP DOWN FROM FY18 DEFERRAL

FY18 PRO FORMA

FY18 PRO FORMA

113.9

110.9

1.9 (4.9)

234.2

(4.9)

BALANCe sheet receivables income statement revenue

A$M (UNLESS OTHERWISE STATED)

ILLUSTRATIVE FY18 PRO FORMA IMPACT OF AASB 9

FY18 PRO FORMA - AASB 9 ADJUSTMENT

AASB 9 FY18 PRO FORMA IMPACT - RECEIVABLES AND REVENUE

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COMMENTS

At-risk remuneration in the form of option grants are a key component of Afterpay’s remuneration framework.

The Group competes in a global technology sector and executive talent pool where option grants are common place and critical to attracting and retaining key talent.

In FY18, Afterpay accrued $16.4m in share based payment expenses related to options, performance rights and loan shares.

$12.5m or 76% of this total expense was an accrual for a proposed 2 million issue of loan shares for the Group Head announced on 30 August 2017.

The size of the accrual reflects the significant increase in Afterpay’s share price, of 246%, from the $2.70 exercise price (being the opening price on the first day of trade as AfterpayTouch) to the closing price on 30 June 2018.

Unlike other SBP related issuances to employees that are not subject to shareholder approval and are valued for accounting purposes at the time of the grant, the value of the Group Head’s proposed LTI grant is calculated using the closing share price at each reporting date until such time as it is approved by shareholders.

The share based payments expense is an accounting accrual only and is non-cash.

SHARE BASED PAYMENTS EXPENSE - BREAKDOWN

A$M (UNLESS OTHERWISE STATED)

OPTIONS1 3.5

LOAN SHARES2 12.5

AFTERPAY U.S. OPTIONS3 0.4

TOTAL SHARE BASED PAYMENTS 16.4NOTES:

1. ALSO INCLUDES EXPENSES RELATED TO A SMALL NUMBER OF PERFORMANCE RIGHTS AND LOAN SHARES

2. EXPENSE RELATED TO THE PROPOSED GRANT OF 2M LOAN SHARES TO DAVID HANCOCK, GROUP HEAD ANNOUNCED ON 30 AUGUST 2017. THE EXPENSE RELATED TO THE LOAN SHARES INCLUDES AN ACCRUAL FOR FBT, PAYROLL TAX AND WORKCOVER PAYMENTS ON A PORTION OF THE LOAN WHICH MAY BE WAIVED BY THE COMPANY

3. INCLUDES AN EXPENSE RELATED TO A SMALL NUMBER OF OPTIONS AND THE MATRIX CONVERTIBLE NOTE

FY18 - SHARE BASED PAYMENTS

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SIGNIFICANT ITEMS - BREAKDOWN AFTERPAY TOUCH

AFTERPAY

A$M (UNLESS OTHERWISE STATED) FY18 FY17

ONE-OFF COSTS

INTERNATIONAL EXPANSION COSTS (1.2) (0.0)

MERGER RELATED COSTS (1.7) (1.5)

FACILITY ESTABLISHMENT COSTS (0.1) (0.6)

SUBTOTAL (3.0) (2.1)

FOREIGN CURRENCY GAINS 1.4 0.0

TOTAL (1.6) (2.1)

DEPRECIATION & AMORTISATION AFTERPAY TOUCH

AFTERPAY

A$M (UNLESS OTHERWISE STATED) FY18 FY17

DEPRECIATION (1.8) 0.0

AMORTISATION (15.5) (2.7)

TOTAL (17.3) (2.7)

COMMENTS

International expansion costs primarily comprise one-off legal, recruitment and other consultancy fees for the establishment of the NZ and US businesses.

Merger related costs primarily comprise one-off consultancy fees (tax, financial, integration advisory and retention bonus fees) associated with the merger of Afterpay and Touchcorp.

Facility establishment cost relates to one-off fees for establishment of the NZ loan facility and increase in the NAB facility from $200m to $350m in November 2017.

Foreign currency gains relate to a foreign currency gain on the US$15m proceeds from the Matrix Convertible Note.

COMMENTS

D&A increased largely due to a full year contribution from Touchcorp and the amortisation of acquired intangibles from the merger of Afterpay and Touchcorp.

This is a non cash charge.

FY18 - SIGNIFICANT ITEMS AND D&A

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Our core - our customers and retailersSection three

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CREDIT CARDS

DEBIT CARDS

Millennials prefer debit cards and want to spend their own money67% of millennials do not own a single credit card.1 1 in 3 have never had a credit card3

Today there are 2x as many debit card transactions as credit card transactions2

The power has shifted to the millennial consumerBy 2030, millennials will earn 2 out of every 3 dollars in Australia4

Alternative to credit

85% of Afterpay’s orders use debit cards

1994 2018

1. BANKRATE MONEY PULSE SURVEY 2016 2. SOURCE: RESERVE BANK OF AUSTRALIA 3. CREDITCARDS.COM 4. MACQUARIE BANK RESEARCH

500

AUSTRALIAN CARD TRANSACTIONS2

MONTHLY, BY VOLUME, ‘000DEBIT

CARD

BUILDING A CUSTOMER FIRST, MILLENNIAL MINDSET

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We are on the customers’ side

Product rules encourage responsible customer spending

Afterpay is a free service for customers who pay on time

Afterpay charges retailers a fee instead of customers

No hidden fees whatsoever (interest or otherwise)

Late fees, if charged, are capped and don’t accumulate

One transaction at a time – not a line of credit

Small transaction sizes – low

outstanding balances

Strict limits, including age, actively monitored

Payment terms are short and cannot be extended

Missed payments result in immediate suspension

of service – customers can’t keep spending

Debt cannot ‘revolve’

Bad debt cannot accrue

Customer base quickly refined to those who use Afterpay repeatedly and

responsibly

HOW WE ARE DIFFERENTWE ARE NOT ANOTHER VERSION OF CREDIT – WE ARE AN ALTERNATIVE THAT PUTS CUSTOMERS’ INTERESTS FIRST

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(77 )

*REVIEW CONDUCTED BY ALPHABETA ADVISORS WITH DATA SUPPLIED BY AFTERPAY, IPSOS AND ILLION JUNE 2018

Afterpay’s customers are

loyalReturning customers account for ~90% of monthly transactions.

Without Afterpay, many (39%)

customers say they would look

elsewhere or not purchase at all

(23%). One-third of customers say the

availability of Afterpay is critical to

their decision on where to shop

INSIGHTS INTO OUR CUSTOMERS AND SERVICERESULTS FROM THE REVIEW CONDUCTED BY ALPHABETA ADVISERS FOUND…

Approximately 2.3 million active customers budgeting tool

The majority of customers use Afterpay as a

%

OVER 85%transactionsare via a linked Debit card(as opposed to a credit card)

than credit card users and overall have lower debt than similar peers and the general population (up to $5,000 less)

Afterpay customers pay

lower fees

>90% of accounts are less than $500

>75% of accounts are less than $350

Average purchase amount is $140–$150 and outstanding account

customers

balances are low

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*REVIEW CONDUCTED BY ALPHABETA ADVISORS WITH DATA SUPPLIED BY AFTERPAY, IPSOS AND ILLION JUNE 2018

DELIVERING RESPONSIBLE SPENDING OUTCOMES AND LOW LOSSES

• An average of 30% of attempted transactions are rejected

• Because of the very short duration of the repayment cycle and the inability to revolve, bad debt is detected quickly and usage suspended

• Net Transaction Loss is at 0.4% (gross 1.5%) in FY18. Improving with scale

• ~95% of instalment payments do not incur a late fee

• 78% of customers have never paid a late fee

• Late fees are stable 1.3% of underlying sales in FY18

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The initiatives not expected to have

a material financial or performance

impact on the business

While Afterpay can do everything

within its power to prevent fraud

from occurring, there will be

instances in which people are not

honest. Illegal and inappropriate use

of the Afterpay platform is acted

upon, including the immediate

suspension of accounts

COMMITTED TO CONTINUOUS IMPROVEMENTSEVERAL PRODUCT AND RESPONSIBILITY ENHANCEMENTS COMPLETED IN FY18

Late fees are intended to be a proportionate incentive

for customers to pay on time for what is otherwise a

free service

Not a source of profits - Afterpay loses more in bad

debts than it collects in late fees

Our communication and practices encourage late fee

avoidance – if all customers paid on time and we didn’t

collect any late fees we would make more money

Afterpay late fee structure is transparent and Afterpay

is absent of any other fees – however termed (e.g.

interest, administration, monthly, account keeping,

service, management etc.)

Late fees are now capped at the lesser of 25%

(min $10) of the order value or $68

External third-party ID Verification has been

implemented in partnership with Illion to

supplement Afterpay’s proprietary systems

Checks will strengthen fraud prevention

and help ensure everyone who uses

Afterpay is over 18 years old, in line with

Afterpay’s Terms

The ID verification process designed to

minimise customer impact and is largely

automated and instantaneous for the

majority of customers

Capping of late fees Enhanced ID verification

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Proactive and voluntary approach with ASIC and other regulators

Engage strongly with all relevant parties with a determination to listen and incorporate feedback

Engagement process currently underway to drive towards a Code of Practice with input from all relevant industry participants

C U S T OM E R S C U S T OM E R A D V O C A T E S BANKS AND SCHEMES PAYMENTS INDUSTRY

MER

CHANTS

RE

GULA

T OR S

GO V

E R

NME N T

COMMITMENT TO STAKEHOLDER ENGAGEMENT AND SUSTAINABILITY

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JUN 15% DEC 15 DEC 16 DEC 17 JUN 18JUN 16 JUN 17

Average age of customer base increased to 32

73% millennial core

ACTIVE CUSTOMER GROWTH

RETURNING CUSTOMER SPEND increasingAVERAGE SPEND PER CUSTOMER

RETURNING CUSTOMER SPENDMONTHLY TRANSACTION SPEND

Broadening appeal

49%54%

66%

75%

86%90% 92%

2.0m2.3m

1.7m1.5m

1.1m

0.8m0.6m

Q4 FY18

TODAYQ3 FY18

Q2 FY18

Q1 FY18

Q4 FY17

Q3 FY17

12 MONTHS TO JUN 17

12 MONTHS TO DEC 17

12 MONTHS TO JUN 18

A$1.1k

A$0.9k

A$0.7k

CUSTOMER GROWTH ACCELERATED TO OVER 4,000 PER DAY IN Q4 FY18

FY18 AVERAGE TRANSACTIONS PER

RETURNING AFTERPAY CUSTOMER

9 TIMES

GEN X

OTHER

MILLENNIALS

39%

23%

28%

10%

72%

1%7%

20%

BABY BOOMER

AfterpayAUSTRALIA Australia

18+1

1. SOURCE: AUSTRALIAN BUREAU OF STATISTICS

AFTERPAY IS RESONATING

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Retailer lead generation from our shop directory in July 2018 reached its highest level ever, beating December 2017, to reach 4.5m with over 70% of those clicks originating from the mobile app.

4.8/5 for the iOS app and 4.7/5 for the Android app

Now ~170k in July 18 up from ~125k in Q4 FY18

MILLIONAPP DOWNLOADS1.7

OVER

MILLIONMOBILE APP SESSIONS

5.5JULY 2018

App ratings

Average daily users

USERS (THOUSANDS)

~125

~170

JUL 18Q4

shop directory

Afteryay Day16 August 2018 biggest day (underlying sales) in Afterpay's history

DRIVING STRONG CUSTOMER ENGAGEMENT

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Today, it is estimated that Afterpay processes more than 10% of all physical online retail in Australia and over 10% of the purchasing Australian population has transacted with Afterpay since inception.

21 mill ion transact ions2 .3 mill ion act ive customers17 .7k reta ilers integrated

Australia New ZEALAND The United States The United kingdom (Next)

CONNECTING BRANDS AND CUSTOMERS

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A U S T R A L I A

H2FY17H1FY17

BY HALF

800

3,600

8,700

13,700

17,700

H1FY18 H2FY18 TODAY

Total merchants onboarded

PARTNERING WITH THE LEADING LOCAL AND INTERNATIONAL BRANDS

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A U S T R A L I A

ONlINE

AUSTRALIA

NEW ZEALAND

INSTORESIGNIFICANT NEW MERCHANT CONTRACTSTHE FOLLOWING RETAILERS ARE EITHER RECENTLY ON-BOARDED OR IN THE PROCESS OF INTEGRATION AND HAVE NOT CONTRIBUTED MATERIALLY TO FY18 UNDERLYING SALES

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Over 10,000 shop

fronts

Full pipeline of

integrating merchants

SMB stand-alone

in-store roll-out has

commenced

On boarding between

600 – 1,000 SMBs per

month

Higher margin

Long-tail (only minimally

penetrated online ~8%*,

and to a lesser extent

In-store)

In-Store SMB New verticals T r a v e LPartnership with Jetstar

was expanded towards the

end of FY18 with a national

advertising campaign,

which followed a more

extensive roll-out of the

Afterpay product on the

Jetstar platform.

H e a l t hSignificant sector covering a number

of sub-verticals.

Five-year agreement with major

dental PMS provider, Software of

Excellence (A Henry Schein One

company), integrating Afterpay in to

its practice management platforms

across Australia and New Zealand.

Afterpay now rolled out across all

Primary Dental Clinics in Australia.

A lot more in the pipeline.

E n t e r t a i n m e n tDreamworld recently

commenced offering

Afterpay and other

entertainment related

opportunities are being

actively pursued.

B e a u t yOver 250 shop fronts are

now live with Salonpay and

at least 500 shop fronts are

in the pipeline with partners

including Ella Bache &

Hairhouse Warehouse.

*SOURCE: IBISWORLD - RETAIL TRADE AUSTRALIA

larger market versus online in

Australia

~5-8x

SIGNIFICANT GROWTH OPPORTUNITIES IN AUSTRALIA AND NEW ZEALAND

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Rich-data co-marketing retailer programmes focused on new customer growth and brand positioning

Shop directory enhancements and lead generation value metrics

In-store product and integration enhancements

1.

2.

3.

4.Personalisation – App based targeted offers based on personal profile and shopping history

RETAIL INNOVATION AND NEW VALUE ADDED SERVICES PLANNED

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retailer led international expansion

Section four

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As part of the execution plan for the US business, we purposely built infrastructure for global scalability.

Technology is based on a single core code base (vs multiple code bases by region) and can be deployed in individual instances by region, tailored to local requirements.

The strategic rationale for entering the US in partnership with Matrix was to establish the foundation for a world class team with global responsibility.

Key hires made in the US include Sales, Risk, Data & Analytics, Technology and Product personnel with a combined headcount in excess of 30.

Each part of the Afterpay business has been assessed individually and also strategically guided to global responsibilities.

Afterpay’s existing partnerships with many global retailers provide the framework to leverage and grow internationally.

BUILDING GLOBAL CAPABILITY

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MAY2018 JUNE JUNEJULY JULYMID-AUGUST 2018

UNAUDITED

Over 800 contracts signed and over 400 merchants liveAS OF MID-AUGUST 2018

Over 150,000 unique customers since launch

Establishing a presence with retail industry leading brands

integrated retail merchants underlying merchant salesA$M

28

282

20.4

121

11.7

422

MOMENTUM BUILDING IN THE U.S.

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Favourable market dynamics• Large and influential millennial customer cohort• Strong debit card transaction preference• Aversion to traditional credit options for online purchasing

3rd largest e-commerce market in the world• >£133b online retail sales p.a.• 87% of consumers shop online

Timing & targets• Afterpay will launch globally scalable

system into the U.K. within six months• Immediate engagement with retailers• Not expected to materially contribute

to revenue in H1 FY19

Global Retailer Led Strategy• Several existing key retailers

encouraging Afterpay to expand• U.K. fits with strategy to serve globally

recognised brands and customers across borders

Acquisition Rationale• Accelerate and de-risk Afterpay’s entry

into the U.K.• Established operational footprint, local

relationships and understanding of local regulatory conditions

• Key employees to integrate and deploy Afterpay’s global system

Acquisition• Acquiring 90% of Clearpay Finance

Limited for 1m Afterpay Shares• Clear path to 100% control

(after China and the U.S.)

U.K. A KEY EXPANSION MARKET

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Signing up the largest retailers and most well-loved

brands in New Zealand.

Afterpay is also continuing to expand its Australian retail

base to New Zealand.

Smaller retail market compared to Australia

Good progress made during H2 FY18 and since inception (approximately 9 months)

New Zealand customer growth is consistently growing in line with our retail footprint expansion

CONSOLIDATING NEW ZEALAND

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THANK YOU

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