INVESTOR PRESENTATION TSX:PRL - March 21, 2022
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INVESTOR PRESENTATION TSX:PRL March 21, 2022
Disclaimer
FORWARD-LOOKING INFORMATION
Certain statements made in this presentation may constitute forward-looking information under applicable securities laws. These statements may relate to our financial and operating targets for fiscal 2022 and 2023, our preliminary
Q4 2021 operational results along with anticipated events or results. Such statements are based on management’s reasonable assumptions and beliefs in light of the information currently available to us and is made as of the date
of this presentation. However, we do not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada.
Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors, including those described in “Risk Factors”. Additional risks and uncertainties are
discussed in the Company’s materials filed with the Canadian securities regulatory authorities from time to time, including the Company’s annual information form dated March 21, 2022 for the year ended December 31, 2021 (the
“AIF”). These factors are not intended to represent a complete list of the factors that could affect us; however, these factors should be considered carefully. A copy of the AIF and the Company’s other publicly filed documents can be
accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. Often but not always, the words “anticipate”, “believes”, “expect”, “estimate”, “intend”, “opportunity”,
“potential”, “seek”, “strategy”, or “target” or variations of such words and phrases or statements that certain future conditions, actions, events or results “will”, “may”, “could”, “would”, “should”, “might” or “can”, or negative versions
thereof, “be taken”, “occur”, “continue” or “be achieved”, and other similar expressions, including references to assumptions, identify forward-looking information. Implicit in forward-looking statements in respect of the Company's
expectations for: (i) Ending Combined Loan and Advance Balances CAGR; (ii) Revenue; (iii) Adjusted EBITDA Margin; (iv) Net Income Margin and (v) Adjusted Net Income Margin for fiscal years 2022 and 2023, are certain
assumptions relating to the COVID-19 pandemic and related government subsidies, the regulatory landscape, our continued expansion of our Federal Deposit Insurance Corporation-insured, state-chartered bank relationships, the
availability and cost of debt capital, the maintenance and expansion of our marketing partnerships and the overall macroeconomic environment, each as further set out in the Company’s management’s discussion and analysis
(“MD&A”) for the year ended December 31, 2021, which is available on SEDAR. The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect
its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. The forward-looking
information contained in this presentation represents our expectations as of the date of this presentation (or as the date they are otherwise stated to be made), and are subject to change after such date. However, we disclaim any
intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
NON-IFRS MEASURES AND INDUSTRY METRICS
This presentation makes reference to certain non-IFRS measures and industry metrics. These measures are not recognized measures under International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IFRS”) and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as
additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as
a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures, including “EBITDA”, “Adjusted EBITDA”, “Adjusted EBITDA Margin”, “Adjusted Net Income”, “Adjusted Net Income Margin” and
“Net Charge-Offs”. This presentation also makes reference to “Annualized Revenue Yield”, “Ending Combined Loan and Advance Balances” and “Total Originations Funded”, which are operating metrics used in our industry. These
non-IFRS measures and industry metrics are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying
solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures and industry metrics in the evaluation of issuers. Our management also uses non-IFRS
measures and industry metrics in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.
Please refer to Appendix B of this presentation for the reconciliation of EBITDA. Adjusted EBITDA and Adjusted Net Income, Net Charge-Offs and Ending Combined Loan and Advance Balances presented by the Company to the most
directly comparable IFRS measure. For definitions of these non-IFRS measures and industry metrics, please refer to the Company’s most recent MD&A available on www.sedar.com. For reconciliations of these non-IFRS measures to
the relevant reported measures, please see Appendix “B” to this presentation.
CERTAIN OTHER MATTERS
Any graphs, tables or other information demonstrating our historical performance or any other entity contained in this presentation are intended only to illustrate past performance of such entities and are not necessarily indicative of
our future performance or such entities.
2
Unless otherwise indicated, information provided in this presentation is provided as of March 21, 2022
Investment Highlights
§ Consumer-focused fintech lending platform
§ Leading-edge, AI-driven, agile tech
infrastructure unlocking credit market
opportunity
§ Innovative, transparent products and services,
including 3 transformational bank programs
§ Profitable, scalable business with ample growth
opportunity
§ Experienced and proven team with
deep industry knowledge
3
OUR MISSION
Inclusion Evolution Experience
Every individual deserves Help consumers evolve to better Provide a best-in-class
access to credit credit products over time consumer experience
We facilitate access to credit for underserved consumers through our belief that every individual deserves credit, our
desire to be an integral part of their evolution to better financial health, and our commitment to provide a best-in-
class customer experience 4
More than 25% of U.S. adults 3 in 10 U.S. adults
are unable to afford a experience hardships due to
$400 emergency expense income volatility
Despite regulatory encouragement, +60M U.S. adults lack access
to traditional credit from mainstream credit providers, making even
a small unexpected expense a financial crisis.
5
PROPEL: the fintech platform for
underserved consumers focused on
helping 25% of U.S. adults get access
to the credit they need
6
Financial Inclusion for the Underserved Population
Mainstream Bank Credit Products Legacy Products
Online, scalable fintech
offering convenient, fair
and transparent access
to credit with potential
to build credit and NO
surprise fees,
DECLINED
origination fees, late
fees or prepayment
penalties
Tier 1 Bank Credit Union LTO Payday Tribal Bank
Loans Lenders Overdraft
< 36% APR > 300% APR
Since 2008, mainstream credit providers have Creditworthy, underserved consumers Very high APR options
pulled back ~$142B in consumer credit
deserve better options 7
Propel Today
100%
online
At Scale Fintech Profitable
$661M ~7.1M
PRODUCTS
Inclusive Transparent Evolving
“MoneyKey was there for me when no one else was. They help give me the money for bills I did [not] have a clue if I could pay.
I’m really thankful that they came through for me.”
~ Christopher, MoneyKey Customer
9
Brands & Products
Propel Brand Consumer Product Operating Structure
Fully amortizing installment State-Licensed Direct Lender
loans
Credit Services Organization/Credit Access
Business
Open-ended Lines of Credit Bank Sub-servicer
Open-ended Lines of Credit Bank Partner
Product and service offerings are underpinned by robust operations and
compliance capabilities
10
10Putting Consumers First
OUR TYPICAL CONSUMER:
Employed
Consistently Lowered Graduation Ability to Improve Financial Wellness
Cost of Credit Over Time Programs
Low-Moderate Income
Credit Score and Education
• Over the last two • Propel platform • Some programs • Financial literacy
years, the cost of offers the offered through resources Bank Account
credit of products capability for the Propel provided to
offered through the existing customers platform offer the consumers free of
Propel platform have (direct or bank opportunity for
charge Mobile-oriented
been reduced by half customers) to consumers to
graduate to lower positively impact
rates and higher their credit rating
loan amounts
Limited Access to Credit
Part of the consumer’s evolution to better financial health
11
11Platform to Succeed
Convenient Seamless Mobile
“I would like to thank this company for helping me through this tough time. […] I would like for you to know that they see the
best in you and will help in your time of need thank you so much.”
~ TyJuan, MoneyKey Customer
12Industry-Leading Proprietary Technology
Designed for Consumer Needs
45+ person
in-house tech team
Major subsystems: proven 6-week Agile delivery cycle
• Acquisition and underwriting engine (AI-powered)
• Loan management system
• Customer self-service portal (mobile optimized)
$14M+
invested to date
31,000+ ~88%
unique applications of applications
per day and growing auto-decisioned Cloud-hosted
scalable, resilient architecture
200,000 ~92%
debit and credit transactions of ad hoc card payments Open architecture
per month and growing made online integrates easily and securely with:
• 29 marketing partners &
channels
• 10+ data providers
• 3 bank partners
Robust, flexible, scalable, mobile first • 2 CSO lenders
• 5 transaction processors 13Looking Beyond Traditional Credit Scores
Our sophisticated AI-powered engine with machine learning algorithms
provides opportunities for creditworthy consumers
1,000+ Attributes Evaluate Credit Worthiness $600,000,000
Fund More 16%
14%
$500,000,000
Alternative Credit Bureau Data Sub-10 second,
Missed Payment 12%
automatic credit adjudication Rate Declined
$400,000,000
Employment Data 10%
$300,000,000 8%
Consumer Behaviour
6%
Income Verification $200,000,000
4%
Reduce Risk
Consumer Verification Data $100,000,000
2%
Cumulative $ Funding
Increasing
Transactional Data $- 0%
2015 2016 2017 2018 2019 2020 2021
Unlocking opportunities for millions of creditworthy consumers
14World Class Operations Team
Relentless focus on service and performance
“I believe CreditFresh helped me out in a very difficult time. They were enthusiastic,
supportive, interested in my personal needs… Thank you CreditFresh!!”
~ Joseph, CreditFresh Customer
Excellent 4.5 and 4.6 ratings from
thousands of consumers
24 / 7 7 days 250+
online platform a week live agent strong operations team across
service 2 centralized locations
Serving customers with urgency, respect and exceptional customer service
15FINANCIAL OVERVIEW
Profitable Diversified Resilient
“CreditFresh accepted me when no one else would. The process was quick and easy. The loan was very helpful. Thank you.”
~ Benjamin, CreditFresh Customer
16Q4 2021 and Fiscal 2021 Financial Performance
Total Originations Funded* +123% in Fiscal 2021
Loans and Advances Receivable Revenue Adjusted EBITDA*
US$M US$M $129.6 US$M
$103.8 $25.4
$20.0
$73.5
$68.0
$49.8
$41.2 $8.0
$26.4
$22.4 $4.0
$2.6
2019 2020 2021 2019 2020 2021 Q4 2020 Q4 2021 2019 2020 2021 Q4 2020 Q4 2021
Ending Combined Loan and Advance Net Income Adjusted Net Income*
Balances*
US$M US$M $12.9
$134.8 US$M
$7.3
$6.6
$9.2
$62.6
$37.3 $2.0
$2.0
$1.2 $1.0
-$1.1 -$2.2
2019 2020 2021 2019 2020 2021 2019 2020 2021 Q4 2020 Q4 2021
Q4 2020
*See "Disclaimer – Non-IFRS Measures and Industry Metrics“ and “Appendix B” Q4 2021 17Q4 2021 and Fiscal 2021 Financial Performance
Revenue
US$M § Record Total Originations Funded*, Loans and Advances
Receivable and Ending Combined Loan and Advance
$129.6 Balances*
§ Expansion and growth in bank programs: new bank
partner; bank partners rolled out 10 new states each
through MoneyKey and CreditFresh brands
§ Variable pricing and graduation capabilities
$68.0
$73.5
§ New marketing partners and channels
§ Macro: return in demand, transition to online
$41.2 § Annualized Revenue Yield* 141% in Q4 2021 and 148% for
fiscal 2021
$22.4
§ Higher relative growth of variable pricing and
graduation Total Originations Funded*
2019 2020 2021 Q4 2020 Q4 2021
§ General reduction in rates of products facilitated
through Propel platform
*See "Disclaimer – Non-IFRS Measures and Industry Metrics“ and “Appendix B”
18Q4 2021 and Fiscal 2021 Financial Performance
Provision for loan losses and other liabilities (“Provision”) and
Net Charge-offs*
§ Net-Charge-offs as % of Funded* decreasing over the
long-term due to evolution towards lower-risk
49%
consumers in portfolio
53%
50% § Q4 2021 and fiscal 2021 performance reflects:
42% 42% § Rapid acceleration in originations in Q3 2021 and
Q4 2021
34%
§ Newer customers have higher default rates
37%
33% § IFRS-9 requires high provisioning at origination,
without commensurate revenue
22%
16%
18%
12% § Q4 2020 and fiscal 2020 uncharacteristically low
due to COVID-related factors
2018 2019 2020 2021 Q4 2020 Q4 2021
Provision % Revenue
Provision % Revenue
Net Charge-offs as % of Funded
Net Charge-offs as % of Funded
19
*See "Disclaimer – Non-IFRS Measures and Industry Metrics“ and “Appendix B”Q4 2021 and Fiscal 2021 Financial Performance
Net Income Adjusted Net Income*
US$M US$M
$7.3 $12.9
$6.6
$9.2
§ Profitability metrics impacted by:
$2.0 § Up-front costs that support record revenue
$2.0
$1.2 $1.0 growth
2019 2020 2021 Q4 2020 Q4 2021 2019 2020 2021 Q4 2020 Q4 2021 § Public company costs, beginning Q4 2021
-$1.1
-$2.2 § $1.6 million in non-recurring transaction
related costs in fiscal 2021
Adjusted EBITDA* § Atypically high credit quality in fiscal 2020
US$M § Adjusted Net Income* and Adjusted EBITDA*
$25.4
removes non-cash provisions on accounts in
$20.0 good standing and non-recurring items
$8.0
$4.0
$2.6
2019 2020 2021 Q4 2020 Q4 2021
*See "Disclaimer – Non-IFRS Measures and Industry Metrics“ and “Appendix B”
20Solid Financial Position
§ IPO and over-allotment proceeds deployed
towards:
Outstanding Debt Maturities
§ Portfolio expansion (in US$M )
§ Supporting roll-out of bank programs to
new states MoneyKey (Capacity) $120.0
MoneyKey (Utilized)
§ Temporary repayment of debt
CreditFresh (Capacity)
§ Over $93 million in undrawn credit capacity as CreditFresh (Utilized)
of December 31, 2021 $77.8
Capacity
§ Debt:equity 0.6x as of December 31, 2021
§ Cost of debt capital has declined to 10.4% in
2021, from 13.2% in 2020 $20.0 $42.2
Utilized
$15.3
$4.7
2022 2023 2024
*See "Disclaimer – Non-IFRS Measures and Industry Metrics“ and “Appendix B” 21Updated Operating and Financial Targets
Target CAGR 2022 2023
Ending Combined Loan and Advance
Balances* Facilitated over the Propel 80% - 90% 45% - 55%
Platform
Target Metric 2022 2023
Revenue $230 - $245 million $345 - $375 million
Adjusted EBITDA Margin* 18% - 22% 25% - 30%
Net Income Margin 7% - 9% 12% - 16%
Adjusted Net Income Margin* 9% - 11% 16% - 20%
*See "Disclaimer – Non-IFRS Measures and Industry Metrics“ and “Appendix B” 22READY FOR TOMORROW
Poised Focused Strategic
“Excellent staff, outstanding services, affordable payment rates, very customer-friendly – CreditFresh is the best…!”
~ Linus, CreditFresh Customer
23Evolving into a Diversified Online Global
Fintech Company
Adjacent products
• Design, deliver and
cross-sell
Geographic expansion complementary
• Expansion into products aligned
new states and with Propel’s core
jurisdictions purpose
Serving lower risk
markets
Graduating
• Extension of existing
consumers up the
product suite into
credit spectrum near-prime market
• Continue to as rates continue to
graduate existing decrease
clients to new
products with
lower cost of credit
Inclusion. Evolution. Experience.
24Appendix A
25Our Senior Leadership Team
Clive Kinross Gary Edelstein Noah Buchman Sheldon Saidakovsky
Co-Founder and President Co-Founder and Co-Founder and
Chief Executive Officer Executive Vice President; Executive Vice President;
President of CreditFresh Chief Financial Officer
Sarika Ahluwalia Dr. Jonathan Goler Jay Vaghela
Senior Vice President, Corporate Co-Founder and Senior Vice President,
Affairs & Executive Vice President; General Counsel &
Chief Compliance Officer Chief Risk Officer Corporate Secretary
26Board of Directors
Michael Stein Clive Kinross Peter Monaco Poonam Puri Geoff Greenwade Karen Martin Yousry Bissada
Mr. Stein is the founder, Co-Founder and CEO Mr. Monaco is Managing Ms. Puri is a professor of Mr. Greenwade was the Ms. Martin was the Mr. Bissada is President
Chairman and CEO of of Propel Holdings. Director and member of the business law and corporate President and CEO of Executive Vice President and Chief Executive Officer
the MPI Group, a Management Committee at governance at Osgoode Green Bank and has 36 and Treasurer of Element and Board Member of
property development Mr. Kinross was Raptor Group Holdings, a Hall Law School, and is Fleet Management Corp Home Capital Group.
previously the years of banking industry
and investment group diversified investment also a corporate/securities and served in executive
with a track record in Co-Founder and President holding company. lawyer at Davies Ward experience, including withmanagement, treasury and Prior to joining Home
incubating, investing in, of OPENLANE, one of the Phillips & Vineberg LLP. with Bank of America, and finance positions in Capital, Mr. Bissada served
and managing Prior to joining Raptor Wells Fargo. financial services for over as President and CEO of
first online used car
successful companies Group, he was a Partner Ms. Puri is an independent 25 years. Ms. Martin is an Kanetix Ltd., and Chief
auction businesses, and Managing Director at director of the Canada
including OPENLANE. Mr. Greenwade currently independent director at Financial Officer of
which sold to ADESA, part Tudor Investment Infrastructure Bank and FirstLine Trust Company.
Mr. Stein is also a serves as the Chairman of ECN Capital where she sits
of KAR Auction Services Corporation. CAPREIT, and is a former
founder of CAPREIT, Texas A&M University Mays on the audit committee. An experienced board
where he served as its (NYSE:KAR), in 2012. Commissioner of the
Mr. Monaco is a 1986 Ontario Securities Business School - Ms. Martin is a Chartered member, Mr. Bissada has
first CEO and continues Mr. Kinross is a Chartered graduate of Harvard Commercial Banking held numerous director
to serve as Chairman. Commission and former Financial Analyst (CFA) and
Accountant. College and active in a director of the Greater Program. a Chartered Professional roles including Canadiana
number of non-profits. Toronto Airports Authority Accountant (CPA), and Financial Corp., Paradigm
and Arizona Mining. holds the professional Quest Inc., Street Capital
independent director Financial Corp., and Equity
designation (ICD.D). Financial Holdings Inc.
27Appendix B
28Non-IFRS Measure Reconciliation
Three Months Ended Dec 31, Year Ended Dec 31,
US$
2021 2020 2021 2020
Net Income (2,213,057) (1,130,772) 6,562,442 7,332,388
Interest on Debt 1,193,162 1,163,830 5,317,923 4,052,783
Interest on lease liabilities 106,035 111,498 440,043 468,428
Amortization of internally developed software 610,520 337,294 2,140,366 1,573,296
Depreciation of property and equipment 24,513 34,377 111,704 161,441
Amortization of right-of-use assets 158,649 180,785 660,778 716,939
Income Tax Expense (Recovery) (1,662,126) 38,048 1,501,830 3,089,391
EBITDA (1,782,304) 735,060 16,735,086 17,394,666
EBITDA margin as a % of revenue (4)% 3% 13% 24%
Transaction Costs and Financing Costs 1,285,034 3,947 1,649,855 26,096
Provision for credit losses on current status
46,552 2,668,923 2,674,338 2,394,856
accounts1
Provisions for CSO Guarantee liabilities and Bank
3,074,339 564,496 4,312,966 149,052
Service Program liabilities
Adjusted EBITDA2 2,623,621 3,972,426 25,372,245 19,964,670
Adjusted EBITDA margin as a % of revenue 6% 18% 20% 27%
1) Provision included for (i) loan losses on good standing current principal (Stage 1 — Performing) balances (see “Critical Accounting Estimates and Judgements — Loans and advances receivable” in MD&A).
29Non-IFRS Measure Reconciliation
Three Months Ended Dec 31, Year Ended Dec 31,
2021 2020 2021 2020
Charge-offs (17,360,239) (5,715,458) (46,898,488) (26,059,774)
Recoveries 2,593,659 322,510 6,909,063 3,874,018
Net charge-offs1 (14,766,580) (5,392,948) (39,989,425) (22,185,756)
Change in Provision for Loan Losses (3,891,179) (5,101,372) (10,294,657) (2,060,321)
Provision for loan losses (18,657,759) (10,494,320) (50,284,082) (24,246,077)
Movement in financial obligation2 (3,074,316) (564,496) (4,312,943) (149,052)
Other lending program costs (114,023) (79,962) (424,073) (361,763)
Provision for loan losses and other liabilities (21,846,098) (11,138,778) (55,021,098) (24,756,892)
1) Movement in financial obligation is equivalent to Provisions for CSO Guarantee liabilities and Bank Service Program liabilities.
30Non-IFRS Measure Reconciliation
Three Months Ended Dec 31, Year Ended Dec 31,
2021 2020 2021 2020 2019
Net Income (2,213,057) (1,130,772) 6,562,442 7,332,388 1,994,849
Transaction Costs and Financing Costs net of
944,500 2,901 1,212,643 19,181 18,814
taxes2
Provision for credit losses on current status
34,216 1,961,659 1,965,639 1,760,219 533,185
accounts net of taxes2
Provisions for CSO Guarantee liabilities and Bank
2,259,639 414,904 3,170,030 109,553 (499,993)
Service Program liabilities net of taxes 2
Adjusted Net Income1 for the period 1,025,298 1,248,692 12,910,754 9,221,341 2,046,855
Adjusted Net Income Margin1 2% 6% 10% 13% 3%
1) Each item is adjusted for after-tax impact at an effective tax rate of 26.5%. 31Non-IFRS Measure Reconciliation
As at Dec 31,
2021 2020
Ending Combined Loan and Advance balances 1 134,843,170 62,643,735
Less: Loan and Advance balances owned by third
(4,260,648) (2,487,802)
party lenders pursuant to CSO program
Less: Loan and Advance balances owned by a
(17,782,252) (3,316,386)
NBFI pursuant to the MoneyKey Bank Service
Loan and Advance owned by the Company 112,800,270 56,839,547
Less: Allowance for Credit Losses (23,700,774) (13,406,118)
Add: Fees and interest receivable 12,034,604 5,262,181
Add: Acquisition transaction costs 2,715,724 1,081,848*
Loans and advances receivable 103,849,824 49,777,458*
There has been a reclassification in 2020 figures in Acquisition transaction costs and, as a result, Loans and advances receivable. Refer to Note 22 in the consolidated financial statements. The amount previously reported were 32
$2,881,948 and $51,577,558, respectively.You can also read
