8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 1/22

Revenue

(Business)Model

1

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 2/22

Disruptive TechnologyOverview

+ Date launched: May 2011

+ # Employees: ~80

+ Equity Raised: $56mm

+ # Qualified customers: 20k+

+ $$ Advances: $185 MM+

+ # Advances to date: 110,000+

+ Issued patents: 2

+ Fully-automated credit screening &real-time monitoring

+ Proprietary “big data” analytics capabilities

+ Efficiently reaches SMBs nationwide &globally via Internet

+ Profitably address long tail with low costmodel

+ Ongoing relationship with customerscreates a recurring revenue stream

+ Over a dozen online & offlinedata partners

+ Robust credit model outperforms FICO

Kabbage at a Glance

2

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 3/22

How are you going to make money?

Obvious & Fast Slow/ More difficult

Kabbage:Lend money: interest

Microsoft:License tech: fees & subscription

Google, Facebook & Twitter:Advertising

LinkedIn:The Trifecta

SnapChat, Instagram

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 4/22

Get to Revenue Fast

Be Able to Explain Your Model

Don’t Reinvent the Wheel

Avoid Obvious Mistakes

Be Realistic About Assumptions & Drivers

1

2

3

4

5

Rules of Engagement

4

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 5/22

Get to revenue fast!

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 6/22

Kabbage Beginning(Market: eBay Sellers)

• 2010 Kabbage 1.0launches

• Instant financingfor eBay customers

• $500 up to $12,000• 57 Qualified

Accounts• $47,900 advanced

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 7/22

Kabbage Today(Market: primarily online sellers)

• 25,730qualified

accounts.• Kabbage has

advancedover

$185mm .

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 8/22

Kabbage Thursday(Market: All SMB’s)

• New market,new model andnew look.

• Kabbage willadvance nearly$400mm thisyear.

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 9/22

Don’t Reinvent the Wheel

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 10/22

WebVan – too much, too soon

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 11/22

Tesco - Increments

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 12/22

Explain Your Model!

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 13/22

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 14/22

Unit Economics on $3,200 Advance

Revenues Variable costs Profit

$426.88

$348.84

$32.93$26.19

$26.03

$10.21

$17.31

Advancecharges

Late charges Cost of acquisition

Cost of capital Bad debt Cost of servicing atransaction

Profit

14

13.3%

(1) Revenue includes advance charges and late charges.

79% of revenue (1)

11% of $3,200advance

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 15/22

Be Realistic About Assumptions & Drivers

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 16/22

16

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 17/22

In case you can’t see it well …..

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 18/22

Model Overview and Growth Drivers

18

Stronggrowth

Loan advances grew 3x y/y in 2013

Cash advance fee revenue grew 2.5x y/y in 2013

CustomersNumber of customers grew 2x y/y in 2013

Loyal customers make repeat loans

Contributionmargin

Expected continued expansion as interest cost declines and creditmodel continues to improve

Credit model has driven loan losses as a % of advances down from

13.1% to 3.5%

Operatingleverage

Expanding operating margins as business scales

Decrease CPA with expanded market and focused marketing dollars

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 19/22

Revenue Drivers

19(1) Defined as loan advances divided by the average year-end customer count for the current year and the prior year.Source: Company data

Customers (000s)

Loan advances ($m)

Principal balance at year-end ($m)

Accounts (000s)

7 66229

799

1,841

2011 2012 2013E 2014E 2015E

210

21

48

98

2011 2012 2013E 2014E 2015E

$6 $53$125

$391

$881

2011 2012 2013E 2014E 2015E

$4$24

$51

$158

$337

2011 2012 2013E 2014E 2015E

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 20/22

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 21/22

8/13/2019 Kabbage - Revenue Model Deck

http://slidepdf.com/reader/full/kabbage-revenue-model-deck 22/22

rob@kabbage.com