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Parlay Buy Now Pay Later Pitch Deck

Hugh
March 21, 2024
120

Parlay Buy Now Pay Later Pitch Deck

What happens if you don’t allow monthly payments?
You may be missing out on millions of dollars in lost opportunities.
Parlay introduces a new option that services your customers seeking monthly payments without the negative side effects.
We pay for the annual Seller’s contract up-front, and the Buyer pays us monthly.

There is ZERO cost to the Seller and Parlay limits your default risk.

It’s a win-win

Hugh

March 21, 2024
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Transcript

  1. Buy Now, Pay Later for SaaS More deals & more

    capital without debt or dilution
  2. 2 What happens if you don’t allow monthly payments? ©

    2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved. You may be missing out on millions of dollars in lost opportunities.
  3. 3 This is where Parlay comes in Parlay introduces a

    new option that services your customers seeking monthly payments without the negative side effects. © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  4. How it works 4 We pay for the annual Seller’s

    contract up-front, and the Buyer pays us monthly. There is ZERO cost to the Seller and Parlay limits your default risk. It’s a win-win © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  5. Parlay turns the negatives into positives 5 ⇡ Speed Deal

    to close timeline shortens When flexible pricing is available. ⇡ Win Rate More net-new deals will close when your customers have flexible financing Options. ⇡ Deal Size Upsell becomes easier and average deal size increases when customers have more budget to work with. ⇡ Retention Rate Flexible payments means happier customers, and a solution more likely to satisfy their expectations. ⇡ Revenue Top line goes up as you recognize more upfront - payments from Parlay means recognizing more, sooner. ⇡ TAM Expansion Flexible payment terms open the door to new market opportunities. ↓ Collections Save yourself the time, resources, and the hassle of chasing payments. With Parlay, we take care of all that for you. ↓ Complexity No longer chasing payments, your team can focus on growing the business. ↓ Risk Limit significant risk by partnering with Parlay. © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  6. 6 Okay… but how does Parlay make money? © 2024

    Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  7. We follow industry standards 7 Company Savings Hubspot 10% Slack

    17% Lucid Chart 18% Monday.com 18% Asana 20% Zoom 21% ClickUp 44% DocuSign 44% QuickBooks 50% Grammarly 61% • The SaaS industry offers an average annual discount rate of 20%. This is also seen in reverse in the form of a fee when moving from annual to monthly contracts. • Most Common Discount: 17% • Smallest Discounts: 5% (Box and Algolia), 10% (InVision, Harvest, Zeplin, FreshBooks, Hotjar) • Largest Discounts: 61% (Grammarly), 50% (Expensify), 44% (ClickUp), 33% (Adobe Creative Cloud and DocuSign) © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  8. 8 How do you account for risk? © 2024 Parlay.

    Confidential. Distribution Prohibited. All Rights Reserved.
  9. Risk Mitigation 9 • Built into Parlay is a proprietary,

    automated underwriting solution that helps us identify buyers that are risky to lend to • If the buyer exceeds the seller’s risk threshold, we can divert them to annual payment options only • The buyer is also asked to pay the first and last month’s installment up front • Parlay pays the seller 85% of the full annual contract 30 days after the buyer pays their first installment • The final 15% is paid to the seller when the buyer completes their final payment at the end of their contract (month 11) © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  10. © 2022 Parlay. Confidential. Distribution Prohibited. All Rights Reserved. 10

    © 2023 Parlay. Confidential. Distribution Prohibited. All Rights Reserved. Payout Schedule Example Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total Company 1 $60,000 $0 $0 $0 $0 $0 $60,000 Company 2 $48,000 $0 $0 $0 $0 $0 $48,000 Company 3 $0 $30,000 $0 $0 $0 $0 $30,000 Company 4 $0 $60,000 $0 $0 $0 $0 $60,000 Company 5 $0 $0 $0 $27,000 $0 $0 $27,000 Monthly Sales $108,000 $90,000 $0 $27,000 $0 $0 $225,000 Paid Up Front $91,800 $76,500 $0 $22,950 $0 $0 $191,250 Paid at End $16,200 $13,500 $0 $4,050 $0 $0 $33,750 Totay Payout $225,000 An example of what upfront (85%) and tail-end (15%) payouts look like.
  11. Extended Example (without discount) Contract Value $108,000 Promissory Note to

    buyer $129,600 20% ACV to Parlay $21,600 85% funding to SaaS (net 30) $91,800 Discount Rate to Buyer 0% 15% Funding to SaaS (Last payment) $16,200 Cashflows In Out Net Note Balance 1st and Last $21,600 Month 1 $21,600 $0 $21,600 $108,000 10 Installments $10,800 Month 2 $10,800 $91,800 -$59,400 $97,200 Month 3 $10,800 $0 -$48,600 $86,400 Month 4 $10,800 $0 -$37,800 $75,600 Month 5 $10,800 $0 -$27,000 $64,800 Month 6 $10,800 $0 -$16,200 $54,000 Month 7 $10,800 $0 -$5,400 $43,200 Month 8 $10,800 $0 $5,400 $32,400 Month 9 $10,800 $0 $16,200 $21,600 Month 10 $10,800 $0 $27,000 $10,800 Month 11 $10,800 $16,200 $21,600 $0 Month 12 $0 Totals $129,600 $108,000 © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  12. Extended Example (with discount) Contract Value $108,000 Promissory Note to

    buyer $97,200 20% ACV to Parlay $21,600 85% funding to SaaS (net 30) $64,260 Discount Rate to Buyer (10%) $10,800 15% Funding to SaaS (Last payment) $11,340 Total paid to Seller $75,600 Cashflows In Out Net Note Balance 1st and Last $16,200 Month 1 $16,200 $0 $16,200 $81,000 10 Installments $8,100 Month 2 $8,100 $64,260 -$39,960 $72,900 Month 3 $8,100 $0 -$31,860 $64,800 Month 4 $8,100 $0 -$23,760 $56,700 Month 5 $8,100 $0 -$15,660 $48,600 Month 6 $8,100 $0 -$7,560 $40,500 Month 7 $8,100 $0 $540 $32,400 Month 8 $8,100 $0 $8,640 $24,300 Month 9 $8,100 $0 $16,740 $16,200 Month 10 $8,100 $0 $24,840 $8,100 Month 11 $8,100 $11,340 $21,600 $0 Month 12 $0 Totals $97,200 $75,600 $21,600 © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  13. 13 What happens if the customer stops paying? © 2024

    Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  14. Shared Default Model 14 • Parlay commits to cover up

    to 8% of the seller’s portfolio default • If default rate exceeds 8%, the difference is trued up against future fundings on a monthly cadence • If the default rate drops back below 8%, the true up would return back to the client until the 8% average rate for the portfolio is reached (Portfolio Deal Value x Default Rate) - (Portfolio Deal Value x Default Coverage)= True Up Value © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  15. So, what are they key results? 15 Your Customer •

    Get’s the software they want • Is empowered to pay how they need • Has more operating/investing power Your Business • Get’s the annual contract up front • Builds strong relationship with the customer • Has more operating/investing power • Looks good on the books • We cover 8% of your default • We take care of your AR (no more chasing cash) © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  16. © 2022 Parlay. Confidential. Distribution Prohibited. All Rights Reserved. 16

    PETE LARKIN Vice President of Sales & Marketing [email protected] Next steps • Sign the Partner Agreement • Schedule onboarding call • Begin running customers through Parlay! What’s next? © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  17. Before Parlay Month 1 Month 2 Month 3 Month 4

    Month 5 Month 6 Total Monthly Sales $160,000 $178,000 $149,000 $192,500 $162,500 $158,000 $1,000,000 Monthly Collections $13,333 $28,167 $40,583 $56,625 $70,167 $83,333 $292,208 COGS $4,000 $8,450 $12,175 $16,988 $21,050 $25,000 $87,663 Fixed Expenses $91,667 $91,667 $91,667 $91,667 $91,667 $91,667 $550,000 Monthly Cash Flow -$82,333 -$71,950 -$63,258 -$52,029 -$42,550 -$33,333 Net Cash Flow -$82,333 -$71,950 -$63,258 -$52,029 -$42,550 -$33,333 -$33,333 With Parlay Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total Monthly Sales $160,000 $178,000 $149,000 $192,500 $162,500 $158,000 $1,000,000 Monthly Collections $160,000 $178,000 $149,000 $192,500 $162,500 $158,000 $1,000,000 COGS $4,000 $8,450 $12,175 $16,988 $21,050 $25,000 $87,663 Fixed Expenses $91,667 $91,667 $91,667 $91,667 $91,667 $91,667 $550,000 Monthly Cash Flow $64,333 $77,883 $45,158 $83,846 $49,783 $41,333 Company Profile Annual Revenue $2,000,000 Gross Margin 70% Fixed Expenses $1,100,000 Net Income 15% Cash Flow Model Parlay front-loads sellers with cash, giving them the capital they need to scale without debt or dilution. © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  18. 19 AR/Collections (before Parlay) Invoice Sent Cash in Hand Accrued

    Revenue Top Line Revenue Current 1-30 Days 31-60 Days 61-90 Days Over 90 Days Total Company 1 $10,000 $0 $0 $0 $0 $10,000 Company 2 $0 $0 $2,000 $0 $0 $2,000 Company 3 $0 $8,000 $0 $0 $0 $8,000 Company 4 $12,000 $0 $0 $0 $0 $12,000 Company 5 $0 $0 $0 $7,000 $0 $7,000 Total $22,000 $8,000 $2,000 $7,000 $0 $39,000 Aging receivables & Day Sale Outstanding (DSO) rates are higher © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  19. 20 AR/Collections (with Parlay) Invoice Sent Cash in Hand Accrued

    Revenue Top Line Revenue Current 1-30 Days 31-60 Days 61-90 Days Over 90 Days Total Company 1 $10,000 $0 $0 $0 $0 $10,000 Company 2 $2,000 $0 $0 $0 $0 $2,000 Company 3 $8,000 $0 $0 $0 $0 $8,000 Company 4 $12,000 $0 $0 $0 $0 $12,000 Company 5 $7,000 $0 $0 $0 $0 $7,000 Total $39,000 $0 $0 $0 $0 $39,000 All receivables become current and DSO rates drop to 48 hours or less © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  20. 21 AR/Collections (before Parlay) Invoice Sent Done Correct error and

    resend invoice First Contact <7 days past due Second Contact 8-14 days past due Third Contact (letter) 15-30 days past due Fourth Contact letter) 31-45 days past due Credit Hold, Fifth Contact 46-60 days past due Internal Error? Payment Received? Payment Received? Payment Received? Payment Received? Investigate Internally Payment Received? Process & Apply Payment Yes No Yes No Yes No No Apply Late Fees (if applicable) Yes Payment Received? Requires Intervention? Yes No No No Hand Off to Collection Agency Continue Outreach Yes No Write Off As Bad Debt Uncollectible? Yes No The collections process is a pain and takes valuable time away from the finance team © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  21. AR/Collections (with Parlay) We take care of collections We got

    it © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  22. 23 Runway (before Parlay) Month 1 Month 2 Month 3

    Month 4 Month 5 Month 6 Total Company 1 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $60,000 Company 2 $0 $8,000 $8,000 $8,000 $8,000 $8,000 $40,000 Company 3 $0 $0 $6,000 $6,000 $6,000 $6,000 $24,000 Company 4 $0 $0 $0 $12,000 $12,000 $12,000 $36,000 Company 5 $0 $0 $0 $0 $9,000 $9,000 $18,000 Monthly Sales $10,000 $18,000 $24,000 $36,000 $45,000 $45,000 $178,000 Monthly Expenses $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $54,000 Net Revenue $1,000 $9,000 $15,000 $27,000 $36,000 $36,000 $124,000 Previous Cash $0 $1,000 $10,000 $25,000 $52,000 $88,000 Total Capital $1,000 $10,000 $25,000 $52,000 $88,000 $124,000 Runway .1 months 1.1 months 2.8 months 5.8 months 9.8 months 13.8 months Monthly payments decrease runway © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.
  23. 24 Runway (With Parlay) Month 1 Month 2 Month 3

    Month 4 Month 5 Month 6 Total Company 1 $60,000 $0 $0 $0 $0 $0 $60,000 Company 2 $0 $40,000 $0 $0 $0 $0 $40,000 Company 3 $0 $0 $24,000 $0 $0 $0 $24,000 Company 4 $0 $0 $0 $36,000 $0 $0 $36,000 Company 5 $0 $0 $0 $0 $18,000 $0 $18,000 Monthly Sales $60,000 $40,000 $24,000 $36,000 $18,000 $0 $178,000 Monthly Expenses $9,000 $9,000 $9,000 $9,000 $9,000 $9,000 $54,000 Net Revenue $51,000 $31,000 $15,000 $27,000 $9,000 $9,000 $124,000 Previous Cash $0 $51,000 $82,000 $97,000 $124,000 $133,000 Total Capital $51,000 $82,000 $97,000 $124,000 $133,000 $124,000 Runway 6 months 9.1 months 10.8 months 13.8 months 14.8 months 13.8 months Increased capital dramatically extends runway © 2024 Parlay. Confidential. Distribution Prohibited. All Rights Reserved.