Cambridge based Bango delivered some very positive full year 2020 preliminary results this morning and I once more caught up with management to hear more.
For anyone unfamiliar with the company, it is worth just running over its operations, which sees it as one that primarily provides extensive Direct Carrier Billing services across the mobile/smart phone space.
This enables end users to click and buy apps or subscription services which are then charged directly to their phone.
More recently the company has extended its offerings, particularly with purchase behaviour technology that enables app developers and other advertisers to target their audiences in specific areas.
The company is extremely familiar to me as I have outlined in previous coverage here and is one where I am invested, with the shares now some 35% higher than my piece written last Autumn.
Bango has, over the years, often been misunderstood and much maligned, but perhaps understandably so in the context of it often standing on a punchy rating relative to tangible delivery.
For some that may still be the case today, the current price as I write at £1.21p giving a market cap of £165m and where profits and cash generation are now really only just taking off.
For advocators and converts however, the results this morning merely confirm that Bango is one to stick with as the results provided further concrete evidence of the long runway ahead, and an increasing acceleration to strong and predictable cash generation.
CEO Paul Larbey, acknowledges to me that the period throughout the current pandemic has seen the business perform very strongly, but views that as having accelerated the drive, as opposed to merely being a short term positive.
He says that to date there has been no evidence of a slow down, even when lockdown restrictions were eased and he sees this positive trend continuing.
In terms of the numbers, full year adjusted EBITDA was a marked 12.5% ahead of broker Liberum’s forecast at £4.6m on revenue of £12.2m with adjusted pre-tax profits of £2.3m.
The net cash position stood at a healthy £5.8m and this is expected to increase to £7.2m for the current year, moving to £9.7m next year, highlighting the potential that exists going forward.
As numbers increase across all of its regions and revenues continue to scale up, this should then drop straight to the bottom line and sees Bango extremely well placed to continue to deliver on future positive numbers.
Across payments, Bango is processing 50% more subscriptions than it was a year back, whilst importantly, new users added in January is also 50% above than at the peak of the lockdown in the first half of last year.
The board sound increasingly confident on maintaining the momentum which is building, as tied in with the biggest names and increasing services across the globe, it looks extremely well placed to further execute.
With more than one string to its bow now, broker Liberum estimates that around 40% of revenues were derived through subscription purchases last year.
These included the likes of Amazon Prime, Netflix, Spotify and Xbox, to name but a few, all of which are destined for further take up.
Within this area, it is notable that the launch of Amazon Prime Video Mobile in India was a key driver which demonstrated very strong demand in what is a populous and extremely exciting growth market.
Aside India, growth should also drive forward now on the back of subscription revenue being derived from previously cemented platform agreements with likes of BT via its BritBox continuing to gain traction.
There is also positivity relayed by the CEO on payment growth prospects set to emerge from the more recent tie up with TPAY Mobile.
That association now opens the door for Bango to more than 600 million end users and looks well placed to further boost the numbers in the coming year and beyond.
Anil Malhotra, who alongside Ray Anderson founded the Cambridge operation, says that it is worth remembering that it takes time for revenues to actually flow and the building of scale past the implementation stage. That usually comes in the following year from inking an agreement he adds and then increases markedly moving forward.
Further strength of the business model comes in the shape of Bango’s more recent utilising of data it has gathered, and holds which can then be leveraged through targeting advertising. This enables app developers and other advertisers to specifically tailor their products providing for increased take up from end users.
I touched on this area in my last piece here following a chat with Paul Larbey and moving ahead there appears to be massive growth potential.
This area of the business has kicked off well and although still very much in its infancy is forecast to triple growth in numbers to £1m this financial year and subsequently triple again in 2022.
All in all, Bango now has a strong connecting offering that reaches across markets and the globe, where it is aligned to big blue chip names spanning a constantly evolving and growing market place.
There should also be further positive news flow throughout the year for investors to look out for as the story continues on its growth trajectory.
Liberum is presently anticipating full year 2021 revenue of £14.7m rising to £18.5m next year with cash, as already mentioned continuing to increase.
The company is actively continuing to further invest in the business though and the broker sees EBITDA being flat for this year, although forecasts £6.2m in 2022 with adjusted pre-tax profits of £3.5m and EPS of 5p.
Although putting the stock on a forward PER of 44 looks pretty punchy, it is worth noting that these numbers may well prove conservative.
Equally, those investors looking to the medium and longer term may consider paying a premium today provides for good value upside further down the line.