BANGO WELL SET TO HIT THE NUMBERS - 09/09/21
At a time when investors are keeping a close eye on the potential for various supply chain disruptions to specific businesses and sectors, it is arguably at present more comforting for those invested in AIM quoted Bango.
The Cambridge based company, which provides a global platform for online commerce, operates in a more insulated spot than many and yesterday released extremely positive Interim results that further supports the investment case and the longer runway.
Bango is very much a familiar subject for me, as I have followed the company for a number of years now which has included visits to the HQ.
So, aside my investment angle and holding, it is good to see a local business thriving and at last seemingly coming of age.
As has happened previously, once more I was fortunate enough to speak with management yesterday, following a release of the numbers and where it is apparent that an overriding confidence prevails.
In terms of the figures, Bango delivered a 49% year-on-year rise in first half revenues to £7.1m, which in turn, saw EBITDA increasing by 83% to £2m, whilst end-user spend jumped to £1.3bn, representing a 74% year-on-year increase.
Perhaps of key importance for investors was the increasing uptake across payments of subscription bundles serving media and various digital platforms, which was kicked off last year by the three year agreement with BT.
CEO Paul Larbey informed me that they are seeing great momentum for the platform business, adding that Bango has reached agreement with one of the largest Telcos in North America, where he is expecting to achieve even more than what they have done with BT.
Larbey also adds that this area provides for the creation of a greater revenue stream and he anticipates pulling out a couple more deals this year.
Looking further ahead, there are opportunities to really expand the revenue both with Telcos and verticals outside Telcos, such as broadband, energy and financial services.
With momentum accelerating across the business as a whole the advent of cash generation is also being welcomed by investors and the CEO believes that Bango is now really on the cusp of something here.
To this end and in terms of notable delivery he says that whether this happens in the next six or twelve months, three to five years on the business will be looking in a very different shape to that of today.
He concludes that Bango is now very much on that curve and it is really starting to ramp up as platform deals start to kick in and licencing builds scale.
Away from platform agreements, other partnerships and ongoing developments anticipated to support growth, are a number of European launches of Microsoft’s Xbox game pass. The pass uses Bango’s e-distribution model along with additional Amazon Prime services that bring six new payment providers into Bango’s virtuous circle.
Another potentially exciting area that could also prove highly significant for the company going forward is recent news relating to Apple and changes that it has made. This relates to the opening up for developers selling through the App store to utilise other payment methods such as the Bango platform.
Co-founder Anil Malhotra sounds very upbeat on the recent developments in this area and also refers to another major change mandated by the S. Korean government, as announced just two weeks back.
This concerns a bill being passed that will prohibit app stores such as Apple and Google from mandating their own payment systems for in-app purchases.
It is a potentially ground breaking development that could push bigger developers towards the Bango Platform and Malhotra says it will now be interesting to see if the Korean ruling is picked up by other countries.
At this juncture, the company has an increasing number of arms to expand the business and revenue stream which includes the Bango marketplace.
There has been increased usage by app developers adopting Bango Audiences with Korean gaming giant NEXON proving of particular note in this space.
With such a positive start to the first half the existing forecasts from broker Liberum look very much on the conservative side, particularly given the second half weighting.
Historically, the company sees a 60% second half bias, which given the current climate
should at the least be replicated.
However, the Liberum forecast for the full year assumes just a 52% weighting which must surely leave the door open for an upgrade on those numbers.
Indeed, any revision on the figures and a continued positive performance and building momentum could in turn also lead to an uptick in the forecast for next year.
At present, beyond the current year 2021, Liberum is expecting 2022 revenue of £18.5m to deliver EBITDA of £6.2m and adjusted pre-tax profits of £3.5m.
The net cash position is also anticipated to swell from the expected 2021 end of £7.2m to £9.7m, emphasising where the business is now heading and where it could be in three or four years time.
Not surprisingly in the current stock market mood Bango’s shares retraced yesterday, which is often the case despite positive numbers being released.
The reaction wasn’t lost on the team and I enquire as to whether a dual US listing would be considered in terms of value appreciation.
Larbey comments that it is something that they talk about but that to date no conclusion has been reached on this, although he adds that they believe that there remains plenty of headroom on AIM.
Either way, he sounds pragmatic on the matter and sums up by saying that irrespective of the share price today, management thinks in terms of a £5.00 share price and beyond.