Bango Share Discussion Threads

[rmillaree] 09/4/2024 13:18

"rmillaree- I appreciate your concerns, but it's notable that the broker yesterday did re-iterate the target financials for '24 as:

Revenue $53.5m
Adjusted Ebitda $16.8m
PBT $5.7"

thoss numbers are consistent with my expectation of post tax profit of $3.5 mill and capital investment of $13.5 mill

[amt] 09/4/2024 12:59

Hastings Thanks for the write up which is good confirmation of consistent reporting of what has been going on.

It confirms to me that the 2024 bald numbers will not be exciting but there will be strong cash flow. Its only in 2025 when all the cost savings come through that I believe we will see transformational numbers and that will propel the share price to multiples of where it is now.
Further ahead the levels to which Bango can grow will depend on DVM which could get very exciting indeed.

[6gr] 09/4/2024 12:50

egrid1 - They are investing much more cash into the DVM business to grow, which is then capitalised and amortised over time in the P&L. So when you accelerate investment the cashflow is usually worse than the P&L.

Cashflow is where you make the choice on what to spend, P&L is merely an accounting consequence.

[6gr] 09/4/2024 12:47

Hastings - thanks for the write-up.

rmillaree- I appreciate your concerns, but it's notable that the broker yesterday did re-iterate the target financials for '24 as:

Revenue $53.5m
Adjusted Ebitda $16.8m
PBT $5.7

I also believe that both the management and brokers are now intentionally being conservative after the debacle in January.

[egrid1] 09/4/2024 12:44

Hastings, thank you for your write up.
I noted:
"Indeed, the CFO said that they feel they are in a good place now on the cash front where they have an as yet unused Barclays facility which is very much there as a buffer, but which might be tapped into at the end of the year."
Have I missed something, were we not being told to expect profits for this year, and if so, why do they not flow through to positive cash flow? Why might it be that they are "tapping" into another as yet unused credit card?

[amt] 09/4/2024 12:41

You wrote "Note the elephant in the room her is the trade and other payables at over $30 mill the total massively exceeds receivables"

You don't state how much of that is trade payables, Its only 10m so trade receivables are only a couple of million lower. You are jumping to conclusions based on superficial research.

[hastings] 09/4/2024 12:04

Write up for interest. Not as in depth as when I chatted with Anil, but hopefully something that is useful. https://martinflitton1.wixsite.com/privatepunter/post/stand-and-deliver-09-04-24

[rmillaree] 09/4/2024 12:03

The good part here is that they don't need any cash, either to survive or to pursue their strategy. At circa $50m of revenue and with the integration complete the level of investment/costs and therefore profits are almost a choice at this point ie they can easily turn down the expenses (at the expense of growth) if they needed to.


errrr perhaps but perhaps not - i have seen it posted here that develpment spend this ytear is expected to drop by $4 million compared to last year. Last year they capitalised over $17.5 mill od develkopmnet spend - does that not mean that they still have $13.5 mill of developmnet spend this year that wont be reflected in the profit numbers other than pro rata reduction - for company making $3.5 mil bottom line profit and with debt that is materially high level of "expected spend" - and thats the stuff that they can capitalise. My rough calcs based on lkast years depn/amortisation charge ($9 mill) - suggest the cashflow could be tight - i am not saying cashflow is a problem but i wouldnt say they have much safety net here for unforseen events. Ok they can pimp up cahsflow if needs.

Note the elephant in the room her is the trade and other payables at over $30 mill the total massively exceeds receivables - i suspect they have already been pimping out cashflow anyway. They dont want suppliers getting over twitchy ref providing credit.

I may nolt be as negative as some ref cashflow prsopects but imho i would say they are possibly in marginal cashflow position here ref ability to invest quickly to grow business as they clearly need to do with the planned capital spend.

my calcs i admit are quickly compiled and sketchy - again its noce nice when we get decvent broker notes confirming the expectations as that avoids us having to make up assumptions

[amt] 09/4/2024 11:02

6gr, although H1 numbers will help a bit we won't get a clear picture until 2025 in the financials

[6gr] 09/4/2024 10:42

I think we'll just have to wait for the H1 results to see a clearer picture on costs, though they should decline from lower Capex investment and from the cost-savings.

I have no doubt that revenues will just keep climbing on both DCB and DVM. DCB is growing at 5% organically and DVM grew at 37% organically alone and new customers will add to that as they come on stream.

It's just annoying to be sat here nervously looking at the share price, down about 40% from my average entry. The good part here is that they don't need any cash, either to survive or to pursue their strategy. At circa $50m of revenue and with the integration complete the level of investment/costs and therefore profits are almost a choice at this point ie they can easily turn down the expenses (at the expense of growth) if they needed to.

The fact that the board own 11% of the company means they are hopefully unlikely to sell cheaply, as they genuinely believe in a £1bn valuation in time (as do I).

[amt] 09/4/2024 10:37

It's not easy forcasting and one blunder, although a bad one, i think over the years their forecasts have been quite good though. Not many misses over the years from memory

[rmillaree] 09/4/2024 10:32

Its not that i donmt belive the cost savings - i think its up to the company to confirm that the costs savings exist and that the 2025 numbers will be that much better - in that regard broker forecasts or clear talk is all i will look at. Its completely bog standard for companies to announce huge costs savings for the end results in 2 years time to not be materialy different than before those cost savings - its almost the norm.

ref not trusting them - well hopefully sooner rather than later we will get broker notes for next year. My deep skepticism at present doesnt mean i dont see the potential - i 100% agree that at face value alot of the reasons for the delayed "profit point" make sense - its just that they have clearly got their prior forecasts terribly wrong - so i am not minded to give them the benfit of the doubt without some firm tangible forecasts to go off - is it too much to expect to get well calculated broker estimates for next year soon ? hopefully not.

[amt] 09/4/2024 10:18

rmillaree I think you have completely missed the point about the cost savings. In the old days they could have made a 40m provision against restructuring costs and then you would see the profits and savings. Rules are more stringent now so they can tell us what the savings are but you won't see them in the numbers until the restructuring is complete at the end of 2024.
If you don't believe the cost saving they are quoting then there isn't much point investing in a company where numbers can't be trusted at all.

[rmillaree] 09/4/2024 10:08

plus I did make clear that the costs from the acquisition were about 10m higher than planned plus taking a year longer to get the benefit.


thats a fair point of its true - if its true i am not sure why the company is highlighting this fc at front and centre that there will be 10 mill drpooing ouit next year compared to this - i have seen little evidence from company that they expect tis to be the case so i am not not so convinced - just like the prior $23 mill of "cost
savings" for whatever reason facts are costs keep gilling in the extra incoem wahtever happens.

What we really ned is broker note or something from company saying that the profits will come back - i supect after the last debacle the brokers probabably rightly want higher level of proof before agreeing to put there name to something. does anyone know when we can expect to get brokjer forecasts for next year. It is extremely common where companies are less than clear and transparent that extra costs turn up to fill in the blanks unles they have clealry indicated otherwise imho. If the company aint slapping us in the face saying they will be mkaing hay next year - i for one am preuming thats because there is material element of uncerrtaintyu that they will do.

I agree this will become clear in 2025 - but how dificult a buisness model do they have predicting costs and sales increases right now - they should be in the sweet spot right now that was the whole point that once they reach the $50 turnover level the profits would start rolling in (before then really)

[amt] 09/4/2024 09:46

rmillaree you are missing my point. The costs you are referring to are the investments into the DVM development plus I did make clear that the costs from the acquisition were about 10m higher than planned plus taking a year longer to get the benefit. You should look at 2025 to see the benefits. It proves my point that investors expect quick returns. I think my point will become clear in 2025 that the Docommo acquisition was worth over 100m in market cap and has not been a really bad investment as you infer and not generating the cash expected.
Anyway when asked about the share price reaction I think Paul was quite sanguine about it. For me it was great news as I could double my investment at 100p which I wouldn't have been able to afford at 2 quid.
No dilution so looking forward to the future.
My point remains though that the UK stock market is hopeless at valuing companies with longterm potential. In the US it would have been a very different story.

[parob] 09/4/2024 09:06

Price closed above 117p yesterday, outside of the 10 week trading range it's been stuck in. Now it's broken out of that range, the share price should keep climbing from here imo, especially as technical traders will join fuelling the recovery. Some will be eyeing the gap on the chart.

[rmillaree] 09/4/2024 09:05

In effect what has happened is they announce an acquisition worth 16m per annum of revenue at 90% margin longterm with virtually no overhead required longterm.

imho this is nonsense - facts are they only expect to report £3 mill profits year end 31/12/2024 and thats with the booked cost savings in place - and they are expecting chunky capitalisation costs this year that will probably outweigh depreciation/amortisation charge. Clearly other costs of some nature are eating into the income - do you not think if it was as easy as merging and booked savings and they were making great profits now that they would not simply be delivering. Clearly they thought previously they could deliver the profits at $15 mill plus- facts are they have foujnd over $10 mill of extra costs this year that have been poorly communicated to the market.

Hopefully the building blocks are in place but when they expect $54 mill of revenues and $51 mill of that goes out as expenses its fairly clear to see the incoem for whatever reason is not all profit. I am never knocking the potential here but huge difference between saying you will deliver and then dont and delivering - the market obviously doesnt fully believe teh story till they deliver.


"It's very difficult for Companies to make longterm strategies in the UK because of a very poor investment environment. Investors want instant results."


How long has bango been trading and the issues here are them promising gold and then yanking it away at the last minute - they have had plenty of time to get up to speed and the issues here are ALL 10% imho to do with management over promising and under delivering - none of thats to say it wont come good but in some resepcts the $200 mil valuation was theer because theye the mangement said they would deliver real profits and they havent as of yet.

[vespasianthesubguest] 09/4/2024 08:54

Sorry to hear that amt. I feel like you might be bringing bad juju at this point 😆
If there's a phat premium offer I wouldn't mind though.

[amt] 09/4/2024 07:11

Yet another of my investments has been taken over, this time Gresham Computing.
It's not a good sign for the UK stock market.

[amt] 09/4/2024 07:00

Lentjes You can ask them if it's of interest. They are open to questions.

[amt] 09/4/2024 06:54

Bango is a classic case of the share price not being valued correctly on a longterm basis. In effect what has happened is they announce an acquisition worth 16m per annum of revenue at 90% margin longterm with virtually no overhead required longterm.
In the first couple of years it will cost 35m to restructure and GM will be about 80% because of the platform they are using.
Therefore expect bad numbers for a couple of years.
initially the share price goes up a bit but when the bad numbers come through are worse by about 10m than expected the share price halves and knocks 100m usd of the market cap.
Now nearly two years after the acquisition the turnover and GM from the acquisition are confirmed by the numbers and the cost savings are confirmed but it's too early to see it in the numbers the market starts to believe in what the management announced two years ago and the share price starts to recover.
It's very difficult for Companies to make longterm strategies in the UK because of a very poor investment environment. Investors want instant results.
I think the acquisition should have added 100m plus to the market cap originally and Paul hinted at that yesterday. The payments business alone is generating 32m usd of revenue at 90 to 95% margin from 2025 and very little cost required to support it. Its almost like a royalty of 30m usd growing at 5% per annum. That alone is worth a lot more than the existing market cap in my opinion. DVM is in for free.

[amt] 09/4/2024 06:40

I don't know but maybe they will want to hold on for the share price to recover. I don't suppose it matters although an unfriendly takeover is possible by another party if NHN want out. Ultimately it doesn't matter in the longrun.

[lentjes] 08/4/2024 22:08

Maybe a question that should have been asked is now NewDeep has been wound down and each party walks away with the right to use the technology why would NHN need or want to stay as a major share holder in Bango

[6gr] 08/4/2024 17:00

Don't forget that $4.6m of the $8m loss was from NewDeep and it's closure. This obviously won't repeat in '24.

[amt] 08/4/2024 16:50

11.6m swing easily achievable by the scenario I outlined.