Bango Share Discussion Threads

[jasperlachat] 16/7/2024 11:52

The inertia here is blindingly obvious. Problems always surface but the current share price more than discounts this. Even the Wife is now totally relaxed here.

[rmillaree] 16/7/2024 10:28

Your calcs make sense amt - i was simply trying to work back to the numbers Taursus had provided without giving details - so presumably drop off in expenses which is good news and refreshing change (if we take the viewpoint they will deliver!!)

"Surely a multiple of at least 12 gives market cap of 360m usd.
Conservative share price of 350 but could be easily double"

Based on prior inability of the company to forecast 12 months out or even 6 months out i can see why the market is taking those numbers with pinch of salt as they have promised before and not delivered for one reason or another - it does though show the obvious potential here if they can deliver. Step one is to deliver the promised EBITA and postive free cashflow 2024 in that regard over half the year is gone now. Note one thing when people say conservative forecasts i dont think this company has in the last 3 years ever really smashed forecasts so i still personlly believe they need to work hard to hit what they have promised - and thats probably why the share is where it is.

[amt] 16/7/2024 09:57

I think for 2025 68m turnover at overall 93% margin gives 63m GP.
Less 33m costs gives 30 Ebitda.
Surely a multiple of at least 12 gives market cap of 360m usd.
Conservative share price of 350 but could be easily double

[amt] 16/7/2024 09:38

rmillaree if you substitute annualised fixed costs of 32m into your projection then using margins of 85% H1 and 93% H2 then you get to about 16m Ebitda.
H2 30M sales at 93% margin equals 28m Gross less 16m costs equals 12m Ebitda add on 4m H1 equals 16m Ebitda

[888icb] 16/7/2024 08:33

ST article conclusion:
Second-half weighting to forecasts
True, there is a hefty second-half bias to forecasts given that Bango’s first-half cash profit of $4mn accounts for less than a quarter of Singer Capital Markets' full-year estimate of $16.8mn, up from $6.4mn in the 2023 financial year. Analyst estimates are based on 16 per cent higher full-year revenue of $53.5mn and factor in a second-half gross margin of 93 per cent, up from around 85 per cent in the first half. That’s a sensible prediction in my view given there is an element of fixed costs within cost of goods sold, so incremental revenue generates a high and rising gross margin for Bango.

The group is also realising cost savings by consolidating its operating platforms following the acquisition of the loss-making global payments business of NTT Docomo, a Japanese mobile network operator with 85mn subscribers. Having signed a long-term platform deal to provide payment services in Japan for the world’s largest merchants, Bango has been taking costs out of the business to transform its profitability.

That said, the second-half weighting means that investors are taking a cautious stance, hence why Bango’s enterprise valuation to 12-month forward cash profit multiple of 8.7 times is almost half that of its peer group (Boku (BKU:178p), Fonix Mobile (FNX:243p) and Eagle Eye Solutions (EYE:473p). However, assuming the board delivers on Singer’s estimates, the ongoing re-rating has further to run to narrow the ratings gap with peers.

So, having seen Bango’s share price rally 16 per cent since I upgraded my view to buy when I covered the annual results (‘Why Bango’s share price is set to recover strongly’, 8 April 2024), I see potential for material upside to Singer’s target price of 220p. Buy.

[888icb] 16/7/2024 08:31

Simon Thompson Buy recommendation:
This payment business's re-rating has further to run

It has delivered a strong first half and a near-50 per cent discount to peers fails to recognise this

July 15, 2024
by Simon Thompson
First-half revenue up 19 per cent to $24.1mn
Underlying cash profit of $4mn, reverses small loss of $0.2mn in 2023
Closing net debt of $5mn
Full-year cash profit forecast to increase 162 per cent
Aim-traded Bango (BGO:145p), a mobile payment platform provider, has released a strong pre-close trading update ahead of its first-half results in September 2024.

The key take was the 130 per cent growth in annual recurring revenue (ARR) to $12.9mn. It was driven by a combination of new customer wins and growth from the group’s digital vending machine (DVM) service. Specifically, DVM enables customers of telecom companies to manage and pay for all their subscriptions in a single place and on one bill.

In the first half, Bango signed four new DVM contracts, including a Latin American bank – the first DVM win in the financial services sector – extended an existing contract with a European telco for a further three years, which guarantees a minimum revenue of $1.5mn, and added 13 new subscription content providers to the DVM service, taking the total past 100 for the first time. In addition, Bango signed a global agreement with international taxi group Uber to accelerate the take-up of Uber One subscriptions through telco channels, highlighting the appeal of the service beyond video, music and streaming services.

DVM growth is important to Bango given the high incremental gross margin earned and the fact that it creates a recurring revenue stream that can be relied on to de-risk earnings forecasts. So, it’s reassuring that Bango’s chief executive flags up a “strong sales pipeline”. It’s also reassuring that Bango boasts an eye-catching 159 per cent net revenue retention, a measure of the like-for-like growth in ARR generated from telco customers year on year.

[lentjes] 16/7/2024 06:49

So on a 40-60 seasonal revenue split on the payments business alone we end the year with US$ 41m, if the DVM business failed to grow in H2 and only repeated H1 performance ( highly unlikely) we would end the year with US$ 56.4m revenue, assuming costs remain the same which appear break even for H1 there would be additional revenue of US$ 8.1m from the payments business dropping to the bottom line, the key is to keep a lid on spend v revenue on the DVM business

Interesting the Bango BoD are sufficiently confident to issue the TU stating they will meet market expectations before the Amazon prime day where as in previous years it appeared this was a key indicator

Also we need to keep in mind we are due to repay US$ 2m of the NHN loan before year end

[amt] 15/7/2024 20:14

rmillaree I don't think gross margins are one hundred % by the way, perhaps 95%.
I suspect costs might be lower H2 as the Docomm acquisition will be more or less all on the Bango platform and perhaps some rationalisation of costs will give further savings.

[rmillaree] 15/7/2024 19:26

i am probably too much of a tightwad if i am being honest - i pay for stockopedia which generally speaking gets me by with enough updates.

[taursus] 15/7/2024 19:09

Yes re your question. Why don’t you subscribe to Research Tree, which is relatively inexpensive at c£20 a month?

[rmillaree] 15/7/2024 18:33

Ok

they did $4.00 mill H1

if we say h2 sales grow to $29.4 mill - up $5.30 mill - so 53.5 full year

In theory if they can keep costs the same H2 (seems a stretch i must admit with sales up 22% !! )

That would give us $4.00 h1 plus $4 mill h2 (no sales uplift) plus $5.3 (h2 sales uplif)

so $13.3 mill so $3.5 mill shy by sketchy calcs - if costs are expected to be $20 mill h2 then thats 17.5% reduction - so i do see where you are coming from.

are you sure te $16.8 isnt an old outdated figure before thr hatchet went to everything this year? Perhaps the dropping off of integration costs explains it but as you say deffo looks like a hard ask unless they are expecting to outperform ref sales - the whole point though is that all tehn numbers should stack up though.

Without access to any broker info i cant really add much more.

[taursus] 15/7/2024 16:41

The adjusted EBITDA per Singer for FY24 is 16.8m

[ic777] 15/7/2024 14:58

Once Bango proves it can be self funded and still growing rapidly then the value will be X times...

[ic777] 15/7/2024 14:57

Guess the markets gives a heavy discount when a company is still not cash flow positive...because it is difficult to raise funds now and raising new equity is very dilution...so the hravy discount will still be there until the company proves it is self funded...

[kaos3] 15/7/2024 14:50

it looks like investors waited for the (good) news to sell into.. so without looking further ... maybe news was not so good after all

[ic777] 15/7/2024 14:45

Wah...the missed revenue is the recurring revenue right? Anyways 2H is typically 60% of FY revenue so increased revenue in 2H should pass thru to costs...so assuming FCF breakeven in 1H, 2H should be quite cash flow positive.

[rmillaree] 15/7/2024 14:38

I dont have access to broker note so i am in the dark - what is the expected year end adjusted EBITDA?

[taursus] 15/7/2024 14:10

From the broker expactations for FY24 less the numbers reported this morning.

[rmillaree] 15/7/2024 13:58

To meet full year adjusted EBITDA expectations, assuming market expectations for revenue are met, total expenses need to fall 20% sequentially in H2

Can you advise how you have calculated these numbers - that seems fairly high reduction needed bearing in mind the increase in revenue that should be expected h2.

The one thing i did note is that it looks like for the first time that i can see revenue has actually dropped when compared with the directly prior 6 month period - thats fine if income is seasonally h2 weighted - but looking at prior comparisons it wasnt hugely obvious there is karge h2 sales bias , presumably that is the case though (now?) based on h1 revenue being lower than h2 last year. Note similar h2 % uplift in sales compared to h1 will be fine when compared to same period prior year to meet expectations. One would think they should at least be on top of sales expectations if nothing else.

[taursus] 15/7/2024 13:39

We were here last year: all depends on H2, only to be disappointed.

This morning’s pretty useless note from Singer (only 1 page of which is available on Research Tree) reads more like the broker swallowing gullibility than exercising super caution.

Given the fiasco with last year’s numbers, it would not be unreasonable to have expected this year’s numbers to be a low bar. It doesn’t quite look like that after this morning’s update.

Rather unhelpfully, the trading update gives no indication of how much of the delayed $3m of revenue from last year is included in this year’s H1 numbers. What was the revenue increase in H1, excluding any of that $3m?

Nor is any detail given about how much of the $2m of increased costs of sale from Docomo acquired routes is included in H1. We were told that this would continue at a reduced rate in 2024.

A concerning trend is the rise in total expenses (cost of sales plus adjusted admin expenses). These were up 5% sequentially in H1 over H2 FY23, at a time when we were told that additional optimisations were being found and that the full effect of all the synergies extracted from the Docomo deal were to be seen.

To meet full year adjusted EBITDA expectations, assuming market expectations for revenue are met, total expenses need to fall 20% sequentially in H2. Nowhere in the trading update or the broker note is any real detail given as to how this is to be achieved.

Nor do today’s numbers mean very much without details of the amount of costs capitalised. In 2023 out of total adjusted admin expenses pre capitalisation of $50.9m, $17.7m (or 35% of the total) was capitalised under Bango’s liberal capitalisation policy. And Bango’s total expenses, including those capitalised, were the same in H1 and H2 2023. It is a fair bet that total expenses in H1 2024 were at same level, By the end of 2024 over £35m in R&D capex will have been spent on the DVM. At what point does this rate of investment slow down and Bango reduce its costs and start to generate cash?

The optics of the newly appointed NED (and Chair of the Audit Committee)and the newly appointed auditors, BDO, are not particularly good. The NED was for many years until 2019 the senior audit partner at…...BDO.

But at least the sales pipeline is full. When is it not in Larbey Land?

[lentjes] 15/7/2024 11:25

So at US$ 5m debt looks like they have maintained US$ 3m of the cash they had at 2023 year end so almost break even for the period

[6gr] 15/7/2024 09:47

A solid and clean set of results, as hoped. H2 should see a big uptick in profits, as the usual H2 weighting on sales goes straight to the bottom line.

Interesting to see that the "we cannot say it's Apple' deal only started going live in H1 '24, let's hope for good news from that going forward, as there's clearly been a lot of development work/time from the original signing point.

Broker is being super-cautious. No change to projections, so a beat is easier and no forecasts beyond the next 6 months.

[parob] 15/7/2024 08:41

Exactly. Everything going to plan. The market can't ignore this high-growth company for much longer. We've been consolidating around 145p for 3 weeks now. Hopefully next leg up will commence soon.

[888icb] 15/7/2024 08:37

It is unfortunate that the trading update has been issued on a day when the market is down. When the market improves BNO should move up to reflect this positive trading statement.

[amt] 15/7/2024 08:36

Look forward to an interview which should give more flavour