Bango PLC
("Bango" or the
"Company")
2023 Full Year Results and
2024 Outlook
Cambridge, UK, 08 April 2024 - Bango (AIM: BGO) today announces its full year results for
the 12 months ended 31 December 2023 and provides an update on the
outlook for 2024.
FY23 Financial
Overview:
Results for the 12 months ended 31 December
2023
|
FY23
|
FY22
|
YoY Change
|
Transactional
Revenue1
|
$32.7M
|
$18.3M
|
+79%
|
DVM, Bango Audiences & One Off
Revenue2
|
$13.4M
|
$10.2M
|
+31%
|
Total Revenue
|
$46.1M
|
$28.5M
|
+62%
|
|
|
|
|
Annual Recurring Revenue (ARR)
3
|
$8.8M
|
$5.0M
|
+77%
|
Net
Retention4
|
137%
|
-
|
-
|
|
|
|
|
Adjusted
EBITDA5
|
$6.4M
|
$5.0M
|
+29%
|
|
|
|
|
Loss After Tax
|
($8.8M)
|
($2.1M)
|
($6.7M)
|
|
|
|
|
Net (debt)/cash at 31
December6
|
($3.9M)
|
$12.7M
|
($16.6M)
|
FY23 Operational
highlights:
·
|
9 new Digital Vending Machine®
('DVM') license customers (total 18 at end of 2023)
|
·
|
Bango DVM now used by 3 out of the
top 5 US telcos
|
·
|
33 new subscription content
providers added to the DVM, taking the total to 93 at the end of
2023
|
·
|
DVM sales opportunity funnel is 7x
larger in December 23 versus December 22
|
·
|
DVM consumer interface released,
enabling telcos to launch their DVM faster and providing Bango with
more consumer behavior data
|
Outlook
(unaudited)
Bango has delivered a strong first
quarter, sustaining good momentum and growing in-line with the
plan. We reiterate our guidance for the full year:
·
|
Revenue in Q1 24 grew by over 20%
from Q1 23
|
·
|
Annualized Recurring Revenue at
the end of March 2024 increased to $11.0M
|
·
|
The Tier 1 US telco (previously
announced in FY23) launched in Q1 24, triggering the start of the
initial license fee tier - minimum $2M ARR
|
·
|
4 new DVM wins in Q1 24
|
·
|
A leading European telco (one of
the early DVM customers) extended their DVM contract for a further
3 years. The minimum contract value over the three year term is
$1.5M
|
·
|
The first launch of telco bundling
for the (previously announced) Global Technology Leader happened in
the quarter.
|
NewDeep Limited Joint
Venture
Bango and NHN Corporation, the two
shareholders of the NewDeep Limited joint venture have agreed that
it is in the best interests of both shareholders to wind down the
joint venture. And, to transfer the technology developed in the
joint venture to Bango and NHN so both can use it without
restriction in their respective core businesses.
Investor Presentation:
Bango is hosting a presentation,
open to all existing and potential shareholders, at 10.00am BST
today. Investors can sign up to Investor Meet Company for free and
register to join the call here:
https://www.investormeetcompany.com/bango-plc/register-investor
Bango CEO, Paul Larbey, said:
"This has been a year of significant development for Bango.
Our strategic focus on capturing the subscription bundling
opportunity with the Bango Digital Vending
Machine® (DVM)
is seeing
growing momentum, with a doubling of the customer base and a strong
growth of 77% in Annualized Recurring Revenue (ARR). Our technology
is trusted by some of the largest companies in the world who rely
on Bango to help them acquire and retain
customers.
One major area of focus in 2023 was the ongoing integration
of the acquired DOCOMO Digital business, which has materially
accelerated our growth. The complexity of the integration was
reflected in the low initial purchase price. The integration went
well with all $21M of cost synergies realized. With the end of year
integration challenges having now been identified and addressed, we
have a clear pathway to deliver further operational and cost
synergies in 2024.
We entered 2024 with increased momentum, a significantly
expanded pipeline and a larger customer base providing clear growth
opportunities. In Q1 24, we won 4 new DVM customers and exited the
quarter with ARR of $11M.
The subscriptions market remains buoyant, with an increasing
variety of services available beyond music and movies. As consumers
add subscriptions in all aspects of their lives, it drives the need
for a solution to manage these subscriptions and the opportunity
for the Digital Vending Machine to become the standard industry
platform for subscription bundling. With our product, partners and
customers, the building blocks are firmly in place. In the year
ahead, our focus is on driving DVM growth with careful control of
costs, which, together with increasing long-term revenue
visibility, gives us confidence in capturing this
opportunity."
Notes:
The Annual Report, including full
accounts, is available at, https://bangoinvestor.com/reports-presentations/,
and will be sent to shareholders shortly.
1 Transactional Revenue is revenue derived by charging a
percentage of the retail price paid by the consumer and is made up
of carrier billing, resale and e-Disti revenue share
amounts.
2 DVM, Bango Audiences & One Off Revenue includes all DVM
license and support fees, revenue from Bango Audiences and one off
fees including DVM set-up and change requests.
3Annual Recurring
Revenue is the expected annual revenues to be generated in the next
12 months
based on contracted revenues
recognized as at 31 December.
4 Net Retention is a
measure of the retention and expansion of revenue from existing
customers over a specific period and is calculated by dividing the
ARR from existing customers at the end of a period by the ARR
generated from those same customers at the beginning of the
period.
5Adjusted EBITDA is
earnings before interest, tax, depreciation, amortization, negative
goodwill, exceptional items, share of net loss of associate and
share based payment charge
6Net debt is cash and
cash equivalents plus short-term investments less loans and
borrowings.
The information contained within
this announcement is deemed to constitute inside information as
stipulated under the Market Abuse Regulations (EU) No.596/2014.
Upon the publication of this announcement, this inside information
is now considered to be in the public domain. The person
responsible for making this announcement on behalf of Bango
is Paul Larbey, Chief Executive Officer.
Contact Details:
Bango PLC
|
Singer Capital Markets (Nominated Adviser and
Broker)
|
+44 1223 617 387
|
+44 20 7496 3000
|
investors@bango.com
|
|
|
|
|
|
Paul Larbey, CEO
|
Harry Gooden
|
Matt Garner, CFO
|
Jen Boorer
|
|
Asha Chotai
|
About Bango
Bango enables content providers to
reach more paying customers through global partnerships. Bango
revolutionized the monetization of digital content and services, by
opening-up online payments to mobile phone users worldwide. Today,
the Digital Vending Machine® is driving the rapid growth of the
subscriptions economy, powering choice and control for
subscribers.
The world's largest content
providers, including Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG)
and Microsoft (NASDAQ: MSFT) trust Bango technology to reach
subscribers everywhere.
Bango, where people subscribe. For
more information, visit www.bangoinvestor.com
Chair
statement
2023 was a landmark year for
Bango. In the first full year following the acquisition of DOCOMO
Digital, the team was focused on both incorporating the acquired
business into Bango and on strengthening our position in the
fast-emerging subscriptions bundling market. Measured
by revenue growth, customer wins, market share gains, industry
awards and product innovation, it was a successful year for Bango,
with positive EBITDA returning - although slower than the market
expected.
Paul's CEO report covers how the
team was able to drive forward the core Bango business and in
parallel how they implemented the substantial synergies arising
from the DOCOMO Digital acquisition. There were a few
negative surprises, such as uncovering some additional costs
associated with legacy business, which are more fully explained in
Matt's CFO report. But, we also had positive surprises, including
the quality of talent and experience we discovered in the expanded
team.
Revenue and market share in the
payments business accelerated by 2 years due to the acquisition.
The financial rationale for the acquisition started to bear fruit
as the cost synergies kicked in, driving the return to positive
EBITDA during the second half of 2023. The benefits of these
synergy savings will increase as we move into 2024 and beyond. They
will drive significant free cash flows from the established
payments business, providing the basis for continued investment in
the subscription bundling opportunity.
All of us have experienced the
early stages of subscription bundling, perhaps adding a streaming
video option to our mobile contract or adding a sport channel to
our TV package. The broadly adopted streaming sports, movie and
music channels are now being supplemented by more and more services
targeting specific needs: lifestyle, education, productivity, home
security, food delivery and health. Bango is experiencing rapid
growth as an early market leader - with telcos as the primary
distribution channel for bundled subscriptions. They see the trend
towards customers selecting from an array of offers and services -
super bundling - as key to growing revenue and retaining
customers.
During 2023, the Bango Board
therefore invested energy into evolving the strategy to build on
Bango success with subscriptions and its strategic
advantages.
The Board analyzed data from the
success of early adopter telcos using Bango technology, and
Directors were able to leverage their own networks and experience
to get an independent assessment of the opportunity. In September,
Darcy Antonellis, a veteran of the US media and technology
industries, accepted an invitation to join the Board as a
Non-Executive Director strengthening its go-to-market knowledge and
customer understanding.
The strategy review confirmed that
the position of Bango in the subscription bundling market is
strong. The fast growing pool of subscription content providers
coming to the Digital Vending Machine® (DVM) during 2023 were
seeing success using telco super bundling. This in turn gave Bango
competitive advantage and drove increasing interest from new telco
customers.
The Board concluded that to
increase shareholder value, Bango should concentrate on enhancing
its importance as a vital technology for the growth of subscription
bundling. The spearhead of this strategy is delivering
content provider success through the telco bundling
channel.
Bango is integrating its major
technologies-such as cutting-edge APIs, subscription management
knowledge, targeted marketing based on purchase behavior, and
AI-driven cross-selling of subscription products into the DVM. This
will enable customers to on-board faster, and to bundle, market and
merchandize subscription products more successfully, supporting
accelerated growth into this very large market
opportunity.
The Board also determined that it
was prudent to carefully manage the pace of investment, given
current market conditions. As migrations complete and the free cash
flows from the payments business rise, a priority is to use these
to build cash reserves, repay any debt and invest in the rapid
growth around the DVM.
The market opportunity is vast,
and ideally suited to a business like Bango with its unique,
scalable and relevant technology, global presence and vendor
independence. The market for subscriptions in 2026 is
expected to be worth over $600B for content alone. Subscriptions
distributed through bundling partners - mostly telcos - will be 25
- 50% of that business (Source: Omdia, 23).
Bango aims to help content
providers benefit from this significant market opportunity by
expanding its early lead as the go-to platform for subscription
bundling. The Digital Vending Machine will be an essential tool for
content providers and resellers, capturing a large portion of this
business.
This journey, while marked by
notable achievements, has also reminded us of the importance of
staying vigilant and responsive to the ever-evolving landscape in
which we operate. Bango is intent on consistent execution and the
delivery of its strategic milestones, and providing a rewarding
journey for our customers, employees and shareholders.
Ray Anderson
Chair
CEO
statement
2023 was a pivotal year for
Bango. While not without its challenges, the transformational
DOCOMO Digital acquisition accelerated our revenue and market share
growth by 2 years and we had continued success with our
Digital Vending Machine® (DVM™) product, winning increased market
adoption.
A key area of focus in 2023 was
the integration of DOCOMO Digital and realization of the planned
$21M of cost synergies. While these were successfully achieved,
additional costs ($2M in 2023 and reducing to $1M in 2024) were
uncovered. However, these will be more than offset by additional
optimizations that will be executed in 2024. Combined with a delay
in customer launches, this impacted our year end profitability.
With sufficient balance sheet strength and banking facilities, we
remain well funded to see the business through to positive free
cash flow.
In 2023, we intensified our focus
on the DVM product and the subscription bundling opportunity that
the Bango DVM unlocks. Annualized Recurring Revenue (ARR) grew 77%
to reach $8.8M at year end. The launch of the third tier 1 US telco
announced in March 2024, adding an additional $2M.
Our focus was rewarded with 9 new
DVM customer wins. This doubled the number of DVM contracted
customers to 18 at the end of 2023, and our pipeline is stronger
than ever.
Additionally, 33 more content
providers signed-up to offer their subscription services in the
Bango DVM, bringing the total to 93. This extensive and
diverse ecosystem of subscriptions services makes the Bango Super
Bundling proposition highly attractive to new customers.
With the subscriptions market
continuing to expand and clear momentum in the business, we expect
strong growth for Bango in 2024, and beyond.
Digital Vending
Machine
Market Opportunity
The subscriptions market is
estimated to reach $600B by 2026 (source: Juniper, 2023), driven by
an increasing variety of subscription services moving beyond music,
games and movies to all aspects of our lives. Choice in streaming
subscription services has never been greater. They have expanded
further into learning, lifestyle, personal health, transportation,
pet services, food, drink, insurance and even car purchases, all of
which have introduced subscription-based offers.
Content providers and other
merchants increasingly seek partnerships as a critical part of
their subscriber acquisition strategies. Consequently, streaming
services are now widely available as offers from third parties like
telecommunications companies.
Analysts estimate that today about
20% of (telco) subscriptions are activated by consumers through
these offers and bundles. That share is expected to grow to between
25% and 50%, depending on geography (Source: Omdia, 2023).
Consequently, in a few years over $150B of subscription spending
will be delivered through these partner channels. This is the
market the Bango DVM serves - enabling subscription services to be
distributed through channels such as telcos.
The Digital Vending Machine - the
proprietary Bango technology that delivers subscription bundling at
scale - is needed to enable this market to grow successfully and
operate efficiently. Both content providers and telcos benefit from
an industry-wide standard for subscriptions bundling, simplifying
integration, subscription management, payments, consumer
experience, marketing and merchandizing. The DVM standardizes the
functionality needed to deliver subscription bundles, and provides
industry-wide data insights that cannot be acquired through any
other bundling solution.
Content Providers
In 2023, 33 new content providers
added their subscription services to the Digital Vending Machine
(DVM) bringing the total to 93 at the end of the year. Each of
these content providers offers one or more subscription products to
consumers via channels such as telcos through the Bango DVM.
Streaming video (or Subscription Video on Demand - SVOD) services
continue to be the dominant category offered via the Bango DVM,
both in terms of subscription volumes and the number of content
providers (44 out of 93 total). Alongside these, the variety and
breadth of subscription services included in the DVM continues to
grow, from gaming services such as NVIDIA GeForceNow to home
delivery services including Walmart+, to premium social media
subscriptions such as Snapchat+.
Digital Vending Machine Customer Growth
All DVM customers saw good growth
over 2023 driven by a variety of factors:
·
|
More Choice - by adding more
subscription services into the DVM, we see consumers adding more
services and trialing new products. Services can be bundled
together into 'Super Bundles' to increase offer attractiveness,
introducing consumers to new and additional services. For example,
one telco increased the number of subscription services available
in their DVM by 50% in 2023.
|
·
|
More Value - Who doesn't love a
great deal? One telco offered the ad supported tiers for both
Netflix and HBO Max for only $10 a month - an annual saving of over
$80. This promotion brought the telcos existing customers to the
DVM for the first time and drove a big increase in the total number
of consumers using the DVM, many of whom then sign up for
additional subscription services within the DVM.
|
·
|
More Relevance - Certain events,
especially sporting, create an immediate demand for related content
and services. By satisfying this demand new customers can be
captured and then upsold additional services beyond the initial
content that attracted them to the DVM. For example, one customer
offered a discounted NFL+ Premium subscription offer timed with the
start of the new football season. This attracted new consumers, in
this case American Football fans, to the DVM who then went on to
purchase additional subscription services.
|
·
|
More Subscription Customers - DVM
telco customers can use exciting third-party services to attract
new customers by linking bundled subscription offers to new
customer activations, while maintaining the price point for the
core broadband services. For example, one telco offered $15 per
month of subscription credits for a cost of only $10. This offer
attracted new customers to not only sign up for the broadband
service but also to immediately engage in the subscription
store.
|
The DVM license fee telcos pay to
Bango is tiered, based on the number of subscriptions (not users)
that the DVM manages. At the start of 2024, most larger telcos were
still operating in the first large tier, but some smaller customers
have now climbed beyond the first tier as demand rises, with one
reaching their top defined tier and now paying monthly overage
charges. Most of the license revenue growth so far has come from
new customer launches. As these customers launch their DVM offers
and the number of managed subscriptions increases, so the license
revenue grows.
New DVM Customers
In 2023, we signed 9 new DVM
customers including our third Tier 1 US telco, and a number of new
deals were signed in Latin America.
The business model for DVM is
different from Direct Carrier Billing (DCB) and has the following
key features:
1.
|
DVM contracts are multimillion
dollar, multi-year commitments: DVM telcos pay an integration fee
and recurring monthly license fee that scales as the number of
managed subscriptions grows. Contracts are for a minimum of 3
years. This is a significant commitment for a telco meaning
procurement processes can take many months to complete. To minimize
this impact, Bango created and trained a new sales team - selling a
SaaS product is very different from the business development
activities associated with DCB revenue share deals.
|
2.
|
DVM forms part of a broader
consumer proposition: launching a DVM bundling proposition often
requires the creation of a marketing strategy by the telco. This
could include the creation of a brand e.g. Verizon's +play and
SubHub from Optus. Understanding how to market the proposition and
what offers to launch requires market testing and can take several
months. After launching many services across the world Bango has
gained a large knowledge-base and set of best practices that telcos
can follow to help launch their service quickly and successfully.
This data within the Bango Platform creates a unique advantage for
Bango in helping telcos define and create new customer offers and
bundles.
|
3.
|
DVM solutions require a consumer
front end: We learned during the early DVM launches that a large
portion of telco effort went into the development of a user
interface for consumers to manage their subscription services. The
new Bango DVM CX - consumer user interface (UI) - provides an out
of the box solution for telcos to simply configure and brand the
DVM subscriptions hub, which enables the DVM to be launched
faster.
|
4.
|
The Bango DVM takes all the
complexity out of the integration with content providers. Having
launched 22 content providers for 1 DVM customer in less than 12
months, and connected services such as Disney+ in as little as 4
weeks from start to launch, the Bango DVM is the simplest and
fastest way for telcos to connect to content providers. The slow
part of the content provider discussions can be in the commercial
agreement traditionally required between content providers and
telcos. To simplify this, Bango offers a unique "eDisti" portfolio
from leading content providers, with pre-agreed commercial terms,
that can be supplied and provisioned by Bango. This reduces the
commercial and legal effort from the telco, allowing Bango to
deliver a DVM pre-stocked with attractive subscriptions.
|
Bango Audiences
In 2023, I identified 3 areas of
focus for Bango Audiences. Taking each in turn:
1.
|
Expand into brand marketing direct
to clients and with agencies: We got traction with brands and
advertising agencies based on the hypothesis that Purchase Behavior
Targeting (PBT) drives more success higher-up the marketing funnel.
From the early trials we came to the conclusion that while PBT
delivered encouraging results, we lacked the breadth of data
(including demographic characteristics) that this market demands.
Consequently, we discontinued this area of focus.
|
2.
|
Support content providers in the
DVM to find new customers: Several DVM content providers adopted
Bango Audiences to help them find more paying subscribers. Moving
forward, we are integrating the technology and intelligence from
Bango Audiences into the DVM to deliver a unique competitive
advantage for content providers.
|
3.
|
Focus on a smaller number of large
app developers: The average spend per customer increased 35% from
2022 to 2023 as we focused on serving fewer but larger, app
developers. A number of these larger developers have, or will
launch subscription products and will ultimately join the Digital
Vending Machine as content providers. Therefore, we have decided to
stop the independent sale of Bango Audiences to app developers,
focusing instead on providing this technology through the Digital
Vending Machine.
|
DOCOMO Digital Acquisition
We completed the acquisition of
DOCOMO Digital at the end of August 2022. We said at the time the
acquisition would accelerate our growth by 2 years and it has done
exactly that. We have extracted the $21M of annualized cost
synergies and when the platform migration completes, further cost
savings will be realized as we continue to optimize the payments
business.
We will continue to simplify the
structure of the acquired business which was overly complex. This
complexity was known and drove the very low purchase price (only
$900k after deducting the cash in the business). It was also the
cause of the end of year additional costs that we announced in the
January 2024 Trading Update. Having now operated the business
through a full Bango fiscal year, we are confident there will be no
such surprises in 2024. There is further simplification of
operating models, contracts and legal entities that will complete
during the year.
Alongside the enlarged customer
base, an additional benefit of the acquisition was the
availability of a skilled team with domain expertise. The two
organizations are now fully integrated and acting as one Bango
team, as evidenced in the continued, strong employee engagement
score of 79%. This score is well above industry benchmarks and a
pleasing result so soon after an integration that saw a
significantly expanded team size. This team has played a key role
in allowing us to increase our focus on the DVM across Bango, from
engineering to marketing and sales.
Payments
Bango DCB continues to grow. In
2023, we launched both new content providers through existing
routes and new payment providers. We expanded our partnership with
TPAY to deliver new Google routes in the Middle East and Africa,
from Egypt to Iraq. Looking forward, we expect further additional
growth particularly in developing markets, but will focus only on
new routes with significant potential ($M's of End User Spend) as
we manage this business both for cash generation and as a source of
new DVM opportunities.
2024 and Outlook
Our focus for 2024 is to deliver
continued DVM growth. Growth will come from:
·
|
Launching the DVM contracts won in
2023,
|
·
|
Growing existing customers usage
so they climb up the license tiers.
|
·
|
Winning new DVM deals in the telco
market. We signed 9 DVM deals in 2023, at the start of 2024, the
sales pipeline has 7 times more opportunities than entering
2023,
|
·
|
We will also continue to evaluate
additional verticals beyond telcos as we look for the next big
Super Bundling market opportunity.
|
In 2024, we will continue to
invest in the DVM product adding features and capabilities to help
content providers sell even more subscriptions. The DVM CX consumer
user interface will continue to evolve, enabling telcos to launch
faster and allow more data to be collected by the DVM which will
create a personalized experience for consumers.
Everybody in Bango is here to
build the de-facto platform for subscription bundling. We made
great progress towards this goal in 2023, delivering revenue growth
of over 60% and generating a significant EBITDA increase in the
second half. A combination of delayed revenue and some unexpected
acquisition costs meant we missed the numbers shareholders were
expecting in 2023. Therefore, our focus in 2024 is to demonstrate
solid execution through the numbers we deliver, while we retain our
primary focus of becoming the standard for subscription bundling -
the place where people subscribe.
Paul Larbey
Chief Executive Officer
CFO
statement
While Bango had to navigate some
challenges at the very end of the year, 2023 was pivotal for Bango;
the first financial period including a full year of trading post
the acquisition of DOCOMO Digital and a step change in scale
positioning Bango well for future growth. During the year revenue
grew 61.8% year-on-year and 27.4% H1 to H2 FY23, highlighting the
usual second half bias (44:56) from the increased activities around
Amazon Prime events, Black Friday and Christmas and reflecting the
increasing DVM transactions. Bango signed 9 DVM contracts in FY23
and the sales pipeline at the start of 2024 has seven times more
opportunities in it than a year earlier. This revenue growth was
achieved while still being impacted by the continuing strength of
the US Dollar, in particular against the Japanese yen which,
following the DOCOMO Digital acquisition, makes up an increasing
percentage of Bango's revenue.
Bango completed the planned
synergies ($21M annualized) following the DOCOMO Digital
acquisition and continued the investment needed to drive the rapid
development of the DVM and additional features.
Bango revenue model
Bango continues to generate
revenue from several streams. From FY23, these will be reported as
follows to provide a more granular split :
·
|
Transactional revenue ($32.7M;
FY22 - $18.3M) which covers the transactional payments business
where income is charged as a percentage of End User Spend going
through the platform; and
|
·
|
DVM License, One-off fees and
Bango Audiences revenue ($13.4M; FY22 - $10.2M)
|
Revenue, such as integration fees,
is recognized on completion of contractual milestones or on a
percentage of completion and after consideration of the
requirements of IFRS15 (Revenue from Contracts with Customers).
Further consideration was also given to the separation between the
integration fees and the subsequent ongoing platform license fees.
It was judged, based on the contractual agreements, individual
orders and discussions between customers and Bango, that these were
two distinct revenue events.
Integration of DOCOMO Digital
Following the DOCOMO Digital
acquisition, which completed on 29 August 2022, FY23 has seen great
progress in the integration of the two businesses. The targeted
$21M of savings have been achieved and routes, relationships and
new customers have been added. Bango no longer approaches this as
two separate revenue streams but has consolidated services, sales
teams and marketing efforts to focus on one Bango product. This
approach has been rewarded with closer relationships with customers
as well as DVM opportunities that have originated from previous
DOCOMO Digital customer relationships.
The robust due diligence
undertaken on the acquired entities, with assistance from external
advisors, identified the complexity of the DOCOMO Digital
organizational structure which was reflected in the original low
purchase price. Despite this, some new facts came to light as the
business became more integrated, including some additional costs of
sale related to the acquired DOCOMO Digital routes.
During the year, there was an
adjustment made to negative goodwill of $3.8M relating to the fair
value adjustment of a deferred tax assessment which is now not
expected to crystallize.
Bango plans to complete the
migration of routes and final integration activities during FY24
after which time it would expect operating costs to further reduce
adding to on-going profitability.
Revenue and costs of
sale
Total revenue from continuing
operations increased 61.8% to $46.1M (FY22: $28.5M) despite the
continuing effects of the strong US Dollar against the Euro and, in
particular, against the Japanese yen, where revenue has increased
significantly following the acquisition; the average JPY:USD
exchange rate moved 9.3% between 2022 and 2023.
Annualized Recurring Revenue
(ARR), calculated by annualizing the December revenue derived from
ongoing, contracted, repeating revenues, increased 77% from
December 2022 to $8.8M (FY22 : $5.0M) at December 2023. The launch
of the third Tier 1 US Telco (announced in 1H22), which was
expected in Q4 FY23, has contributed an additional $2M ARR
following its 1Q24 launch.
Bango has seen gross profit
margins reduce this year to 86.0% (FY22: 90.6%), largely the result
of some DOCOMO Digital routes. Bango plans to complete the
migration of these routes onto the Bango Platform during FY24,
which will see gross profit margins returning to the 90-95% range
once completed.
Operating expenditure of continuing
operations
As anticipated at the time of the
acquisition, administration costs increased to $44.8M (FY22:
$30.3M) reflecting the first full year of combined business costs
and before the full impact of restructuring activities is
reflected. The largest area of cost arises from other expenses
which increased to $11.0M (FY22: $2.0M). Increased costs within
this area include Cloud platform costs and customer support with
work already undertaken to reduce these next year.
Adjusted EBITDA* for the year has
increased to $6.4M, (2022: $5.0M). This was below the market
expectations following delayed revenues (c.$3M) and increased costs
of sale from DOCOMO Digital acquired routes (c.$2M). After
discussion with the auditors, unrealized foreign exchange costs
($0.9M) relating to an inter-company loan between pre-acquisition
DOCOMO Digital companies were moved to reserves following IAS21.
The additional costs of sale will continue at a reduced rate in
FY24 and, internally, the inter-company loans are being addressed
as part of a wider piece of work in FY24 to simplify the current
Bango structure.
The share-based payment charge of
$2.3M (2022: $1.6M) was again calculated using the Black-Scholes
model. The share-based payments relate to the Bango share option
program that enables all Bango employees to share in the growth in
value of Bango. Share options are allocated to employees twice a
year. It is a vital recruitment and retention tool in an
increasingly competitive employment market. The increase over the
prior year reflects the higher employee numbers following the
acquisition.
As Bango continues to implement
its capitalized R&D for commercial benefit, amortization and
depreciation reflected this and increased to $9.1M in FY23 (2022:
$6.0M).
Exceptional items
Exceptional costs for the year of
$3.9M (2022 : $11.0M) include the impact of the closure of the
Net-M subsidiary in the year and the write-down of development
costs incurred on the former DOCOMO Digital platform that would
ordinarily be capitalized under IAS 38, but due to the planned
migration to the Bango Platform, have been expensed. Costs related
to unsuccessful attempts to secure a new office for Bango have also
been included within exceptional costs.
Associate company
Bango and NHN Corporation, the two
shareholders of the NewDeep Limited joint venture have agreed that
it is in the best interests of both shareholders to wind down the
joint venture and to share the technology developed in the joint
venture to Bango and NHN so both can use it without restriction in
their respective core businesses. The technology is particularly
relevant to the Bango DVM.
The Bango share of the net loss
from the NewDeep associate totaled $1.8M in FY23 (2022:$1.4M). No
significant costs related to NewDeep are expected in 2024. Bango
also decided to fully impair its NewDeep investment in FY23,
resulting in a $2.8M non-cash cost recognized in the profit &
loss statement within the share of net loss of
associate.
Loss for the financial year and earnings per
share
The total loss after tax of $8.8M
(2022 : loss $2.1M) includes the Bango share of net loss from the
NewDeep associate of $4.6M (2022 : loss £1.4M). Exceptional costs
of $3.9M (2022 : $11.0M), share-based payments of $2.3M (2022 :
$1.6M), a negative goodwill adjustment $3.8M (2022 : $10.2M) and
R&D tax credits from Bango investment in driving forward its
technology of $1.4M (2022: $1.3M). This loss, though $6.7M higher
than in the previous year, does include the impairment of the
investment in the associate company, increased amortization of
$2.9M as Bango uses its intangible investments and does not yet
reflect the full impact of the synergy savings which will become
more apparent in FY24.
Basic and diluted loss per share
was 11.51 cents (2022 Basic and diluted loss per share : 2.81
cents).
Statement of financial position
Net assets at 31 December 2023
decreased to $27.4M (31 December 2022: $31.4M). Bango continues its
investment in intangible assets that form the core of the business
leading to an increase from $27.2M to $37.7M.
Cash, net debt and cashflow
Bango had cash, cash equivalents
and cash held in short term investments of $3.8M at 31 December
2023 (31 December 2022: $12.7M), financing debt from leases of
$2.8M (31 December 2022: $2.6M) and an external loan of $7.9M (31
December 2022: $nil). The external loan carries a fixed annual
interest rate of 6 per cent with repayment in eight quarterly
instalments commencing in September 2024, or earlier if Bango
chooses. There is no early repayment penalty and the loan is
unsecured. In connection with the loan, the provider has been
granted 314,380 5-year warrants with a fair value of $285k, which
have been capitalized against the loan, to purchase new ordinary
shares in Bango at 202p each (the average closing share price over
the 30 trading days preceding the agreement).
Cashflow saw an increase from
operating activities ($4.7M; FY22 - negative $5.0M) prior to
movements in working capital (negative $3.1M; FY22 - $10.8M). A
significant level of investment in internally generated R&D as
detailed below saw outflow from investing activities rise by $17.6M
(2022 - $9.6M) which was supported by initial cash reserves and the
loan from NHN in June 2023 ($7.9M)
Intangible assets
Intangible assets net book value
increased $10.5M to $37.7M (2022: $27.2M) largely reflecting the
increase in internally generated R&D ($17.6M; FY22 - $9.6M)
from the investment in the DVM including base platform and advanced
features to user interface development, together with core platform
developments, data features and migration related R&D. Bango
expects this level of investment to decline as the migration
related work ends. Internally generated R&D is calculated in
line with the principles of IAS38 and is based on data from
timesheets related to key projects which are then amortized over 5
to 7 years, commencing upon deployment, with projects assessed in
relation to their individual cash generation ability.
Liabilities
Overall current liabilities have
remained fairly constant at $34M (2022 : $33M) although the split
has seen an increase in other creditors in respect of amounts owed
to content providers offset by reductions in trade payables, social
security and other taxes and the restructuring accrual. Right of
Use lease liabilities at 31 December 2023 have remained level post
acquisition at $2.7M (2022: $2.6M).
Going concern
With continued high growth of the
Bango Digital Vending Machine® and stable growth of the legacy
payments (carrier billing) business detailed in previous sections,
the Board believes there continues to be sufficient cash and
resources to support further planned investments to drive sales
growth and to continue the development of the platform and new
products. In addition Bango has an overdraft facility with Barclays
Bank PLC for £3.0M which was undrawn at the end of 2023.
For the above reasons and having
taken into account the wider macro-economic effects, including
foreign exchange and interest rate fluctuations, the Directors have
concluded that the going concern basis remains
appropriate.
Matt Garner
Chief Financial Officer
*Adjusted EBITDA is earnings
before interest, tax, depreciation, amortization, negative
goodwill, exceptional items, share of net loss of associate and
share based payment charge
Consolidated statement of comprehensive income For the year
ended 31 December 2023
Revenue
|
|
2023
$ 000
46,098
|
2022
$
000
28,490
|
Cost of sales
|
|
|
(6,476)
|
(2,671)
|
Gross profit
|
|
|
39,622
|
25,819
|
Other operating income
|
|
|
-
|
1,123
|
Administrative expenses
|
|
|
(44,767)
|
(30,343)
|
Adjusted EBITDA
|
|
|
6,395
|
4,951
|
Exceptional items
|
|
|
(3,857)
|
(10,960)
|
Negative goodwill
|
|
|
3,799
|
10,203
|
Share based payments
|
|
|
(2,345)
|
(1,634)
|
Depreciation
|
|
|
(1,052)
|
(760)
|
Amortization
|
|
|
(8,085)
|
(5,201)
|
Operating (loss)
|
(5,145)
|
(3,401)
|
Finance costs
|
(497)
|
(58)
|
Finance income
|
15
|
57
|
Share of net loss of associate
accounted for using the equity
method
|
(4,577)
|
(1,393)
|
(Loss) before taxation
|
(10,204)
|
(4,795)
|
Income tax credit
|
1,378
|
2,655
|
(Loss) for the financial year (attributable to
equity holders of the company)
|
(8,826)
|
(2,140)
|
Other comprehensive income
|
|
|
Items that may be reclassified subsequently to profit or
loss
|
|
|
Foreign exchange on consolidation
|
1,701
|
(4,921)
|
Currency movement in net
investment
|
(922)
|
-
|
|
779
|
(4,921)
|
(Loss) and total comprehensive
income for the financial year
|
(8,047)
|
(7,061)
|
(Loss) per share attributable to the equity holders
of the parent
Basic (loss) per share
(11.51) c
(2.81) c
Diluted (loss) per share
(11.51) c
(2.81) c