Bango PLC

("Bango")

Interim Results for the six months ended 30 June 2024

Cambridge, UK, 30 September 2024 - Bango (AIM: BGO), today announces its interim results for the six months ended 30 June 2024.

Financial Overview (unaudited):

Notes:

Operational Highlights

Presentation and Webcast

A presentation of the interim results will be made to investors and analysts at 10:00 BST today via the Investor Meet Company Platform. Those wishing to join the call can sign up to Investor Meet Company for free via:
https://www.investormeetcompany.com/bango-plc/register-investor

Paul Larbey, Chief Executive Officer of Bango, commented:

"The first six months of 2024 have gone to plan and are in-line with the Trading Update issued in July. The payments business continues to deliver growth, providing cash to fund expansion of the Digital Vending Machine® (DVM), which continues to be adopted as the defacto standard platform for subscription bundling by the world's largest companies. The addition of Disney+ to the Bango eDisti program is further evidence of this and will help accelerate time-to-revenue from DVM deals. With 4 new DVM wins in the 1H and a further 3 in Q3, the pipeline built over the past years continued to deliver results and provides confidence in meeting market expectations for the full year.

The subscriptions market is vast and growing, and the percentage of subscriptions bundled through channels is increasing. Bango's leadership position in this market is strengthening with the DVM now playing a key role in the customer acquisition and engagement strategies of major content brands. We are excited by the opportunity ahead and remain on track to continue our strong growth trajectory and return to a positive net cash position in FY25."

¹ Transactional Revenue is revenue derived by charging a percentage of the retail price paid by the consumer and is made up of direct carrier billing, resale and revenue share amounts.

² DVM, Bango Audiences & one-off Revenue includes all DVM license and support fees, revenue from Bango Audiences (discontinued in Q1) 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 30 June 2024.

⁴ Net Revenue Retention is a measure of the retention and expansion of revenue from existing customers over the previous 12 months and is calculated by dividing the ARR from customers at the end of 1H24 to the ARR from those same customers at the end of 1H23.

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 the loan from NHN and borrowings. Barclays continues to provide an overdraft facility which was not used at the end of the period.

⁷ eDisti is a program that allows Bango to resell subscriptions from content providers removing the need for a commercial agreement between the DVM customer and the content provider.

ENDS

Contact Details:  

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

CEO Statement

Introduction

During the first half of 2024 we have been laser focused on our strategy for growth. This strategy has four key pillars:

·      Expand: Lead the bundling of subscription services through telco channels

·      Extract: Manage the transactional business for cash and profit

·      Explore: Identify new bundling opportunities outside telcos

·      Enhance: Use data to differentiate Bango and monetize content providers

Expand: Lead the bundling of subscription services through telco channels

As content providers look for new ways to attract, engage and monetize subscribers, bundling with telco services is increasingly the answer. For telcos, offering these subscription bundles increases the value of their network services. As Verizon's CEO said, "…. the more perks you have, the lower the churn is." In fact, Verizon saw churn reduce by up to 70% after bundling 3^rd party services with the Bango DVM.

There is clear consumer demand for bundling. Our research highlights rising consumer frustration with the complexity of managing an increasing number of subscriptions. In these surveys, telcos always come out on top when people are asked who they would choose to purchase all their subscriptions from. With telcos already bundling 20-25% of all SVOD (Subscription Video on Demand) services (source: Omdia, 2023), they are the place content providers are looking at to expand their distribution.

So far, in 2024 we have seen good progress on this pillar:

·      4 new customer wins in 1H 2024, with 3 more in Q3

·      The launch of previously announced deals, including a Tier 1 US telco that contributes materially to ARR

·    An existing major DVM customer renewing their contract for a further three years, extending the customer propositions powered by the Bango DVM

·      Growth in existing customers as evident in growing ARR.

Extract: Manage the transactional business for cash and profit

The transactional business continued to grow despite the headwind created by a weak Japanese Yen.

The global technology leader (announced in June 2022) launched its first two telcos with Bango in 1H24. Additional launches are planned in 2H24.

We added new content providers, including a gaming provider who has their own gaming app store.

The success of Amazon Prime Day meant that the second half of the year is off to a good start and with the usual Black Friday, Cyber Monday and Christmas shopping events to come, we expect a strong 2H.

The route migrations from the DOCOMO Digital platform are well advanced. We expect to complete these and start the decommissioning of the German data center at the end of the year.

Explore: Identify new bundling opportunities outside telcos

The Bango platform is agnostic to the channel through which subscriptions are distributed, and while telcos remain the most popular channel demanded by content owners, other channels are emerging. Our research indicates that financial services (banks, credit unions and digital wallets) are always ranked second by consumers (after telcos) when asked where they would like to purchase and manage their subscriptions.

We won our first customer in this vertical (a bank in Brazil) in 1H24 and the pipeline of similar opportunities is building. Retail (especially reward clubs) is also an interesting opportunity that we continue to explore.

Enhance: Use data to differentiate Bango and monetize content providers

Ultimately, the DVM exists to allow the content owners to grow and expand. They are the constant no matter if it is a telco or bank doing the bundling. The DVM is increasingly the platform subscription content providers are choosing to help them grow, as demonstrated by companies like Uber joining the Bango DVM to help drive adoption of the Uber One subscription service - covering food delivery, taxi rides etc.

These content providers use the Bango platform to quickly and easily open new channels - reducing a typical integration project from 6-12 months (if they did it themselves), to as little as 2-4 weeks with Bango. However, the platform is much more powerful than just providing channel connectivity.

The Bango eDisti program is an innovation that allows content providers to quickly establish a standard commercial relationship with telcos alongside the technical and operational gains from using the DVM. This program has taken-off rapidly and there are now 20 content providers in the eDisti program including Disney, who joined in 1H24, allowing Bango to distribute Disney+ through the DVM.

The addition of Disney+ to the eDisti catalogue is a marquee brand that will accelerate DVM licensing deals in the funnel and help get others launched more quickly.

We are also seeing a number of content providers looking to create their own bundles, incorporating third-party subscriptions that complement their own, e.g. music with eBooks. The Bango DVM is equally well positioned to help content owners create these bundles, increasing the value Bango delivers in the subscriptions ecosystem.

The Digital Vending Machine® is the market leading platform for subscription bundling and our technology continues to evolve. The next phase is to increase the availability of subscriptions data and consumer insights that our platform enables, leveraging our unique position serving multiple content providers and resellers. The integration of Bango Audiences into the DVM was the first phase of this. With bundling accounting for 1 in 4 subscriptions worldwide (and up to 40% of subscriptions in some markets) the ability to use data to compete in this segment of the market becomes enormously valuable. To help accelerate the DVM data offering, we recently recruited a new Chief Product Officer who has a track record of achievement using data and AI to drive commercial success.

Summary

Our strategy is clear and our execution on track. The market opportunity from DVM is quickly developing which, coupled with the strong cash generation from the transactional business, positions us well to deliver good returns for shareholders.

Paul Larbey

CEO

CFO statement

I am pleased to present the interim financial results for the six months ended 30 June 2024. During this period, we have delivered strong revenue growth while continuing to invest strategically in key areas of the business, ensuring sustainable long-term growth and future profitability.

Financial Performance

Revenue for the first half of 2024 increased by 18.6% to $24.1M (1H23: $20.3M), driven by an impressive 62.5% increase in the DVM, Audiences & One-off revenue (1H24 $7.7M: 1H23 $4.7M). In addition, Bango delivered a solid 5.3% growth in transactional revenue (1H24 $16.4M: 1H23 $15.5M). The growth in Direct Carrier Billing (DCB) revenues was slowed by the weakening of the Japanese Yen during the first six months of 2024. 1H24 margin has decreased from 2H23 (82.8%) to 80.8% due to the geographic mix of transactional revenue in the period. The DVM business continued to achieve margins at over 95%. With further growth in 2H and beyond expected to come predominately from DVM revenues, Bango expects the overall margin to improve.

Annual Recurring Revenue (ARR) rose 130% to $12.9M (1H23: $5.6M) driven by growth in the volume of subscriptions bundled through the DVM and new customer wins. Net Revenue Retention, a measure that compares ARR from telcos active at the end of 1H23 against the end of 1H24, was 159%, highlighting the continued growth from existing customers during the period. The DVM is a very sticky solution so customer churn remained at zero.

Other Income of $1.4M, which is not included in the revenue figure above, related to recovery of tax costs from the acquisition of DOCOMO Digital. $1.1M is accounted for as a tax cost, resulting in $0.3M profit gain. This is not expected to repeat in 2H24.

Core administrative costs which exclude depreciation & amortization, foreign exchange costs, share-based payments, R&D Capitalization and exceptionals, have reduced 10.8% ($3.0M) on the same period in 2023 to $23.8M and 6.7% ($1.8M) in 2H23, reflecting continued operational efficiency and disciplined cost management, including the on-going reductions as part of the DOCOMO Digital restructuring. At the same time as Bango continues to develop the DVM product, R&D capitalization dropped 14.1% (1H24 $7.6M: 1H23 $8.9M) and 22.0% on a sequential basis (2H23: $9.8M) as R&D related to DCB and migrations from DOCOMO Digital decreased. We expect administrative costs to reduce further in 2H24.

Adjusted EBITDA rose $4.2M to $4.0M (1H23: Negative $0.2M) benefitting from the increased revenues and reduced costs. Bango's net loss for the period was $4.2M (1H23: Loss $4.3M). Adjusted EBITDA gain was offset by higher amortization and depreciation (1H24 $5.6M: 1H23 $3.5M) as capitalized costs, including those of the DVM development, are amortized against the revenues generated. Tax costs in the period (1H24 $0.8M: 1H23 Gain $0.7M) include the costs associated with the other income from the DOCOMO Digital acquisition discussed earlier and the benefit of an R&D tax claim.

Balance Sheet and Cash Flow

Our balance sheet remains solid with investments into the Bango platform raising Long Term Assets to $43M (FY23: $42.0M). Net debt increased to $5.1M (FY23: $4.0M), with cash of $2.2M (FY23: $3.7M) and loans of $7.3M (FY23: $7.7M), reflecting the investment in new product development in DVM. The £3.0M bank overdraft facility with Barclays was undrawn at the end of the period.

Operating cash flow generated $7.3M in the period with a focus on working capital optimization, resulting in improved receivables. We expect to increase cash generation through the second half of the year which will continue to be used for investment, as well as the repayment of the loan from NHN.

Outlook

We have entered the second half of the year with a strong pipeline of new business, especially within DVM which saw strong growth in 1H24. Growth in this area of the business, with its >95% gross profit margins, will strengthen our cash position, complemented by reducing costs as the migrations of the acquired DOCOMO routes to the Bango platform complete.

We continue to see good growth from our existing wins with DVM as customers climb through their pricing tiers, and in 2H 24, we will realize a full six months of revenue from wins in 1H24.

With the normal second half weighting of revenues driven by the likes of Amazon Prime days, Cyber Monday, Black Friday, Thanksgiving and Christmas/New Year spending, we remain confident in producing results for the full year in-line with market expectations.

Matthew Garner

Chief Financial Officer 

Consolidated statement of comprehensive income for the year ended 30 June 2024