Bango has announced FY 19 results in-line with the December-19 trading statement and our forecasts. The business has grown strongly throughout the Brexit hiatus, notably FY 19 saw the key End User Spend (“EUS”) metric double once again to £1.1bn. With the global macro-economic situation continuing to be impacted by the Coronavirus, we believe market attention will focus on the outlook. The release confirms that Bango has no supply chain dependencies, its products are available without interruption. Furthermore, management has re-iterated its expectation for continuing exponential growth in EUS. We maintain FY 20E estimates following the release and will revisit as visibility on “stay at home” behaviour improves.
FY 19 results in line with our forecasts: Bango reported FY 19A revenue of £9.31m (+41% YoY) and EBITDA of £0.45m. We had forecast £9.3m and £0.4m respectively. The closing (gross) cash position was confirmed at £2.69m, a £0.44m improvement on the H1 19 level.
Momentum remains strong: The release highlights that Bango is achieving momentum in a number of areas. We note: 1) EUS of £1.1bn continues the five-year trend of annual doubling. Growth continues to be driven by a combination of new routes (e.g. Google Play, Amazon and Microsoft), new merchants (Spotify, AE Tolls, YouTubeTV) and increased user activity. 2) Bango Resale was expanded to Pre-pay mobile (>3bn subscribers globally); launched with fixed-line, and payTV operators; and has entered mainstream retailing. 3) With verifiable improvement in marketing RoI of up to 9x, Bango Marketplace is gaining repeat business from app developers. 4) Via the strategic partnership with NHN, Credit Card payment data has been introduced to the Bango Platform.
Positive outlook commentary: We contend that the services offered by Bango – particularly payments for digital content – are likely to experience increased demand in times of population lock- down. The announcement confirms that Bango has no supply chain dependencies and c98% of customer contact is remote. With strong operational momentum being reported across the business (see above), and incremental growth opportunities in retail sales, bundling and digital wallets, management has reiterated their expectation for ongoing exponential growth in EUS.
Earnings estimates unchanged: We leave FY 20E earnings estimates unchanged following the release.