Bango’s H1 20 trading update in our view delivers a number of confident messages. Growth in the key End User Spend (“EUS”) metric remainsrobust, and the group delivered record revenue growth and EBITDA during the period. The group’s financial position saw a solid improvement in the first half. A closing gross cash position of £4.2m represents a £1.5m increase on the FY 19A level and demonstrates the company is now generating cash from its operations. H1 20 was a busy period for Bango, with a number of new contracts signed in both the payments business and Bango Marketplace, establishing a good base for growth in the second half and into 2021. We make no changes to estimates following the update but believe that Bango continues to demonstrate strong momentum and that the group remains well placed to deliver its FY 20E targets.
EUS for the period was confirmed to exceed £740m, a c60% improvement on H1 19A. This was achieved without a material impact from the Softbank Japan route which launched late in the period, and with the benefit of big EUS kickers like Amazon Prime Day and Black Friday still to come in the second half of the year. The update also confirms management’s view that the strong operational momentum delivered in H1 20 (see below) will enable the group to deliver a c£2bn FY 20E EUS outcome.
Revenue grew by an impressive 50% YoY during the period to a record level for the platform business of £4.8m. The group expects to report a record adjusted EBITDA for H1 20. The announcement notes that EBITDA in the last six months has exceeded the £0.45m level of FY 19A.
The Bango Platform was cash generative in H1 20, and the group closed the period with a gross cash balance of £4.2m. Note that the figure includes the net proceeds from the NHN transaction and payment of the Audiens earnout and transaction costs. The additional £6.2m invested by NHN into Audiens is not included as Bango now owns 40% of that business.
During H1 20 Bango: 1) Signed a three-year platform deal with a leading global telecoms provider, worth at least £1.5m. 2) Announced the launch of a payment option for Softbank in Amazon.co.jp and 3) Launched new Google play routes in three continents.