Bango PLC (AIM:BGO, OTCQX:BGOPF) this week reported strong financial results for the first half of 2024, showcasing significant growth and profitability improvements.
The company highlighted a 19% increase in revenue, driven by the performance of its Digital Vending Machine (DVM) segment and transactional payments business.
Chief executive Paul Larbey highlighted, in a Proactive interview that the firm’s transactional business, which involves direct carrier billing, grew by 6% in actual currency and 9% in constant currency.
The overall positive tenor gave confidence for the company’s second half.
Here’s what Larbey told us.
Proactive: We’re joined by Bango CEO Paul Larbey. Paul, good to speak with you again. You're out with a trading statement this week. Could you take us through some of the highlights, please?
Paul Larbey: Yeah, great to be back. Hopefully, everybody saw the trading update this week for the first half of the year. We reported 19% revenue growth. That breaks down into our transactional business, the payments business, and direct carrier billing, where we charge a percentage of the retail price for processing transactions to be charged to your mobile phone bill. That business grew by 6% in actual currency and 9% in constant currency, considering the Japanese yen's decline against the US dollar. The exciting element is the other revenue segment dominated by the DVM, which grew by 64% year-on-year.
We also saw a significant change in profitability, moving from a slight EBITDA loss in the first half of last year to an excess of 4 million. We’ll report the full number during our full interim results in September. If this trend continues into the second half, with newer, higher-margin business and further cost savings, we feel positive about a substantial EBITDA change year-on-year and meeting market expectations for profitability. So, a really good start to the year.
Proactive: Paul, could you maybe expand on that DVM growth? It was the driver over the first half.
Paul Larbey: Sure. There are two elements to it: recurring revenue and new customers. The DVM is a licensed model that helps people or subscription services distribute through channels, mainly telcos. We charge a license fee based on the number of subscriptions we manage for them. Recurring revenue grew by 130% from the first half of last year, now just shy of 13 million. This growth comes from new customers—we signed four new deals in the first half, including our first win in the banking sector in Latin America—and existing customers, evidenced by a net revenue retention of 159%.
Proactive: Can you take us through your ecosystem model and the benefits it offers?
Paul Larbey: Our programming allows us to distribute the Digital Vending Machine, pre-stocked with technical capabilities and commercial agreements with content owners. This reseller model helps telcos get to revenue quicker and launch new services rapidly. We now have 16 merchants signed up, including Microsoft, and recently signed a significant tier-one provider.
Proactive: How do you see the opportunities for the DVM?
Paul Larbey: The DVM is closely linked to the subscription economy, which is diversifying beyond traditional music, gaming, and video services into other areas. The DVM reduces churn; for example, Verizon reported a 60-70% reduction in churn due to bundling. Content providers also see a reduction in churn when their services are bundled. The subscription economy is growing, with price rises and more variations in subscription tiers. The DVM simplifies this complexity and offers better value, flexibility, and control for consumers.
Proactive: What's next for Bango?
Paul Larbey: We'll have our full interim results in September, with updates on our progress. We're in a solid position, with a good first half setting us up to meet market expectations for the full year and a return to a net cash position in 2025. So, a good start to the year overall.
Proactive: Thank you for the update, Paul.