Bango PLC (LON:BGO) is ready to move into profitability, according to City broker Cenkos, which found the company’s financial results to be ahead of expectations.
“We see a clear path to Q4 2017 run-rate profitability and are firmly of the view that Bango is well on the way to realising its potential for substantial step changes in EUS growth,” Cenkos analyst Ian McInally said.
The group, which enables payments for apps and games including Pokemon GO, told investors that end user spending (EUS) rose 150% to £46.17mln in the six months ended June 30.
On an annualised basis, EUS amounted to 159mln, some 250% above the same measure a year before.
Ian McInally told investors: “During H1/16 EUS accelerated faster than our forecast expectations and we believe that once the BilltoMobile integration has been fully completed, Bango Boost technology should successfully add further EUS growth
“We believe Bango now has the required funding to move into profitability.”
McInally, who rates Bango as a ‘buy’, also highlighted that he anticipated that the company had “a strong and growing pipeline” of new business through the rest of 2016 and into 2017.
The analyst currently estimates gross EUS up to £258.9mln for 2017 and to £498mln by 2018 at which point he forecasts the group will be generating £8.2mln of gross profit with positive earnings of £3mln for the year.
He also notes Bango’s recently agreed partnership with Danal, a South Korean mobile commerce group, as a further catalyst from which he sees “a growing number of new opportunities”.
What does Bango do?
In its own words, Bango makes it easier for customers like you and I to buy digital content like apps, games and music on our phones and tablets.
Once users are ready to complete their app store purchases, they just click once and they’ve paid.
The payment is charged to the user’s mobile phone bill, meaning that there is no need to enter card details or any other personal information.
Essentially, you can make app store purchases whenever, wherever and in one tap.
The firm says that its technology reaches more people and delivers a higher conversion rate than any other method.
Within a split second of pressing the buy button, Bango is able to work out the user’s identity; which operator the customer is paying through; if funds are available to make the purchase; as well as anti-fraud information to help secure the payment.
How does it make money?
Bango has processed hundreds of millions of digital content payments for the likes of Amazon, Microsoft, Samsung and Google.
For each of these purchases that is made using Bango’s payment platform, the firm takes a small percentage.
But it doesn’t stop there.
Through all these transactions, Bango collects data by the masses, which it uses to generate unique insights into customers’ buying habits.
The company can then use this information to offer optimisation recommendations to its partners about how they could improve the user experience and, more importantly, how they could increase their conversion rate.
And finally, the share price…
Bango shares are slightly lower in the year-to-date after entering 2016 at around the £1 mark.
Shares dipped to as low as 35p in April, before staging a solid recovery in recent months on the back of some positive news flow.
The share price currently stands at 87p or thereabouts, giving it an approximate market value of £57mln.