Shares in Bango (BGO) plunged as much as 15 per cent after the mobile billing processor revealed a sharp fall in half-year revenue, higher costs and larger losses. Admittedly, that doesn't sound encouraging, but there are early signs that Bango has turned a corner and is capable of generating significant growth.
Bango has been transitioning the business away from its legacy feature phone business and into new smartphone app store partnerships. True, that shift has been expensive, but it is now largely complete. More than 95 per cent of end-user spend in the first half came via smartphones, compared with 77 per cent six months ago. Moreover, gross end-user activity increased 74 per cent on the back of higher user spending in BlackBerry World, Google Play, Microsoft Windows Phone Store and Facebook. A contract with web browser Mozilla Firefox went live last month, too. Management says systems have been put in place in anticipation of much higher volumes, with transaction processing headroom increased from 10 times to over 100 times.
The pace of growth, however, is the big unknown here with neither management nor house broker Cenkos Securities willing to provide revenue forecasts until full-year results at the earliest. Still, Bango looks well capitalised until then following an over-subscribed £6.5m placing at 200p in February.
BANGO (BGO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 163p | MARKET VALUE: | £74.3m | |
| TOUCH: | 161-165p | 12-MONTH HIGH: | 289p | LOW: 159p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 25p* | NET CASH: | £6.7m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 5.67 | -1.33 | -3.23 | nil |
| 2013 | 4.54 | -1.83 | -3.87 | nil |
| % change | -20 | - | - | - |
*Includes intangible assets of £3.5m, or 8p a share | ||||
