Aim-traded Bango (BGO:130p), a provider of a state-of-the-art mobile payment platform enabling smartphone users to charge purchases made in app stores straight to their mobile phone account, has announced several contract awards in the past few weeks, adding substance to the investment case I outlined when I covered the interim results (‘Bango turbocharged for profitability’, 17 September 2019).
Firstly, Bango has just launched carrier billing payment services for the monthly subscription-based YouTube TV package. Following an initial launch with a leading mobile operator in the US, customers can now subscribe to YouTube TV paying on their monthly telephone bill. YouTube TV is the live streaming subscription service owned by YouTube, a subsidiary of Google (US:GOOG), which enables subscribers to stream popular movies and shows on-demand, and watch live TV from over 70 major broadcast and popular cable networks on mobile, desktop, TV, and other connected devices. A subscription to YouTube TV costs $49.99 a month, for which the customer also receives cloud-hosted, and Digital Video Recorder storage for their own video content.
Secondly, Bango is collaborating with MobileAction, a leading app store marketing tool that provides app publishers with app analytics to boost their in-app payment revenues through smart campaign targeting. MobileAction's global community of app developers can now gain a competitive advantage by accessing audience groups listed in Bango Marketplace, a product that enables app developers to direct their marketing towards selected customers that are far more likely to respond, thus helping them to choose customer segments in countries that will generate a higher return on their marketing spend. The audiences are ready to plug in to Facebook campaigns with no effort by the app developer.
It’s cost-effective marketing, too. That’s because directing user acquisition campaigns through Bango Marketplace has been shown to boost revenue generated by up to nine times compared with targeting audiences that don’t offer Bango’s payment insight. Global consumer spending in apps is forecast to be worth over $155bn (£121bn) by 2023, so app developers are increasingly looking to use sophisticated marketing and monetisation techniques in order to win a share of this spend. Also, the ability to go straight to new users with a history of paying in apps can turn a lossmaking campaign into a profitable line of business.
Thirdly, Bango has signed an agreement with NHN ACE, the South Korean big data digital advertisement company, to enable global app developers to target their offers and promotions to high-value mobile and internet users in Korea. Under the agreement, NHN ACE and Bango are making audiences of Korean customers who are interested in paid content available for marketing.
South Korea offers some of the world's highest ‘lifetime value’ customers, who spend hundreds of dollars a month online. Mobile devices dominate online usage, with mobile gaming popularity making Korea the world's fourth-biggest mobile games market, according to Newzoo, a global provider of analytics for e-games and e-sports. Consequently, user acquisition costs are high, which means marketing to low or non-spenders is a sure-fire way to lose money, hence the tangible benefit to app developers of being able to access targeted customer audience groups through the valuable data Bango’s tie-up with NHN ACE will enable. It’s not only app developers that have the opportunity to generate significant revenue from Korea's high-spending gamers, but it is likely to prove a valuable revenue generator for Bango, too, by monetising the insight it has into customer mobile payments data.
Bango’s share price is up 40 per cent since I first initiated coverage ('Bang on the money', 26 Sep 2016) and I maintain my view that this is a business that has real potential to be generating £10m of annualised cash profit on revenue of £20m in two years' time, and producing free cash flow, too. That possibility is simply not priced into Bango’s market capitalisation of £92m. Buy.
■ Simon Thompson's latest book Successful Stock Picking Strategies and his previous book Stock Picking for Profit can be purchased online at www.ypdbooks.com, or by telephoning YPDBooks on 01904 431 213 to place an order. The books are being sold through no other source and are priced at £16.95 each plus postage and packaging of £3.25 [UK]. Postage and packaging is only £3.95 for purchases of both books.
Details of the content of both books can be viewed on www.ypdbooks.com. They include case studies of Simon Thompson’s market beating Bargain Share Portfolio companies outlining the investment characteristics that made them successful investments. Simon also highlights many other investment approaches and stock screens he uses to identify small-cap companies with investment potential, too.
Simon Thompson has been named 2019 Small Cap Journalist of the year at the 2019 Small Cap Awards, a prestigious event celebrating the best and rewarding the finest professionals and companies that work within the AIM and NEX communities. It is attended by institutions, fund managers, brokers and advisors operating in the sub-£100m market cap quoted company sector.