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Priced for a highly profitable outcome

A provider of a state-of-the-art mobile payment platform is delivering eye-catching revenue growth and is poised to smash full-year earnings estimates
 Priced for a highly profitable outcome
  • First half revenue soars 49 per cent to £7.1m
  • App developers using Bango Marketplace doubled to 4,000 in past six months
  • Largest subscription agreement signed to date with a tier 1 US telecoms group

Aim-traded Bango (BGO:215p), 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 more than doubled its first-half cash profit to £2m, buoyed by 74 per cent higher end-user spend of £1.3bn.

In the period, Bango signed a raft of new partnerships including ones with NTT Data Hong Kong and T-Pay Mobile (combined over 1bn users) to enable merchants connected to Bango’s platform to access new operators and wallet billing connections across Asia, the Middle East and Africa. Bango is also scaling up its subscription revenue, expanding arrangements with Amazon Prime and Microsoft Xbox Game Pass and announcing its largest deal to date with a tier 1 US telecoms carrier. That contract could be worth more than £0.5m in annual revenue. Platform partnerships enable hundreds of millions of online customers to benefit from offers for products including Netflix, BritBox, Spotify, Pandora Radio and YouTube TV, all through the Bango platform.

Moreover, Bango is benefiting from Apple’s decision to give users the choice to opt out of any type of targeting or tracking. Millions are doing so, which means that app developers are placing an even higher value on Bango’s audiences. This is the data monetisation side of the business, which improves the return on marketing spend for app developers by providing them with targeted audience groups that are most likely to buy their products. Bango has recently partnered with TikTok to bring purchase behaviour targeting to merchants marketing on the social media platform for the first time.

House broker Liberum Capital had previously expected Bango’s full-year cash profit to be flat at £4.5m on 20 per cent higher revenue of £14.7m as the company absorbed £1.9m higher investment this year in sales, marketing, R&D and the platform. However, these forecasts are far too conservative given Bango’s seasonal 60 per cent second-half weighting. I can also see material upside to Liberum’s 2022 forecasts (cash profit of £6.2m on revenue of £18.5m) given the momentum in the business.

Bango’s shares are up 139 per cent gain since I initiated coverage ('Bang on the money', 26 September 2016), and 5 per cent higher than when I covered the annual results (‘Investments for the new normal’, 25 March 2021). Offering 20 per cent upside to my raised target of 260p they rate a strong buy.


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