Direct carrier billing is a burgeoning market. The process allows people to pay for purchases made on mobile devices via their phone bills, providing an alternative to those seeking more seamless payment journeys – or who simply don’t have credit or debit cards.
Enter Boku (BOKU) – a direct competitor to wonder-stock Bango (BGO) – whose shares began trading on the Alternative Investment Market (Aim) on 20 November. Its first day of dealings followed an oversubscribed share placing for institutional investors, which raised £45m via shares priced at 59p each.
Boku’s platform connects customers – including Apple, Google, Facebook, Microsoft, Spotify and Sony – with mobile network operators, ultimately making each phone number “a convenient and secure payment method”. The company principally operates in Europe, Asia and the Middle East, although chief executive Jon Prideaux says that customers direct where they will operate.
The World Bank has identified 98 mobile subscriptions per 100 people across the globe; by contrast, only 62 per cent of adults have bank accounts. It is perhaps unsurprising that shares in the group had risen by more than a third on the listing price, at the time of going to press.
Management claims Boku generates higher sales than any other independent carrier billing company. For the year to December 2016, Boku delivered revenue of $17m (£12.8m) – impressive, despite being down $2m against 2015. That was generated on total payment volumes of $554m (£418m). The gross margin rose from 79 per cent to 84 per cent. The group is lossmaking, although underlying cash losses narrowed to $2.8m during the six months ending June 2017, from $7.2m year on year.
Boku has greater scale than rival Bango – despite being mature – along with a specialised platform, and intellectual property, with 73 patents granted so far. However, while Bango’s revenues are significantly smaller than Boku’s, IC buy tip Bango has a strong direct carrier billing relationship in place with Amazon Japan, Amazon’s third-largest market, and has been working on global expansion. Shares in Bango have more than doubled during the past 12 months.
Boku does not intend to pay dividends at present, preferring to invest for growth. The company had borrowings of $8m as at 30 June, but is in a net cash position post-IPO, management says.
