Shares in Boku (BOK) plunged by more than a fifth after the direct carrier billing group issued a trading update for 2019. Peel Hunt – which maintained its ‘buy’ rating – said that “our conviction that Boku is the way to play the rise of the global mobile economy remain intact”. However, “extrapolating trends” seen during the past year, the house broker has “rebased” its forecasts “at a lower level” for 2020.
For its core payment business, Boku expects to report revenues of $43.3m (£33m) – up by 23 per cent. That said, this includes $3.2m of non-recurring sales – meaning that underlying payments revenue grew at a lesser 14 per cent. Peel Hunt notes that this is “around market growth”. Analysts here have opted to take “a more prudent stance with the payment outlook”, now expecting the division to add $5m in 2020 and 2021 – implying underlying growth of 11-12 per cent.
Meanwhile, the group’s identity business – which was established after it bought Danal last January for $25.1m – saw revenues rise by just over a quarter to $6.7m. At the time of the acquisition, Boku had said that deferred consideration for Danal would only be paid if it reached $10m in sales during 2019. Peel Hunt says that the “slow start” for identity stemmed from time taken to open non-US channels, as well as supply side issues in the US.
Overall, Boku is still set to deliver revenues of between $50m-50.5m for 2019 – up by more than 42 per cent. It expects cash profits to range between $10m-10.5m – up by more than 59 per cent. And it had around $35.6m in cash at the year-end, up from $32.3m.
