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Boku Inc.

Boku reports strong Payments performance in H1

Boku Inc (LON:BOKU), a leading global mobile payment and mobile identity company, has provided the following unaudited trading update for the six months ended 30 June 2020.

Group

·    Group Revenues for H1 2020 are expected to be at least $24.7m

o  Underlying Payments revenue* growth has been strong at over 13.5%

o  Identity revenue impacted by coronavirus particularly in June, though with minimal effect on Group EBITDA

·   Acquisition of DCB payments company Fortumo Holdings Inc (‘Fortumo’) completed on 1 July consolidating Boku’s dominant position in the global Direct Carrier Billing (DCB) market

·    Group cash of $80.7 million at 30 June 2020 which included $44.5m of cash held to pay for the acquisition of Fortumo on 1 July 2020. Excluding this cash, the balances were $36.2 million (30 June 2019: US$27.8 million)

·   The average daily cash balance – a measure which smooths out the effect of carrier and merchant payments, was $25.7 million in June 2020 (June 2019: $22.2 million)

·    Full year Group Adjusted EBITDA** is expected to be at least in line with expectations and at least 65% higher than 2019

Payments division

·    Underlying Payments revenues* increased by 13.5% to at least $22.0m (H1 2019 $19.4m, excluding the impact of a non-recurring item, $20.2m reported)

·    Total Payment Volume (“TPV”)*** of $3.1 billion in H1 2020, 35% up on H1 2019 ($2.3 billion)

·    10.8 million New Users made their first ever Boku transaction during the first half of the year, 19% up on the prior year, driven by increased adoption during the coronavirus lockdowns

·    20.3 million Monthly Active Users (“MAU”) of the Boku platform in June 2020 (June 2019: 15.3 million), a 33% increase

·    Carrier billing launches in H1 with Google, Netflix, Sony, Spotify and Tencent

·    Good progress with eWallets with seven mobile wallets now live including Grabpay, GoPay and Dana and further contracts signed

Identity division

·    Identity revenues of approximately $2.7m (H1 2019: $3.4 million)

·    Revenues and new sales have been impacted by coronavirus, particularly in June, though with minimal impact on expected EBITDA

·    Good progress on building out international carrier supply – now live with more than 200 carriers in 51 countries. Merchants now live and generating revenues in five countries

·    Contract wins including FIS (owners of Worldpay)

*       2019 H1 revenues included $790k of one off revenues relating to a contractual change that accelerated revenue recognition of a large contract

**     Adjusted EBITDA: Adjusted for stock option expenses, Forex gains/losses and Exceptional items

***   TPV is the US$ value of transactions processed by the Boku platform

Jon Prideaux, Boku’s CEO, commented: “Boku has traded well in the first half with revenues and EBITDA ahead of the same period last year.

“Our Payments division has performed strongly through the period of coronavirus lockdown in H1 with video and gaming merchants benefiting from increased demand for home entertainment, leading to record levels of new users making their first Boku payment. In June we announced the acquisition of Fortumo for a maximum enterprise value of $41m, further extending Boku’s dominant position as the scale player in the direct carrier billing (DCB) market. We have also seen good progress with eWallets with seven mobile wallets now live and further contracts signed, including LinePay and PayPay in Japan.

“In contrast our Identity division has been affected by the coronavirus pandemic which impacted both revenues from existing merchants and slowed new sales, particularly in June. As flagged previously, the Identity division also suffered a supply side impact in the US in Q4 2019 when one of the four US carriers switched off supply to all Identity businesses and as a result H1 revenues were lower than the same period in 2019. There are parallels with Boku’s DCB payments business which had similar supply side challenges in the US in its early days, but went on to build the world’s largest DCB network. The forward-looking indicators for the division are strong. The international supply network now extends to more than 200 carriers in 51 countries. Large customers are interested in the service and moving through the pipeline. We remain confident that the fledgling Identity business is on track to build a similar global Identity network.

“With Payments growth supporting investment in Identity, I am confident that the full year Group EBITDA performance will be at least in line with expectations.”

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.