Boku Inc (LON:BOKU), the world’s leading independent carrier commerce company, has provided the following unaudited trading update for the financial year ended 31 December 2020 (“FY 2020”).
The Group saw continued strong payments revenue growth in H2 2020, particularly in Q4, which translated into higher levels of EBITDA due to powerful operational gearing, with Group results for FY 2020 now expected to be ahead of the current market consensus expectations for both revenues and EBITDA.
· Group revenue for 2020 is expected to be at least $56.3m (2019 $46.8m); an increase of at least 20% on 2019 underlying revenues*
· Group adjusted EBITDA** is expected to be at least $15.0m (2019: $7.4m); showing an increase of over 100% on 2019, and a further $1.5m ahead of market consensus expectations, as upgraded following the Company’s trading update on 2 December 2020
· The Company held approximately $62.7m in cash on 31 December 2020 (31 December 2019: $35.6m). To part-fund the acquisition of Fortumo Holdings Inc (“Fortumo”), a new $20.0m debt facility was taken out in June 2020 and as at 31 December 2020 the Company had reduced this facility by $7.6m to $12.4m. The average daily cash balance, a measure which smooths out the effect of carrier and merchant payments, was $46.7m in December 2020 (December 2019: $22.4m)
Boku Payments division
Boku’s Payments division had another very positive year with strong operational leverage coming through:
· Acquisition of direct carrier billing company Fortumo, for a maximum enterprise value of $41.0m, completed on 1 July 2020
· Group Payments revenue is expected to be at least $51.1m, an increase of 25% on 2019’s underlying figure of $40.1m* (excluding the effect of a $3.3m non-recurring item – reported figure $43.4m) and approximately 91% of the Group total, comprising:
o Boku Payments revenue of at least $46.7m (2019: $40.1m*)
o Fortumo Payments revenue of at least $4.4m following acquisition on 1 July 2020
· Total Processed Value (“TPV”)*** of $6.9bn for 2020, an increase of 37% (2019: $5.0bn). This total included $114m from Fortumo. The blended take rate rose in H2 due to good growth in settlement volumes plus the acquisition of Fortumo settlement model merchants
· The Group had 28.8 million Monthly Active Users (“MAU”) across the Boku and Fortumo payments businesses in December 2020, an increase of 8.4 million from June 2020 and 11 million higher (+61%) than December 2019 (17.8 million). 4.6 million of these users were processed by Fortumo
· Payments adjusted EBITDA** is expected to be at least $18.8m, up 47% (2019: $12.8m) which includes Fortumo EBITDA of at least $1.5m. As previously highlighted, COVID-19 related cost savings have had a material one-off impact that has positively impacted Payments EBITDA
· Direct Carrier billing launches in 2020 included Apple, Epic Games, Google, Microsoft, Netflix, Sony, Spotify and Tencent
· Encouraging progress made in adding e-wallets to the Boku payments platform, primarily in Asia, alongside carrier billing – with 11 merchants now live across 11 wallets in seven countries. These merchant launches include global players in music streaming and console games. Volumes are growing strongly from a small base
Boku Identity division
Identity revenues are expected to be in line with market expectations.
· Reduced Identity EBITDA** loss of approximately $3.8m (2019: $5.3m)
· Identity revenues of at least $5.2m (2019: $6.7m) – impacted by coronavirus and local US supply headwinds
· Good progress on building out international carrier supply – now live with more than 200 carriers in 60 countries
· Contract wins in 2020 include LexisNexis, FIS (owners of Worldpay) and GDC
· Carrying value of Identity goodwill likely to be impaired as at 31 December 2020
* Reported Group revenues of $50.1m included $3.3m of one off revenues that related to an earlier period. Underlying Group revenues $46.8m. Underlying Payments revenues $40.1m ($43.4m reported)
** Adjusted EBITDA: Adjusted for stock option expenses, Forex gains/losses and Exceptional items
*** TPV is the US$ value of transactions processed by the Boku platform
Jon Prideaux, Boku’s CEO, commented: “COVID-19 has cast a long shadow over 2020. The pandemic has affected all aspects of business and personal lives. Many companies have been hanging on for their lives, others have perished in the struggle. Boku, positioned as it is, at the intersection of mobile and digital entertainment, is one of the fortunate companies that has been able to prosper.
“Boku’s customers primarily supply digital entertainment services: they saw demand increase and we, in turn, saw increased volumes and increased revenues. In December, 28.8 million users transacted through our payments systems. At peak, we processed more than 400 transactions each second. Both are new records. Growth has been driven by existing connections, new launches and the Fortumo acquisition. New launches have been made for Amazon, Apple, Epic Games, Sony, Spotify, Netflix, Tencent, Microsoft, Google and many other smaller merchants.
“Whilst the Boku Payments Division – accounting for more than 90% of revenues – prospered in the pandemic, Boku Identity trod water. Revenues will be at least $5.2m (lower than last year due to carrier supply issues and the impact of COVID-19), but losses too have reduced to c.$3.8m. There has been progress: services are now available from more than 200 carriers in 60 countries and important contract wins, including GDC, LexisNexis and FIS. The task for 2021 will be to roll these merchants out and increase revenues. That said, it is likely that goodwill associated with the acquisition of Danal in 2019 will be impaired in the full year audited results.
“Our current expectations for both revenues (at least $56.3m) and EBITDA (at least $15.0m) are ahead of the current market consensus (and this on top of a $1m upgrade to the EBITDA consensus at the beginning of December 2020 following our trading update).
“Looking forward, we have made real progress on launching wallets as a new payment method, initially to our existing merchants. We’re now live with 11 wallets: volume growth has been material, albeit off a small base. Pleasingly we’ve also launched with global merchants against much larger competition and have a healthy pipeline of new deployments. It is clear that wallets will be a material contributor to revenues and profits in future years. In 2021 we will be investing in the platform to ensure that we can maximise these opportunities.
“We look forward to reporting on progress with both divisions, along with our audited results, in March 2021.”
