Boku’s FY17 results confirmed growth in all metrics, as new merchant connections helped drive a more than doubling of monthly active users and a tripling of payment volumes. With underlying costs actually falling year-on-year, the company significantly reduced losses and is on course to generate positive operating profit and EPS in FY18. FY18 outlook is unchanged and our forecasts are substantially unchanged. With net cash of $16m, the company is in a strong position to fund future growth, with products under development to use carrier data to optimise e-commerce.
FY17 results in line; strong growth in all metrics
Boku reported FY17 results in line with our expectations: strong growth in monthly active users (+141% y-o-y) generated growth in total payment volumes (TPV) of 207% y-o-y which, once taking into account the mix of transaction types, resulted in revenue growth of 42%. Better buying power and lower underlying operating costs
led to a substantial narrowing of the EBITDA loss from $12.3m in FY16 to $2.3m in FY17, with positive EBITDA in H217. As a result of funds raised in the November IPO, the company closed the year with a net cash position of $16.2m.
Positive FY18 outlook; development of new products
The combination of new connections, growth in digital content, and growth in user numbers from recent connections support our revenue forecasts in the short to medium term. Longer term, Boku is looking to supplement its payment solutions with new products relating to customer registration, authentication and location. As management expects FY18 TPV and revenue growth to be in line with market expectations, we make no changes to our revenue and EBITDA forecasts. Small changes to operating profit and net income relate to revised amortisation forecasts.
Valuation: Reflects strong growth potential
Near-term EV/EBITDA and P/E multiples are at a premium to peers, but in our view are justified by the company’s strong sustainable earnings growth potential. Data points to evidence that Boku is meeting or beating its current plan include updates on new major merchant wins, existing merchant roll-outs to new carriers and/or new geographies, TPV growth, and tracking the performance of current key merchants. In the longer term, we expect to see new products developed to extend the services that can be offered by merchants and MNOs, and could see bolt-on acquisitions to acquire technology or customer relationships.
