Bango interview: 'Let's keep doubling'

After impressive interim results, Lee Wild was granted access to chief executive and co-founder Ray Anderson to see what's behind such rapid growth.

"Leading merchants including Amazon, Microsoft, Google and Samsung use the Bango Platform to collect payments from tens of millions of customers and gain increased marketing effectiveness and reach from data that only Bango can provide." Bango

Summary of results by chief executive and co-founder Ray Anderson

• On the financial side, the big news is becoming EBITDA positive at the Payments business and End User Spend (EUS) increasing by 138% year-on-year to £220 million.
• Because there's a stable cost base, the scene is set for good profitability in the future. There's a good cash position. This is a financially strong story.
• We can continue our track record of doubling EUS.

EUS remains on course to more than double for the fourth consecutive year. What’s going to be driving EUS during the second half?

The second half is usually stronger as we tend to experience new wins after the Christmas period. This is the buying season when we see Amazon Prime Day, Thanksgiving and end-of-year activity. It's a 60:40 split between the second and first halves.

The Payments business is operating profitably, has high operating margins and a stable cost base as transaction volumes grow rapidly. How much is it making and what are the margins?

The best way of thinking about margin is if we add tens of millions of EUS, we'll get revenue and the cost of processing that revenue is zero, so margin is 100%.It's all paid for in our payments fee. There's a lot of headroom to process more, so it's a nice business from that perspective.

The biggest opportunity is bringing across the mobile operators going directly to Google. In some cases, billions of dollars of spend is going through that. We just want to keep growing EUS. 'Let's keep doubling' is the in-house mantra. There's never a moment we can rest on our laurels, but even now we're just scratching surface. There's a huge opportunity on the data side as well.

You've had a great couple of years in terms of share price performance, but it seems the market is waiting for something – what could that be?

We've demonstrated financial progress. We're doing what we said we were going to do. We were also wise to invest in data monetisation [Bango bought Audiens, the subsidiary of an Italian ad agency, in January], but now we need to show that the results are beneficial. Scare stories around Cambridge Analytica besmirched that activity.

Source: interactive investor (*)      Past performance is not a guide to future performance

House broker Cenkos Securities says:

"Bango has increased R&D spending to support the launches of new products and services with major customers such as the Mobile Network Operator (MNO) package subscriptions for Amazon Prime Video and Pandora Radio.

"The large volume of transactional data from the Bango platform enables MNOs and developers to open-up new and further develop existing sources of revenue. The acquisition and further development of Audiens technology has been a core component in Bango’s strategy to monetise this data, leading to the creation of a new business segment.

"Bango has also accelerated sales and marketing activity, mostly in Asia, especially to support the focus on Google upgrades (which can quickly add significantly to EUS)."

Cenkos forecasts total EUS to more than double in 2018 to £592 million and top £1.3 billion next year. After making a cash profit of £1 million this year, Bango is expected to make £5.6 million of pre-tax profit in 2019.

*The horizontal lines on the chart represent previous technical support and resistance levels.