REG - Bango PLC - 2022 Preliminary Results
28/03/2023 07:15
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RNS Number : 4406U Bango PLC 28 March 2023
Bango PLC
("Bango")
2022 Preliminary Results
Strong growth, accelerated by the acquisition of DOCOMO Digital
Cambridge, UK, 28 March 2023 - Bango (AIM: BGO), the global platform for
data-driven commerce, today announces its unaudited preliminary results for
the 12 months ended 31 December 2022.
Financial highlights:
· Revenue up 38% to $28.5M (FY21 $20.7M).
· Accelerated organic growth in annual recurring revenue(1) (ARR) to $5.0M
(2021: $1.1M), driven by multi-year SaaS contract wins with T-Mobile, Televisa
Univision and Liberty Global, alongside the launch of Verizon +Play in
December 2022.
· Trading momentum in 2023 has continued, in particular for Bango Digital
Vending Machine ("DVM") technology. 2023 exit ARR is now expected to reach
$10M, comfortably ahead of previous $7M guidance.
· End User Spend (EUS) $5.6B (2021 $4.1B). Run rate EUS exiting 2022 was
$8.6B/yr.
· Adjusted EBITDA(2) of $5.0M (2021 $6.1M), ahead of market expectations(3),
including the initial negative contribution from the DOCOMO Digital
acquisition as planned.
· $11M of the planned $21M/year cost synergies from the acquisition of DOCOMO
Digital in August 2022 had been executed as of 31 Dec 2022. The acquisition
remains on track to deliver $10M of incremental Adjusted EBITDA in 2024.
· Cash at period end of $12.7M (30 June 2022: $5.7M). This includes $2.9M of
restricted cash related to a discontinued business segment from the DOCOMO
Digital acquisition.
Adjustments from 24 January 2023 Trading Update
Adjusted EBITDA
· $0.9M higher largely due to further restructuring costs related to the
acquisition of DOCOMO Digital moving to exceptional costs.
Revenue
· $1.1M from the DOCOMO Digital acquisition has been reclassified as other
income.
· The $1.1M cash has been received in full.
· A $3.3M non-recurring fee (and the associated costs) connected to one large
contract that commenced in 2H 2022 will now be recognized across 2022-2024
rather than in 2022, based on an alternative interpretation of IFRS 15.
· The $3.3M cash has been received in full.
· There is no impact on ARR or profit.
· There is no impact to any prior periods or guidance.
Operational highlights:
Bango Payments & DOCOMO Digital Acquisition
· Transformational acquisition of DOCOMO Digital in August 2022 solidifies Bango
market leadership. The deal brings significant scale to the business, adding
an additional $3.5B EUS and $16M in annual revenue from 2023, as well as over
100 new customers including Telefonica, Hutchison, Discovery+, Jetstar &
Shopify.
· Migration of services from the legacy DOCOMO Digital system to the Bango
Platform is underway and on track to complete in early 2024.
· Long-term strategic agreement with NTT DOCOMO (the world's largest provider of
direct carrier billing) for integration of global merchants into Japan.
· Strong positive feedback from existing and acquired customers, creating new
sales opportunities across the business.
Digital Vending Machine
· New Digital Vending Machine (DVM) deals with T-Mobile, Televisa Univision and
Liberty Global. These, alongside the December 2022 launch of Verizon +Play,
drove ARR growth.
· 44 new organic merchant customers including McAfee, HBO, Paramount, NFL and
Duolingo, plus major win in June of the 'Global Tech Leader'. These merchants
can now offer their products to all the operators connected to the Bango
Platform.
· Strong pipeline of DVM deals expected to close during 2023.
Bango Audiences
· Growing demand for Bango Audiences in existing sectors including gaming and
more broadly with e-commerce retailers such as Adidas.
Sustainability
· Record employee engagement score of 83%.
· Reduced carbon intensity by 12% and committed to net zero by 2040.
Post period highlights:
· New DVM contract win with Benefit One, the leading employee benefits provider
in Japan. This highlights an expanding market opportunity beyond the telco
space. Using the DVM, Benefit One will offer its 10M+ customers bundled
subscription services as additional employee incentives.
· Dropbox joined the Bango Platform to grow its subscriber base globally.
Productivity services like Dropbox broaden the range of subscription products
for offers and bundles, alongside traditional TV & music streaming
services.
Outlook:
· Trading in the current year has started well, and the Board remains confident
in Bango prospects for the year ahead.
· Well placed to grow ARR from existing and new Bango DVM customers. The current
industry move to online subscriptions has the potential to accelerate demand
for DVM technology across multiple sectors including telcos, employee
benefits, utilities, financial services and retailers.
· Board now expects Bango to exit 2023 with $10M of ARR, providing good
visibility of sustainable, profitable growth.
· Well-funded to deliver on the growth strategy and enhance Bango profit
margins.
Investor Presentation:
Bango is hosting a presentation, open to all existing and potential
shareholders, at 10.30am today. Investors can sign up to Investor Meet Company
for free and register to join the call here:
https://www.investormeetcompany.com/bango-plc/register-investor
(https://www.investormeetcompany.com/bango-plc/register-investor)
Bango CEO, Paul Larbey, said:
"2022 was a transformative year for Bango. The business delivered double digit
revenue growth together with accelerated progress in annual recurring revenue,
supporting strong forward momentum.
At the October 2021 investor strategy day, I talked about Bango approaching an
inflection point in its growth trajectory. In 2022, we passed though that
inflection point driven by rapid, organic growth, and then accelerated our
strategy by 2 years with the transformational acquisition of DOCOMO Digital.
The acquisition not only increases the scale of Bango financially and
operationally, but it solidifies our leading position in the market. Feedback
from customers and partners has been overwhelmingly positive as we position
ourselves to deliver even greater value to the world's largest online
merchants and their partners.
There is a large and accessible market opportunity ahead for Bango. We enter
the remainder of the year in a strong position with a healthy pipeline and a
profitable and cash generative business which, combined with our strong
balance sheet, enables us to continue investing in our growth strategy. I am
hugely excited for the year ahead as we continue to focus on helping our
customers and partners increase their revenues, fuelling further growth for
Bango and delivering increasing value for our shareholders."
Notes:
The Annual Report, including full accounts, will be published and sent to
shareholders shortly.
(1) Annualized December revenues derived from ongoing, repeating contracts.
(2) Adjusted EBITDA is earnings before interest, tax, depreciation,
amortization, share based payment charge, negative goodwill and exceptional
items.
(3)Market consensus can be found here:
https://bangoinvestor.com/analyst-consensus/
(https://bangoinvestor.com/analyst-consensus/)
The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU)
No.596/2014. Upon the publication of this announcement, this inside
information is now considered to be in the public domain. The person
responsible for making this announcement on behalf of Bango is Paul Larbey,
Chief Executive Officer.
Contact Details:
Bango PLC Singer Capital Markets (Nominated Adviser and Joint Broker) Stifel Nicolaus Europe Limited (Joint Broker)
+44 1223 617 387 +44 20 7496 3000 +44 20 7710 7600
investors@bango.com (mailto:investors@bango.com)
Paul Larbey, CEO Harry Gooden Nick Adams
Matt Garner, CFO Jen Boorer Alex Price
Anil Malhotra, CMO Asha Chotai Ben Burnett
Rebecca Jamieson, IR
About Bango
The world's largest online merchants, including Amazon (NASDAQ: AMZN), Google
(NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT), use Bango technology to acquire
more paying users.
Bango has developed unique purchase behavior technology that enables millions
more users to buy the products and services they want, using innovative
methods of payment including carrier billing, digital wallets and subscription
bundling. Bango harnesses this purchase activity into valuable marketing
segments, called Bango Audiences. Merchants use these audiences to target
their marketing at paying customers based on their purchase behavior. Better
targeting increases spend through the Bango payments business, in turn
generating more data insights, creating a powerful virtuous circle that drives
continuous growth. Everyone connected to the Bango Platform thrives as the
virtuous circle grows.
Bango, the technology behind every payment choice. For more information,
visit www.bangoinvestor.com (http://www.bangoinvestor.com/)
Chair statement:
In nuclear physics, a chain reaction can occur if a single nuclear reaction
causes an average of one or more subsequent nuclear reactions, leading to a
self-propagating series of reactions. Critical mass is the smallest amount of
material needed for a sustained nuclear chain reaction - which depends on its
structure, enrichment and surroundings.
The Bango Platform, following the acquisition of DOCOMO Digital, has now
reached its own critical mass with its unique structure, financial strength,
and its surrounding partners. Bango is unleashing explosive growth with rising
energy, momentum and awesome power that is harnessed by merchants to grow
their businesses faster.
$200B/year of digital services will flow though telcos in the coming year.
Bango is expanding into this huge market opportunity as our unique technology
and market position replaces legacy methods. Without Bango, the market is
large but fragmented and inefficient. Hundreds of one-to-one integrations,
with no easy way for consumers to get to grips with their multiple
subscriptions.
The emergence of the Bango Platform as a global standard, and its innovative
Digital Vending Machine, is catalyzing a new wave of efficiency and
effectiveness for merchants, telcos and consumers. Adoption of Bango
technology is accelerated by the increasing demand from consumers for greater
choice and better value in online content and services. With leading telcos
such as NTT DOCOMO, Verizon and LGI backing the Bango Platform, merchants
offering these services have confidence in the Bango vision. As one of these
said to me recently: "At last there is a standard model that the industry can
rally around to drive the next wave of growth."
The flow of digital commerce enabled by Bango doubled over 2022 to a run rate
of well over $8B/year. The power of a common platform means the additional
revenue generated by this growing volume does not add extra cost, so revenue
flows through to operating profit, providing Bango with increasing firepower
to drive more growth.
Every new adoption of the Bango Platform adds value to those already on the
Platform, so existing customers encourage more customers to join.
Bango proved that a Platform approach streamlines assimilation when we
acquired US based Billtomobile in 2016. Dozens of customers were seamlessly
migrated to the Bango Platform within sixteen months, enabling the closure of
legacy systems and software and delivering the expected synergies. Eight
months into the process with the DOCOMO Digital acquisition, and with the
added benefit of critical mass and market momentum, the team is on plan and
synergies are flowing. This should give you confidence that Bango is in a
strong position to drive further consolidation and able to add new
capabilities into the Bango Platform as the chain reaction effect drives
increasing market share.
Part of my role as Chair is to catalyze high level relationships with
companies that are synergistic with Bango. In addition to developing our
relationships with industry giants like NTT DOCOMO in Japan and NHN
Corporation in Korea, we continue to innovate. Beyond the existing $200B
digital services opportunity, the broader subscription economy is growing
fast. There is nothing to prevent Bango expanding into this space in future,
building on our success in digital.
The importance of Bango is not just shown by its financial metrics. In the
coming year, you will see the increasing adoption of Bango Platform to deliver
the Digital Vending Machine model across the industry and the increasing
adoption of the privacy safe Bango model for Purchase Behavior Targeting. I
look forward to working with the Board as Bango progresses through this
significant value inflection point.
Ray Anderson
Executive Chair
CEO statement:
Introduction
2022 was a transformative year for Bango.
1. The traction with the Digital Vending Machine increased 5x over the year. This
technology enables telcos to make life easier for all of us by creating a
single portal to manage subscriptions.
2. The acquisition of DOCOMO Digital and the signing of a new, long term
strategic agreement with NTT DOCOMO solidified our position as a leader in
payments, accelerating the Bango strategy by over two years and supporting our
medium-term goal of moving towards hundreds of millions of dollars of revenue.
3. Bango Audiences, implementing unique Purchase Behavior Targeting ("PBT")
technology, expanded its customer base beyond App Developers targeting new
paying users, to major brands such as Adidas who are focused on the early
identification of prospective customers higher up the marketing funnel.
I have always believed in the momentum of Bango. In Physics, momentum is
velocity multiplied by mass. Bango has always had the velocity; moving quickly
to capture new markets with technologies such as Purchase Behavior Targeting
and solutions like the Digital Vending Machine. What 2022 brought was a
substantial increase in mass; a doubling in scale with an EUS run rate ending
2022 of $8.6B/year. This serves only to compound our momentum, accelerating
Bango growth.
This momentum delivered 38% revenue growth in a year where a strong dollar
reduced the financial benefit from contracts in Euros and Japanese Yen and
inflation & interest rates soared bringing a cost-of-living crisis at a
level not seen for a generation. The momentum of Bango makes these major
events minor bumps in the road rather than barriers or obstacles.
Bango progress is evident not only in the financial statements and major
customer wins but in the recognition from across the industry. Awards such as
"Diversity Champion" at the AIM Awards and "Quoted Company of the Year" at the
Business Weekly Awards, in addition to numerous product awards, provide
acknowledgement that Bango is an exceptional business; a point further
reinforced by our annual employee engagement score which increased yet again
to 83%.
Digital Vending Machine
How many subscriptions do you pay for? A recent Bango survey revealed that 78%
of consumers want a single place to manage their subscriptions with most
voting for their telco, broadband or PayTV provider to offer this service.
This is the problem the Bango Digital Vending Machine solves.
The Digital Vending Machine is the Bango Platform connecting multiple
subscriptions to one consumer bill, for example, a telco bill, in a single
online experience. The telco chooses which subscription products to stock the
Digital Vending Machine with, and provides a way to pay, but it is the Bango
Platform that 'dispenses' those subscriptions.
The Digital Vending Machine has created a recurring revenue stream for Bango.
The telco providers pay a setup fee and then a monthly or quarterly license
fee that scales with the number of subscriptions being managed. More users and
more subscriptions per user moves telcos into the next license tier increasing
Bango recurring revenue.
The world's largest telcos and merchants rely on Bango to drive their growth.
In 2022, as a direct result of the Digital Vending Machine telco wins, 44
merchants joined the Bango Platform. This momentum puts clear distance between
us and the nearest competitor in terms of connected merchants. Each new
merchant makes the Bango proposition even more compelling to prospective
customers. The addition of the "Global Technology Leader" back in June 2022
added the one missing logo to the list of mega merchants in the Digital
Vending Machine.
The power of the merchants connected to the Bango Platform along with the rich
feature set have led to some of the world's largest telcos including BT,
Verizon, T-Mobile US, Optus Australia and Liberty Global adopting the Digital
Vending Machine. Bango is rapidly becoming the de facto standard.
Payments & DOCOMO Digital Acquisition
The Bango Payments business allows global merchants to find new customers
through alternative payment methods - simply put, this is anything other than
credit cards, including both wallets and carrier billing. This business is
built on the same Bango Platform that powers the Digital Vending Machine and
Bango Audiences. Bango charges a percentage of the retail price to process the
payment transaction. The organic growth of this business, coupled with the
leverage in the Platform, has allowed us to generate profits and cash that we
have chosen to invest in new growth areas such as the Digital Vending Machine
and Bango Audiences. During 2022 the business continued to grow and the
"Global Technology Leader" win announced back in June added another leading
app store to the list of large global merchants using the Bango Platform.
In August, the strategic value of the Bango Platform was further evidenced
when NTT DOCOMO (the world's largest carrier billing operator) selected Bango
as the acquirer of DOCOMO Digital and simultaneously signed a multi-year
strategic agreement that positions Bango as the platform to connect global
merchants into Japan. This acquisition brought new operators such as
Telefonica, Three and Millicom to Bango for the first time. It also solidified
our position with existing operators such as Vodafone. The same story is
reflected on the merchant side, Bango and DOCOMO Digital were, together,
number 1 & 2 for both Google Play and Amazon integrations - when you
combine the number 1 & 2 in any business, a clear leader emerges.
The acquisition accelerated our growth by over two years. It brought
additional data to monetize in Bango Audiences, along with more merchants and
operators for the Digital Vending Machine, adding further momentum to the
Bango virtuous circle. On announcing the acquisition, we were very clear that
in 2024 it would bring $16M of revenue and $10M of EBITDA. To get to this we
must realize $21M of synergies by combining the companies and migrating all
the routes to the Bango Platform. In the first four months we executed over
half of the targeted savings. More work is needed but, although time
consuming, it is neither difficult nor complex. The hard steps are behind us
and we are executing to plan.
Bango Audiences
Payment data from the Bango Platform, along with third party data sources
(such as credit card processors), are combined using unique Bango Purchase
Behavior Targeting (PBT) technology to create Audiences of users, which allow
marketers to target their marketing campaigns at consumers who have actually
paid for similar products previously. Bango Audiences are much more effective
(2-9x) than relying on soft indicators such as "searched for" or "like" data
provided by platforms such as Google and Facebook.
2022 was certainly not a dull year for marketers; the aftershocks of Apple's
IDFA privacy changes, along with Facebook pricing and a certain degree of
chaos at Twitter, created lots of uncertainty. One thing is certain however;
as the dust settled, the value of Bango Audiences and PBT became even clearer.
PBT is a new concept to many marketing teams. In previous years, our own
marketing campaigns have focused on raising awareness about the value this
technology brings to ad targeting. In 2022, amid the turmoil, the industry
started to see the benefits of Bango technology for itself as Bango won both
the "Most Effective User Acquisition Company" at the Mobile Marketing Awards
and the Sales & Marketing Technology Award 'The Sammy' for Ad Technology
Product of the Year.
In 2022, we added support for Snapchat to the Bango Audiences product and, for
the first time, attracted brands such as Adidas, who used Bango Audiences both
at the bottom of the marketing funnel to drive the conversion of paying users
and higher up the funnel in their brand awareness campaigns to find more
interested and engaged customers.
2022 also saw the beginnings of Digital Vending Machine merchants becoming
Bango Audience customers as they look to find new users for their subscription
services.
Outlook
The Digital Vending Machine is our number one priority for 2023. We will
invest to reduce sales cycles and deployment times, speeding-up the start of
license revenue. Investments will include adding new features to the product
and "pre-stocking" the vending machine with subscriptions using the Bango
e-distribution ("e-Disti") model. The e-Disti model standardizes the technical
and commercial model for selling digital subscriptions through channel
partners. Bango acts as the merchant, supplying subscription services directly
into the vending machine. The e-Disti model provides a faster launch of
services and has already been successful with merchants such as Microsoft and
McAfee.
We had previously stated our expectation was for $7M of ARR by the end of
2023. Given the progress so far and ongoing traction we now expect to reach
$10M by 31 December 2023 (double that reported for December 2022).
Bango Audiences will focus on growing its share of the largest app developers'
ad spend and expanding into brand marketing higher up the funnel. And, by
using Bango Audiences to help Digital Vending Machine merchants target new
customers, we not only generate revenue from the use of Bango Audiences but
create more subscriptions to drive up ARR.
Inside Bango, our goals for 2023 are grouped in to three categories:
· Growth - Accelerating our growth
· Simplify - The team, processes and tools to deliver growth with increased
profitability
· Sizzle - Making Bango THE winner - the company everyone wants to work with or
at
The growth will be evident both in the announcements of new customers as well
as in the financials. The simplification of the business will be evident in
the EBTIDA as the cost synergies from the DOCOMO Digital Acquisition drop to
the bottom line. The sizzle comes from the accelerating momentum of the
Platform. The intersection of consumer subscription services delivered through
a channel (e.g. a telco) is one where a single platform such as Bango will
dominate.
We are excited by the opportunity as we enter the next stage of our growth
journey, our 2023 results will demonstrate progress on our growth and simplify
objectives, as for sizzle, ultimately, you will need to judge that for
yourself - the Bango team certainly feels it.
Paul Larbey
Chief Executive Officer
CFO statement:
This financial year saw Bango continue to grow revenue organically, growth
that was accelerated by the acquisition of DOCOMO Digital Limited at the end
of August 2022. Even with increased and some replicated costs arising from
the acquisition, the enlarged Bango still returned a positive Adjusted EBITDA
and remained cash positive with no debt.
Bango revenue model
Bango continues to generate revenue from several streams. Transactional
revenue which covers the transactional payments business and data monetization
through Bango Audiences' purchase behavior targeting and non-transactional
revenue which encompasses platform license and integration fees for the
Digital Vending Machine. Where the business engages in distribution
activities, it assesses the nature of that business against the
Agent/Principal principles outlined in IFRS15 (Revenue from Contracts with
Customers). Bango has been assessed to act in some cases as a principal and
others as agent dependent upon its involvement.
Acquisition of DOCOMO Digital
On 29 August 2022, Bango completed the acquisition of the entire issued share
capital of DOCOMO Digital Limited and its associated Group from NTT DOCOMO,
Inc. of Japan. This acquisition has accelerated Bango growth by over two years
and has added new customers, routes and relationships.
During the acquisition process, Bango undertook robust due diligence on the
acquired entities, including financial and tax investigation and research with
assistance from Grant Thornton and EY respectively, to identify risks and
opportunities. Detailed financial projections were prepared outlining
significant financial synergies and by the end of FY2022 Bango had executed on
$11M of a targeted $21M of these savings with the balance expected by the end
of FY2023.
Post-acquisition, Bango engaged with Grant Thornton in respect of the Purchase
Price Allocation with assets and liabilities recognized based on the fair
valuation on the date of acquisition per IFRS3. Bango identified two key areas
to be considered and valued, customer relationships and technology IP with two
other areas, non-competition agreements and trade names/brands considered but
not valued. The outcome of these valuations resulted in a negative goodwill
figure as the purchase price was lower than the total fair value of the assets
and liabilities acquired and this recognized as an exceptional gain in the
income statement.
End User Spend (EUS)
EUS is calculated based on the total value of transactions processed by the
Bango Platform (excluding taxes) together. EUS, increased by 35.7% in the year
from $4.1B to $5.6B. This measure, although less correlated than ever with
revenue, continues to be an important Key Performance Indicator for the
business and an essential provider of Purchase Behavior Targeting information
for Bango Audiences.
Revenue and costs of sale
Total revenue from continuing operations increased 37.6% to $28.5M (2021:
$20.7M). Bango continues to break this down into transactional payments &
data monetization revenue and non-transactional payments revenue (encompassing
platform & technology, licensing of software and integration) and has
added a new metric for revenue monitoring during the period by breaking out
Annualized Recurring Revenue (ARR). This metric, which is calculated by
annualizing the December revenue derived from ongoing, contracted, repeating
revenues, showed a 4.7x increase from December 2021 to $5.0M. This is a very
strong indicator of the continuing, sustainable growth of the company.
Bango earns revenue from payment transactions processed by the Bango Platform,
from platform and software licenses and from the data insights sold as Bango
Audiences. Revenue, such as integration fees, is recognized on completion of
contractual milestones and after consideration of the requirements of IFRS15
(Revenue from Contracts with Customers). Further consideration was also given
to the separation between the integration fees and the subsequent ongoing
platform license fees. It was judged, based on the contractual agreements,
individual orders and discussions between customers and Bango, that these were
two distinct revenue events.
Bango has seen gross profit margins reduce slightly this year to 90.6% (2021:
94.1%). This is the result of increasing revenue derived from the growing
Audiences business, which shares revenue back with the data provider,
additional cost of sales where a third party is used to provide connections to
the local payment provider together with some costs associated with new
Digital Vending Machine customers, and some short-term higher costs of sale
from the newly acquired DOCOMO Digital business, which currently runs on a
different platform and low distribution margin where Bango has acted as
Principal.
Operating expenditure
The combination of the inclusion of DOCOMO Digital costs from the beginning of
September with the ongoing planned, strategic investment in the development of
the Bango Platform, saw administrative expenses increase to $30.3M (2021:
$18.9M).
Adjusted EBITDA* for the year reduced to $5.0M, (2021: $6.2M). This reflects
the impact from the additional costs taken on as part of the acquisition of
DOCOMO Digital and before the impact of the $21M of annualized synergy savings
that will be achieved by the end of FY2023.
The share-based payment charge was $1.6M (2020: $1.5M) calculated using the
Black-Scholes model. The share-based payments relate to the Bango share option
program that enables all Bango employees to share in the growth in value of
Bango. Share options are allocated to employees twice a year. It is a vital
recruitment and retention tool in an increasingly competitive employment
market.
Exceptional items
As explained above, Bango undertook a provisional Purchase Price Allocation
process upon acquisition of DOCOMO Digital which resulted in a negative
goodwill adjustment of $10.2M which is reflected within the consolidated
statement of comprehensive income.
As part of the ongoing integration of DOCOMO Digital, Bango incurred certain
costs related to personnel and overheads that are not part of the normal
course of business. These have been included as exceptional costs within our
profit & loss. These include both incurred costs and costs which have been
communicated but not executed.
Financial results and earnings per share
The total loss after tax of $2.1M (2021 Profit : $0.4M) includes exceptional
costs of $11.0M, exceptional income through recognition of negative goodwill
of $10.2M, the Bango share of net loss from the NewDeep associate of $1.4M
(2021 : loss £2.1M), share-based payments of $1.6M (2021 : $1.5M) and R&D
tax credits from Bango investment in driving forward its technology of $1.2M
(2021: $0.7M).
Basic loss per share was 2.81 cents (2021 earnings: 0.58 cents).
Statement of financial position
Net assets at 31 December 2022 decreased to $31.4M (31 December 2021: $36.8M).
Investment in intangible assets that form the core of the business continue to
be key and increased from $18.6M to $27.2M. Receivables and payables both
increased as a result of the acquisition, reflecting the large cost burden of
the acquired business against payables which includes liabilities under IFRS16
for leased offices and a deferred tax liability in respect of some withholding
taxes. Receivables were again boosted by contracts converted late in the final
Quarter with no abnormal debt payment issues. Accruals growth includes
exceptional costs that will be expensed in FY2023.
Cash
Cash balance, including cash equivalents and cash held in short-term
investments, at 31 December 2022 increased to $12.7M (2021: $9.7M) assisted by
increasing sales, cash from the acquisition, favorable payment terms for a
distribution contract and proceeds of share options exercised. Of this $2.9M
is considered to be restricted and related to a discontinued business segment
from the DOCOMO Digital acquisition. There are no bank borrowings.
Intangible assets
Intangible assets net book value of $27.2M (2021: $18.6M) showed an increase
of $8.6M and includes acquired contract intangibles, as well as internally
developed capitalized R&D. Intangible asset costs relating to capitalized
internal R&D increased $7.3M, after a reduction of $2.4M due to foreign
exchange movements to $30.8M from $23.5M in 2021 reflecting the continued
drive to innovate for future growth. The net value of internally developed
capitalized R&D also increased from $9.8M to $15.0M at the end of 2022.
Internally generated R&D is amortized over 5 to 7 years, commencing upon
deployment, with projects assessed in relation to their individual cash
generation ability.
Liabilities
Lease liabilities at 31 December 2022 were $2.6M (2021: $0.1M) and have
increased post-acquisition as a result of leased offices included with the
DOCOMO Digital business.
Going concern
The combination of good operating cash flow and strong revenue growth supports
the Directors' view that Bango has sufficient funds available to meet its
foreseeable working capital requirements including costs related to any
restructuring following the DOCOMO Digital acquisition. These requirements
support the planned investment to grow marketing and sales, and to develop new
products.
The Directors have taken into account the wider macro-economic effects,
including foreign exchange and interest rate fluctuations, and have concluded
that the going concern basis remains appropriate.
Matt Garner
Chief Financial Officer
*Adjusted EBITDA is earnings before interest, tax, depreciation, amortization,
exceptional items, negative goodwill and share based payment charge
Consolidated statement of comprehensive income for the year ended 31 December
2022
2022 2021
$ 000 $ 000
Revenue 28,490 20,704
Cost of sales (2,671) (1,231)
Gross profit 25,819 19,473
Other operating income 1,123 -
Administrative expenses (30,343) (18,928)
Adjusted EBITDA 4,951 6,178
Exceptional items (10,960) -
Negative goodwill 10,203 -
Share based payments (1,634) (1,547)
Depreciation (760) (224)
Amortization (5,201) (3,862)
Operating (loss) / profit (3,401) 545
Finance costs (58) (10)
Finance income 57 11
Share of net loss of associates accounted for using the equity method (1,393) (2,081)
Loss before taxation (4,795) (1,535)
Income tax expense 2,655 1,977
(Loss) / profit for the financial year (attributable to equity holders of the
company)
(2,140) 442
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign exchange on consolidation (4,921) (214)
(Loss) / profit and total comprehensive income for the financial year (7,061) 228
(Loss) / earnings per share attributable to the equity holders of the parent
2022 2021
Basic (loss) / earnings per share (2.81)c 0.58c
Consolidated statement of financial position as at 31 December 2022
2022 2021
$ 000 $ 000
ASSETS
Non-current assets
Property, plant and equipment 1,145 242
Right of use assets 2,640 83
Intangible assets 27,244 18,645
Investments accounted for using the equity method 3,766 5,630
34,795 24,600
Current assets
Trade and other receivables 22,016 7,099
Research and development tax credits 2,030 778
Short-term investments 41 945
Cash and cash equivalents 12,657 8,706
36,744 17,528
Total assets 71,539 42,128
EQUITY
Capital and reserves attributable to equity holders of the parent company
Share capital 24,471 24,392
Share premium account 62,411 62,057
Merger reserve 2,886 2,886
Share-based payments reserve 4,029 3,635
Foreign exchange reserve (2,812) 2,109
Accumulated losses (59,541) (58,265)
Total equity 31,444 36,814
LIABILITIES
Current liabilities
Trade and other payables 32,533 5,209
Lease liabilities 841 56
33,374 5,265
2022 2021
$ 000 $ 000
Non-current liabilities
Trade payables 512 -
Lease liabilities 1,801 49
Deferred tax 4,408 -
6,721 49
Total liabilities 40,095 5,314
Total equity and liabilities 71,539 42,128
Consolidated cash flow statement for the year ended 31 December 2022
2022 2021
$ 000 $ 000
Cash flows from operating activities
Net cash flow from operating activities 5,867 6,001
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired 9,179 -
Acquisitions of property plant and equipment (1,435) (209)
Expenditure on capitalized development costs and intangible assets (9,640) (5,102)
Acquisition of other intangible assets - (1,048)
Short-term investments 904 (945)
Interest received 57 11
Net cash flows from investing activities (935) (7,293)
Cash flows from financing activities
Proceeds from issue of ordinary shares, net of issue costs 433 2,243
Interest paid (10) (7)
Repayment of other borrowing - (3)
Payments to finance lease creditors (451) (97)
Interest payment on finance (48) -
Net cash flows from financing activities (76) 2,136
Net increase in cash and cash equivalents 4,856 844
Cash and cash equivalents at 1 January 8,706 7,958
Effect of exchange rate fluctuations on cash held (905) (96)
Cash and cash equivalents at 31 December 12,657 8,706
Consolidated statement of changes in equity for the year ended 31 December
2022
Share premium Merger Share based payment Foreign currency Retained
Share capital account reserve reserve translation earnings Total
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
At 1 January 2022 24,392 62,057 2,886 3,635 2,109 (58,265) 36,814
Loss for the year - - - - - (2,140) (2,140)
Foreign exchange translation - - - (376) 376 - -
Foreign exchange on consolidation - - - - (5,297) - (5,297)
Total comprehensive income - - - (376) (4,921) (2,140) (7,437)
Share-based payment transactions - - - 1,634 - - 1,634
Transfer for exercised options - - - (864) - 864 -
Exercise of share options and warrants 79 354 - - - - 433
Transactions with owners 79 354 - 770 - 864 2,067
At 31 December 2022 24,471 62,411 2,886 4,029 (2,812) (59,541) 31,444
Share premium Merger Share based payment Foreign currency Retained
Share capital account reserve reserve translation earnings Total
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
At 1 January 2021 24,033 60,173 2,886 3,306 2,323 (59,804) 32,917
Profit for the year - - - - - 442 442
Foreign exchange translation - - - (121) 121 - -
Foreign exchange on consolidation - - - - (335) - (335)
Total comprehensive income - - - (121) (214) 442 107
Share-based payment transactions - - - 1,547 - - 1,547
Transfer for exercised options - - - (1,097) - 1,097 -
Exercise of share options and warrants 359 1,884 - - - - 2,243
Transactions with owners 359 1,884 - 450 - 1,097 3,790
At 31 December 2021 24,392 62,057 2,886 3,635 2,109 (58,265) 36,814
1 Basis of preparation
The Group financial statements, which consolidate those of Bango Plc and all
of its subsidiaries, have been prepared under the historical cost convention
and under the basis of going concern. The financial information for the year
ended 31 December 2022 is unaudited.
Bango has prepared these accounts for the year ended 31 December 2022, in
accordance with UK-adopted International Accounting Standards ("IFRS"). IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's
and Company's accounting policies. The financial information included in this
preliminary announcement does not include all the disclosures required in
accounts prepared in accordance with UK adopted International Accounting
Standards (IFRS) and accordingly it does not itself comply with UK adopted
International Accounting Standards.
The audit of the statutory accounts for the year ended 31 December 2022 is not
yet complete. These accounts will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement.
The financial information for the period ended 31 December 2021 is derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors have reported on the accounts for the
year ended 31 December 2021; their report was unqualified, did not include any
matters to which the auditor drew attention by way of emphasis and did not
contain a statement under s498(2) or s498(3) of the Companies Act 2006.
These financial statements are presented in US Dollars (USD), the presentation
currency of Bango PLC Group. The Group's functional currency is GBP Sterling.
The directors have reviewed the functional currency of the group in light of
the change in presentational currency and are comfortable that their
assessment of GBP remains appropriate for the Group's functional currency.
2 Revenue
Revenue by product:
2022 2021
$ 000 $ 000
Payments - transactional & data monetization 18,185 15,684
Payments non-transactional (licensing of software, platform & technology),
and integration
10,305 5,020
28,490 20,704
Most income is currently recognized at a point in time rather than over time.
Bango Plc believes that any further breakdown could reveal commercially
sensitive information.
2022 2021
$ 000 $ 000
Annual recurring revenue 4,963 1,053
4,963 1,053
Geographical analysis
Bango Plc's revenue from external customers is divided into the following
geographical areas.
2022 2021
$ 000 $ 000
United Kingdom (country of domicile) 1,242 948
EU 3,765 2,213
USA and Canada 8,078 4,428
Rest of the World 15,405 13,115
28,490 20,704
All turnover is spread over many territories, of which $8.7M comes from two
partners in the Rest of the World and $3.5M comes from a partner in USA and
Canada. (2021: $2.6M from the partner in the USA and Canada, $6.7M from two
partners in the Rest of the World).
3 Basic (Loss) / earnings per share
Basic (loss) / earnings per share are calculated by dividing the profit
attributable to equity holders of Bango Plc by the weighted average number of
ordinary shares in issue during the year.
2022 2021
Basic (loss) / earnings per share $ 000 $ 000
(Loss) / profit for the financial year (2,140) 442
Weighted average number of ordinary shares in issue 76,173,439 75,640,815
Basic (loss) / earnings per share 2022 2021
Basic (loss) / profit per share attributable to equity holders (2.81) c 0.58 c
Basic adjusted earnings per share
Adjusted earnings per share is a key financial information which discloses the
financial performance of the core business for which the directors have direct
control. Adjusted basic earnings per share is determined as the profit
attributable to equity holders of Bango Plc excluding the Bango Plc share of
the net loss of associate for the period, negative goodwill and exceptional
items divided by the weighted average number of ordinary shares in issue
during the year.
2022 2021
$ 000 $
0
0
0
Profit attributable to equity holders of Bango PLC:
From continuing operations (2,140) 442
Exceptional items 10,960 -
Negative goodwill (10,203) -
Share of net loss of associates accounted for using the equity method 1,393 2,081
Profit attributable to equity holders of Bango PLC 10 2,523
Weighted average number of ordinary shares in issue 76,173,439 75,640,815
Adjusted basic earnings per share attributable to equity holders (c) 0.01 c 3.34 c
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