REG - Boku Inc - Results for the year ended 31 December 2023
19/03/2024 07:00
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RNS Number : 3253H Boku Inc 19 March 2024
19 March 2024
Boku Inc.
("Boku", the "Company" or the "Group")
Results for the year ended 31 December 2023
An exceptional year of growth, driven by the addition of more digital wallets
and account to account ("A2A") connections to our global network of Local
Payment Methods ("LPMs"), delivering revenue and EBITDA significantly ahead of
initial expectations
Boku (AIM: BOKU), a global network of localised payment solutions, is pleased
to announce its audited results for the year ended 31 December 2023 ("FY23").
Financial Highlights
· Revenues for the year up $18.9 million (30%) to $82.7 million (FY22: $63.8
million)
o 33% higher than 2022 on a constant currency basis*
· Full year revenues include $16.9 million from digital wallets and A2A
connections, up 153% from $6.7 million in 2022, following increasing adoption
these payment methods by Boku's key merchants
· Adjusted EBITDA* of $25.8 million up $5.6 million (FY22: $20.2 million
restated) at almost 32% adjusted EBITDA margin even after allowing for
continued investment in Boku's global LPM network and management's decision to
pay one-time non-contractual bonuses totalling $0.9 million to reward all
staff for the Company's exceptional growth in FY23.
· Profit before tax from continuing operations up 178% to $11.4 million (FY22:
$4.1 million)
· Net profit after tax of $10.1 million (FY22: $4.3 million, which excluded the
profit after tax from discontinued operations of $24.6m)
· Total Group cash was $150.9 million at 31 December 2023, up from $113.9
million at 30 June 2023 and $116.5 million at 31 December 2022. The Group is
debt free. In FY23 Boku spent £7.9 million repurchasing 5,512,079 of its own
shares under the share buyback scheme
· The average daily cash balance*, a measure that smooths out the effect of
carrier and merchant payments, was $131.7 million in December 2023, up from
$105.8 million in June 2023 and $98.8m in December 2022
· Cash generated from operations before working capital movements during the
year was $23.4 million (FY22: $22.0 million)
· Interest income increased to $1.9 million (FY22: $0.2 million) as interest
rates increased and more funds were moved to longer term deposits
Following the disposal of Boku's Identity division on 28 February 2022, the
comparative results shown are for the continuing Payments division only.
Non-Financial KPIs
· 67.4 million Monthly Active Users ("MAUs") of the Boku platform in December
2023 (December 2022: 52.3 million), a 29% increase
· 66.1 million new consumers made their first payment or bundling transaction
with Boku during 2023
· Total Payment Volume ("TPV") of $10.5 billion in 2023, up 18% from $8.9
billion in 2022. On a constant currency basis*, TPV was 23% higher than 2022
· Particularly strong growth in digital wallets and A2A connections:
o 76% increase in MAUs of digital wallets and A2A connections, to 6.7 million in
December 2023 compared to 3.8 million in December 2022
o New users of digital wallets and A2A connections increased 64% to 13.8 million
in 2023 (2022: 8.4 million)
· Take rate increased to 0.79% in 2023 (2022: 0.72%) as a result of higher take
rates from digital wallets and A2A connections, with H2 take rate of 0.81%
(2022 H2: 0.74%)
· In 2023 Boku completed approximately 125 new payment launches with existing
and new merchants including Google, Meta, Microsoft, Amazon, Disney, Netflix,
Spotify, Samsung, Sky and EA Games, through Boku's expanded global network of
localised solutions. Of these launches, around half were for digital wallets
and A2A connections.
*These represent alternative performance measures ("APMs") for the Group.
Refer to the Non-IFRS financial information section of Boku's 2023 Annual
Report for a glossary of the Group's APMs, their definition, the criteria for
how adjusted EBITDA is considered, together with definitions of abbreviations.
Stuart Neal, Chief Executive of Boku, commented. "These results demonstrate
that Boku is in strong financial shape and poised to fulfil its potential to
grow significantly in the world of Local Payment Methods, which now represent
two thirds of all global online payment volumes. It is testament to our focus
on delivering for our customers, combined with a clear long-term strategy,
that we are expanding the relationships with all of our key global merchants,
beyond our Direct Carrier Billing ('DCB') product, to now incorporate Digital
Wallets and Account to Account ('A2A') schemes across the globe. 2024 has
started strongly and with deals that are already in place, we have the ability
to double the business over the mid-term, as previously stated, with
additional value to be created from expansion into new verticals. I am beyond
excited at the potential for growth in this business as we create the global
network for localised payment solutions."
Investor Presentation
The Company will provide a live investor presentation relating to the results
via Zoom at 5.30 p.m. GMT today. The presentation is open to all existing
and potential shareholders. Those wishing to attend should register via the
following link:
https://us02web.zoom.us/webinar/register/WN_OccPOHOWQFCCVKfehEFuVQ
(https://us02web.zoom.us/webinar/register/WN_OccPOHOWQFCCVKfehEFuVQ)
There will be the opportunity for participants to ask questions at the end of
the presentation. Questions can also be emailed to boku@investor-focus.co.uk
(mailto:boku@investor-focus.co.uk) ahead of the presentation.
Enquiries:
Boku, Inc. +44 (0)20 3934 6630
Stuart Neal, Chief Executive Officer
Keith Butcher, Chief Financial Officer
Investec Bank plc (Nominated Advisor & Joint Broker) +44 (0)20 7597 5970
Edward Knight / Nick Prowting / Cameron MacRitchie
Peel Hunt LLP (Joint Broker) +44 (0)20 7418 8900
Paul Gillam / Tom Ballard / Adam Telling
IFC Advisory Limited (Financial PR & IR) +44 (0)20 3934 6630
Tim Metcalfe / Graham Herring / Florence Chandler
Note to Editors:
Boku Inc. (AIM: BOKU) is a leading global network of localised payment
solutions. Boku's mobile-first payments network, including digital wallets,
direct carrier billing, and A2A (account to account)/real-time payments
schemes, reaching over 7.5 billion mobile payment accounts through a single
integration.
Customers that trust Boku to simplify sign-up, acquire new paying users and
prevent fraud include global leaders such as Amazon, Meta Platforms, Google,
Microsoft, Netflix, Sony, Spotify and Tencent.
Boku Inc. was incorporated in 2008 and is headquartered in London, UK, with
offices in the US, India, Brazil, China, Estonia, France, Germany, Indonesia,
Japan, Singapore, Spain, Taiwan and Vietnam.
To learn more about Boku Inc., please visit: https://www.boku.com
(https://www.boku.com/)
Chair's Statement
Boku has seen significant change since the last Annual Report setting us up
well for sustainable future growth.
Our revenue growth has accelerated considerably thanks to broadening our range
of local payment methods. As a result of our strong operational gearing, we
are thus seeing strong adjusted EBITDA growth and increasing cash balances. I
am very proud of the team effort that has achieved this.
We expect this growth to continue so we have embraced important changes in our
organisation and how we present ourselves to the world. As a result, we are
confident we are in great shape to deliver the next phase of our growth.
Now I would like to comment on some of the changes. First, I would like to
thank Jon Prideaux, who retired as CEO at the end of 2023, for his enormous
contribution to Boku's development. He was responsible for overseeing its
growth over the past decade. Under his leadership, the Company has become an
increasingly important player in the specialised payments world and he has
built a team who perform with great skill and commitment and which has a
culture to be admired.
When Jon shared his intention to retire it is fair to say the Board was very
cognisant of the high regard staff and shareholders have for him in shaping
our future plans. However, we were very fortunate to persuade Stuart Neal to
return as CEO. He had been the CFO at the time of Boku's flotation in 2017
and then migrated internally to run our Identity division. With his help, that
division was sold in 2022 and Stuart went with it. Fortunately for us, he left
Twilio Inc, the new owner, early in 2023 which meant we could invite him back.
Not only do the Board, staff and many investors hold Stuart in high regard,
but this meant we avoided the risk of hiring someone unfamiliar with Boku. To
make for a smooth transition, Jon, as CEO, and Stuart, as CEO designate worked
together for the second half of 2023 and we are delighted that we have
achieved a smooth and seamless transition and pleased that Jon is remaining on
the Board as a Non-Executive Director.
We are also about to see the retirement of Stewart Roberts at the AGM as
Senior Independent Director and Audit Committee Chair. I would like to thank
him for his support and willingness to challenge our approach and decisions.
That and his deep financial knowledge and experience of the payments industry
will be missed, and I would like to wish him the very best in the future.
Again, we had the good fortune to be able to fill Stewart's roles from within
our ranks. I am pleased that Charlotta Ginman, an existing Independent
Non-Executive Director, has agreed to take on both of Stewart's roles for
which she is well qualified.
Turning to the overall Board composition, after the AGM we shall have eight
Directors in total, two Executives and six Non-Executives, four of which
(myself included) are independent. I am proud of the wide range of experience
of our Non-Executive team which includes the payments industry, telecoms,
internet, Far East operations, accounting, HR, customer experience, ESG and
public company board exposure. This depth of experience is complemented by a
wide range of personal backgrounds from different countries and cultures.
As well as handling changes in the internal Boku team, we have also changed
our auditors to PwC and appointed Investec as our NOMAD with Peel Hunt staying
in place as one of our two brokers. I am pleased to welcome the new advisers
to our support team and to thank Peel Hunt for agreeing to continue with us.
Revenue and profit growth are crucial to Boku's existence. However, we shall
continue to pay close attention to each of the following:
· Relevance and resilience: Boku prides itself on its ability to satisfy
customers' demanding requirements to support their growth. As our merchants
include many of the major western digital companies, with some of the largest
platforms on earth, they demand the highest standards.
· Compliance and service: As a payments company, we are proud of our ability to
comply with regulatory requirements in the more than 50 countries where we
operate. Compliance with regulations and high standards of customer service
are central to our culture and are two of the secrets of our success.
· Our people: We value all our staff and treat them with the respect and
consideration they deserve. We have, and intend to retain, high levels of
staff loyalty and diversity. The Boku culture is, in my opinion, one of the
most attractive features of this business.
We also welcome the recently revised QCA Code with which we shall comply. In
particular, the Board has determined that all the Directors should be subject
to an annual re-election starting this year at our AGM in 2024. To facilitate
this, as a US incorporated company, we need to modify our constitution and the
resolution for this will be put to shareholders at this year's AGM.
In conclusion, we are a company with the highest standards of technical
skills, customer service and integrity. This underlines why we continue to
supply payment services to the world's largest digital companies. Alongside
this we have a culture which makes Boku an attractive place to work and allows
us to hire and retain the very best staff wherever they may be based and
whatever their backgrounds are.
In my opinion the outlook for Boku is extremely exciting. We have demonstrated
through our impressive customer list that we have the skills to exploit
changing opportunities in the payments world where demanding merchants are
selling products to people in many countries with a wide range of regulations
to adhere to. I expect to see our current rapid growth continuing, but I
acknowledge the challenge of growing our staff at the pace we shall need. That
is one reason our culture is so important to our future.
I remain extremely proud to be a member of the Boku team and would like to
thank all my colleagues, Executive and Non-executive, for their continuing
commitment to our exciting journey.
Richard Hargreaves
Non-Executive Chair
19 March 2024
Chief Executive Officer's Report
I am delighted to present my first set of financial results as CEO of Boku, in
a year where the business achieved significant momentum, as demonstrated by
growth in monthly active users, total processed volume, revenue, EBITDA and
cash balances. But the financial results are an output measure delivered as a
consequence of a clear strategy and lots of hard work by Boku colleagues
around the world.
Picking up the baton - A smooth transition
I wish to formally recognise the significant contribution made by Jon
Prideaux, Boku's CEO from 2014 to 2023, to these impressive results. It is
true that financial results are a lagging indicator of strategic decisions and
operational execution that happened in the past, and this is certainly the
case with regards to our 2023 financial results.
The seeds of our current growth, specifically the ramp in Local Payment Method
("LPM") revenues, were sown way back in 2018, when, post a solid IPO, Boku
began to search for routes to longer term strategic diversification. The
ongoing themes covered in this report began life some time ago and are now
beginning to bear fruit. When Jon took charge of Boku, the Company had just
over 100 staff, with revenues that were less than $20m annually and falling.
It is testament to Jon's belief, drive and undying optimism that the Company
posted 2023 revenues of over $82m, which equates to growth of 30% between 2022
and 2023.
Taking up the baton from Jon was always going to be challenging. After all,
for the past ten years, Jon and Boku have been synonymous. Fortunately,
however, my previous stints in senior leadership roles at Boku, including my
time as CFO, have given me a deep appreciation and sensitivity to what makes
the Company great, the embedded culture, the drivers of success and the
heritage in carrier billing…more on this later.
It was with the thoughts of a winning relay team in mind that Jon has taken
great care to ensure the Boku baton has been placed firmly in my palm so that
I can take the Company on to the next phase in our growth story. My
appointment as CEO comes after a six-month transition period, during which
time I had the pleasure of being able to spend time with many of the 416
incredibly talented Boku colleagues from all over the world, hear from our
global merchants about what's important to them and speak to many of our
investors, including those who have been with us since IPO.
What I hear consistently from many of our key stakeholders is that they are
excited about the future of Boku and the opportunity in front of us to
establish ourselves as the number one global payment network for LPMs.
Global-localisation will be the driver of growth in the payments industry over
the coming years!
A Values Based Company
At the heart of our success are our incredibly talented people, who drive the
business forward by embracing the company values - putting merchants first
(with their end customers at front of mind), being ambitious, always
collaborating and showing flexibility in how we operate. The Boku values are
the cornerstone of how we do things, how we work with merchants to deliver
world-class solutions and how we operate effectively as a globally distributed
organisation. We are where our merchants need us to be.
We have strong momentum and proven product-market fit for our LPM payment
network, which now incorporates both DCB and acceptance of local digital
wallets and bank oriented A2A schemes. The challenge for Boku going forward is
to ensure that we effectively scale the operations of the business in line
with the size of the commercial opportunities that we have created for
ourselves.
The acid test for LPMs - will DCB lead to Digital Wallets which will lead to
A2A?
The question we asked ourselves was - can we take what we have learned from
winning in the Direct Carrier Billing (DCB) world and win in the materially
bigger 'pond' of cross-border payments? In addition to this, can we broaden
our reach beyond digital products and make our network relevant to more
merchants, more use cases, more segments?
The answer to both of the above questions has been a resounding YES. During
the course of 2023, we broadened our partnership with ALL of our key global
merchants beyond DCB and into LPMs. We have expanded our use cases from
digital and gaming and into advertising, with broader e-commerce scheduled for
mid-2024 launch.
We also witnessed significant inbound demand for marketing style services,
that have seen Boku power consumer acquisition (bundling) programmes for the
likes of Amazon Prime and more recently ComCast/Peacock's NFL streaming
campaign for the 2023/4 SuperBowl playoffs. Supporting the biggest live
streaming event in the history of the internet, demonstrates the resilience
and scale of our platform.
We have the proof points that we need to have every confidence in our
mid-term strategy.
The Network effect
Success for any payments company comes from building a virtuous circle -
adding more payment methods brings more connected consumers which attracts
more global merchants which attracts more payment methods, and so on…
During 2023 we added 27 new connections to our network, which now totals
around 300 LPMs. We also enabled 125 new payment launches for our merchants
during the year.
Across our network, monthly active users ("MAUs") continued to grow strongly
by 29%, reaching 67.4 million in December, which included 6.7 million users
from LPMs alone, growth of 78%.
The culmination of all of the above increases in activity across our network,
led to Total Payment Volume ("TPV") processed growing to $10.5 billion, an
increase of 19% compared with 2022. This includes TPV in relation to DCB which
grew by 19% and other LPMs (digital wallets and A2A) which grew by more than
250% over the period.
Our financial performance is predicated on more people using our network,
combined with our ability to generate margin by being increasingly useful to
our merchants. The fact that we have simultaneously grown TPV and margins in
2023 is especially pleasing as it tells me that, right now, we continue to add
value for our merchants.
Outlook - Steady as she goes, the strategy is working
I am delighted to be taking up the reins of a company that I truly believe in,
with the incredible momentum we are currently experiencing.
The future of Boku will be one of evolution and not revolution. 2024 will see
the Company continue along its current path - helping our merchants to grow
cross-border, bringing them more users by adding more local payment
connectivity. To ensure that we can continue to provide best in class service
to our global merchants, with growing volumes and growing complexity across
our platform, we will be investing in back-office processing and automation
capabilities, incorporating a focus on continuous enhancement of our banking,
treasury and settlement capabilities, making life easier for many of our
merchants when it comes to doing business globally.
We will continue to invest in those core capabilities that will provide
enablers to achieving long term sustainable growth and ensuring success in the
Big Pond of cross-border payments, an exponentially bigger market than where
we came from.
As we expand and grow, we will continue to respect and value the culture that
got us to this point and allowed us to win at DCB. It is those very DCB genes
that have equipped us to successfully add digital wallets and A2A to our
network of LPMs. Being creative, collaborative and ambitious enough to turn
messy, complex and dis-aggregated technologies into harmonised engines for
growth.
I would like to reaffirm my belief in the previously stated ambitions to
double the business in the mid-term. If we get this right, Boku can be a
rocket ship and to quote a Pixar classic "to infinity and beyond!!"
Stuart Neal
Chief Executive Officer
19 March 2024
Chief Financial Officer's Report
Strong revenue and EBITDA growth driven by growth in Local Payments Methods
Group results
2023 was a highly successful year for Boku as we saw a 30% increase in
revenues of $18.9 million to $82.7 million (FY22: $63.8 million). The primary
driver of that success was growth of our connections to Local Payment Methods
("LPMs") for our global merchant base but we also saw good growth from Direct
Carrier Billing ("DCB").
Adjusted EBITDA* also grew strongly to $25.8 million (FY22 restated: $20.2
million( 1 )), in line with revenue growth, and this was net of one-off
non-contractual bonuses to all of our staff in recognition of the highly
successful year, together with a significant increase in contractual executive
bonuses related to overperformance against both budget and market consensus
expectations at the beginning of 2023. It's worth recalling that as we headed
into 2023, market consensus expectations were revenues of $69.2 million and
adjusted EBITDA of $22.9 million, so the actual over performance in 2023 was
substantial. Group profit before tax from continuing operations for 2023
increased to $11.4 million (FY22: $4.1 million). Year-end cash balances
increased considerably to $150.9 million (FY22: $116.5 million) even though we
purchased £7.9 million of our own shares as part of our continuing share
buyback programme.
Consolidated Statement of Comprehensive Income
Payments division (continuing operations)
Following the disposal of Boku's Identity division on 28 February 2022 Boku
now only has one division - Payments.
Boku's Payments business was founded on Direct Carrier Billing ("DCB") which
enables end user customers of Boku's merchants to charge payments to their
phone bills, but our payments network has expanded in recent years to offer
connections to offer other Local Payment Methods ("LPMs") such as digital
wallets and real time Account to Account ("A2A") payments through its
'mobile-first' payments platform. These services are provided to many of the
world's largest digital entertainment merchants including Amazon, Netflix,
Meta/Facebook, Google, Spotify, Microsoft and Sony.
In 2023 the Company performed strongly with revenues increasing to $82.7
million (FY22: $63.8 million) an increase of 30% and 33% on a constant
currency basis, which in turn delivered increased adjusted EBITDA of $25.8
million (FY22 restated: $20.2 million( 1 )). Growth comes from both the
existing merchant base and from adding new carrier and LPM connections to new
and existing merchants.
Total Payments Volume ("TPV") increased to $10.5 billion (FY22: $8.9 billion)
while Monthly Active Users ("MAUs") grew by 29% to 67.4 million (FY22: 52.3
million) and 66.1 million new users made their first payment or bundling
transaction with Boku during 2023 (FY22: 56.7 million).
We saw particularly strong growth in digital wallets and real time A2A
payments: Revenues of $16.5m up 152% from $6.7m in 2022 following increasing
adoption of these products by our key merchants; a 154% increase in volumes
processed, compared to 2022; a 76% increase in MAUs of LPMs, to 6.7 million in
December 2023 compared to 3.8 million in December 2022, while new users of
LPMs increased 64% to 13.8 million in FY23 (FY22: 8.4 million).
( 1 ) Right-of-use assets were restated to prepayments in the year ended 31
December 2022, see note 2 for further details.
In 2023 Boku completed approximately 125 new payment launches with existing
and new merchants including Google, Meta, Microsoft, Amazon, Disney, Netflix,
Spotify, Samsung, Sky and EA Games, through Boku's expanded mobile-first
payments network. Of these launches, around half were for LPMs.
Our take rate increased to 0.79% in 2023, with H2 take rate of 0.81%, as a
result of higher take rates from digital wallets which are all settlement
model where we handle the cash and so charge higher fees. (FY22: take rate
0.72% with H2 at 0.74%).
We continued to invest in Boku's mobile-first payments platform in 2023 as we
further expanded our LPM capabilities and continued our investment in Boku's
regulated payment capabilities which now cover more than 60 markets where Boku
is able to process regulated payments either directly or indirectly.
Adjusted Operating Expenses (continuing operations)
Adjusted operating expenses* for the continuing Payments business increased to
$54.9 million (FY22: $41.8 million).
restated( 1 )
Year ended Year ended
31 Dec 31 Dec
2023 2022
$'000 $'000
Gross profit 80,670 61,993
Adjusted EBITDA (25,799) (20,238)
Adjusted Operating Expenses 54,871 41,755
( )
( 1 ) Right-of-use assets were restated to prepayments in the year ended 31
December 2022, see note 2 for further details.
This was due to a number of factors including significant payroll increases
due to high wage inflation in all locations and additional headcount as we
continued to invest in building out Boku's 'mobile-first' payments network
globally. We also added capabilities in digital wallets and real time A2A
payments globally, including a further expansion of our regulatory footprint
by adding new licences and legal entities. These regulated payment
capabilities now cover more than 60 markets.
The Group capitalised $5.4 million of internally generated intangible assets
during the year compared with $4.9 million in 2022.
Discontinued operations (Identity division)
Following the disposal of Boku's Identity division to Twilio on 28 February
2022 the prior year comparatives included in the consolidated statement of
comprehensive income include the results relating only to the continuing
Payments business. The Identity results are shown separately under
"discontinued operations". The final payment from Twilio was received in full
on 9 September 2023. There was no gain or loss on disposal in 2023.
( 1 ) Right-of-use assets were restated to prepayments in the year ended 31
December 2022, see note 2 for further details.
Adjusted EBITDA
Adjusted EBITDA for the full year 2023 was up 28% to $25.8 million (FY22
restated: $20.2 million( 1 )). This includes a one-time non-contractual bonus
payment to all staff to recognise the considerable over achievement against
budget and market expectations as well as contractual over performance bonuses
to senior executives. In total these over-performance bonuses totalled
approximately $2.0 million, which directly impacted EBITDA.
We continued our investment into expanding Boku's mobile-first network but
still managed to achieve adjusted EBITDA margins of almost 32%. Adjusted
EBITDA is earnings before interest, tax, depreciation and amortisation,
non-recurring other income, share-based payments expense, forex gains/losses
and exceptional items.
Profit before tax from continuing operations
Profit before tax from continuing operations for 2023 was $11.4 million (FY22:
$4.1 million). This can be broken down as follows:
· Gross margin increased to $80.7 million/98% (FY22: $62.0 million/97%).
· Share Based Payments expense increased to $7.6 million from $5.2 million in
2022 as we grew our headcount. The Share Based Payments expense comprises the
IFRS 2 charge and related National Insurance expense. Boku continued with its
policy of offering all staff share based awards annually. RSU and stock option
charges are spread over three and four years respectively, and in line with
their vesting conditions, from the date of grant. Of the $7.6 million booked
in 2023, $0.6 million was paid out cash (FY22: $0.3 million) (relating to NI),
the remainder was non-cash. All comparatives are for the continuing Payments
business only.
· Depreciation and amortisation charges increased to $7.6 million (FY22
restated: $5.4 million( 1 ))
· Foreign exchange movements resulted in a loss of $1.0 million (FY22: $0.8
million loss) mainly unrealised differences on the currency balances we hold.
· No amounts relating to intangibles were impaired in the year (FY22: $1.3
million related to impairment of the Fortumo domain and 'brand' which was
discontinued). See also intangibles section below.
· Charitable donations were similar to 2022 at $0.3 million (FY22: $0.3
million).
· Financing expenses fell to $0.3 million in FY23 (FY22: $0.7 million). These
costs relate to interest and set up fees on leases and bank loans/overdraft
facility.
· Interest income increased significantly to $1.9 million (FY22: $0.2 million)
as interest rates improved and we were able to move more funds onto longer
term deposits.
· A fair value adjustment credit of $0.1 million (FY22: charge of $3.47 million)
in relation to warrants granted in September 2022 to a subsidiary of Amazon
Inc, Amazon.com NV Investment Holdings LLC (see note 3).
· Other income of $0.1 million (FY22: $0.8 million) related to income from Boku
providing ongoing accounting services to Twilio following the sale of the
Identity business to enable a smooth transition (also in FY22). This amount
has been excluded from adjusted EBITDA as a non-trading, non-recurring item.
These services to Twilio have now ceased.
· Tax charge of $1.3 million in the year (FY22: $0.2 million credit). Please see
Note 7 for details.
( 1 ) Right-of-use assets were restated to prepayments in the year ended 31
December 2022, see note 2 for further details.
Profit from discontinued operations, net of tax (comparative)
The 2022 comparative for profit from the discontinued Identity business of
$24.6 million included a $25.2 million profit on disposal of Boku's Identity
business to Twilio on 28 February 2022 net of disposal costs and offset by the
Identity trading loss for the two months to the end of February 2022 (see note
8).
Profit after tax
The Group reported a net profit after tax of $10.1 million for the period
(FY22: $28.9 million, primarily driven by profit from the disposal of the
discontinued Identity division of $24.6 million, excluding this profit on
disposal, profit after tax was $4.3 million).
Consolidated Statement of Financial Position
· Closing cash balances were $150.9 million at the end of 2023 (including
restricted cash balances of $33.5 million) up from $116.5 million on 31
December 2022 (including restricted cash of $17.0 million). Boku also has a
Revolving Credit Facility ("RCF") of £10.0 million with Citibank. At year end
the RCF facility remained undrawn.
· The average daily cash balance, a measure which smooths out the effect of
carrier, digital wallet and merchant payments, was $131.7 million in December
2023, up from $105.8 million in June 2023 and $98.8 million in December 2022.
· Deferred tax assets of $15.3 million were recognised at 31(st) December 2023
(FY22 restated: $15.5 million( 2 )). This restatement reflected an error in
the usability of certain tax losses and future transaction volumes through its
US and UK incorporated entities) and deferred tax liabilities of $182 thousand
were recognised (FY22: $Nil).
· From a working capital perspective, current assets exceeded current
liabilities at 31 December 2023 by $64.6 million compared with $55.1
million( 1 ) at the 2022 year end.
· Intangible assets were $56.6 million as at 31 December 2023, compared to $56.2
million at 31 December 2022 due to year end revaluation into USD. The Payments
CGU (cash generating unit) was assessed using discounted cashflows and
determined that no impairment was required at 31 December 2023. Following the
disposal of the Identity CGU in 2022 only the Payments CGU remains.
· Goodwill and other intangibles were assessed for impairment and it was
determined no impairment was required as at 31 December 2023.
· Intangible assets are broken down as follows
31-Dec 31-Dec
2023 2022
$'000 $'000
Goodwill 42,183 41,733
Other intangibles 14,437 14,497
Intangible assets 56,620 56,230
( )
( 1 ) Right-of-use assets were restated to prepayments in the year ended 31
December 2022, see note 2 for further details.
( 2 ) Deferred tax in the year ended 31 December 2022 was restated, see note 2
for further details
Consolidated Statement of Cashflows
During the year there was a net increase in the cash and cash equivalents of
$33.4 million (FY22: $59.6 million), excluding the effect of foreign currency
translations.
Cash from operations before working capital changes was $23.1 million broadly
in line with prior year at $22.0 million, however we saw large increases in
trade and other payables of $70.9 million (FY22: increase of $40.3 million)
due to timing of payables to merchants as daily settlement to merchants of
funds received from digital wallets was delayed over the Christmas shut down
at the merchants' request. This was largely offset by an increase in
receivables of $53.0 million (FY22: increase of $12.3 million) for similar
reasons as receipts from carriers and wallets were delayed. This situation
largely reversed after year end when Boku paid funds delayed over Christmas to
merchants and received the delayed funds from carriers and wallets.
We purchased £7.9 million (FY22: £1.6 million) of our own shares in 2023 to
cover employee RSU awards and Amazon warrants, per notes 20 and 23.
Amazon contract and warrants
On 16 September 2022, an Amazon Inc. subsidiary, Amazon.com NV Investment
Holdings LLC ("Amazon"), signed a multi-year agreement with Boku to connect to
new Local Payment Methods in multiple geographies which validated Boku's move
into offering the new Local Payments Methods including digital wallets and
real-time A2A payments via our expanded mobile-first network. In conjunction
with the agreement, Boku entered into a stock warrant agreement with Amazon
allowing them to acquire up to 3.75% (11,215,142 shares) of Boku common stock
at 81.20p per share based on Amazon spend with Boku over a seven-year period.
747,676 shares of common stock vested immediately on the signing of the
warrant agreement on 16 September 2022.
The warrant valuation resulted in recognition of a warrant contract asset of
$2.0 million (FY22: $1.7 million) and a $5.5 million (FY22: $5.2 million)
contract liability as at 31 December 2023. Please refer to Note 23 for full
details.
Looking Ahead
In 2023 revenues grew $18.9 million to $82.7 million compared to growth of
$1.0 million in 2022. That 2023 revenue growth was a significant achievement
and we rightfully rewarded all of our staff with a one-off bonus to reflect
the significant over-performance against our internal budget and external
market consensus expectations at the start of 2023. This revenue success has
seen similar percentage growth in EBITDA despite Boku also continuing to
invest in its mobile-first platform in order to take advantage of the
opportunities in Local Payment Methods worldwide, in particular Account to
Account, as well as investment to allow Boku to scale to meet the significant
transaction and cash processing volumes we expect to see over the next few
years. In our Capital Markets Day in February 2023, I outlined how we believed
Boku could double its revenues in the medium term and that in turn would
result in an expansion of adjusted EBITDA margins once the heaviest investment
phase was over - and with 30% revenue growth in 2023 we remain confident that
goal is achievable and quicker than we imagined back in February.
We are pleased with the 2023 financial results and the substantial progress we
have made and believe the Company is well positioned for 2024 to exploit the
substantial opportunities it has. We look forward to the future with
confidence.
Keith Butcher
Chief Financial Officer
19 March 2024
Strategic Report
Boku - Enabling businesses to unlock growth by freeing their customers to pay
the way they want, wherever they are in the world
The world of payments is changing before our eyes.
Ever since the mobile revolution of the 1990s and the introduction of
smartphones in the 2000s, across the world, consumers are choosing
increasingly to manage their lives via apps (or 'Super Apps') on their mobile
devices …and that, importantly, also includes how they choose to pay for
goods and services. After 50 years of standardisation in payments, driven by
global card networks, who offered a harmonised user experience aimed initially
at face-to-face transactions via point-of-sale devices, the modern consumer is
seeking something different: Payment choice and the familiarity of their local
brands.
Enter the Local Payment Method ("LPM") revolution
LPM is a broad term to capture a preferred domestic (or perhaps regional)
payment type that is popular among consumers, but is not part of a globally
harmonised payment brand, such as Visa or MasterCard. Included within this
definition (but not exhaustively) are digital wallets, domestic Bank-run
Account to Account ("A2A") (real time payments) schemes and Direct Carrier
Billing ("DCB").
In a world now dominated by mobile commerce, the use of plastic cards seems a
somewhat old-fashioned concept when it comes to completing a transaction, and
relying on them excludes many people around the world from participating in
global digital platforms. Payments are becoming an embedded part of the way in
which companies attract, onboard, service and retain consumers. Global
organisations are acutely aware of the need to offer payment choice as a means
of accessing and retaining the largest pool of consumers in each individual
country they choose to operate within. That's where Boku comes in.
The problem for such large global merchants is how to access what are
disparate and non-standardised LPMs. After all, the beauty of the card
networks is that everything works the same, wherever you happen to be in the
world. Standardisation is the key.
However, no two LPMs are the same; have the same technology; same way of
operating; same APIs; same underlying commercial framework. To solve this,
Boku has created a platform which connects to over 300 funding sources,
creating a global network of LPMs to help many of the world's largest digital
merchants grow in territories where connecting to card networks simply isn't
enough. The Boku network offers merchants one simple API connection that
provides a slick, tokenised payments experience for an end customer that
allows for repeat transactions and subscriptions, irrespective of the
underlying funding source. Put simply, Boku deals with the complexity of LPMs
and harmonises connectivity for our global merchants and their customers.
Importantly, the shift toward LPMs is not just a developing markets
phenomenon. Whilst it is true that, in certain countries, the emergence of
LPMs has been to leapfrog the investment in card-based technology, driven by
the need for respective governments to drive financial inclusion through rapid
deployment of new payment technologies (India for example). In many developed
markets (Italy, Sweden, Switzerland, Spain, China, Korea, to name a few) the
rise of the digital wallet has been driven by demographic preference, the 'Gen
Z' effect, whereby an entire generation is growing up with no affinity to
plastic cards, but a high expectation when it comes to user experience and
convenience. It is also reasonable to say that technology and regulation have
been equally influential in instigating the rapid emergence of direct A2A
banking payments, which allow for a wallet-style mobile experience, but with a
direct link to a user's bank account (ref UPI in India, PIX in Brazil,
PromptPay in Thailand, Open Banking in the EU).
Why our merchants choose Boku - The bundle of services
At Boku, we see ourselves as a growth partner to our large global merchants
and not merely a supplier of payment services. This tying of our own success
to the success of our merchants ensures that our goals are mutual and clearly
linked.
It may not be immediately obvious, even to those who study the payments
landscape closely, but there is a subtle but important difference between the
role of Boku and that played by more mainstream card (payment) processors.
Over the past 20 years, the goal of the global payment processor has been to
generate economies of scale through large M&A combinations and
standardisation of product and processes, hinged around well-established
protocols issued by the card networks (e.g. Visa and MasterCard). Boku, to the
contrary, has been aggregating disparate local payment methods (and bank
operated schemes) globally, creating a network that adds value by dealing with
complexity and tailoring our offering to each of our large global merchants.
In this arena, Boku's focus is on customisation and specialisation.
Over the same 20-year period, LPMs have grown in popularity to now comprise
over two-thirds of global online payment volume. (source: Worldpay]
The role of Boku is therefore threefold:
1) 'Before a transaction'
To help our merchants to commercialise in places where customer payment choice
is key to commercial success. Offering better payment choice also brings with
it the opportunity for consumer acquisition. During 2023, Boku helped our
merchants to add over 66 million new paying consumers through a number of
targeted bundling and user acquisition programmes.
2) 'During a transaction'
To create 'effective simplicity' by connecting to popular local payment
methods around the world and then working with our merchants to build APIs
that provide a frictionless user experience and consequently have the highest
possible user conversion rate (payment success).
3) 'After a transaction'
To move money, convert currencies and remit funds in multiple countries.
Allowing consumers to pay in local currencies and enabling merchants to
receive funds in whichever currency they wish.
At the heart of our momentum is the incredible set of assets that have been
created by Boku. Boku's network now spans more than 70 countries and connects
to around 300 LPMs, including over 240 Mobile Network Operators plus 52
digital wallets & local Banking (A2A) schemes. Supporting this technical
infrastructure are licences to move money in over 60 countries worldwide,
underpinned by banking facilities covering 34 currencies via 190 distinct bank
accounts.
The Next Stages of Growth:
To capitalise on the significant foundations and momentum that we have
created, the Company has identified a number of key strategic focus areas to
ensure success over the coming years.
· Continued development of the LPM network
o Our heritage in delivering complex connectivity to mobile operator billing
capability globally has created an expertise in-house that places the business
in a unique position to be successful when it comes to connecting to local
digital wallets and domestic bank schemes. We will continue to grow our global
reach in line with demands of our merchants.
· Deliver Account to Account (A2A) payments for mobile commerce
o Banks around the world are investing $millions in developing 'open banking'
style real time networks that are increasingly being used to power commerce -
reference UPI in India or PIX in Brazil. This new style of payment methods
comes with some added nuances - such as real time cleared funds and the
requirement for direct scheme participation.
· Marketing via LPMs
o This may be the world's fastest growing marketing channel. Boku's network can
now connect to seven billion standalone consumer accounts. That equates to a
lot of eyeballs and a significant opportunity for our merchants to market
services using Boku's network.
· Expand Banking and settlement capabilities - moving the money
o To fully capitalise on the opportunity generated by the LPM network, Boku will
be adding increasing value to our merchants by continuing to invest in our
ability to process, reconcile, convert and settle funds globally.
'You're going to need a bigger boat!'
Of course, executing on all of the above is not straightforward or easy. There
is a reason that many of the most successful payments companies in the world
are themselves giant global organisations. Servicing a global payments network
for large global companies requires scale itself, to efficiently connect
demand and supply, authenticate, secure and process a material value of
commerce through one centralised platform takes enormous corporate muscle.
To ensure that we continue to win in Direct Carrier Billing ("DCB") and
digital wallets, but also to press our advantage in emerging A2A commerce,
Boku will be making strategic investments for long term growth in core
back-end processing capabilities, driving automation in the back office,
introducing sophisticated tooling for our engineers (including early
exploration of AI), adding bench strength in our finance operations,
governance and compliance teams whilst layering on dedicated customer success
capabilities.
To get ourselves ready for the next period of expansion - it's not sufficient
to simply reach the 'Big Pond' of global cross-border payments - we have to
win in the Big Pond! Boku is no longer a start-up, we are scaling up. To
access the material opportunity provided by the world of local payments, the
company is increasing scalability across all facets of the organisation - from
sales & product, through to engineering, legal/regulatory & finance.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
restated*
Year ended Year ended
31 December 2023 31 December
2022
Note(s) $'000 $'000
Continuing operations
Revenue 3 82,720 63,764
Cost of sales (2,050) (1,771)
Gross profit 80,670 61,993
Administrative expenses 4 (71,057) (54,742)
Other Income 103 755
Operating profit 9,716 8,006
Fair value gain/ (loss) on warrants 3, 23 53 (3,470)
Finance income 6 1,887 201
Finance expense 6 (249) (675)
Profit before tax from continuing operations 11,407 4,062
Taxation 7 (1,321) 237
Profit from continuing operations 10,086 4,299
Profit from discontinued operations 8 - 24,605
Total profit for the year 10,086 28,904
Other comprehensive income/ expense net of tax
Items that will or may be reclassified to profit or loss:
Foreign currency gain/(loss) on translation of foreign operations 1,572 (3,576)
Total other comprehensive income/ (expense) for the year 1,572 (3,576)
Total comprehensive income for the year attributable to equity holders of the 11,658 25,328
parent company
Earnings per share 9
Total
Basic EPS ($) 0.0339 0.0969
Diluted EPS ($) 0.0322 0.0934
from continuing operations
Basic EPS ($) 0.0339 0.0144
Diluted EPS ($) 0.0322 0.0139
Alternative performance measures restated*
Adjusted EBITDA(1) 25,799 20,238
*The prior year has been restated to exclude the fair value loss on warrants
from administrative expenses, further details can be found in note 2.
The accompanying notes form an integral part of these consolidated financial
statement
(1) Adjusted EBITDA is a non-IFRS measure defined as earnings before interest,
tax, depreciation, amortisation, non-recurring income, share based payment
expense, foreign exchange gains/(losses) and exceptional items.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated* restated*
31 December 31 December 1 January
2023 2022 2022
Note(s) $'000 $'000 $'000
Non-current assets
Property, plant and equipment 10 758 696 669
Right-of-use assets 10 2,784 3,233 4,661
Intangible assets 11 56,620 56,230 63,117
Warrant contract asset 3, 23 1,840 1,519 -
Deferred tax assets 7 15,306 15,518 15,981
Total non-current assets 77,308 77,196 84,428
Current assets
Trade and other receivables 13 148,522 90,509 82,897
Warrant contract asset 3, 23 122 192 -
Financial asset at fair value through profit or loss - 5,600 -
Cash and cash equivalents 14 150,859 116,513 62,440
Total current assets 299,503 212,814 145,337
Total assets 376,811 290,010 229,765
Current liabilities
Trade and other payables 15 233,049 156,263 119,641
Current tax payable 509 222 -
Bank loans and overdrafts 17 - - 1,125
Current lease liabilities 16 1,370 1,277 1,335
Total current liabilities 234,928 157,762 122,101
Non-current liabilities
Other payables 15 979 1,194 1,700
Warrant liabilities 3, 23 5,511 5,206 -
Deferred tax liabilities 7 182 - 456
Bank loans - - 6,688
Non-current lease liabilities 16 1,682 2,272 3,498
Total non-current liabilities 8,354 8,672 12,342
Total liabilities 243,282 166,434 134,443
Net assets 133,529 123,576 95,322
Equity attributable to equity holders of the company
Share capital 18 29 29 29
Other reserves 19 255,249 252,385 246,883
Foreign exchange reserve 19 (4,718) (6,290) (2,714)
Treasury shares 19 (6,628) (1,835) -
Retained losses (110,403) (120,713) (148,876)
Total equity 133,529 123,576 95,322
*Deferred tax positions and right-of-use assets in the year ended 31 December
2022 and opening balances as at 1 January 2022 have been restated, further
details can be found in note 2.
The financial statements were approved by the Board for issue on 19 March 2024
Stuart
Neal
Keith Butcher
Chief Executive
Officer
Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Other Foreign exchange reserve Treasury shares Accumulated Total Equity
reserves losses
Note(s) $'000 $'000 $'000 $'000 $'000 $'000
Equity as at 1 January 2022 29 246,883 (2,714) - (161,752) 82,446
Correction of error - - - - 12,876 12,876
Equity as at 1 January 2022 (restated*) 29 246,883 (2,714) - (148,876) 95,322
Comprehensive income/ (expense)
Profit for the year - - - - 28,904 28,904
Other comprehensive income/ (expense) - - (3,576) - - (3,576)
Total comprehensive income for the year attributable to equity holders of the - - (3,576) - 28,904 25,328
parent company
Transactions with owners in their capacity as owners
Issue of share capital upon exercise of stock options and RSUs - 470 - - - 470
Taxation adjustment on share-based payment* - - - - (741) (741)
Share-based payments expense 20 - 5,032 - - - 5,032
Purchase of treasury shares - - - (1,835) - (1,835)
Equity as at 31 December 2022 (correction of error*) 29 252,385 (6,290) (1,835) (120,713) 123,576
Comprehensive income
Profit for the year - - - - 10,086 10,086
Other comprehensive income - - 1,572 - - 1,572
Total comprehensive income for the year attributable to equity holders of the - - 1,572 - 10,086 11,658
parent company
Transactions with owners in their capacity as owners
Issue of share capital upon exercise of stock options and RSUs - 406 - - - 406
Share-based payment expense 20 - 7,467 - - - 7,467
Taxation adjustment on share-based payment - - - - 224 224
Purchase of treasury shares - - - (9,802) - (9,802)
Issue of treasury shares to employees - (5,009) - 5,009 - -
Equity as at 31 December 2023 29 255,249 (4,718) (6,628) (110,403) 133,529
*Deferred tax positions in the prior years ended 31 December 2022 and opening
balances as at 1 January 2022 have been restated, further details can be found
in note 2.
The accompanying notes form an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
31 December 31 December
2023 2022
Note(s) $'000 $'000
Operating activities
Cash generated from operations 22 40,935 49,966
Income taxes paid (338) (314)
Net cash from operating activities 40,597 49,652
Investing activities
Purchase of property, plant and equipment 10 (434) (470)
Payments for internally developed software 11 (5,430) (4,866)
Proceeds from discontinued operations (net of cash disposed) 8 5,600 26,545
Proceeds from sale of assets - 1
Interest received 6 1,887 201
Net cash (used in)/ from investing activities 1,623 21,411
Financing activities
Principal elements of lease payments 16 (1,478) (1,556)
Interest paid on leases 16 (171) (235)
Issue of share capital on exercise of options and RSUs 406 470
Purchase of treasury shares (9,802) (1,835)
Cash received on sale of treasury shares 2,333 -
Interest paid on loan 6 (78) (127)
Loan settlement costs - (25)
Repayment of bank loan - (8,125)
Net cash used in financing activities (8,790) (11,433)
Net increase in cash and cash equivalents 33,430 59,630
Effect of foreign currency translation on cash and cash equivalent 916 (5,557)
Cash and cash equivalents at beginning of year 116,513 62,440
Cash and cash equivalents at end of year 14 150,859 116,513
The accompanying notes form an integral part of these consolidated financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General Information
Boku, Inc. is a public company incorporated and domiciled in the United States
of America. The shares of the Company are traded on AIM, a market of the
London Stock Exchange Group plc. The registered office of the Company is
located at 660 Market Street, Suite 400, San Francisco, CA 94104, United
States.
These consolidated financial statements comprise the Company (Boku, Inc.) and
its subsidiaries (together referred to as the "Group").
The principal business of the Group is the provision of local payment
solutions for its merchants.
Boku's payments network provides multiple mobile payment methods, including
via digital mobile wallets, direct carrier billing and real-time account to
account payment schemes.
Going concern
The consolidated financial statements have been prepared on a going concern
basis. The Group meets its day-to-day working capital requirements through its
cash balances and also has a revolving credit facility that it can use. The
Group's forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group expects to be able to
operate within the level of its current cash resources and bank facilities.
Further information on the Group's borrowings and available facilities is
given in Note 17 to these consolidated financial statements.
The Directors have prepared cash-flow forecasts covering a period of at least
12 months from the date of approval of the financial statements to December
2024, to which they foresee that the Group will be able to operate within its
existing facilities.
Furthermore, in carrying out the going concern assessment, the Directors
considered a number of scenarios, including revenue falling between 29% and 9%
over the forecast, which would bring profit before tax in 2024 to break-even.
This is a severe but plausible scenario and it was concluded that the business
would still have adequate resources to continue in operational existence for
at least 12 months from the approval of the accounts. Management also has the
ability to identify cost savings, if necessary, to help mitigate any impact on
cash outflows.
The ongoing Russia/Ukraine conflict has not had a material impact on Group
revenues.
The Directors confirm that they have a reasonable expectation that the Group
will have adequate resources to continue in operational existence for at least
the next 12 months from approval of these financial statements and meet its
financial obligations as they fall due for at least the next 12 months from
the date of signing these financial statements. Accordingly, these financial
statements are prepared on a going concern basis.
2. Accounting policies
Basis of preparation
The financial information has been prepared using the historical cost
convention, except for derivative financial liabilities recognised, as stated
in the accounting policies below. These policies have been consistently
applied to all years presented, unless otherwise stated.
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and International
Financial Reporting Interpretations Committee ("IFRIC") as issued by the
International Accounting Standards Board ("IASB").
The consolidated financial statements have been prepared on a going concern
basis. These financial statements have been prepared for a 12-month calendar
year.
The preparation of financial statements in conformity with 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 accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the Consolidated
financial statements are disclosed below in, "critical accounting estimates,
assumptions and judgements". There are deemed to be no new standards,
amendments and interpretations to existing standards, which have been adopted
by the Group, that have had a material impact on the financial statements
effective from 1(st) January 2023.
The Group's consolidated financial statements are presented in US Dollars,
rounded to the nearest thousands (expressed as $'000) unless otherwise
indicated. The main functional currencies for the Company's subsidiaries are
US Dollar, Euro and Pounds Sterling.
Basis of consolidation
The consolidated financial statements presents the results of the Company and
its entities controlled by the Company ("the Group") made up to 31 December
2023.
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are achieved: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
Intercompany transactions and balances between Group companies are eliminated
in full on consolidation.
The consolidated financial information incorporates the results of business
combinations using the acquisition method. In the statement of financial
position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is obtained.
They are deconsolidated from the date on which control ceases. The excess of
the cost of acquisition over the fair value of the Group's share of the
identifiable net assets acquired is recorded as goodwill. A list of the
subsidiary undertakings is given in Note 12 of the financial information.
There were no business transaction costs accounted for as a deduction from
equity in the current or prior year.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method.
The cost of the acquisition is measured at the aggregate of the fair values,
at the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of the
acquiree. Costs related to acquisitions, other than those directly
attributable to the issue of debt or equity, are expensed as incurred.
Goodwill arising on acquisition is recognised as an asset and initially
measured at cost, being the excess of the cost of the business combination
over the Group's interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised. If, after reassessment, the
Group's interest in the net fair value of the acquiree's identifiable assets,
liabilities and contingent liabilities exceeds the cost of the business
combination, the excess is recognised immediately in the profit or loss.
Restatement
During the change in auditors, an error in application of deferred tax
recognition was identified relating to the look forward period for future
taxable profits. As a result, it was identified, that the Group had
under-recognised deferred tax assets from prior years. Accordingly, the
opening consolidated statement of financial position as at 1 January 2022 and
year ended 31 December 2022 has been restated. The opening balances at 1
January 2022 had increased deferred tax assets recognised from $3,105k to
$15,981k and the year ended 31 December 2022 had increased deferred tax assets
recognised from $3,383k to $15,518k. The net deferred tax asset recognised as
at the 31 December 2023 balance sheet date is $15,124k (FY22: $15,518k).
The consolidated statement of comprehensive income in the year end 31 December
2022 has been restated to move the fair value gain/(loss) on warrants from
administrative expenses to a separate line below operating profit, to more
appropriately reflect the accounting judgement.
Additionally, for the year ended 31 December 2022 and opening balances as at 1
January 2022 amounts previously accounted for under IFRS 16 as right-of-use
assets of $429k and $340k respectively, were restated to prepayments in the
consolidated statement of financial position. In 2022, notes 4, 10 and 13 have
also been restated to reflect the movement to prepayments and the reduction in
depreciation of $226k.
None of these adjustments have had any impact on the consolidated statement of
cash flows.
Deferred tax As originally reported Effect of restatement Group restated amounts
1 January 2022 $'000 $'000 $'000
Consolidated statement of Financial Position (extract)
Deferred tax asset 3,105 12,876 15,981
Accumulated losses 161,752 (12,876) 148,876
Consolidated Statement of Changes in Equity (extract)
Total equity 82,446 12,876 95,322
Deferred Tax
Net opening position 253 - 253
Net recognition in the year 2,396 12,876 15,272
P&L 2,359 - 2,359
Equity - 12,876 12,876
Foreign exchange revaluation 37 - 37
Net closing position 2,649 12,876 15,525
A deferred tax asset (liability) has not been recognised for the following
(Gross):
Non-deductible Reserves 39 (39)
-
Accrued Compensation 84 (84)
-
Stock Based Compensation 1,819 227 2,046
Other temporary and deductible differences 527 (527)
-
Unused tax credits 189 (189)
-
Unused tax losses 27,952 94,840 122,792
Total deferred tax assets (not recognised) 30,610 94,228 124,838
As originally reported Effect of restatement Group restated amounts
31 December 2022 $'000 $'000 $'000
Consolidated Statement of Financial Position (extract)
Deferred tax asset 3,383 12,135 15,518
Accumulated losses 132,848 (12,135) 120,713
Consolidated Statement of Changes in Equity (extract)
Opening balance (Total equity) 82,446 12,876 95,322
Profit for the year 28,904 - 28,904
Other comprehensive loss (3,576) - (3,576)
Correction of error 3,667 (741) 2,926
Closing balance (Total equity) 111,441 12,135 123,576
Deferred Tax
Net opening position 2,649 12,876 15,525
Net recognition in the year 734 (741) (7)
P&L 733 - 733
Equity - (741) (741)
Foreign exchange revaluation 1 -
1
Net closing position 3,383 12,135 15,518
A deferred tax asset (liability) has not been recognised for the following
(Gross):
Non-deductible Reserves 60 (60)
-
Accrued Compensation 56 (56)
-
Stock Based Compensation 1,939 (1,698) 241
Other temporary and deductible differences 321 (321)
-
Unused tax credits 189 (189)
-
Unused tax losses 11,082 17,976 29,058
Total deferred tax assets (not recognised) 13,647 15,652 29,299
Fair value gain or loss on warrants
The prior year consolidated statement of comprehensive Income has been
restated to exclude fair value loss on warrants of $3,470k from administrative
expenses. The impact on operating profit is detailed below:
As originally reported Effect of restatement Group restated amounts
31 December 2022 $'000 $'000 $'000
Consolidated Statement of Comprehensive Income (extract)
Gross profit 61,993 - 61,993
Administrative expenses (58,212) 3,470 (54,742)
Other Income 755 - 755
Operating profit 4,536 3,470 8,006
Fair value loss on warrants - (3,470) (3,470)
Finance income 201 - 201
Finance expense (675) - (675)
Profit before tax from continuing operations 4,062 - 4,062
Right-of-use assets
As originally reported (after restatement from FV g/l warrants)* Effect of restatement Group restated amounts
31 December 2022 $'000 $'000 $'000
Consolidated Statement of Financial Position (extract)
Non-current assets
Right-of-use assets 3,662 (429)
3,233
Current assets
Trade and other receivables 90,080 429 90,509
Alternative performance measures (extract)
Adjusted EBITDA 20,464 (226) 20,238
As originally reported Effect of restatement Group restated amounts
1 January 2022 $'000 $'000 $'000
Consolidated Statement of Financial Position (extract)
Non-current assets
Right-of-use assets 5,001 (340)
4,661
Current assets
Trade and other receivables 82,557 340 82,897
Adoption of new and revised standards
New and amended standards that are effective for the current year
A number of new or amended standards became applicable from 1 January 2023 and
as a result the Group has applied the following standards:
- Amendments to IFRS 16: Property, Plant and Equipment - Proceeds
before Intended Use
- Amendments to IFRS 3: Reference to Conceptual Framework
- Amendments to IAS 1: Presentation of Financial Statements -
Classification of Liabilities
- Amendments to IAS 37: Onerous Contracts - Cost
The above requirements did not have a material impact on the consolidated
financial statements. There are no other new or revised standards or
interpretations that are effective for the first time for the financial year
beginning on or after 1 January 2023 that would be expected to have a material
impact on the Group.
New standards, interpretations and amendments not yet effective
Name Description Effective date
IAS 1 (amendments) Non-current liabilities with covenants 1 January 2024
The Directors do not expect the adoption of these standards and amendments to
have a material impact on the consolidated financial statements.
Critical accounting estimates, assumptions and judgements
In preparing these consolidated financial statements, the Group has made its
best estimates and judgements of certain amounts, giving due consideration to
materiality. Actual results may differ from those reported.
The Group regularly reviews these estimates and judgements and updates them as
required. Unless otherwise indicated, the Group does not believe that there is
a significant risk of a material change to the carrying value of assets and
liabilities within the next financial year related to the accounting
judgements and assumptions described below.
The Group considers the following to be a description of the most significant
estimates and judgements, which require the Group to make subjective and
complex judgements related to matters that are inherently uncertain.
Judgements
Goodwill, Intangible assets acquired in a business combination
The useful economic lives of intangible assets (other than goodwill) acquired
in a business combination are estimated in order to calculate the appropriate
amortisation charge. Goodwill is subject to an annual impairment review which
is performed by comparing the balance value with the recoverable amount of the
asset or CGU.
Annually for Goodwill, or where an indication of impairment exists, value in
use calculations are performed to determine the appropriate carrying value of
the asset. The value in use calculation requires the estimations of the future
cash flows expected to arise for the CGU and a suitable discount rate in order
to calculate present value. Where the actual future cash flows are less than
expected, a material impairment loss may arise. See note 11 for specific
judgements and assumptions used to calculate the value in use of the CGU.
It is necessary to consider the forecasted cashflow of the Group when
comparing against the carrying value and why it has been considered that there
is only one payments CGU. This is since the contracts in place with a
merchant, regardless of whether they have been acquired will generally follow
the same cashflow for that specific merchant.
Discontinued operations
The Identity business was sold on 28(th) February 2022 and the result of the
sale is presented in Note 8 Discontinued operations.
Capitalised internally generated intangible assets
Other intangible assets include acquired merchant relationships, IT Platforms
and Domain names as well as internally developed intangibles (capitalised
development costs). Acquired intangible assets are recognised at fair value at
the acquisition date and are amortised on a straight-line basis over their
estimated useful lives. Initial capitalisation cost for internally generated
intangibles is based on the developer estimate of the time spent on
development projects.
Deferred tax
In recognising income and deferred tax assets, management makes judgements of
the likely outcome of future taxable profits for certain jurisdictions.
Judgements are also made regarding the probability of these forecasts.
Critical accounting Estimates
Share-based payments
The Group measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which
they are granted. Estimating fair value for share-based payment transactions
requires determining the most appropriate valuation model, which is dependent
on the terms and conditions of the grant. This estimate also requires
determining the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield and making
assumptions about them. Where such a model is required, the Group uses the
Black Scholes model to calculate its share-based payments expense (please
refer to Note 20 for full details).
Taxation
In recognising income and deferred tax assets, management makes estimates of
the likely outcome of future taxable profits for certain jurisdictions. Where
the outcome of such matters is different or expected to be different from
previous assessments made by management, a change to the carrying value of
income tax assets and liabilities will be recorded in the period in which such
a determination is made.
Fair value measurement - Amazon warrants
The Group's accounting for warrants issued to Amazon is determined in
accordance with accounting standards for financial instruments and revenue
recognition. The initial fair value of the warrants issued were recognised as
a contract asset and liability respectively (see note 3 for more details). The
contract asset is amortised to revenue (reducing revenue) over the 7-year
vesting period based on Amazon revenue earned to date as a proportion of total
estimated Amazon revenue over the 7-year vesting period. The derivative
financial liability is remeasured to fair value at each reporting date. The
fair value movement attributable to the change in the number of shares
expected to vest due to a change in estimated Amazon revenues over the 7-year
vesting period is recorded as an equal and opposite increase to the financial
liability and contract asset, based on the fair value of the warrant at
inception. The fair value movement attributable to the change in the fair
value of the underlying warrants is recorded as gains or losses in profit or
loss. The determination of fair values involves assumptions and estimates of
revenue and share price volatility, risk-free rate, and future Amazon
revenues. Due to the long-term nature of the warrants, such estimates
involve significant estimation uncertainty.
Revenue from contracts with customers
Boku builds custom digital payment connections between many payment methods
(LPMs) and merchants.
The merchant's end users will make an online purchase via a LPM, Boku will
provide the reconciliation, connection and often transfer of these funds from
the LPM to the Merchant. Revenue generated is the service fee from this
connection. In this regard, Boku acts as the agent between the merchant and
LPMs.
For each connection with a merchant, a contract is agreed. It is determined
that there is one performance obligation for each contract, being the
facilitation of the payment connection between the merchant and their end
users. This service fee is recognised at a point in time as the obligation
is fulfilled when the transaction occurs, since the risks and rewards have
been transferred on completion of the transaction. Therefore, there is no
deferred revenue recognised in the current or prior year.
Revenue is initially recorded as accrued income prior to receiving a statement
of information from the LPMs. Accrued income is recognised as a contract asset
within trade and other receivables.
Collection of service fees will vary depending on the nature and agreement
between each merchant.
The different types of service fees can be categorised as follows:
i. Settlement
For each purchase a merchant's end user makes, Boku will collect the funds
from the LPM, deduct a service fee and pass the net funds on to the merchant.
On initial receipt of a statement of information from the LPM, accrued revenue
is recognised as a percentage of the underlying transaction and a
corresponding payable is recognised as a contract liability within trade and
other payables, representing the amount owed from the LPM.
Amounts become due to the merchant on receipt of funds from the LPM and are
settled in the original currency of the transaction.
Additional settlement fees may arise under the following circumstances:
a) Foreign currency translation fees
An additional foreign exchange fee is charged when settlement is required by
the merchant in another currency.
b) Advanced payment service fees
An additional fee is charged when the merchant requires early settlement,
prior to Boku receiving funds from the LPM.
ii. Transactional
Boku will provide the connection between the merchant and their end user and
the LPM will pay the funds directly to the merchant. A service fee is then due
from the merchant to Boku.
Identity Revenue (discontinued)
On 28 February 2022, the Group sold its entire Identity business (Boku
Identity Inc. and its 100% subsidiary Boku Mobile Solution Ireland Ltd) to
Twilio (see Note 8 for full details).
Discontinued operations
A discontinued operation is a component of the Group's business, the
operations and cash flows of which can be clearly distinguished from the rest
of the Group and which:
• represents a separate major line of business or geographical area of
operations;
• is part of a single co‑ordinated plan to dispose of a separate major
line of business or geographical area of operations; or
• is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal
or when the operation meets the criteria to be classified as held for sale
(see Note 8 for details).
When an operation is classified as a discontinued operation, the comparative
statement of comprehensive income is re‑presented as if the operation had
been discontinued from the start of the comparative year.
Cost of sales
Cost of sales is primarily related to the monthly fees and some service
charges from MNOs and other providers, customer services fees, some marketing
expenses and bad debt.
Operating Segments
The Group determines and presents operating segments-based information
provided internally to the Group's operating decision makers, defined in the
Group as the General Management Committee ("GMC").
The Board considers that the Group's provision of a payment platform for the
payment processing of virtual goods and digital goods purchases constitutes
one operating and one reporting segment (Payments segment). Management reviews
the performance of the Group by reference to total results of a segment
against budget on a monthly basis.
Retirement Benefits: Defined contribution schemes
The Group operates various pension schemes in various jurisdictions, all being
defined contribution schemes (pension plans). A defined contribution plan is a
pension plan under which the Group pays fixed contributions into a separate
entity. The Group has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior periods.
For defined contribution plans, the Group pays contributions to publicly or
privately administered pension insurance plans on a mandatory, contractual or
voluntary basis. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as an employee
benefit expense when they are due.
In the United States, the Group has a 401(k) plan, a type of defined
contribution scheme in which all United States employees can participate after
meeting eligibility requirements. Participants may elect to have a portion of
their salary deferred and contributed to the scheme up to the limit allowed by
applicable income tax regulations. The Company has made a matching
contribution to the scheme for the years ended 31 December 2023 and
31 December 2022.
Contributions to defined contribution schemes are charged to the consolidated
statement of comprehensive income in the year to which they relate.
Intangible assets and Goodwill
Goodwill
Goodwill arising on consolidation represents the excess of the cost of a
business combination over the Group's interest in the fair value of
identifiable assets, liabilities and contingent liabilities acquired from the
business combination, at the date of acquisition. Costs directly attributable
to the acquisition are expensed in the period. Goodwill is initially measured
at cost and subsequently measured at cost less any accumulated impairment
losses.
An impairment in carrying value is charged to the consolidated statement of
comprehensive income. An impairment loss recognised for goodwill is not
reversed.
For the purposes of impairment testing, Goodwill is allocated to the Group's
cash generating unit (CGU). Goodwill is not amortised but is tested annually
for impairment or whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. The recoverable amount is
determined based on value in use calculations. The use of this method requires
the estimation of future cash flows and the determination of a discount rate
in order to calculate the present value of the cash flows. The major
assumptions are disclosed in note 11.
Identifiable assets acquired, liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the
acquisition date. Where the fair value of identifiable assets, liabilities and
contingent liabilities exceed the fair value of consideration paid, the excess
is credited in full to the consolidated statement of comprehensive income on
the acquisition date.
Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are identified, valued
and recognised separately from goodwill where they satisfy the definition of
an intangible asset. All intangible assets acquired through business
combinations are amortised over their useful lives.
Subsequent to initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated amortisation and accumulated
impairment losses. The carrying values are tested for impairment when there
is an indication that the value of the assets might be impaired.
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and
subsequently amortised on a straight-line basis over their useful economic
lives.
Internally generated intangible assets (development costs)
Expenditure on internally developed software products and substantial
enhancements to existing software product is recognised as intangible assets
only when the following criteria are met:
1. it is technically feasible to develop the product to be used or sold;
2. there is an intention to complete and use or sell the product;
3. the Group is able to use or sell the product;
4. use or sale of the product will generate future economic benefits;
5. adequate resources are available to complete the development; and
6. expenditure on the development of the product can be measured reliably.
The capitalised expenditure represents costs directly attributable to the
development of the asset from the point at which the above criteria are met up
to the point at which the product is ready to use. The costs include external
direct costs of materials and services consumed in developing and obtaining
internal-use computer software, and payroll and payroll-related costs for
employees who are directly associated with and who devote time to developing
the internal-use software. If the qualifying conditions are not met, such
development expenditure is recognised as an expense in the period in which it
is incurred. Development costs previously recognised as an expense are not
recognised as an asset in a subsequent period.
Subsequent expenditure is capitalised only when it increases the future
economic benefits embodied in the specific asset to which it relates. All
other expenditure, including expenditure on internally generated goodwill and
brands, is recognised in the statement of comprehensive income as incurred.
Amortisation rates
Amortisation is calculated to write off the cost of intangible assets less
their estimated residual values using the straight-line method over their
estimated useful lives and is recognised in the statement of comprehensive
income within administrative expenses. Goodwill is not amortised.
The significant intangibles recognised by the Group and their useful economic
lives are as follows:
Intangible asset Useful economic life
Trademarks Indefinite life - not amortised
Merchant relationships 5 -10 years
Developed technologies 2-10 years
Domain names 10 years
Internally developed software 3 years
Trademarks do not expire after a period of time (unlike patents and
copyrights). They exist as long as the owner continues to use the trademark.
Therefore, trademarks are considered to have an indefinite life, and are not
amortised, as trademarks can retain their value forever, and contribute to net
cash inflows indefinitely. Trademarks will not be amortised as their useful
life is determined to be infinite.
Property, plant and equipment
Property, plant and equipment are held under the cost model and are stated at
historical cost less accumulated depreciation and any accumulated impairment
losses. Historical cost includes expenditure that is directly attributable to
bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and maintenance
expenditures are charged to the consolidated statement of comprehensive income
during the financial year in which they are incurred.
Depreciation is calculated using the straight-line method to write off the
cost of each asset to its residual value over its estimated useful life as
follows:
Office equipment and fixtures and fittings 3-5 years
Computer equipment and software 3 years
Leasehold improvement 3-5 years
Right-of-use assets Shorter of useful life of the asset or lease term
Gains and losses on disposals are determined by comparing the disposal
proceeds with the carrying amount and are included in the consolidated
statement of comprehensive income.
Depreciation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate. Carrying amounts are reviewed on
each reporting date for impairment. Where the carrying amount of an asset is
greater than its estimated recoverable amount, it is written down immediately
to its recoverable amount.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, Restricted Cash (see below and note 14) and other short term highly
liquid investments with original maturities of three months or less.
Restricted cash
The Group holds merchants' cash in transit and in segregated accounts of some
of its regulated subsidiaries and discloses restricted cash separately from
own cash. Other funds not available to the Group are also classified as
restricted and presented as restricted cash.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
Financial assets
Financial assets are classified on initial recognition at fair value and then
subsequently measured at amortised costs, fair value through other
comprehensive income and fair value through profit or loss.
i. Financial assets at amortised cost
The Group's financial assets mainly comprise of cash, trade and other
receivables. These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market (trade
receivables), but also incorporate other types of contractual monetary asset.
Trade and other receivables are initially recognised at fair value and
subsequently measured at amortised cost less provisions for impairment based
upon an expected credit loss methodology. The Group applies the IFRS 9
simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance matrix for all trade receivables (including accrued
receivables). A provision of the lifetime expected credit loss is established
upon initial recognition of the underlying asset and is calculated using
historical account payment profiles along with historical credit losses
experienced. The loss allowance is adjusted for forward looking factors
specific to the debtor and the economic environment. The amount of the
provision is recognised in the consolidated statement of comprehensive income.
ii. Financial assets at fair value through profit and loss
The holdback receivable asset outstanding from the sale of the Identity
business in the prior year and the Amazon warrant contract asset are held at
fair value through profit and loss.
Financial liabilities
The Group classifies its financial liabilities into two categories, depending
on the purpose for which the liability was acquired.
Fair value through profit and loss ("FVTPL"):
The warrant liability is classified as a financial liability at FVTPL and
valued using a combination of the Black-Scholes Model and Monte Carlo
simulation. Financial liabilities at FVTPL are stated at fair value, with any
gains or losses arising on re-measurement (due to changes in the fair value of
the warrant) recognised in profit or loss.
Financial liabilities at amortised cost:
The Group includes in this category loans, trade and other payables and
liabilities to related parties.
Financial liabilities are recognised when the Group becomes a party to the
contractual agreements of the instrument.
Trade and other payables (excluding other taxes, social security costs and
deferred income) and other short-term monetary liabilities, are initially
measured at their fair value plus, if appropriate, any transaction costs that
are directly attributable to the issue of the financial liability. These
financial liabilities are subsequently carried at amortised cost.
Bank borrowings and other interest-bearing liabilities are initially
recognised at fair value net any of transaction costs directly attributable to
the issue of the instrument. Such interest-bearing liabilities are
subsequently measured at amortised cost ensuring the interest element of the
borrowing is expensed over the repayment period at a constant rate.
A financial liability is derecognised when the obligation under the liability
is discharged, cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the statement of comprehensive
income.
The gain or loss for fair value changes should be classified based on the
classification of the underlying instruments. As the fair value changes of the
Amazon warrant liability are highly dependent on the share price of Boku, Inc.
rather than the business performance in the reporting year these gains and
losses have been classified as exceptional items and this policy will be
applied consistently going forward.
Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation, and the amount can be
reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management's best estimate of
the expenditure required to settle the present obligation at the end of the
reporting period. The provision for employer taxes on future employee share
instruments are not discounted as it is not considered material.
Leases
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease
(i.e. the date the underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation and impairment losses,
and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made on or before the
commencement date less any lease incentives received. Unless the Group is
reasonably certain to obtain ownership of the leased asset at the end of the
lease term, the recognised right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life and the
lease term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. Break clauses may be provided in the lease agreements, calculations are
prepared up to the end of the lease term. In calculating the present value of
lease payments, the Group uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in
the in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term
leases (i.e., those leases that have a lease term of 12 months or less from
the commencement date and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption to leases of office
equipment that are considered of low value (i.e., below $5,000). Lease
payments on short-term leases and leases of low-value assets are recognised as
an expense on a straight-line basis over the lease term.
Incremental borrowing rate
IFRS 16 Leases requires that all the components of the lease liability are
required to be discounted to reflect the present value of the payments. The
discount rate to use is the rate implicit in the lease, unless this cannot
readily be determined, in which case the lessee's incremental borrowing rate
is used instead.
The definition of the lessee's incremental borrowing rate states that the rate
should represent what the lessee 'would have to pay to borrow over a similar
term and with similar security, the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic environment.' In
applying the concept of 'similar security', a lessee uses the right-of-use
asset granted by the lease and not the fair value of the underlying asset.
This is because the rate should represent the amount that would be charged to
acquire an asset of similar value for a similar period.
In practice, judgement may be needed to estimate an incremental borrowing rate
in the context of a right-of-use asset, especially when the value of the
underlying asset differs significantly from the value of the right-of-use
asset.
The discount rate will be revised, in line with IFRS 16, and the lease
liability remeasured only when:
- there is a change in the lease term,
- a change in the assessment of whether the lessee is reasonably
certain to exercise an option to purchase the underlying asset or
- a change in floating interest rates, resulting in a change in
the future lease payments (this approach is consistent with IFRS 9's
requirement for the measurement of a floating rate financial liabilities
subsequently measured at amortised cost)
A lessee is not required to reassess the discount rate when there is a change
in future lease payments due to a change in an index. - e.g. the consumer
price index.
Share Capital
Ordinary shares are classified as equity and are stated at the proceeds
received net of direct issue costs.
Share buyback
On 7(th) July 2022 the Group announced the share buyback programme to
repurchase common stock in the capital of the Company (Boku, Inc.) up to a
maximum aggregate consideration of £8 million and up to a maximum of five
million Common Stock.
The purpose of the Buyback Programme is to hold the Common Stock in treasury
for the purpose of satisfying future obligations in relation to the staff
equity remuneration programme.
The Buyback Programme will operate within certain pre-set parameters,
including that the maximum price paid per Common Stock shall be 105 per cent
of the trailing 5-day average mid-market price, and in accordance with the
authority granted by the Company's Board.
The Buyback Programme became effective from 7(th) July 2022 with an expiry
date of 30 June 2023, or earlier, if either the maximum aggregate number of
Common Stock have been purchased or the maximum aggregate consideration had
been reached. On 8 June 2023 it was announced that the Buyback Programme was
to be extended for a further 12 months (the "Extended Buyback Programme") and
will expire on 30 June 2024, or earlier, if either the maximum aggregate
number of Common Stock have been purchased or the maximum aggregate
consideration has been reached. The extended programme will involve the
repurchasing of common stock with par value of $0.0001 per share in the
capital of the Company ("Common Stock") up to an additional maximum aggregate
consideration of £10.5 million and up to an additional maximum of 5.25
million Common Stock.
Due to the limited liquidity in the issued Common Stock, a buy-back of Common
Stock pursuant to the Authority on any trading day may represent a significant
proportion of the daily trading volume in the Common Stock on AIM and may
exceed 25 per cent of the average daily trading volume. Accordingly, the
Company will not benefit from the exemption contained in Article 5(1) of the
UK version of the Market Abuse Regulation (Regulation (EU) No 596/2014) (as in
force in the UK and as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019 and the Financial Services Act 2021).
The cost of treasury shares held is presented as a separate reserve (the
"treasury share reserve") and recorded in equity. Any excess of the
consideration received on the sale of treasury shares over the weighted
average cost of the shares sold is credited to other reserves.
Share-based payments
Where equity settled share options and Restricted Stock Units ('RSUs') are
awarded to employees, the fair value of the options or RSUs at the date of
grant is charged to the consolidated statement of comprehensive income over
the vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each reporting
date so that, ultimately, the cumulative amount recognised over the vesting
period is based on the number of options or RSUs that eventually vest.
Where the terms and conditions of options or RSUs are modified before they
vest, the increase in the fair value of the options, measured immediately
before and after the modification, is also charged to the consolidated
statement of comprehensive income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the
consolidated statement of comprehensive income is charged with the fair value
of goods and services received.
Where options are cancelled within the vesting period, the remaining cost of
the options is accelerated and charged to the statement of comprehensive
income in the year. When an employee leaves the Group, unvested grants are
forfeited and the cumulative share-based payment expense is reversed on the
leaving date. Unvested RSUs are forfeited on leaving the Group for any reason
including as part of discontinued operations.
The Group's scheme, which awards shares in the parent entity, includes
recipients who are employees in the parent company and subsidiaries. In the
consolidated financial statements, the transaction is treated as an
equity-settled share-based payment, as the subsidiary has received services in
consideration for Boku, Inc's equity instruments. An expense is recognised in
the consolidated Group Income statement for the fair value of share-based
payment over the vesting year, with a credit recognised in equity. In the
subsidiaries' financial statements, the awards, in proportion to the
recipients who are employees in said subsidiary, are treated as an
equity-settled share-based payment, as the subsidiaries do not have an
obligation to settle the award. An expense for the grant date fair value of
the award is recognised over the vesting period, with a credit recognised in
equity. The credit is treated as a capital contribution, as the parent company
is compensating the subsidiaries' employees with no cost to the subsidiaries
where there is no expectation to recharge the cost. In the parent Company's
financial statements, there is no share-based payment charge where the
recipients are employed by a subsidiary, with the parent company recognising
an increase in the investment in the subsidiaries as a capital contribution
from the parent and a credit to equity.
RSU's issued in connection with business combinations as replacements for
instruments held by employees are treated as part of the consideration
transferred to the extent that the Company is obliged to issue the replacement
awards and that they compensate for service that has been provided
pre-combination. To the extent awards are voluntary or that they relate to the
provision of future services they are treated as a post-combination expense.
Share options and RSUs which will incur future employer payroll taxes on
exercise, are accrued for the future cost of Employer's National Insurance
from the point the options are granted over their vesting period. This
liability is then amended at each subsequent reporting date under IFRS 2.
Taxation
The income tax expense represents the sum of the tax currently payable and
deferred tax. Deferred tax relating to the timing differences arising on
share-based payments recognised in equity, is also recognised in equity and
not as a tax expense.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in profit or loss because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible.
Current taxes are calculated according to local tax rules, using tax rates
enacted or substantially enacted at the reporting date.
A provision is recognised for those matters for which the tax determination is
uncertain, but it is considered probable that there will be a future outflow
of funds to a tax authority. The provisions are measured at the best estimate
of the amount expected to become payable. The Group's method for calculating
the tax provision under IFRS on an individual entity basis for the year ending
31 December 2023, involves the following approach.
Entities are categorised according to a materiality threshold, considering
current tax impacts and deferred tax effects from categories such as
share-based payments, carried forward losses, and PPE. Tax provisioning
calculations for immaterial entities utilise profit/(loss) before tax figures
multiplied by foreign tax rates. Material entities include corporations in the
UK and USA. These entities undergo a more detailed calculation process, with
US and UK group entities preparing the tax provision closely aligned with
their actual tax return. This approach ensures that the Group's tax provision
aligns accurately with its tax obligations under IFRS on an individual entity
basis.
Deferred tax
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability in the consolidated statement of financial position
differs from its tax base, except for differences arising on:
· the initial recognition of goodwill;
· the initial recognition of an asset or liability in a transaction which is not
a business combination and at the time of the transaction affects neither
accounting or taxable profit; and
· investments in subsidiaries where the Group is able to control the timing of
the reversal of the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which the deductible
temporary differences and unused tax loses can be utilised.
The amount of the deferred asset or liability is determined using tax rates
that have been enacted or substantively enacted by the reporting date and are
expected to apply when the deferred tax liabilities or assets are settled or
recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
· the same taxable group company; or
· different company entities which intend either to settle current tax assets
and liabilities on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which significant amounts
of deferred tax assets and liabilities are expected to be settled or
recovered.
Presentational currency
The presentational currency for the Group is US dollars, as the company is
incorporated in the USA which is the currency of its primary economic
environment in line with IAS 21. Boku Group has its main contracts, assets,
intellectual property.
Functional currency
The functional currency for subsidiaries is the local currency of the entity's
country of incorporation. Items included in the financial statement of each of
the Group's entities are measured in the functional currency of each entity.
Foreign currency
Foreign currency transactions and balances
i) Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions.
ii) Monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the exchange rate at the reporting
date.
iii) Non-monetary assets and liabilities that are measured at fair value in a
foreign currency are translated into the functional currency at the exchange
rate.
iv) Non-monetary items that are measured based on historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction.
v) Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at the reporting period end exchange
rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement within administrative expenses.
vi) Any goodwill arising on the acquisition of a foreign operation and any fair
value adjustments (including purchased intangible assets) to the carrying
amounts of assets and liabilities arising on the acquisition are treated as
assets and liabilities of the foreign operation and translated at the closing
rate.
Consolidation of foreign entities
On consolidation, the results and financial position of all the Group entities
that have a functional currency different from the presentation currency of
the Group are translated into the presentation currency as follows:
i) Assets and liabilities for each Consolidated statement of financial position
presented are translated at the closing rate at the date of that Consolidated
statement of financial position.
ii) Income and expenses for each Consolidated statement of comprehensive income
item are translated at average exchange rates; and
iii) All resulting exchange differences are recognised as a separate component of
equity.
Exchange differences are recycled to profit or loss as a reclassification
adjustment upon disposal of the foreign operation.
3. Revenue from contracts with customers and other segmental disclosures
The Group's revenue is principally service fees earned from merchants. All
revenue is earned at the time the transactions is processed and as a result,
all revenue is recognised at one point in time. Therefore, at 31 December 2023
and 31 December 2022, the Group does not have deferred revenue on the
Consolidated statement of financial position.
Fees are calculated as a percentage of the value of transaction. Additional
fees are also earned when a merchant requires settlement in a foreign currency
from the currency received, or before the funds are received from LPMs:
2023 2022
$'000 $'000
Revenue 82,720 63,764
The geographical analysis of the revenue by location of the users is presented
below:
Group Revenue by Region Continuing Operations Payments
'$ 000 USD 2023 %
Americas 3,204 3.9%
APAC 47,230 57.1%
EMEA 32,286 39.0%
Grand Total 82,720 100.0%
Continuing Operations Payments
Group Revenue by Region
' $000 USD 2022 %
Americas 628 1.0%
APAC 36,167 56.7%
EMEA 26,969 42.3%
Grand Total 63,764 100.0%
An analysis of non-current assets by geographical market is given below:
restated*
2023 2022
$'000 $'000
United States of America (continuing operations) 50,240 48,502
Europe 11,504 12,724
Rest of the World 258 452
Total 62,002 61,678
*Right-of-use assets in the prior year were restated to prepayments, see note
2 for further details.
In FY23 there were four customers (FY22: one customer), with revenue amounting
to more than 10% of the payments segment revenue, contributing $57.6m (FY22:
$30.9m).
Amazon warrants
On 16 September 2022, the Group entered into a stock warrant agreement with
Amazon in conjunction with a commercial service level agreement for the Group
to provide payment processing services to Amazon.
Under the agreement, the Group issued warrants to Amazon allowing them to
purchase common stock that will vest incrementally, based on the amount of
revenue earned by the Group from Amazon via Boku payment processing methods.
The warrant agreement grants Amazon the right to acquire up to 11,215,142
shares of common stock in the Group (equivalent to 3.75% of the Group's total
common stock as at the inception of the warrant agreement). 747,676 shares of
common stock vested immediately on the signing of the warrant agreement on 16
September 2022. 209,350 additional shares of common stock will vest for every
$1 million of revenue generated by the Group under its service level agreement
with Amazon over a 7-year vesting period ending 15 September 2029. No
further warrants will vest if $50 million of revenue is generated under the
service level agreement, which results in a final vesting increment of 209,316
shares of common stock. The exercise price of vested warrants is 81.20p per
share, based on the 30-day volume weighted average trading price as at 16
September 2022.
The Group has determined that the 747,676 warrants of common stock that vested
immediately on signing of the warrants are equity instruments under IAS 32, as
they represented a fixed number of shares that will be exercised at a fixed
price. The warrants are therefore not accounted for until they are exercised
and paid, at which point share capital and other reserves will be recorded.
The Group has determined that the remaining warrants linked to revenue under
the service level agreement are within the scope and revenue recognition and
financial instruments accounting standards. The warrants represent a
derivative financial instrument classified as a financial liability in
accordance with IAS 32 and IFRS 9, remeasured to fair value with gains and
losses recorded in profit or loss. The warrants also represent non-cash
consideration payable to a customer under IFRS 15, which is recorded as a
reduction to revenue and measured at fair value, but not subsequently
remeasured.
At inception of the warrant, an equal and opposite derivative financial
liability and corresponding contract asset were recorded at fair value, based
on the total number of warrants expected to vest (linked to forecasted Amazon
revenues under the service level agreement) and the fair value a single
warrant.
The contract asset, which effectively represents a prepaid or deferred volume
rebate, is amortised to revenue based on Amazon revenues to date as a
proportion of total expected Amazon revenues over the 7-year vesting period.
The derivative financial liability is remeasured to fair value at each
reporting date. The fair value movement attributable to the change in the
number of shares expected to vest due to a change in estimated Amazon revenues
over the 7-year vesting period is recorded as an equal and opposite increase
to the financial liability and contract asset, based on the fair value of the
warrant at inception. The fair value movement attributable to the change in
the fair value of the underlying warrants is recorded as gains or losses in
profit or loss within operating profit.
The initial fair value of the warrants at inception was $1,755,640, based on a
fair value of 1 warrant of $0.348 and a total number of warrants expected to
vest over the 7-year vesting period of 5,049,288. As at 31 December 2022,
the total number of warrants expected to vest decreased to 4,992,086,
resulting in a decrease to the contract asset and financial liability of
$19,862, and the fair value of 1 warrant increased to $1.043, resulting in a
loss of $3,470,333. As at 31 December 2023, the total number of warrants
expected to vest increased to 5,333,781, resulting in an increase to the
contract asset and financial liability of $358,774, and the fair value of 1
warrant decreased to $1.033, resulting in a gain of $53,476. The fair value
of the warrants was determined using a combination of Monte Carlo Simulation
and Black-Scholes Model valuation methods and are classified within Level 3 of
the fair value hierarchy, see Note 23 for further details.
Amounts recognised from amortisation of the warrant contract assets in the
year were as follows:
31-Dec-23 31-Dec-22
$'000 $'000
Amortisation to revenue 108 25
On 28 February 2022, the Group sold the entire Identity business segment. As a
result, from 1(st) March 2022, the Group reported its financial statements on
a single segment basis: "Payments segment". The Identity segment results for
the two months of 2022 are presented below under 'discontinued operations'.
The Group operated with only one operating segment through financial year
2023, the Payments Segment. Operating segments are reported in a manner
consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been identified as the
management team including the Chief Executive Officer and the Chief Financial
Officer. The Group CEO and CFO review the monthly management reports for both
segments before sending the results to the Board.
4. Administrative expenses
Operating profit from continuing operations is stated after charging:
restated*
2023 2022
$'000 $'000
Staff costs (excluding share-based payments expense - Note 5) 39,981 30,946
Depreciation of property, plant and equipment (Note 10) 385 395
Right-of-use asset depreciation (Note 10) 1,430 1,411
Amortisation of intangible assets (Note 11) 5,742 3,631
Impairment of intangible assets (Note 11) - 1,264
Share-based payments expense (Note 20) 7,595 5,165
Foreign exchange loss 1,034 796
*Right-of-use assets in the prior year were restated to prepayments, see
note 2 for further details.
5. Employee information
Included in administrative expenses are costs related to employee benefits,
analysed as follows:
2023 2022
Payroll costs $'000 $'000
Salaries 32,536 24,805
Short-term benefits 1,767 1,390
Social security costs 4,293 3,339
Pension costs 249 236
Other staff costs 1,136 1,176
Staff costs excluding share-based payments 39,981 30,946
Share-based payments 7,595 5,165
Total staff costs 47,576 36,111
Key management personnel compensation was made up as follows:
2023 2022
$'000 $'000
Salaries 5,104 3,847
Short-term benefits 101 95
Social security costs 1,108 497
Share-based payments 3,402 2,952
Long-term employee benefits 18 16
Total compensation 9,733 7,407
6. Finance income and expense
2023 2022
$'000 $'000
Finance income
Interest income from bank deposits (1,887) (201)
Total finance income (1,887) (201)
Finance expenses
Interest on bank loans 76 121
Other interest payables 2 6
Interest on operating leases 171 235
Amortisation of debt discount - 313
Total finance expenses 249 675
Net finance (income)/ expense (1,638) 474
7. Taxation
2023 2022
$'000 $'000
Current tax
Current tax on profits for the year 427 239
Foreign tax 903 257
Adjustments in respect of prior years (7) -
Total current tax 1,323 496
Deferred tax
Origination and reversal of temporary differences 355 (1,870)
Adjustments in respect of prior years (357) 1,137
Total deferred tax (2) (733)
Total tax expense/(credit) 1,321 (237)
The reasons for the difference between the actual tax charge for the period
and the applicable rate of income tax of the US reporting entity applied to
the results for the period are as follows:
2023 2022 (restated)*
$'000 $'000
Profit before tax 11,407 4,062
Tax rate (US income tax rate) 21% 21%
Profit before tax multiplied by the applicable rate of tax: 2,395 853
Variance in overseas tax rates 28 1,182
Impact of change in tax rates (204) -
Impact of difference between CT & DT rate 1,010 -
Expenses not deductible for tax purposes 1,003 1,143
Utilisation of tax losses (3,532) (6,429)
Non qualifying depreciation 7 -
Adjustments in respect of prior years (364) 1,137
Foreign tax 249 77
Other differences 288 -
US state taxes/ Withholding taxes 441 1,800
Total tax (credit)/ expense 1,321 (237)
*Deferred tax positions in the prior years ended 31 December 2022 and opening
balances as at 1 January 2022 have been restated, further details can be found
in note 2.
2023 2022 (restated)*
Deferred Tax $'000 $'000
Net opening position 15,518 15,525
Net recognition in the year (394) (7)
P&L 2 733
Equity (396) (741)
Foreign exchange revaluation - 1
Net closing position 15,124 15,518
*Deferred tax positions in the prior years ended 31 December 2022 and opening
balances as at 1 January 2022 have been restated, further details can be found
in note 2.
The net closing position is made up of:
· The deferred tax liability at 31 December 2023 is $182k (2022: $NIL Restated).
The current year deferred tax liability relates to tax positions connected
with the Boku, Inc. UK fixed temporary differences.
· The deferred asset of $15,306k (2022: $15,518k restated) relates primarily to
the recognition of the US and UK available losses which management believe can
be utilised within the next eight years. Each year management assess the
usability of the deferred assets
A deferred tax asset/ (liability) has not been recognised for the following
items:
2023 2022 (restated)*
$'000 $'000
Stock Based Compensation - 241
Other temporary and deductible differences (7,925) -
Unused tax losses 6,197 29,058
Total deferred tax assets (1,728) 29,299
*Deferred tax positions in the prior years ended 31 December 2022 and opening
balances as at 1 January 2022 have been restated, further details can be found
in note 2.
The Group has carried forward losses and accelerated timing differences at the
reporting date as shown below. In respect of its UK subsidiary, these can be
carried forward and offset against UK taxable income indefinitely. In respect
of its US entities, net operating loss carry forwards can be carried forward
and offset against taxable income for 20 years for losses incurred up to and
including 31 December 2017. All net operating loss carry forwards incurred
after 31 December 2017 can be carried forward and offset against US taxable
income indefinitely. Utilisation of net operating loss or tax credit carry
forwards may be subject to annual limitations if an ownership change had
occurred pursuant to the section 382 Internal Revenue Code and similar state
provisions.
The unused tax losses must be utilised by various dates. U.S. federal tax
losses expire in various dates through to 2037.
At the reporting date, undistributed reserves on non-US subsidiaries $7,115k
which would attract withholding tax and $810k undistributed Estonian
subsidiary profits for which deferred tax liabilities have not been
recognised. No liability has been recognised in respect of these differences
because the timing of any distribution is under the Group's control and no
distribution which gives rise to taxation is contemplated.
UK corporation tax rates increased from 19% to 25% with effect from 1 April
2023, in accordance with the Finance Act 2021. Current taxes have been
calculated using a blended rate, while deferred taxes have been computed at
25%, aligning with the substantively enacted rate as of 31 December 2023.
There have been no significant changes in tax rates enacted or effective in
the current or prior year that are expected to have a material impact on the
financial statements. The company will continue to monitor any potential
changes in tax legislation that may impact its future financial performance.
8. Discontinued operations
On 28 February 2022, the Group sold its entire Identity business (Boku
Identity Inc and its 100% subsidiary Boku Mobile Solutions Ireland Ltd).
As required, at 31 December 2022, discontinued operations were excluded from
the results of continuing operations and were presented as a single entry in
the Income Statement as 'Profit from discontinued operations' in the income
statement.
The financial results related to the discontinued operations for the period to
the date of disposal are presented below:
2022 (2 months)
$'000
Fee Revenue 1,153
Cost of sales (719)
Gross Profit 434
Administrative Expenses (1,541)
Operating loss analysed as:
Adjusted EBITDA (652)
Depreciation and amortisation (238)
Share based payments expense (163)
Foreign exchange losses (54)
Operating loss (1,107)
Profit on disposal 26,614
Disposal costs (1,408)
Share based payments expense reversed 506
Total Profit before tax on disposal of Identity business 24,605
Tax -
Net profit for the period attributable to equity holders of the parent company 24,605
The net cashflows used in the Identity business disposed in the prior period
are as follows:
31-Dec
2022
$'000
Net cash used in operating activities (1,106)
Net cash used in investing activities (178)
Net cash from financing activities 570
Net cash used in discontinued operations (714)
Reconciliation of consideration received with the total profit and loss from
discontinued operations:
31 Dec 2022
$'000
Total consideration received in the prior year 26,761
Financial asset through profit and loss - holdback receivable 5,600
Working capital adjustment 156
Total consideration 32,517
The holdback receivable of $5.6m was received during the year.
Assets and liabilities of disposal
The assets and liabilities relating to the Identity business were reclassified
as held for sale at 31 December 2021. As at 31 December 2022, these values
were nil as the sale completed in February 2022.
9. Earnings per share
Basic EPS is calculated by dividing the profit or loss attributable to equity
holders of the Company by the weighted average number of ordinary shares in
issue during the year, excluding shares purchased by the Company (Note 18). As
at 31 December 2023 there were 4,007,868 shares held in treasury (FY22:
1,500,000).
Diluted EPS represents the basic EPS, adjusted for the effect of the dilutive
shares issuable on exercise from employee share options under the Group's
share-based payment schemes, weighted for the relevant period.
The weighted average number of shares in issue during the year was as follows:
2023 2022
Weighted average number of shares in issue 297,942,357 298,275,521
Effect of dilutive share options, RSU's and warrants 15,337,750 11,254,745
Diluted weighted average number of shares in issue 313,280,107 309,530,266
Total
Profit for the year attributable to shareholders of the Company ($,000) 10,086 28,904
Basic earnings per share ($) 0.0339 0.0969
Diluted earnings per share ($) 0.0322 0.0934
From continuing operations
Profit for the year attributable to shareholders of the Company ($,000) 10,086 4,299
Basic earnings per share ($) 0.0339 0.0144
Diluted earnings per share ($) 0.0322 0.0139
From discontinuing operations
Profit for the year attributable to shareholders of the Company ($,000) - 24,605
Basic earnings per share ($) - 0.0825
Diluted earnings per share ($) - 0.0795
The Amazon Warrants increase the number of diluted shares reported, which has
an effect on our fully diluted earnings per share. Further, the Amazon
Warrants are presented as an asset and derivative financial liability in the
audited consolidated statement of financial position The liability is subject
to fair value measurement adjustments during the periods that it is
outstanding. Accordingly, future fluctuations in the fair value of the Amazon
Warrant could adversely impact our results of operations. If Amazon exercises
its right to acquire Boku common shares pursuant to the Amazon Warrant, it
will dilute the ownership interests of then-existing shareholders and reduce
earnings per share.
10. Property, plant and equipment
*restated
Computer equipment & software Office equipment and fixtures and fittings Leasehold improvement Property, plant and equipment Total Right-of-use assets
$'000 $'000 $'000 $'000 $'000
Cost
At 1 January 2022 1,214 276 255 1,745 6,789
Restatement of right-of-use asset - - - - (305)
At 1 January 2022 (restated*) 1,214 276 255 1,745 6,484
Additions (restated*) 422 48 - 470 129
Disposals (41) (16) - (57) (144)
Exchange adjustment (49) (22) (27) (98) (291)
At 31 December 2022 (restated*) 1,546 286 228 2,060 6,178
Additions 372 62 - 434 957
Disposals (37) (4) - (41) (975)
Exchange adjustment 20 12 9 41 89
At 31 December 2023 1,901 356 237 2,494 6,249
Accumulated depreciation
At 1 January 2022 744 216 116 1,076 1,788
Restatement of right-of-use assets - - - - 35
At 1 January 2022 (restated*) 744 216 116 1,076 1,823
Charge for period (restated*) 313 41 41 395 1,411
Disposals (34) (16) - (50) (144)
Exchange adjustment (31) (14) (12) (57) (145)
At 31 December 2022 992 227 145 1,364 2,945
Charge for period 305 38 42 385 1,430
Disposals - - - - (971)
Exchange adjustment (25) 6 6 (13) 61
At 31 December 2023 1,272 271 193 1,736 3,465
Net book value
At 1 January 2022 (restated*) 470 60 139 669 4,661
At 31 December 2022 (restated*) 554 59 83 696 3,233
At 31 December 2023 629 85 44 758 2,784
*Right-of-use assets in the prior year were restated to prepayments, see note
2 for further details.
The additions related to the renewal of the Estonia office, together with the
1-year renewal of the office lease for Ireland, Germany, Japan and Singapore.
Additions in the prior year (FY22) related to the 1-year renewal of the office
lease for Ireland and Singapore. The Group had no contractual commitments for
the acquisition of property, plant and equipment in the current or prior year.
Impairment of Property and Equipment
The carrying amounts of the Group's assets including right-of-use assets are
reviewed at the end of each reporting period to determine whether there is any
indication of impairment loss. If any such indication exists, the asset's
recoverable amount is estimated in order to determine the extent of the
impairment loss, if any. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less cost to sell
and value in use. Impairment losses are charged to the profit and loss in
other operating expenses. During the years ended 31 December 2023 and 2022, no
impairments have been recorded.
11. Intangible assets
Domain name Developed technology Merchant relationships Trade-marks Goodwill Internally developed software Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost
At 1 January 2022 1,836 8,001 15,750 110 45,379 14,621 85,697
Additions - - - - - 4,866 4,866
Disposals (1,562) (19) - - - (3) (1,584)
Disposals (discontinued operations) - (1,918) - - (2,784) (2,996) (7,698)
Exchange adjustment (134) (271) (851) - (862) (87) (2,205)
At 31 December 2022 140 5,793 14,899 110 41,733 16,401 79,076
Additions - - - - - 5,430 5,430
Exchange adjustment - 389 444 - 450 (167) 1,116
At 31 December 2023 140 6,182 15,343 110 42,183 21,664 85,622
Accumulated amortisation
At 1 January 2022 395 3,600 10,111 - - 8,474 22,580
Charge for period 81 494 616 - - 2,677 3,868
Impairment 1,264 - - - - - 1,264
Disposals (1,562) - - - - - (1,562)
Disposals (discontinued operations) - (1,217) - - - (1,419) (2,636)
Exchange adjustment (38) (60) (523) - - (47) (668)
At 31 December 2022 140 2,817 10,204 - - 9,685 22,846
Charge for period - 1,276 904 - - 3,562 5,742
Exchange adjustment - 383 (15) - - 46 414
At 31 December 2023 140 4,476 11,093 - - 13,293 29,002
Net book value
At 31 December 2021 1,441 4,401 5,639 110 45,379 6,147 63,117
At 31 December 2022 - 2,976 4,695 110 41,733 6,716 56,230
At 31 December 2023 - 1,706 4,250 110 42,183 8,371 56,620
The amortisation charge of intangible assets is recognised in administrative
expenses in the consolidated statement of comprehensive income.
Goodwill
Goodwill acquired in a business combination is allocated to the cash
generating units ("CGU's") that expect to benefit from that business
combination.
Goodwill mainly consists of the assets from the acquisition of Mopay AG
("Mopay") in October 2014 and Fortumo Holdings Inc. on 1(st) July 2020,
absorbed into the payment CGU.
Goodwill is reviewed annually for impairment and at the year-end an impairment
test was undertaken by comparing the carrying value with the recoverable
amount of the Group's CGU. The recoverable amount of the cash generating unit
is based on value-in-use calculations. These calculations have been calculated
using pre-tax discounted cash flow projections based on financial budgets and
forecasts approved the Board of Directors. The projections cover a five-year
period and a calculation of the terminal value, for the period following these
projections.
The recoverable amount of the Payments CGU was calculated to be in excess of
the carrying value, indicating there is no impairment required. The key
underlying assumptions used in the calculations are those regarding projected
cash flows, growth rates, increases in costs and discount rates.
Growth rates consider historic experience and current market trends:
- Revenue growth ranges from 19.2% to 24.9% (FY22: 15.4% to
23.8%).
- Take rate growth rate of 0.1% (FY22: 0.1%)
- Gross profit ranging from 97% to 99% (FY22: 97% to 99%)
The pre-tax discount rate was calculated at 15% (FY22: 15.5%). This is based
on the Group's assessment of risk-free interest rates and the risks specific
to the CGU. The terminal value calculation for 2023 was based on growth rate
of post-tax free cashflow of 2% (FY22: 2%) for the CGU.
Sensitivity analysis has been performed and the net present value of the
cashflows would need to fall by a factor of 9.5 to equal the carrying value of
the CGU (FY22: 3.4).
Fortumo domain name
During the prior year management decided to discontinue the Fortumo domain
name and to rebrand all the Fortumo products and rename the acquired entities
of Fortumo group to Boku's name. As a result, the Fortumo domain which was
separately valued as part of the PPA work at the time of the acquisition of
Fortumo in July 2020 and included in intangibles, was impaired in full by
$1.26 million ($1.44 million at 31 December 2021 less amortisation $0.18
million) as the Fortumo domain name is no longer being used internally or
externally.
The Group had no contractual commitments for the acquisition of intangible
assets in the current or prior year.
Developed technology
During the year it was agreed to begin a project to migrate the merchants
purchased under the Fortumo acquisition from the Fortumo platform to the Boku
platform, after which the Fortumo platform would become obsolete. The project
is expected to complete in 2025 and as a result the amortisation has been
accelerated to align with the expected remaining useful life of the platform.
12. Subsidiaries
The subsidiaries of the Company, all of which have been included in the
consolidated financial information, are presented below.
Name Ownership Principal activity Place of Incorporation
Boku Payments, Inc. 100% owned by Boku, Inc. Holding Company United States
Boku Network Services, Inc. 100% owned by Boku, Inc. Holding Company United States
Boku Account Services, Inc. 100% owned by Boku, Inc. Holding Company United Stated
Boku Account Services UK Ltd. 100% owned by Boku Account Services, Inc. Mobile payment solutions United Kingdom
Boku Brasil Participações Ltda. 100% owned by Boku Network Services, Inc. Holding company Brazil
Boku Network Brasil Instituição De Pagamento Ltda. 100% owned by Boku Brasil Participações Ltda. Mobile payment solutions Brazil
Boku Network Services GmbH 100% owned by Boku, Inc. Mobile payment solutions Germany
Boku Network Services UK Ltd 100% owned by Boku Network Services, Inc. Mobile payment solutions United Kingdom
Boku Network Services AU Pty Ltd 100% owned by Boku Network Services, Inc. Mobile payment solutions Australia
Boku Network Services IN Pvt. Ltd. 100% owned by Boku Network Services, Inc. Mobile payment solutions India
Boku Network Services SG Pte. Ltd. 100% owned by Boku Network Services, Inc. Mobile payment solutions Singapore
Boku Network Services HK Limited 100% owned by Boku Network Services, Inc. Mobile payment solutions Hong Kong
Boku Network Services Taiwan Branch Office 100% owned by Boku Network Services, Inc. Mobile payment solutions Taiwan
Boku Network Services Japan Branch Office 100% owned by Boku Network Services, Inc. Mobile payment solutions Japan
Mopay AG Beijing Representative Branch 100% owned by Boku Network Services AG (Germany) Mobile payment solutions China
Boku Network Services IE Limited 100% owned by Boku Network Services, Inc. Mobile payment solutions Ireland
Boku Network Services MY Sdn. Bhd. 100% owned by Boku Network Services, Inc. Mobile payment solutions Malaysia
Boku Network Services EE Holdings, Inc. 100% owned by Boku Network Services, Inc. Holding Company United States
Boku Network Services TH Co Ltd. 100% owned by Boku Network Services, Inc. Dormant Thailand
Boku Network Services PH, Inc. 100% owned by Boku Network Services, Inc. Mobile payment solutions Philippines
Boku Network Services MX S. de R.L. de C.V. 50% owned by Boku Network Services, Inc. 50% owned by Boku, Inc. Dormant Mexico
Boku Network Services Estonia OÜ (previously Fortumo OÜ) 100% owned by Boku Network Services EE Holdings, Inc. Mobile payment solutions Estonia
Boku Network Services ES S.L. 100% owned by Boku Network Services Estonia OÜ Mobile payment solutions Spain
Fortumo Mobile Services Pvt. Ltd. 100% owned by Boku Network Services Estonia OÜ Mobile payment solutions India
Fortumo Singapore Pte. Ltd. 100% owned by Boku Network Services Estonia OÜ Mobile payment solutions Singapore
Boku Network Services PE S.A.C. 100% owned by Boku Network Services, Inc. Dormant Peru
Boku Network Services CO S.A.S. 100% owned by Boku Network Services, Inc. Dormant Colombia
Boku Network Services CL S.P.A. 100% owned by Boku Network Services, Inc. Dormant Chile
Boku Network Services ZA (Pty) Ltd 100% owned by Boku Network Services, Inc. Dormant South Africa
Boku Network Services KE Limited 100% owned by Boku Network Services, Inc. Dormant Kenya
Boku Network Services TZ Limited 99.999% owned by Boku Network Services, Inc. 0.001% owned by Boku, Inc. Dormant Tanzania
Boku Network Services AR S.R.L. 95% owned by Boku Network Services, Inc. 5% owned by Boku, Inc. Dormant Argentina
Boku Network Services UG Limited 99.95% owned by Boku Network Services, Inc. 0.05% owned by Boku, Inc. Dormant Uganda
Boku Network Services UY S.A. 100% owned by Boku Network Services, Inc. Dormant Uruguay
(https://bokucorp.atlassian.net/wiki/spaces/LEGPAYMO/pages/7396950457)
13. Trade and other receivables
restated*
31 December 31 December
2023 2022
$'000 $'000
Trade receivables 53,117 27,898
Accrued income 92,527 59,550
Accounts receivable 145,644 87,448
Less: provision for impairment (2,047) (1,238)
Net accounts receivable 143,597 86,210
Other receivables 281 100
Deposits held 448 426
Sales taxes receivable 1,011 938
Prepayments (restated*) 3,185 2,835
Total current trade and other receivables 148,522 90,509
Financial assets at fair value through profit and loss - 5,600
*Right-of-use assets in the prior year were restated to prepayments, see note
2 for further details.
Accrued income relates to expected revenue generated from settlement and
transaction fees. On receipt of statements from carriers and eWallets the
accrued income is reversed, and actual receivable balances are recognised
accordingly.
$5.6m was received in the current year relating to the final settlement from
the sale of the Identity business. See note 8 for further details.
Provision for receivables:
31 December 31 December
2023 2022
$'000 $'000
Opening balance 1,238 756
Utilised during the period (208) (19)
Increase/(decrease) during the period 1,017 501
Closing balance 2,047 1,238
In accordance with IFRS9, the Group reviews the amount of credit loss
associated with its trade receivables based on forward looking estimates that
take into account and forecast credit conditions as opposed to relaying on
past default rates. The Group has applied the Simplified Approach, applying a
provision matrix based on the number of days past due to measure lifetime
expected credit losses and after taking into account customer sectors with
different credit risk profiles and current and forecast trading conditions.
14. Cash and cash equivalents and restricted cash
31 December 31 December
2023 2022
$'000 $'000
Cash and cash equivalents 117,360 99,551
Restricted cash 33,499 16,962
150,859 116,513
The restricted cash primarily includes segregated client funds and other
client money received but not yet paid to merchants (in transit) for Boku's
licenced entities, cash held at bank to secure a lease agreement for the
Company's San Francisco office and monies held at a financial institution to
collateralise Company credit cards.
15. Trade and other payables
31 December 31 December
2023 2022
Current $'000 $'000
Trade payables 182,397 118,829
Accruals 48,678 35,550
Total financial liabilities classified as financial liabilities 231,075 154,379
Other taxes and social security costs 1,386 1,024
Provision for social security costs on issued stock options 588 860
Total current trade and other payables 233,049 156,263
Non-current
Accrued taxes on issued stock options 979 1,194
Total non-current trade and other payables 979 1,194
The carrying values of trade and other payables and accruals approximate to
fair values.
16. Lease liabilities
The table below shows a reconciliation for discounted lease liabilities
included in the statement of financial position:
Property (office leases) IT Equipment Total
$'000 $'000 $'000
Lease liabilities as at 1 January 2022 4,833 - 4,833
Additions 129 315 444
Interest expense 235 - 235
Payments to lease creditors (1,476) (315) (1,791)
Exchange adjustment (172) - (172)
Lease liabilities as at 31 December 2022 3,549 - 3,549
Additions 937 - 937
Interest expense 171 - 171
Payments to lease creditors (1,649) - (1,649)
Exchange adjustment 44 - 44
Lease liabilities as at 31 December 2023 3,052 - 3,052
The table below represents the maturity analysis of contractual undiscounted
lease payments:
2023 2022
£'000 £'000
Less than one year 1,294 1,427
One to five years 1,768 2,407
Total undiscounted lease liabilities as at 31 December 2023 3,062 3,834
There are no leases with a term of more than 5 years.
Lease liabilities included in the statement of financial position:
2023 2022
£'000 £'000
Current 1,370 1,277
Non-current 1,682 2,272
The following represents the lease expenses and depreciation of right-of-use
assets in relation to leases charged to the Consolidated statement of
comprehensive income:
restated*
2023 2022
£'000 £'000
Interest on lease liabilities 171 235
Expenses related to short term leases 329 238
Depreciation of right-of-use assets (Note 10) (restated*) 1,430 1,411
*Right-of-use assets in the prior year were restated to prepayments, see note
2 for further details.
The amounts recognised in the consolidated statement of cashflows are
presented below:
2023 2022
£'000 £'000
Payment of principal 1,478 1,556
Payment of interest 171 235
Total cash outflows 1,649 1,791
17. Loans and borrowings
On 26 June 2020 the Group entered into a loan agreement with its bankers for
$20.0m to part finance the acquisition of Fortumo Holdings Inc, and its
subsidiaries on 1(st) July 2020. The loan was structured as a $10.0m term loan
repayable in 4 years and $10.0m revolving facility. Associated costs of $500k
were incurred and are amortised over the life of the loan.
On the sale of the Identity division, the outstanding term loan with Citibank
of $8.125m was repaid from the consideration. As at 31 December 2023 the Group
has no bank loans (FY22: Nil). The Group retains the $10m revolver facility
(RCF) which is currently not drawn upon (FY22: $10m facility, $nil drawn
upon). This revolver facility expires on 1 July 2024.
2022 Non-cash changes 2023
Cash flows Borrowing costs expensed in the year Foreign Exchange Movement Lease Liabilities (IFRS 16)
$'000 $'000 $'000 $'000 $'000 $'000
Short-term lease liabilities 1,277 (1,649) - 44 1,698 1,370
Long-term lease liabilities 2,272 - - - (590) 1,682
Total liabilities from financial activities 3,549 (1,649) - 44 1,108 3,052
2021 Cash flows Non-cash changes 2022
Borrowing costs expensed in the year Foreign Exchange Movement Lease Liabilities (IFRS 16)
$'000 $'000 $'000 $'000 $'000 $'000
Short-term borrowings 1,125 (1,125) - - - -
Long-term borrowings 6,688 (7,000) 312 - - -
Short-term lease liabilities 1,335 (1,791) - (129) 1,862 1,277
Long-term lease liabilities 3,498 - - (43) (1,183) 2,272
Total liabilities from financial activities 12,646 (9,916) 312 (172) 679 3,549
18. Share capital
The Company's issued share capital is summarised in the table below:
31 December 31 December
2023 2022
Common shares of $0.0001 each Number of shares issued and fully paid Number of shares issued and fully paid
'000 $'000 '000 $'000
Opening balance 299,270 29 295,876 29
Exercise of options and RSUs 1,797 - 3,394 -
Closing balance 301,067 29 299,270 29
Common Shares
At 31 December 2023, the Company had 301,066,914 (FY22: 299,270,021) common
shares issued and fully paid. The Company has only one class of shares with
par value of $0.0001 each. The authorised share capital is 500,000,000 shares.
The Company holds 4,007,868 shares in treasury (FY22: 1,500,000 shares held in
treasury).
19. Reserves
The other reserves disclosed in the consolidated statement of financial
position includes share premium representing the difference between the issue
price and nominal value of the shares issued by the Company. It includes all
stock options expenses reserves.
Retained losses are the cumulative net profits / (losses) in the consolidated
income statement.
Foreign exchange reserve stores the foreign exchange translation gains and
losses on the translation of the financial statements from the functional to
the presentation currency.
Movements on these reserves are set out in the consolidated statement of
changes in equity.
Treasury reserve relates to the amounts paid to buy back shares in Boku, Inc.
from the market.
20. Share-based payment
The Group operates the following equity-settled share-based remuneration
schemes for employees, Directors and non-employees:
1. 2009 equity incentive plan (2009 Plan) for the granting of stock
options, restricted stock awards (RSA) and restricted stock units (RSU). No
options were available to be issued under this plan as at 31 December 2023 or
2022. There are 2,218k options vested but not exercised under this plan as at
31 December 2023 (FY22: 3,771k).
2. 2017 Equity Incentive Plan (2017 Plan) for the granting of stock
options and restricted stock units (RSUs). The Group reserved an initial ten
million shares of common stock for issue under the plan. The activity under
this plan is presented separately from the rest of the plans, as explained
below. There are 836k options (FY22: 837k) and 11,597k (FY22: 10,069k) RSUs
outstanding as at 31 December 2023.
2009 Equity Incentive Plan
The options activity under the 2009 Plan (including RSUs) are as follows:
2009 Plan (Options)
Number of options WAEP(1)
'000
At 1 January 2022 4,736 $0.34
Exercised (965) $0.34
At 31 December 2022 3,771 $0.34
Exercised (1,513) $0.31
Cancelled $0.28
(40)
At 31 December 2023 2,218 $0.30
(1)WAEP - weighted average exercise price
A summary of other information related to the options granted under this plan
is presented in the table below:
2009 Plan December 2023 December 2022
Outstanding options at reporting end date:
- total number of options 2,218 3,771
- weighted average remaining contractual life excluding RSUs (years) 2.43 2.49
Vested and exercisable ('000): 2,218 3,771
- weighted average exercise price $0.30 $0.44
Weighted average share price exercised during the period (excluding RSUs) $0.31 $0.34
Share-based payment expense for the period ('000) - -
The fair value of each option (excluding RSUs) has been estimated on the
date of grant using the Black-Scholes option pricing model with the following
assumptions: expected terms ranging from 4.99 to 6.89 years; risk-free
interest rates ranging from 0.73% to 3.05%; expected volatility of 58%; and no
dividends during the expected term (2017: expected terms ranging from 5.04 to
6.01 years; risk-free interest rates ranging from 1.87% to 1.92%; volatility
of 45%; and no dividends during the expected term).
2017 Equity Incentive Plan
Options were granted under the 2017 Equity Incentive Plan only in January
2018. Since then, only RSUs have been granted under the plan. The options
granted under this plan vest over 3 years and contain a one-year cliff.
Therefore, 25% of the options vest at the end of one year and from year two a
graded quarterly vesting takes place, where each instalment of vesting is
treated as a separate stock option grant.
RSUs under the 2017 Plan may be outstanding for periods of up to three years
following the grant date. Outstanding RSU grants generally vest over three
years in three equal portions or one third after two years and two thirds in
the third-year anniversary from the grant date. Options under the 2017 Plan
may be outstanding for periods of up to ten years from the grant date.
Performance-based restricted stock units (RSUs)
Performance-based RSUs vest on the completion of a specified service period
and the achievement of certain performance targets, which may include
individual performance measures as well as Company measures, and are converted
into common stock upon vesting.
Share based payments expense for RSUs is based on the fair value of the shares
underlying the awards on the grant date and reflects the estimated probability
that the performance and service conditions will be met; specifically, where
the restricted stock units are nil-cost awards with a non-market performance
condition, so they are valued at the share price as at the day of grant. The
share-based payments expense is adjusted in future periods for subsequent
changes in the expected outcome of the performance related conditions until
the vesting date. Performance-based RSUs vest after three years of issue, in
one vesting event, if the performance conditions are met, however these may
also vest at the discretion of the Board in the event that underlying
performance conditions are not met.
The activity under the 2017 Plan for both options and RSU are as follows:
Available(1) Options WAEP RSUs WAEP(2) Total
'000 '000 '000 '000
At 1 January 2022 35,228 969 $1.205 10,663 - 11,632
Authorised 12,565 - - - - -
Granted (3,914) - - 3,914 - 3,914
Exercised - (132) $1.205 (2,292) - (2,424)
Cancelled 2,216 - $1.205 (2,216) - (2,216)
At 31 December 2022 46,095 837 $1.205 10,069 - 10,906
Authorised 12,982 - - - - -
Granted (5,832) - - 5,832 - 5,832
Exercised - (1) $1.205 (3,290) - (3,291)
Cancelled 1,014 - - (1,014) - (1,014)
At 31 December 2023 54,259 836 $1.205 11,597 - 12,433
1- The number of available RSUs available for future use in the plan.
2- RSUs are issued with a zero-exercise price and therefore the WAEP is
Nil.
A summary of other information related to the options and RSUs granted under
this plan is presented in the table below:
2017 Plan 31 December 2023 31 December 2022
Outstanding options at reporting end date:
- total number of options (excluding RSUs) ('000) 836 837
- weighted average remaining contractual life (years) 4.0 5.0
(excluding RSUs) (years)
Vested and exercisable ('000):
- weighted average exercise price $1.205 $1.205
Weighted average fair value of options granted during the period (excluding $0.44 $0.44
RSU)
Total number of RSUs outstanding 11,597 10,069
Vested and exercisable - Options 836 837
Share-based payment expense for the period ('000) $7,595 $5,165
Reconciliation of share-based payment expense (continuing operations)
December 2023 December 2022
$'000 $'000
2009 Plan
Options - -
2017 Plan
Options - -
RSUs 7,467 5,553
Total share-based expense (excluding national insurance) 7,467 5,553
National insurance reversal accrued (435) (639)
National insurance paid in the year (see Note 4) 563 251
Total share-based payment charge 7,595 5,165
21. Dividends
No dividends were declared or paid in the current year (FY22: Nil).
22. Cash generated from operations
Year-ended Year-ended
31 December 31 December
2023 2022
$'000 $'000
Profit after tax 10,086 28,904
Add back:
Tax charge/ (credit) 1,321 (237)
Amortisation of intangible assets 5,742 3,868
Depreciation of property, plant and equipment 1,815 2,032
Gain on discontinued operations after tax - (26,614)
Loss on disposal of property, plant and equipment 1 6
Loss on disposal of intangible assets - 22
Finance income (1,887) (201)
Finance expense (includes interest on lease liabilities) 249 675
Foreign exchange loss (unrealised) (1,352) 4,407
Employer taxes on stock option and restricted stock units (accrual) charge (435) (639)
Fair value adjustment on warrants valuation (53) 3,470
Amortisation of warrant asset 108 25
Impairment of intangible asset - 1,264
Share based payment expense 7,467 5,045
Cash from operations before working capital changes 23,062 22,027
Increase in trade and other receivables (53,004) (12,328)
Increase in trade and other payables 70,877 40,267
Cash generated from operations 40,935 49,966
The share-based payment expense has been split between the charge using the
Black Scholes method for the period $7,467k (FY22: $5,553k) and the change in
the accrual for employer taxes on stock option and restricted stock units
$-435k (FY22: -$639k). The total share-based payment expense in the
consolidated statement of comprehensive income includes $563k (FY22: $251k)
employer taxes paid via payroll to tax authorities.
The impairment of intangible assets in 2022 relates to the full impairment of
the Fortumo domain name which was discontinued in the comparative period.
23. Financial Risk Management
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible without unduly
affecting the Group's competitiveness and flexibility. The Group reports in
US$. All funding requirements and financial risks are managed based on
policies and procedures adopted by the Board of Directors. The Group does not
issue or use financial instruments of a speculative nature.
The Group is exposed to the following financial risks:
· Market risk (Interest rate risk & Foreign Exchange risk)
· Credit risk
· Liquidity risk
In common with all other businesses, the Group is exposed to risks that arise
from its use of financial instruments. The principal financial instruments
used by the Group, from which financial instrument risk arises, are as
follows:
· Trade and other receivables
· Cash and cash equivalents and restricted cash
· Trade and other payables
· Bank loans
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets
and liabilities
• Level 2: other techniques for which all inputs which have a significant
effect on the recorded fair value are observable, either directly or
indirectly; and
• Level 3: techniques which use inputs that have a significant effect on the
recorded fair value that are not based on observable market data. The Group
has classified the warrant liabilities in this category.
The following tables present the Group's assets and liabilities that are
measured at fair value by the level in the fair value hierarchy as at the
reporting date:
Financial instruments by category
31 December 31 December
2023 2022
Measurement level 1 $'000 $'000
Financial assets
Cash and cash equivalents 117,360 99,551
Restricted cash 33,499 16,962
Total Cash 150,859 116,513
Other financial assets at amortised cost
Net accounts receivable 143,597 86,210
Other receivables 729 526
Total other financial assets 144,326 86,736
Cash and other financial assets at amortised cost 295,185 203,249
Measurement level 3
Financial assets at fair value through profit and loss
Holdback receivable asset - 5,600
31 December 31-Dec-22
2023 2022
Measurement level 1 $'000 $'000
Financial liabilities
Trade payables 182,397 118,829
Current tax payable 509 222
Total other financial liabilities 182,906 119,051
Lease liabilities 3,052 3,549
Financial liabilities at amortised cost 185,958 122,600
Measurement level 3
Financial liabilities at fair value through profit or loss
Derivative financial liability (Amazon warrant liability) 5,511 5,206
Amazon warrants
The fair value of the warrant obligations was $5,511k as at 31 December 2023,
$5,206k as at 31 December 2022 and $1,756k at the inception of the warrants on
16 September 2022. The increase in fair value from inception to 31 December
2022 was primarily due to an increase in the spot price from $0.77 to $1.395.
The increase in fair value from 31 December 2022 to 31 December 2023 was
primarily due to an increase in the number of warrants expected to vest from
4,992k to 5,334k.
The warrants are classified as Level 3 derivative liabilities as there is no
current market for the warrants, such that the determination of fair value
requires significant judgment or estimation. The Group values the warrants
using a combination of Monte Carlo Simulation and Black-Scholes Model
valuation methods.
Significant unobservable inputs as at the inception of the warrant agreement
on 16 September 2022 included volatility of the Company's common stock of 40%,
revenue volatility of 30%, a risk-free rate of 3.39%, and forecasted revenue
from Amazon over the 7-year vesting period. Significant unobservable inputs as
at 31 December 2022 and 31 December 2023 included volatility of the Company's
common stock of 40%, revenue volatility of 30%, a risk-free rate of 3.81%, and
forecasted revenue from Amazon over the 7-year vesting period.
A significant increase in volatilities in isolation would result in a
significant change in fair value as at 31 December 2023. If equity
volatility and revenue volatility were both to decrease by 5% to 35% and 25%
respectively, the total fair value of warrants would decrease to $5,281k,
representing a decrease in fair value of $230k. If equity volatility and
revenue volatility were both to increase by 5% to 45% and 35% respectively,
the total fair value of warrants would increase to $5,771k, representing an
increase in fair value of $259k.
Movement of the contract asset for Amazon and warrant liabilities as at 16
September 2022 (inception) to 31 December 2023
Warrant contract asset $'000
Initial recognition of warrant contract asset 1,756
Change in number of warrants expected to vest (20)
Amortisation to revenue (25)
Balance as at 31 December 2022 1,711
Change in number of warrants expected to vest 359
Amortisation to revenue (108)
Balance as at 31 December 2023 1,962
Financial liability $'000
Initial recognition of contract liability (1,756)
Change in number of warrants expected to vest 20
Change in fair value of warrants (3,470)
Balance as at 31 December 2022 (5,206)
Change in number of warrants expected to vest (358)
Amortisation to revenue 53
Balance as at 31 December 2023 (5,511)
Market risk
Market risk arises from the Group's use of interest bearing and foreign
currency financial instruments. There is a risk that the fair value or
future cash flows of a financial instrument will fluctuate because of changes
in interest rates (interest rate risk) or foreign exchange rates (currency
risk).
Interest rate risk
The Group has a $10m revolving facility, which can be used if needed (FY22:
$10m). Interest rates for the current Boku revolving facility loan were based
on LIBOR, however LIBOR was phased out by the end of 2021. Current rates are
based on the Secured Overnight Financing Rate. The Group manages the interest
rate risk centrally. The term loan taken out to part fund the acquisition of
Fortumo in 2020 was repaid in full on 28(th) February 2022 following the
disposal of the Identity division to Twilio. As at 31 December 2023 the Group
has no loans (FY22: Nil). The Group's borrowings are disclosed in note 18.
During the year to 31 December 2023 interest rates increased in many
jurisdictions as governments tried to control inflation. The Group has cash
balances in many jurisdictions and the increase in interest rates had a
positive effect on the Group cash position. The bank interest earned during
2023 was $1,887k (FY22: $189k).
Foreign currency risk
Foreign exchange risk is the risk that movements in exchange rates affect the
profitability of the business.
The Group serves many of our U.S. based clients with global operations using
the Group subsidiaries in Singapore, Ireland, UK, Japan and Hong Kong.
Although contracts with these clients are typically priced in U.S. dollars a
substantial portion of client funds receivable and related costs and revenues
are denominated in the local currency of the country where services are
provided, resulting in foreign currency exposure which have an impact on our
results of operations.
Our primary foreign currency exposures are in Japanese Yen, EURO, GBP, Turkish
lira, Thai Baht, Korean Won, Taiwanese dollar and Philippines Peso. There can
be no assurance that we can take actions to mitigate such exposure in the
future, and if taken, that such actions will be successful or that future
changes in currency exchange rates will not have a material adverse impact on
our future operating results. A significant change in the value of the U.S.
Dollar against the currency of any one or more of these currencies mentioned
above may have a material adverse effect on our financial condition and
results of operations. A 10% impact on foreign currency balances is detailed
further in this note.
Foreign currency exchange risk arises mainly where receivables and payables
exist in different currencies due to transactions entered into in foreign
currencies. As such, management believe that the Group is exposed to the
following foreign currency exchange risks:
a) Transaction foreign currency risk is the exchange risk associated with the
time delay between entering into a contract and settling it. Greater time
differences exacerbate transaction foreign currency risk, as there is more
time for the two exchange rates to fluctuate. The Group manages this risk in
various ways:
· by implementing procedures to receive funds faster (daily where possible) and
settle the funds to merchants daily by shortening the settlement times.
· By implementing a mark-up fee to cover the FX fluctuations when the settlement
currency is different from the transaction currency
· by contractual agreement to convert the funds at the foreign exchange rate
received from the aggregators or other suppliers.
· by using foreign exchange contracts timely to the extent that any remaining
impact on profit after tax is not material.
b) Translation foreign currency risk is the risk that the Group's non-U.S. Dollar
assets and liabilities, revenues and costs will change in value as a result of
exchange rate changes on converting them to US Dollars, which is the reporting
currency of the Group. Monetary assets and liabilities are valued and
translated into U.S. Dollars at the applicable exchange rate prevailing at the
applicable date. Any adverse valuation moves due to exchange rate changes at
such time are charged directly and could impact our financial position and
results of operations.
For the purposes of preparing the consolidated financial statements, the Group
convert subsidiaries' financial statements as follows:
Statements of financial position are translated into U.S. Dollars from local
currencies at the period-end exchange rate, shareholders' equity is translated
at historical exchange rates prevailing on the transaction date and income and
cash flow statements are translated at average exchange rates for the period.
The Group manages all treasury activities centrally, with the exception of the
acquired Fortumo entities where treasury processes are in the process of being
aligned with Group treasury policies and procedures.
As of 31 December 2023, the Group's gross exposure to foreign exchange risk
was as follows:
Euro GBP Other Currency Total
31 December 2023 $'000 $'000 $'000 $'000
Trade and other receivables 41,076 15,933 75,150 132,159
Cash and cash equivalents and restricted cash 25,220 8,379 37,631 71,230
Trade and other payables (54,702) (19,074) (109,554) (183,330)
Net financial assets 11,594 5,238 3,227 20,059
10 % impact +/- 1,288 582 358 2,228
Euro GBP Other Currency Total
As at 31 December 2022 $'000 $'000 $'000 $'000
Trade and other receivables 23,113 12,242 46,900 82,255
Cash and cash equivalents 21,284 8,521 32,225 62,030
Trade and other payables (49,100) (16,877) (68,917) (134,894)
Net financial (liabilities)/ assets (4,703) 3,886 10,208 9,391
10% impact +/- (523) 432 1,135 1,044
The Group operates in 60 currencies (FY22: 48 currencies). We have identified
Euro and GBP as the main affected currencies by fluctuations in exchange rates
for 2023. In 2022 the main currencies were GBP and EUR. Other currencies are
included in the 'Other' column. The impact of 10% movement in foreign exchange
rate of US$ will result in an increase/decrease of total comprehensive
profit/loss after tax and financial assets/(liabilities) of $2,228k for
December 2023 (FY22: $1,044k).
c) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations.
The Group is exposed to credit risk in respect of these balances such that, if
one or more the aggregators, MNOs or wallet providers encounters financial
difficulties, this could impact the Group's financial results. The Group
mitigates its credit risk by assessing the credit rating of new customers and
MNOs prior to entering into contracts, by entering contracts with customers
with agreed credit terms and also primarily by limiting its liability
contractually to its customers/merchants in the event of non-payment from
wallet providers, MNOs or aggregators.
To minimise this credit risk, the Group endeavours only to deal with companies
that are demonstrably creditworthy and this, together with the aggregate
financial exposure, is continuously monitored. The maximum exposure to credit
risk is the value of the outstanding receivables amount from
carriers/aggregators less the value of corresponding outstanding amounts
payable to merchants, which equals the revenue amount recorded in the
financial statements in respect of the uncollected funds. An APS fee is also
charged to merchants for early settlement.
At the reporting date, the exposure was represented by the carrying value of
trade and other receivables, against which $2,047k was provided at 31 December
2023 (FY22: $138k). The provision amounts represent an estimate of potential
bad debt in respect of the year-end Group trade receivables. The Group's
customers are concentrated to certain sectors, however the concentration of
credit risk from trade receivables relating to carriers and aggregators is
mitigated by a corresponding trade payable to merchants. Boku only settles
merchant payable balances after corresponding funds are collected from
carriers and wallets, mitigating credit risk.
A debt is considered to be bad when it is deemed irrecoverable, for example
when the debtor goes into liquidation, or when a credit or partial credit is
issued to the customer for goodwill or commercial reasons. The Group has
applied the simplified approach applying a provision matrix based on number of
days past due being greater than 150 days to measure expected credit losses
and after taking into account customer sectors with different credit risk
profiles, history of collections and current and forecast trading conditions.
The Group's receivable provision matrix is as follows:
31 December 2023 < 60 days 61-90 days 91-150 days > 150 days Total
Expected credit loss % range 0% 0.30% 0.72% 59.7%
Gross carrier receipts ($'000) 130,844 7,395 4,066 3,339 145,644
Expected credit loss rate ($'000) - (22) (30) (1,995) (2,047)
31 December 2022 < 60 days 61-90 days 91-150 days > 150 days Total
Expected credit loss % range 0% 0% 0% 95%-100%
Gross carrier receipts ($'000) 84,792 1,384 34 1,238 87,448
Expected credit loss rate ($'000) - - - (1,238) (1,238)
At 31 December 2023 the Group had a net provision for $1,712k (FY22: $138k) of
which $1,574k was provided for in the year (FY22: $11k was reversed in the
year). The Company revenue is recorded as the net between the amounts received
from carriers and aggregators less the amounts payable to merchants. This
represents management's best estimate of the potential revenue loss for the
Group if the $2,047k (FY22: $1,238k) old receivables were not received from
carriers.
Other receivables are considered to be low risk. Management do not consider
that there is any concentration of risk within other receivables. No other
receivables have been impaired.
The maximum credit risk exposure is the amount of cash held with at the bank
(cash and cash equivalents). To date, the Group has not experienced any losses
on its cash and cash equivalent deposits. $122.4m (FY22: $89.6m) of cash and
cash equivalents were held in A(+) rated bank accounts.
d) Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to ensure that it will
always have sufficient cash to allow it to meet its liabilities when they
become due.
The statement of financial positions related to merchant funds flows are
considered to be neutral from a liquidity perspective as these cash balances
and related payables are interrelated from a liquidity perspective. This is
due to the fact that Boku only settles merchant payables after cash is
collected from carriers and wallets.
The table below analyses the Group's financial liabilities by contractual
maturities (all amounts disclosed in the table are the undiscounted
contractual cash flows):
31 December 2023 Within 1 year 2-5 years More than 5 years Total
$'000 $'000 $'000 $'000
Trade and other payables 233,049 - - 233,049
Financial liability (Amazon warrant liability) - - 5,511 5,511
Leases liabilities 1,294 1,768 - 3,062
Total* 234,343 1,768 5,511 241,622
*No material difference between discounted and undiscounted fair value.
31 December 2022 Within 1 year 2-5 years More than 5 years Total
$'000 $'000 $'000 $'000
Trade and other payables 154,379 - - 154,379
Financial liability (Amazon warrant liability) - - 5,206 5,206
Lease liabilities 1,427 2,407 - 3,834
Total* 155,806 2,407 5,206 163,419
*No material difference between discounted and undiscounted fair value.
The Board receives financial reports on a monthly basis as well as information
regarding cash balances and investments. The liquidity risk of each group
entity is managed by the Group treasury team at the entity level to meet any
liquidity obligations. Where facilities of group entities need to be
increased, approval must be sought by the entity's CFO. Where the amount of
the facility is above a certain level, agreement of the Group CFO and the
Board is needed.
Capital Management
The Group's capital is made up of share capital, other reserves, treasury
shares, foreign exchange reserve and retained losses.
The Group's objectives when maintaining capital are:
· To safeguard the entity's ability to continue as a going concern,
so that it can continue to provide returns for shareholders and benefits for
other stakeholders; and
· To provide an adequate return to shareholders by pricing products
and services commensurately with the level of risk.
The capital structure of the Group consists of shareholders' equity as set out
in the consolidated statement of changes in equity. All working capital
requirements are financed from existing cash resources and borrowings.
The Group manages its capital structure and makes the necessary adjustments in
the light of changes of economic circumstances, the risk characteristics of
underlying assets and the projected cash needs of the current and prospective
operational / financing / investment activities. The adequacy of the Group's
capital structure will depend on many factors, including capital expenditures,
market developments and any future acquisition.
24. Related party transactions
In 2023, the Group was remitted $119,711,637 in net payments from 2 suppliers
who are shareholders of the Company (FY22: $132,800,653 - from 3 suppliers).
At 31 December 2023, the Company had receivables of $23,853,885 (FY22:
$13,594,020) due from these companies.
25. Ultimate controlling party
There is no ultimate controlling party of the Company.
26. Contingent liabilities
In the normal course of business, the Group may receive inquiries or become
involved in legal disputes regarding possible patent infringements. In the
opinion of management, any potential liabilities resulting from such claims,
if any, would not have a material adverse effect on the Group's consolidated
statement of financial position or results of operations.
From time to time, in its normal course of business, the Group may indemnify
other parties, with whom it enters into contractual relationships, including
customers, aggregators, MNOs, lessors and parties to other transactions with
the Group. The Company has also indemnified its Directors and executive
officers, to the extent legally permissible, against all liabilities
reasonably incurred in connection with any action in which such individual may
be involved by reason of such individual being or having been a Director or
executive officer. The Group believes the estimated fair value of any
obligation from these indemnification agreements is minimal; therefore, this
consolidated financial information do not include a liability for any
potential obligations at 31 December 2023 and 2022.
27. Events after the reporting date
Stuart Neal was appointed CEO on 1 January 2024 and appointed as a Director of
the Company on 17 January 2024.
NON-IFRS FINANCIAL INFORMATION
Management regularly uses adjusted financial measures internally to
understand, manage and evaluate the business and make operating decisions.
These adjusted measures are among the primary factors management uses in
planning for and forecasting future periods.
Management present non-GAAP financial measures because they believe that these
and other similar measures are widely used by certain investors, securities
analysts and other interested parties as supplemental measures of performance
and liquidity. These measures are used internally to establish forecasts,
budgets and operational goals to manage and monitor the business, as well as
evaluate underlying historical performance. It is believed these non-GAAP
financial measures depict the true performance of the business by encompassing
only relevant and controllable events, allowing management to evaluate and
plan more effectively for the future.
The primary adjusted financial measures are EBITDA, Adjusted EBITDA and
Adjusted Operating expenses, which management considers are relevant in
understanding the Group's financial performance. Management uses the adjusted
financial measures by excluding certain non-cash and one-off items from the
actual results. The determination of whether non-cash items or one-off items
should form part of the adjusted results, is a matter of judgement and is
based on whether the inclusion/exclusion from the results represent more
closely the consistent trading performance of the business.
"EBITDA" is defined as net income / (loss) for the year, less discontinued
operations gains, net of tax, before finance expenses (including finance costs
related to lease liabilities), depreciation and amortisation (including
depreciation of right-of-use assets), and income tax expense / (benefit).
"Adjusted EBITDA" is defined as earnings before interest, tax, depreciation
and amortisation, non-recurring other income, share based-payments expense,
foreign exchange losses and exceptional costs. Adjusted EBITDA is used
internally to establish forecasts, budgets and operational goals to manage and
monitor our business, as well as evaluate our underlying historical
performance. We believe that Adjusted EBITDA is a meaningful indicator of the
health of our business as it reflects our ability to generate cash that can be
used to fund recurring capital expenditures and growth. Adjusted EBITDA from
continuing operations also disregards non-cash or non-recurring charges
(exceptional costs) that we believe are not reflective of our long-term
performance. We also believe that Adjusted EBITDA is widely used by investors,
securities analysts and other interested parties as a supplemental measure of
performance and liquidity.
"Adjusted Operating expenses" is defined as Gross profit less Adjusted EBITDA.
Constant currency measures (Revenue only)
Constant currency revenues are calculated by applying the monthly average
foreign exchange rates for each month of 2022 to the actual 2023 monthly
results.
"Average daily cash" is the average cash balance for each day.
"Adjusted EBITDA margin" is gross profit less Adjusted EBITDA.
A reconciliation of Adjusted EBITDA to operating profit is as follows:
restated*
Year ended Year ended
31 December 2023 31 December 2022
Note $'000 $'000
Alternative performance measures
Adjusted EBITDA 25,799 20,238
Other Income 103 755
Depreciation and amortisation (restated*) 10, 11 (7,557) (5,437)
Share-based payments 20 (7,595) (5,165)
Foreign exchange loss (1,034) (796)
Exceptional items - (1,589)
Operating profit 9,716 8,006
*Right-of-use assets in the prior year were restated to prepayments and
depreciation was restated, see note 2 for further details.
Exceptional items are included in administrative expenses and include the
following items:
Year ended Year ended
31 December 2023 31 December 2022
Exceptional items $'000 $'000
Impairment of intangible assets - (1,264)
Exceptional items - (317)
Professional costs - (8)
Total exceptional items - (1,589)
Charitable contributions of £Nil (FY22: $317k) were classified as
exceptional. These represent monies donated to charities in aid of the Ukraine
war.
Impairment of intangible assets of £Nil (FY22: $1,264k) was recognised,
(further details can be found in note 11).
GLOSSARY
Abbreviation Definition
A2A Account to Account based payment systems allow payments to be made from one
bank account to another, generally in real time. They are contrasted with
card-based payment systems where the payment is mediated through a card
scheme. In A2As the payment is direct. A2A payments can be organised as
schemes, typically under the jurisdiction of the Central Bank (UPI in India or
Pix in Brazil), as interbank initiatives (Twint in Switzerland, Blik in
Poland) or as infrastructure (Open Banking access to Faster Payments in the
UK)
AGM Annual General Meeting
AIM Alternative Investment Market
AISP Under Open Banking, an Account Information Service Provider, with consumer
consent can access information about the transactions and balances in the
consumer's bank account. AISPs can then provide services that provide a
consolidated view of a consumer's activity across multiple banks, or analysis
that might not be available from their financial institution. In the UK, AISPs
are authorised by the FCA
ATV The Average Transaction value is the TPV divided by the total number of
successful transactions
Bundling The distribution of a digital entertainment company's services through a 3rd
party such as a Telco, TV company, Bank or retailer, typically as part of a
new tariff (e.g. "Get 6 month's streaming music as part of your mobile phone
service"). Boku's services link the distributor and the entertainment
company's systems.
Carriers Carriers are the consumers phone company where purchases can be charged to a
phone bill, see DCB
Constant currency Constant currency is calculated by applying the monthly average foreign
exchange rates in 2022 to the actual 2023 results
CEO Chief Executive Officer
CFO Chief Finance Officer
CGU Cash generating unit
COO Chief Operating Officer
CT Corporation tax
DCB Direct Carrier Billing is a form of payment method whereby consumers can
purchase digital goods using their post-paid mobile phone account or pre-paid
mobile phone balance.
DEI Diversity, equity and inclusion
DT Deferred tax
EPS Earnings per share
eWallet/ digit wallet An eWallet is a type of payment method that allows a user to undertake
transactions online and, sometimes, offline. A user will link their eWallet to
a funding source which might be a bank account, debit card or cash top up. The
balance in the wallet is then used to fund the purchase. In some cases,
eWallets will have an auto top up feature that allows funds to be withdrawn
from the funding source if there is insufficient balance. Examples include
Alipay, PayPal, Dana or Gopay.
GMC Global management committee
Gross margin The difference between revenue and cost of sales divided by revenue
Group Boku, Inc. and its controlled entities
IFRS International Financial Reporting Standards
Issuer The Issuer is the entity within the Boku system who has the relationship with
the consumer, issues them with payment credentials, collects the amounts owed
by the consumer and settles them. The Issuers within the Boku network include
Mobile Network Operators, eWallet providers and A2A schemes.
LPMs Local Payment Methods are those which typically operate in a single country.
They embrace domestic card schemes, domestic voucher schemes, mobile network
operators, eWallets, Account to Account based payment systems and Buy Now Pay
Later operators. Local Payment schemes typically operate to their own standard
and are not interoperable with other schemes.
LTIP Long term incentive plan
MAU Boku defines a Monthly Active User as one who has undertaken one or more
successful payment transactions or who has an active bundle within the month
in question. Users who have registered and still have an active payment method
on file are not defined as active unless they have successfully transacted
Merchant The merchant is the party in the system who wishes to sell products or
services to consumers and needs to support various payment methods in order to
collect the money.
MNOs Mobile network operator, see carrier.
Nomad Nominated adviser
NPV Net present value
Open Banking In Open Banking markets, banks are required to provide interfaces to
authorised 3(rd) parties to access account information (AISP) or initiate
payments (PISP)
PISP Under Open Banking, a Payment Initiation Service Provider, with consumer
consent, can initiate payments from the consumer's bank account. In the UK,
PISPs are authorised by the FCA
Platform The platform that Boku have built to connect Merchants and local payment
methods
PPA Price purchase allocation
PSP A Payment Service Provider acts as a technical layer connecting a merchant to
various issuers. The base level of service is the transaction model where only
technical services are provided. It can be supplemented by the settlement
model whereby funds are collected and settled to those merchants.
PwC PricewaterhouseCoopers LLP
RCF Revolving credit fund
RSU Restricted Stock Units are share awards subject to a vesting schedule and
certain vesting conditions
Settlement Model In the Settlement model, Boku provides not only technical transaction
processing services but also collects the funds due from the Issuers and
settles them to the merchant in the currency of their choice.
SID Senior Independent Director
SMS aggregator Company used by Boku used to purchase SMS messages in bulk
Take Rate Take rate is defined as revenue divided by TPV. It is a measure of the average
price obtained
TPV Total Payment Volume is total value transacted through the system in US
dollars. For payments, this is the total amount successfully transacted by
consumers translated into USD at average FX rates for the month. For bundling
transactions, it represents the total retail value of the bundles. In some
case this value is inferred from revenue.
Transaction model The Transaction Model is when Boku provides solely technical connectivity
services to a merchant who arranges for settlement directly with the issuer.
WACC Weighted average cost of capital
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