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Interims on Monday.
Bango has many employees working from home. During the pandemic Bango moved to larger premises and I understand they are looking to move again to even larger premises. There are a number of employees working at the telcos sites e,g, Verizon. The 21m$ savings are annual so about half this will be seen in H2.
Thanks for the summary, so we should start to see the benefit of most of the 21m $ savings from the integration and increased sales dropping down to the bottom line in H2 with the full benefit in 2024, a couple of points from the below that I’m not clear on is if we have terminated the lease on the Docomo offices where are the 231 staff supporting sales located and what is the intention going forward in relation to the these staff, will they be retained, I thought getting rid of the majority of the staff would be the majority of the 21m $ savings or will there be further exceptional costs related to redundancy, apologies in advance if I have misunderstood
Half year results next week so further clarification expected
There were three main costs relating to Docomo. First of all the costs of running the Docomo platform. Bango migrated the processing from the Docomo platform to the Bango platform last year and recorded the cost of about ten million dollars as an exceptional item in 2022. The next big cost was the termination of leases on Docomo offices. This was achieved in the first six month of 2023 and it would seem has not been treated as an exceptional item. The next large cost is the cost of 231 additional staff. These are being used to support sales and so should largely appear in the cost of sales. Sales should increase as a result of the extra staff which is what happened.
The integration progress was projected to result in 21 million dollars of annual savings. At the half year Bango claimed to have achieved 19 million of this. The second half will reflect the savings and in 2024 the EBITDA is projected to increase by 10 million dollars. (see page 17 of the 2022 Bango Annual Report.)
I doubt there will be any Docomo costs in 2024 just benefits.
Pensioner, thx for that info, i wasn’t aware Singer hadn’t updated their 2024 forecasts. Still, a full year of DOCOMO costs rather than just four months’ worth would add quite a bit to the cost base, but then there’ll be significant integration savings. We’ll just have to wait for the updated forecasts.
The almost doubling of wages and salaries in 2022 is in small part due to Docomo. Docomo digital became part of Bango at the end of August so only four months and a day of Docomo wages are included. I was told by Bango that they had increased their headcount by about 60% prior to the acquisition. Bango moved to larger premises about 18 months ago.
The big growth area for Bango is bundling. Docomo was mainly involved in DCB rather than Software as a Service.
When Singer published their latest forecast for Bango they stated they had not updated the 2024 revenue figures. Bango almost certainly is involved with Apple. They are very restricted in what they can reveal about this so the forecast figures for 2024 have not been updated.
Much of the increases in revenue and cost base were due to the integration of DOCOMO, though. It’s impossible to split out the components of organic vs inorganic growth, but we do know the cost base pre-DOCOMO was always considered “flat-ish” - I’d expect that to continue from the new, rebased level. And current 2024 forecasts for revenue are only $57.5m vs almost $50m this year.
According to the 2022 accounts the wages and Salaries in 2022 were 17,348,000 Dollars compared with the 2021 figure of 8,874,000 dollars. This does not indicate a stable cost base.
According to the July update 'Bango generated strong growth during the first half of FY23 with revenue up 88% to $20.3M (1H22 $10.8M)' . To me an 88% growth is quite significant and given the more than doubling of headcount I would expect high levels of growth to continue.
With a stable cost base it should have the ability to pay dividends well, this might be an income play rather than a growth one.
I don’t think BGO has the ability to grow that much, you’ve caught it too far along in its development. Some simple maths - assume cost base is relatively flat (which it is) - 5% pa increases. And revenue growth is 15%pa - which is current consensus for 2024 over 2023. Then by 2030 revenue is $133m, costs $40.2m, EBITDA $92.8m. If EV/EBITDA remains unchanged compared to forecast 2024 (c9.1, at an sp of 200p) then the sp in 2030 would be c675p. For comparison, 25% pa growth in revenue would see an sp of 1303p. So that’d be 6.5x growth. You’d need 65% pa growth over this period to increase the sp by 40x, which seems highly unrealistic.
Anyone got a 5 yrs or 10 yrs forecast, as i like to own microcaps with a potential to go up 30, 40 times. This is only done if the company can grow earnings exponentially for many years at a growth rate or 30-50% eps, And not hit saturation point or maturity after a say 2 or 3 yrs, a company must be constantly evolving its products and selling them worldwide. plus it must have a fair p/e starting point, as p/e expansion is also part of a share price growth as well as the eps growth.
Indeed. Current Enterprise Value is about $192m. Next year’s forecast EBITDA $27.5m. That’s a ratio of 7. Far, far too low for a still-fast growing tech company.
Interesting , thanks. Personally I’m more interested in 12 months from now when I expect we will be sitting quite a bit higher than today. PL in recent interview seemed to beam confidence, as I suspect he knows where this is heading !
Sp, appear a to have marginally broken the down trendline, which is bullish, and the Relative strength indicator (RSI), shows a positive divergence for the major troughs, which is bullish. Although the two Bollinger bands are separating, there has been little sp, movement for 2 days, so the lower Bollinger band, is likely to turnup, soon. This would signal a sp, retracement, probably between the earlier bottom at 185.00 and the later peak of 183.5.
At the moment we are flying under the radar. The Interest rate rises don't help.
However the expansion in EBITDA and the cost synergies do. The maths make it happen. This is on the side of the stock.
Good Company and Good execution so far from management.
Time to add.
This is one where I don’t give a ‘Donald’ what the market thinks. Company and management tip top. Fully invested.
……and the share price falls.
So is it all priced in? I find that hard to believe, given that the share price is little more than it was five years ago and all the other measures are immensely different.
In line with expectations on EBITDA, cash and integration synergies. Some exciting large partners. What’s not to like?
Analyst consensus SP target is 343p with ‘23 Adj. Ebitda of $12.5m, which the Company seem comfortable they’ll meet. All’s good.
The Bango Digital Vending Machine ("DVM") continued to drive growth, with ARR up 64% to $5.6M (1H22: $3.4M) and remains on track to reach $10M by the end of 2023. Bango signed new DVM contracts in the first half, with BenefitOne and 2 US telcos, including another top 5 operator. These new US contracts will begin generating ARR in 2H23. The Bango DVM now enables digital subscription services for 3 out of the top 5 US operators, serving 61% of US consumers.
Adjusted EBITDA* in 1H23 is expected to be -$0.4M (1H22: $2.9M), in line with management expectations, reflecting the costs associated with the DOCOMO Digital integration. The integration is progressing well with actions already taken to deliver $19M of the $21M of guided cost synergies. The benefit from synergy actions and the typical second half revenue weighting underpins management's confidence in delivering EBITDA in line with market expectations for the full year.**
Gross profit margin remained high at 90% in 1H23 (FY22: 91%). As at 30 June 2023, Bango had net cash of $13.4m (31 December 2022: $9.5M***) , including the previously announced $8M NHN loan. This is as a result of the phasing of working capital movements, which has positively impacted the first half.
Has Mr Market forgotten the great acquisition here? The positive inertia within the business is a given; looking forward to the interims/update.
The H1 update may drop this morning, looking forward to progress which should include first numbers from the deal with the large global tech leader that shall not be named amongst many other deals signed last year, also details of any upfront platform deal payment’s signed in H1 and the progress with the integration of DOCOMO will be interesting which according to the recent loan RNS excellent progress has been achieved