Boku Share News (BOKU)

(Sharecast News) - Mobile payments and identity company Boku advised shareholders in an update on Wednesday that it was expecting 2021 earnings nearly a third higher than the prior year, as it announced the divestment of its identity subsidiary in a deal worth up to $32m.
The AIM-traded firm said group revenues for the year ended 31 December were expected to be around $69m, making for a year-on-year increase of 22%, while group adjusted EBITDA looked to have increased by 31% to an estimated $20m.

On a constant currency basis, both group revenues and EBITDA would have been $2.3m higher, the board noted.

Group cash stood at $62.4m at year-end, up from $48.6m at the interim point on 30 June, with $11.88m of the $20m debt used to acquire Fortumo paid down by the end of 2021.

Average daily cash balances - a measure which the board said "smooths out the effect" of carrier and merchant payments - was $50.5m in December, compared to $38m in June.

"We are pleased with our 2021 performance with both payments and identity showing good growth, and group revenue and EBITDA running considerably ahead of last year," said chief executive officer Jon Prideaux.

"Without a significant exchange rate headwind, mostly affecting the second half, both revenues and EBITDA would have been materially higher."

Prideaux said the results showed Boku was able to maintain its performance through the pandemic, despite some distortion to traditional seasonality patterns which it was expecting to revert to normal in 2022.

"Our growth has enabled us to make significant investment in the second half in building out our mobile first 'M1ST' payments network."

At the same time, Boku said it had agreed the divestment of its wholly-owned subsidiary Boku Identity to cloud platform operator Twilio for a maximum transaction value of $32.3m in cash.

The Boku Identity division provides real-time mobile identity and authentication solutions to mobile network operators.

It said the disposal would allow Boku to become a pure-play payments business, focusing its resources on exploiting the mobile payments opportunity, particularly to continue to expand its M1ST network including direct carrier billing, e-wallets and real-time payments.

Boku said it would invest part of the proceeds in the M1ST network to take advantage of the "substantial" opportunity, as well as to repay outstanding bank debt, with the remainder to be used for working capital purposes.

The disposal was expected to be immediately earnings-enhancing for Boku.

"Boku has decided to divest its identity business so that we may focus our resources on our payments business," Jon Prideaux said.

"In 2021, Boku has grown its payments network to reach seven billion consumer payment accounts, increased its mobile wallet payments transaction value more than five-fold, as well as launching mobile-first payments for world leading digital advertising, music and video streaming, video and console game companies."

Prideaux said that by becoming a pure-play payments business, the firm was looking to capitalise on its momentum and maximise its market opportunity in 2022 and beyond.

"We believe Boku Identity will be able to continue to develop under Twilio's ownership and we wish the business and its staff well for the future."

At 1157 GMT, shares in Boku were down 2.67% at 164p.