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KingB You seem to be new to this board so I thought I would post a link which will help you understand what is going on. http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BGO/12928774.html The Japan and Korea moves are a result of the partnership with Danal which is now bearing fruit. Danal is very involved with DCB and I believe their annual EUS is about 1billion dollars. Danal have been preparing to tackle the huge Chinese market and Bango is hoping to benefit from this. Danal has also biometric identification tech which will be useful for Bango with respect to PSD2.
I agree with slowburner. The move into Korea is not new in that Bango was integrated into Danal�s offering as a result of the intercompany agreement in 2016. This addressed DCB for digital content in the country. What is new is that Bango is moving to address the market for the sale of physical goods and IOT in Korea. Ultimately the sales of physical goods using DCB will dwarf the sales of digital content. DCB for physical goods is much more complicated than for digital content. Bango signed a development contract with Amazon in 2011 and it has taken until 2017 to more or less get the product right. This is a huge opportunity for Bango. With regard to profitability this is, in my opinion, less important than the accelerating rate of end user spend. It seems to me that whatever assumptions one makes about the figures, the underlying growth in EUS that must have taken place, is impressive. I am surprised that Simon expects an RNS of EUS in December bearing in mind that provisional year end results will be announced in January. December would then be a closed period.
BDC, I think stt1 may be using derivatives such as CFD rather than shorting. He certainly seems to have a knack of distorting positive news into negative news but does not seem to be very bright. I would expect his exposure is quite large by for him, given the effort he puts into distorting reality into negative posts. It is the less experienced investors who he is attempting to exploit. For the F4 they will need audited statements. This will be the main cause of delay. Auditors in the US need to take care because of the much greater risk of litigation. As you know the share price of small tech companies is driven by news. Currently we are in a period of no news and so volumes are low and the share price tends to drift downwards. In December there will be a more detailed outlook statement and more information and in the run up to the December Interim report, say the week before, the share price will probably start to rise.
I wondered what people's view is with regard to future earnings. It seems to me that after the disaster orchestrated by SC who was simply a techie with little or no experience of running a business and who had an incredible and in my opinion unjustified ego, the company has made good progress sorting out the mess created. I am disappointed that he is still associated with the company. He is on the audit committee and I wonder what he knows if anything on audit. I really like the Yume acquisition. The HQ of the two companies are about thirty miles apart and so there is no rush to merge the HQs and they should have a reasonable chance of retaining key staff. BM is leaving R1 at about the stage as he left Miva where he did much the same job. Letting go of lots of people and getting rid of non core businesses leads to a lack of popularity and fear for ones job which in turn reduces cooperation. I think going forward there will be an attempt to move the culture towards that existing in YUME. With regard to forward projections Digital Look has a projection for R1 of earnings of 42p per share for the year ending 31/03/19. This would tend to indicate a share price of about 4 times what it is now. http://www.digitallook.com/equity/Rhythmone-20240 . The projection could be way out as there are risks the company will have to face. Not the fabricated ones imagined by stt1. It does seem that the company is moving in the right direction.
Rubicon and SpotX are not implementing ads.txt , i.e. making it mandatory, but urging the publishers to use ads.txt. For example SpotX is driving the adoption of the IAB Tech Lab�s recently introduced ads.txt technical solution. Everyone thinks it is a good idea but there is a reasonable amount of effort required by for some publishers to implement it and while it is not usable this effort takes a low priority.
BDC:- I think for some time R1 has held on to the cash for security. A far as I am concerned the fact that they have spent the cash shows confidence that R1 has reached sustainable profitability.
Stt1 In the real world companies are funded with debt and equity. R1 has for may years been sitting on a big pile of cash so has practically no debt. Now that they are profitable and have significant assets they are credit worthy and I would expect would have little difficulty in borrowing say dollars 100 million over a short period. In fact they need much less to tide them over until they get hold of Yume's cash. With regard to ads.txt. This will only be of significant help if the publisher's adopt the approach. To date few have. https://digiday.com/media/ads-txt-created-help-publishers-fight-fraud-isnt-adopted-publishers/
A few years ago I went along to the AGM of Bango. I was interested in two things. One was the motivation of Ray who is the key driver of the company. He is very wealthy having already built up and sold two companies. He could buy lots of toys such as his own plane etc. The other reason was to see what Bango was doing about enabling DCB on physical goods. It seemed to me that it was essential that Bango developed in this direction as the purchase of physical goods, while much more complicated than digital content, would in comparison be huge. I satisfied myself on both counts. Your rough projections do not include anything for physical goods and so are grossly understated. I am sure you realise this but not everyone reading the share chat will. In the interim financial report DCB for physical goods is described as vital technology. Bango has been developing this together with Amazon for several years. Sales of digital goods will be insignificant when compare to sales of physical goods. At the end of June the EUS run rate was �300m while at the end of August it was �400m. If this rate of increase is projected forward, the year on year increase would be in excess of 450%. Projecting the EUS to increase by only 100% could be a gross understatement. On top of the above there are other developments such as the impact of the Danal acquisition and new business such as IOT. The purpose of this post is not to criticise but to point out that the profit in 2019 could be much higher. Perhaps even �80m.
Just a minor point although it is significant. Ray, in the video, says that doubling of EUS in future years seems increasingly likely. Note, if you listen carefully, he is using the plural of year. Bearing in mind he is conservative, my interpretation is we are looking at doubling this year, next year and at least the year after.
Slowburner, in the latest video http://www.proactiveinvestors.co.uk/LON:BGO/Bango-plc/ Ray refers to things that were said earlier today and projects a doubling of EUS this year
Why so pessimistic ? Ray Anderson is much more bullish. http://www.proactiveinvestors.co.uk/LON:BGO/Bango-plc/
One thing that people do not seem to have mentioned on this board is the number of engineers being recruited together with the nature of the work for which they are being employed. I have been an investor for several years. Two or three years ago the recruitment was for developers. Now it seems to be largely for integrations and customer support. This is indicative of the changes in the company and the fact that they are winning a lot of business.
I do not understand how you arrive at your figures in that you are only talking in terms of EUS doubling in 2017. The EUS rate is increasing exponentially. The rate was £195m at the start of the year and at the half year more than £300m. Based on this rate of growth it would be reasonable to expect a run rate of somewhere in the region of £450m at the year end. Revenue in FY 2016 was £2.6m and I expect this to rise to just over £6m for FY 2017 when the company will be making a small profit. The cash outflow at the half year was only £0.1m and while some of the improvement will be down to changes in working capital the majority will be down to improved trading. The really interesting projections are those for FY 2018 and beyond. In the short term I do not see the rate of growth subsiding.
My understanding is there are various ways of paying for digital content other than DCB. For example Google Play sells gift cards and it is possible to maintain a balance on ones Google play account. There are also digital wallets, M-Pesa and Fundamo etc. What is interesting is what appears on the Bill itself. If there were simply a line on the carrier's invoice which said other charges, this would lead to lots of inefficient queries. I believe that Bango feeds through to the billing process some details of the description of the expenditure. In other words Bango is to a certain extent integrated with the Carrier's billing system. It follows that if Bango is live for one App store it is comparatively simple to extend this to other App stores. This is purely conjecture.
Last year Anil sold shares in January. Perhaps the expectation was that the shares were high. They did in fact go down before April. This year the expectation has been (from statements made by Ray) that the shares are on the up and so the sales occurred more or less at the last minute within the tax year. The percentages of the director's holdings is a fraction of a percent and I do not think you can draw conclusions from such insignificant sales.
It is reported that Microsoft is ending DCB on windows phones in India. This is too important a market for Microsoft to ignore. I suspect that what is happening is that Microsoft used Boku. Boku's approach is to use premium rate text messages. This is unsatisfactory for several reasons and I suspect that what is happening is that Microsoft are going to switch from Boku to Bango. I could be wrong. Any comments ?
I think that the route Netflix is following is to enable direct carrier billing through Google Play. Recently they produced an App to do this and I suspect Bango helped them hence the reference on the slides for Bango strategy. I suspect this will be a big money earner in countries such as India. https://www.engadget.com/2016/04/27/netflix-google-play-billing-android/ . It seems to me that there are a lot of 'momentum sales' for Bango. If Bango does nothing there will be many more smartphone sales, companies such as Idea will expand through acquisition,more interesting games will be produced, people will become more accustomed to buying content using DCB etc. The sales projections by Progressive seem very conservative. I expect Bango to be profitable in FY 2017.
I believe Boku and Fortumo work in a different way from Bango, relying on text messages. This is why Ray makes a big thing of the frictionless purchasing. The cost and charges are much higher than Bango's and ultimately the lowest cost provider will triumph. So it does not make that much sense to compare end-user spend. Fortumo has been profitable for some time but they are unlikely to maintain their market share and are in the process of switching to the Bango approach. All a bit late.
If the company were to buy back shares it would temporarily raise the share price. This would be seen as a selling opportunity for many frustrated shareholders. Mass selling would result and the company would be left with less cash and a lower share price. With fewer shares there would be greater volatility. This is the ideal scenario for the shorters to return.
Thanks Bouncy. I share your frustrations and agree they have to put up.