The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
The following is a positive summary from PERL which was published yesterday. The data business is expected to grow rapidly and the high margin revenue is in addition to the payments business.
https://www.proactiveinvestors.co.uk/companies/news/214740/bango-targets-profitability-following-launch-of-data-marketplace-214740.html
It is one thing to read an Annual Report and another thing to understand it. Moorhay, you do not seem to understand the difference between a debt which is something that is owed and an accumulated loss. Who is the £37,474,820 owed to and when do you expect them to seek payment ? Before you look for people to accuse of being ignorant, look at yourself in a mirror.
The loss carried forward is in the balance sheet because there are tax and distribution implications.
I think it must be about the bottom. in just over a month we will have the full 2018 FY report and an update on the outlook. The BofD will be talking to analysts and it is the time when ST tips the share. So there is very little downside and potentially a lot of upside over the next six weeks.
Moorhey where do you find the £35 million debt ? From last year's report Total borrowings at 31 December 2017
were £0.3 million and consist of finance leases used to purchase computer equipment
and software. 10 years ago there was not a single app store now Google play has millions of Apps in its store. I have been around for years and am still a fervent supoorter but I do not post much as the board has been taken over by people who do not understand the company. I bought 10000 more shares this morning at 77p.
It is a mistake to draw too many conclusions from watching the share price. You have to understand what is happening and realise Bango is restricted in what they can announce. Deals which only indirectly involve Bango they generally have to leave to their partners. While there are no announcements from Bango the volume of shares traded is very low and the price drifts downwards. To give an example Bango has a agreement with Telefonica which had to be announced. https://news.bango.com/2013/01/17/bango-and-telefonica-announce-global-mobile-payments-partnership/
When Netflix and Telefonica came to an agreement Bango was not allowed by their confidentiality agreements to announce this. https://www.telefonica.com/en/web/press-office/-/telefonica-to-integrate-netflix-into-its-tv-and-video-platforms-in-latin-america
However Bango is involved and it will be significant.
So when you get a snippet of information on a company such as they are increasing the capacity of their platform, you should as the simple question why.
In a way I am surprised that Bango announced the Amazon Prime deal with Vivo in Brazil. It was a press release rather than an RNS as the view of Bango is that a regulatory announcement is not required. The view is that they announced that they were working with Telefonica on a worldwide basis several years ago and what Telefonica and Netflix do is for them to announce. There are confidentiality agreements to restrict Bango which restrict Bango from undermining product launches. So in order to understand what is going on you need to keep abreast of the MNOs and Video streaming companies. Netflix preceded the Amazon Prime deal with Vivo but was not the subject of a Bango press release.
The MNOs have realised that Video Streaming can be a useful way of increasing their ARPU (Average Revenue Per User). The following is an interesting article on Movistar, which like O2 and Vivo is owned by Telefonica.
https://advanced-television.com/2018/09/27/movistar-seeks-new-netflix-type-alliances/
Slowburner, I do not know what percentage of the subscription revenue Bango receives but believe the amount to be significant as the amount paid for subscriptions is huge. I suspect Bango is not being paid for the free promotional period but after that period the subscription charge per user will be somewhere in the region of $100 per year. The number of Vivo users in Brazil is almost 100 million and some will have subscriptions to both Netflix and Amazon Prime and of course some will have neither.
The recent RNS was a bit vague on subscriptions : 'Management has decided to take revenue on several new contracts for subscription services as long-term, higher value annuity revenues rather than one-time, up-front fees this year.' The impact of dealing with subscriptions in this way is made clear by PERL who are briefed by BANGO and paid by Bango to disseminate the results. 'Underlying earnings (EBITDA) will be positive for the final quarter of the year (Oct-Dec), but not for the year as a whole. That’s because management has decided to take revenue on several new contracts for subscription services as long-term, higher value annuity revenues rather than one-time, up-front fees this year.' In other words BANGO would be EBIDTA positive for the year if they had not adopted this accounting treatment.
https://www.proactiveinvestors.co.uk/companies/news/211748/bango-expecting-end-user-spend-to-double-once-again-in-2018-211748.html
I should add that many of the mobile companies are or have been in negotiations with companies whose content can be streamed. For example Telefonica with whom Bango has a long term relationship. Telefonica has a deal with Amazon to roll Amazon Prime out in South America and Europe. https://www.bloomberg.com/news/articles/2018-08-22/telefonica-is-said-to-be-seeking-to-add-amazon-video-to-services.
The fixed costs of Amazon Prime are high and to get a decent return Amazon need to roll out it out quickly. In the third world the best way seems to be through the local MNOs with Direct Carrier Billing. For example in the Philippines Bango's Platform is integrated with Globe. It is then very easy to include Amazon Prime Video with Globe's offering. https://www.esquiremag.ph/culture/arts-and-entertainment/amazon-prime-video-coming-philippines-globe-telecom-streaming-a00203-20180830
Governments place barriers in the way of eCommerce for goods as it hurts local merchants but it is more difficult to place barriers against subscriptions for video, especially if what is being sold is bundled with the telephone service.
https://www.cambridgenetwork.co.uk/news/du-launch-carrier-billing-five-app-stores-bango-payment-platform/?
The subscription business is becoming huge. Bango were working on subscriptions in 2011 but only recently have they been working at scale with Amazon Prime, Netflix Pandora etc. It seems wherever they have integrated their payments system with Google Play they will be rolling out Amazon Prime video.
https://bango.com/news/general/post/top-trends-that-are-expanding-the-latin-america-mobile-commerce-market Bango has been investing heavily in South America and has an office in Sao Paulo.
Bango now has several fairly new businesses including their data business, the bundle and resale business , facilitating mobile banking, purchase of physical goods etc. The following sales video explains what Bango does with regard to subscriptions https://youtu.be/1YDQXD-NYB0
When 5G is rolled out, which starts this year, their IOT business will take off. 5G generally will benefit Bango. There will, for example, be lots of decent second hand smart phones.
I do not expect Bango shares to hit £4 this year but certainly in FY2020.
It is perhaps not that helpful to speculate as to what happened to the cash. There are probably several reasons for the reduction. At the half year the statement released by Bango stated that the cash on hand is sufficient to support both planned investment to grow sales and develop new products. Simon Thomson said in an article on 23rd October “However, the short-term cost of investment in accelerating the data strategy is that Bango’s cash profitability will be less this year than analysts were anticipating at the start of the year, albeit the upside in 2019 is greater too.”
It looks as though they expected to be investing in new products. This could be simply be Audiens or something else. They look to be making less use of Finance Leases and Debtors probably increased.
End User Spend run rate must now be in the region of £850 million per year. Soon investors will lose interest in FY 2018 and will be concentrating on what is likely to happen in 2019 and later.
A year ago the share price was two and a half times what it is today. What has changed?
A year ago we were looking at EUS of approximately £550m for the coming year. Now we are looking at EUS spend in excess of £1bn for the coming year.
Last year brokers were forecasting profit just below break-even. This year they are forecasting the coming year’s EPS to be at least 5p per share.
Audiens was not taken into consideration in last year’s forecast. It resulted in a reduction in profitability in FY 2018 but in December of this year it was announced that the Audiens analytical capabilities had been incorporated into the Bango platform. The result will be an addition to next year’s profit. If Bango competed with Boku on price it would be a race to the bottom. The Bango platform is the justification for a merchant or MNO to select Bango rather than a competitor.
Last year Bango's shareholders were dumb. This year they are even dumber.
stt1 please could you explain why Tosca increased its shareholding recently? They are almost certainly well informed.
Probably only Boku know how they justify the claim. I think the key is probably the word independent and perhaps it is independent of App stores. Boku was established by Mark Britto who joined PayPal just before Boku's flotation and was replaced as CEO by Jon Prideaux who seems to be a sales and marketing man. I have experience of such people being prone to exaggeration. If you read this glassdoor review https://www.glassdoor.co.uk/Overview/Working-at-Boku-EI_IE428315.11,15.htm , the individual says he cannot trust the CEO.
I consider the purchase price of Danal Inc incredibly high. Perhaps I am missing something.
In January there will be a Strategy Day and I would expect this will clarify the importance of the subscriptions. This is new business and is in addition to the sale of goods and apps. In FY 2018 this will not have had a huge effect as the initial offering was free for a limited period. To give an indication of the significance, Netflix in Mexico was made available to 12 million customers. The basic Netflix package there is priced at five dollars a month so $60 per year. The EUS is potentially 720 million per year. In India the target for Netflix is 300 million subscribers.
https://polaris.brighterir.com/public/bango_plc/news/rns/story/w3de7dx
https://polaris.brighterir.com/public/bango_plc/news/rns/story/w99gzew
Bango is involved with Netflix in India
https://www.medianama.com/2018/08/223-airtel-carrier-billing-deal-with-netflix/
Originally the Indians could buy access to Netflix through Google Play but Netflix needed to reduce their costs and so are going the DCB route
https://tech.economictimes.indiatimes.com/news/internet/netflix-plans-lower-priced-plans-in-india-other-markets/66267235
Although there are a lot of google play downloads in India there is a reluctance to pay for Apps. Consequently a lot of Apps are funded by in App purchases and advertising. The charge for Apps in India is generally much lower than elsewhere. Still the revenue is growing and Google introduced Google Play Family to India recently.
https://indianexpress.com/article/technology/techook/how-to-use-google-play-family-library-india-5362636/
Slowburner
The article you quote is based on an earlier article.
Amazon has 11 million users in India signed up to Amazon Prime. The subscription is just over 1 dollar per month which equates to 14$ a year. That equates to $154 million per year. It illustrates the significance of the subscription market is significant which it is growing fast. https://www.digit.in/mobile-phones/over-a-billion-smartphones-will-be-sold-in-india-by-2025-counterpoint-research-43923.html
Amazon are investing heavily in Hindi films and not at all in Cricket. Amazon's objective is to provide an overall package and I believe they are not in competition with Hotstar. The real battle is over e-commerce and the real competitor is Flipkart which is 77% owned by Walmart. Walmart recently paid $16 billion for their share of Flipkart.
Bango has had a relationship with Telefonica for some years. This is one of the reasons Bango opened an office in Sao Paulo, close to one of Telefonica's office. Telefonica is the major telecoms company in South America.
Netflix has a lot of content in Spanish. Amazon Prime is not nearly as strong in this area. Telefonica has done a bundling deal with Netflix https://www.telefonica.com/en/web/press-office/-/telefonica-to-integrate-netflix-into-its-tv-and-video-platforms-in-latin-america. This is being rolled out in South America. Bango is involved but there are confidentiality agreements which mean Bango cannot publicise their involvement.
Brasil is a major country, there are more smartphones in the country than any other in LA, and Netflix has started to roll out in Brasil through Telefonica's subsidiary Vivo. They have acquired rights to Portuguese language films. The following article is in Brasilian Portuguese but machine translation is understandable. https://canaltech.com.br/entretenimento/vivo-passa-a-oferecer-acesso-a-netflix-a-partir-do-decodificador-de-tv-a-cabo-124938/