Member Info for Persiflage

Cannaccord Genuity issued a very informative (and long) note today entitled "CA concerns overblown; strong BUYing opportunity". It is well worth a read for anyone with access to Research Tree. Of course it contains an amount of the usual broker guff, but its main points come across as well argued and are supported by copious numerical evidence.

It looks likes share buying and a contract win are starting to move the dial. It's very good to see the CFO buying a few shares. A journey of a thousand miles starts with a single step and all that. Now the tight-fisted and tone deaf three non-execs who hold no shares or a token amount need to follow the CFO's lead. It would be great to hear their explanations as to why they hold no shares or a token number. This could perhaps be forgiven if the board collectively had done a good job in the last three years, which clearly it hasn't.

The directors don't help. Two of Bango’s directors own no shares at all (Tony Perkins and Darcy Antonellis) and a third holds a token number (Lisa Gansky, 1,000). Shame on all three.

In 2025 the directors between them spent a mere £39,601 on buying 43,624 shares (0.0567% of the share capital!) directly in the market. The CFO bought none at all directly in the market. A non-executive bought 16,500 shares on 3rd February 2025, two weeks after the trading update on 20th January 2025. What is stopping his fellow directors now?

IWantThatOne: Thanks. I take your point about traditional seasonality. But DCB only very marginally favourably influenced the H2 numbers this year. The DVM, excluding implementation revenues, should continue to show sequential improvement due to rapid growth rather than due to any seasonal influence. The cost cuts from 2025 should fully annualise in 2026 so the effect sequentially should continue to be favourable, forex impacts aside. ‘Other income’ is unpredictable, but I think the EBITDA margin improvement in H2 is due to fundamental rather than to any seasonal factor and is sustainable into H1 FY26 and beyond. Also, the deferral of DVM implementation revenue from H2 FY25 into H1 FY26 should help the EBITDA margin in H1 FY26.

If I didn’t already have too large a position I would be buying more. But is it a good question as to why the CFO (and other board members) are not buying at these levels.

As I a holder for over 4 years, I am as frustrated as the next person over the staggering incompetence of the board since August 2022, the ‘miscommunication’ of forecasts to the market, the concealment from the market of how difficult the Docomo integration was proving to be, and the relentless, indefatigable and, frankly, jarring bullishness of the CEO, unsupported by any hard data.

The best news at Bango in 2025 was the replacement of an incompetent CFO by one who at least gives the impression of being highly competent. And that impression, yesterday’s miss against the adjusted EBITDA forecast aside, is borne out by yesterday’s numbers. They very clearly show he is getting a grip on the business.

Some have remarked on the DCB numbers in yesterday's update being poor. The new CFO had flagged the volatility and/or decline in the high cost of sales DCB routes. He had highlighted how these are very low gross margin so that the volatility is neither here nor there in terms of meeting the numbers. So the fact that DCB revenues fell by around 14% in H2 FY25 v. H2 FY24, and all in high cost of sales routes, is inconsequential. Why care? The core transactional business grew in FY25 at the rate that Bango signalled some time ago it would: in mid-single digits. If DCB really is 40% EBITDA margin, then isn’t that good news? That is one Rule of 40 business.

The sequential improvement from H1 to H2 is marked and positive in all key metrics. H2 adjusted EBITDA was $9.6M v. $6.7m in H1, a $2.9m increase. But sales were up only $1.6m sequentially. $1m of this sales increase was in the DVM, which dropped straight through to adjusted EBITDA. Another $1.1m of the sequential increase in adjusted EBITDA came from a sequential cost reduction in core admin expenses. Another $0.6m of the sequential increase in adjusted EBITDA came from an increase in ‘Other income’. This means that the remaining $0.2m of the increase in adjusted EBITDA must have come from the DCB business, whose sales were up $0.6m sequentially ($17.0m v. $16.4m), despite the sharper sequential drop-off in higher cost of sales routes in H2.

The adjusted overall EBITDA margin in H2 was nearly 35.7% compared with 26.6% in H1. Isn’t a near 10ppt sequential improvement to be applauded? If the DCB business had a 40% adjusted EBITDA margin in H2, then the DVM business in H2 must have had a 28.3% adjusted EBITDA margin. Add in the DVM’s growth rate and doesn’t that make it a Rule of 40 business, too?

Cash EBITDA as defined by Bango was in-$0.6M in H1 and +$2.9m in H2. Capex $7.3m in H1 and $6.7m in H2. All the important sequential numbers look positive to me.

The only shame was that apparently not enough allowance was made in the guidance given to the brokers for a miss on adjusted EBITDA due to possible deferral of DVM implementation revenues and for adverse forex. Hopefully, the CFO will have learned his lesson. But he deserves big plaudits for the big improvement in