Growth on track

Boku 30 May 2019 Update
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Boku

Growth on track

Capital markets day

Software & comp services

30 May 2019

Price

138.5p

Market cap

£339m

$1.27:£1

Net cash ($m) at end FY18

28.9

Shares in issue

245.0m

Free float

86.3%

Code

BOKU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

4.9

68.9

38.2

Rel (local)

8.8

67

47.5

52-week high/low

184p

69p

Business description

Boku operates a billing and identity verification platform that connects merchants with mobile network operators in more than 50 countries. It has c 180 employees, with its main offices in the US, UK, Germany and India.

Next events

H119 trading update

July 2019

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Boku is a research client of Edison Investment Research Limited

Boku’s capital markets day (CMD) highlighted the strength of the company’s platform, the growth drivers for the direct carrier billing business and outlined the progress of the newer identity services business. The recent trading update confirmed that the company is on track to meet our FY19 estimates, and recent contract announcements provide further support to the company’s growth outlook.

Year
end

Revenue ($m)

EBITDA*
($m)

EPS*
($)

DPS
($)

P/E
(x)

EV/EBITDA
(x)

12/17

24.4

(2.3)

(0.03)

0.0

N/A

N/A

12/18

35.3

6.3

0.02

0.0

113.4

65.6

12/19e

53.0

9.5

0.02

0.0

96.5

43.6

12/20e

70.0

22.3

0.06

0.0

31.4

18.6

12/21e

80.9

29.7

0.08

0.0

22.8

14.0

Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Strategy: Simplifying mobile transactions

At the recent CMD, Boku outlined its overall strategy to support mobile commerce by enabling consumers to undertake transactions on mobile devices in a simple and secure manner. Having invested more than $100m in its platform to date, it has connections to 183 carriers in 58 countries. The platform has been built to scale and is operating at just over a third of its maximum capacity. With direct carrier billing and identity verification services live on the platform and driving significant growth in the medium term, we expect the company to add additional services that make use of the platform and network Boku has created to drive growth in the longer term.

Recent contracts support growth forecasts

Boku recently announced a new merchant, DAZN, in the sports streaming market. Notably, the contract is the first to offer the ability to pay via broadband or pay TV bills. Boosting its presence in South-East Asia, Boku has integrated with GrabPay, a mobile wallet available in eight countries. These new contracts and the recent trading update support our forecasts for FY19–21.

Valuation: Confidence returns

The stock has gained 97% year to date, reacting positively to FY18 results and in our view, as investors have gained confidence that the identity services business is making progress towards FY19 targets. On an EV/EBITDA basis, Boku is trading at a premium to peers in FY19–20e, but this declines to a discount by FY21e. On a P/E basis, Boku trades at a premium to peers for FY19–21e, albeit reducing to a much smaller premium by FY21e. Boku’s strong cash generation is reflected in its above average free cash flow yield for FY20 and FY21. Confirmation of contract extensions and new merchants for the Identity business could drive further upside from this point.

Capital markets day highlights

On 22 May, Boku held its first CMD. The main areas covered were as follows:

Group strategy – mobile transactions made simple

In a world where consumers are spending increasing amounts of time on their mobile, consuming content and transacting online, Boku aims to make these mobile transactions as simple and secure as possible. It does this by removing friction in the process (eg for signing up or making payments on the mobile) while maintaining security. The company aims to provide the tools for merchants to discover, register, validate, transact with, deliver to and retain customers.

Its platform connects merchants and mobile carriers, and currently supports two services: direct carrier billing and identity verification. In the longer term, additional services that can take advantage of the network that Boku has created are expected to be added.

Platform built to scale

Mike Cahill, COO, highlighted the investment in the platform that is allowing Boku to scale its business efficiently. Operated out of two data centres and using Google Cloud Platform and Amazon Web Services, redundancy is built in at all levels. The two data centres run on an active/active basis and can failover in around one second. The platform has handled peak transaction volumes of 220 per second and is designed to handle peak volumes of up to 600 per second. In 2018, the platform saw no unscheduled downtime and was able to fend off all cyber-attacks.

Incremental volumes can now be processed at a much lower cost per transaction.

Currently, the platform operates across 58 countries and is connected to 183 carriers, with 267 connections (176 for payments/81 for payments & core identity/10 for payments & full identity).

DCB growth: New merchants, more carrier connections, digital content consumption

The company has always been clear about the appeal of its direct carrier billing (DCB) service to merchants – the payment method is used as a customer acquisition and retention tool, with the fee paid by the merchant being a combination of a payment processing fee and customer acquisition cost.

The company outlined the main growth drivers for the DCB business as follows:

Signing up new merchants.

Adding more carrier connections for existing merchants.

Underlying growth in digital content (music streaming, video streaming, gaming).

The company has seen strong growth in total payment volume (TPV) over the last two years: 207% in FY17 and 109% in FY18, from a combination of the factors described above. Last week’s trading update confirmed ongoing TPV growth, with TPV of $1.6bn for the four months January to April 2019 (+64% y-o-y), driven by growth in average monthly active users of 56% y-o-y (from 9.4 million to 14.6 million). This supports our forecast for TPV of $5.29bn for FY19 (+49% y-o-y).

Identity services: Geographic expansion underway

Boku Identity is already live in the US and the UK. The company has the technical capability to undertake identity verification in 42 countries, across 91 carriers, and is aiming to extend these capabilities to a further 20 countries by the end of 2019. Crucially, the identity services business operates using the same platform as direct carrier billing.

The company already supports a number of multinational merchants including MoneyGram, PayPal, Square, Uber, and Western Union. While the direct carrier billing service tends to be used by digital content merchants, the identity verification service can be used by merchants in a wider range of verticals, including financial services, on-demand services and government services. We expect growth in this business to come from a combination of extending identity verification services to new countries for existing merchants and signing up new merchants.

In the trading update, Boku noted that the number of phone numbers monitored in January to April 2019 totalled 69.8m (+458% y-o-y) and that billable transactions grew 106% y-o-y to 102m. We assume that the company has provided volume discounts such that revenue growth will lag volume growth this year, but nonetheless should still be strong.

New contracts announced for payments business

Prior to the CMD, Boku announced two new contracts in its payments business.

GrabPay wallet – access to eight South-East Asian markets

Boku has announced an integration with GrabPay, the mobile wallet developed by Grab Holdings Inc (Grab). Grab is a ‘super-app’ that provides a variety of on-demand services in eight South-East Asian countries (Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) including taxis, food delivery, car hire and electric scooter hire. Grab’s integration with the Boku platform means that merchants can offer GrabPay as a payment mechanism. Boku will then act as the processor of payments, collecting from GrabPay and paying across to the merchant. In the same way that digital content merchants use Boku as a combined customer acquisition tool and payment processor, we expect this will appeal to global merchants wanting to access consumers in South-East Asia.

Mobile wallets are a common payment method in Asia, and this contract marks the first such relationship for Boku. We view this type of integration as a way for Boku to increase its presence in Asia, as direct carrier billing is not commercially attractive in countries such as India or China.

New sports streaming merchant DAZN

Boku announced a global partnership with DAZN, a pure-sport live and on-demand streaming service. This will allow subscribers to sign up and pay for the service using their mobile phone, broadband and pay TV accounts. This is the first time that Boku has enabled payment via internet service provider and traditional broadcast TV billing systems, expanding its consumer addressable market. DAZN currently operates in nine countries – Austria, Germany, Japan, Switzerland, Canada, Italy, the US, Spain and Brazil – and has ambitions to expand further geographically. The payment capabilities are targeted to go live later this year.

Notably, Ben King, DAZN’s SVP Global Distribution and Business Development, who presented at the CMD, previously worked at Apple for 12 years where was involved in the services side of the business, in particular iTunes, Apple Music and the App Store. Apple started using Boku for carrier billing in 2015, and we assume that the experience of the successful use of this billing mechanism as a customer acquisition tool helped in the decision for DAZN to integrate with Boku.

Changes to estimates

In its trading update, the company confirmed it is on track to at least hit its $52m revenue target for FY19, with c 15–20% of revenue from the Identity business, and expects adjusted EBITDA growth of 45-50% y-o-y. Trading in the Identity business is gaining momentum and gross margins are expected to remain strong.

We make no changes to our revenue and EBITDA forecasts. We have increased our forecast for share-based payments for FY19-21 reflecting the higher share price at the time the shares were granted, although this has no impact on normalised forecasts. The company guided to slightly higher capitalised development costs in FY19, as it invests in integrating the Identity business with the existing Boku platform. We have increased our capitalised development spend from $0.3m to $0.9m in FY19 and assumed a slightly higher level in FY20 and FY21 (from $0.3m to $0.6m in both years). This increases the amortisation rate, which results in a 3.2% cut in normalised EPS in FY19, and 1.5% in FY20 and FY21. Our net cash estimate falls from $80.4m to $79.2m by the end of FY21.

Exhibit 1: Changes to estimates

$'m

FY19e

FY19e

FY20e

FY20e

FY21e

FY21e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Old

New

Change

y-o-y

DCB revenues

43.0

43.0

0.0%

22.0%

52.0

52.0

0.0%

20.8%

58.4

58.4

0.0%

12.3%

Identity revenues

10.0

10.0

0.0%

N/A

18.0

18.0

0.0%

80.0%

22.5

22.5

0.0%

25.0%

Total revenues

53.0

53.0

0.0%

50.3%

70.0

70.0

0.0%

31.9%

80.9

80.9

0.0%

15.6%

Gross profit

44.2

44.2

0.0%

34.9%

57.6

57.6

0.0%

30.3%

65.8

65.8

0.0%

14.3%

Gross margin

83.3%

83.3%

0.0%

-9.6%

82.3%

82.3%

0.0%

-1.0%

81.4%

81.4%

0.0%

-0.9%

EBITDA

9.5

9.5

0.0%

50.6%

22.3

22.3

0.0%

133.9%

29.7

29.7

0.0%

33.4%

EBITDA margin

18.0%

18.0%

0.0%

0.0%

31.8%

31.8%

0.0%

13.9%

36.7%

36.7%

0.0%

4.9%

Normalised operating profit

7.0

6.8

-2.8%

41.4%

20.5

20.2

-1.5%

195.6%

28.0

27.6

-1.4%

36.2%

Normalised operating margin

13.3%

12.9%

-0.4%

-0.8%

29.3%

28.9%

-0.4%

16.0%

34.6%

34.1%

-0.5%

5.2%

Reported operating profit

3.7

0.8

-77.5%

-134.5%

17.8

14.2

-20.2%

1606%

25.5

21.8

-14.5%

53.5%

Reported operating margin

7.0%

1.6%

-5.4%

8.4%

25.5%

20.3%

-5.1%

18.7%

31.6%

27.0%

-4.6%

6.7%

Normalised PBT

6.2

6.0

-3.2%

41.0%

19.8

19.5

-1.5%

224.6%

27.3

26.9

-1.5%

38.0%

Reported PBT

2.9

(0.0)

-100.0%

-100.0%

17.1

13.5

-21.1%

N/A

24.9

21.2

-14.9%

57.0%

Normalised net income

4.9

4.7

-3.2%

41.0%

15.6

15.4

-1.5%

224.6%

21.6

21.3

-1.5%

38.0%

Reported net income

2.7

(0.0)

-100.0%

-100.0%

15.4

12.1

-21.1%

N/A

21.2

18.0

-14.9%

48.3%

Normalised basic EPS

0.021

0.020

-3.2%

28.2%

0.061

0.061

-1.5%

204.5%

0.085

0.083

-1.5%

37.6%

Normalised diluted EPS

0.019

0.018

-3.2%

17.5%

0.057

0.056

-1.5%

207.8%

0.078

0.077

-1.5%

37.6%

Reported basic EPS

0.011

(0.000)

-100.0%

-100.0%

0.060

0.048

-21.1%

N/A

0.083

0.071

-14.9%

47.8%

Net debt/(cash)

(29.1)

(28.5)

-2.1%

-1.2%

(51.1)

(50.2)

-1.8%

76.0%

(80.4)

(79.2)

-1.5%

57.8%

TPV ($bn)

5.29

5.29

0.0%

49.1%

6.81

6.81

0.0%

28.9%

8.11

8.11

0.0%

19.0%

Take rate

0.81%

0.81%

0.0%

0.76%

0.76%

0.0%

0.72%

0.72%

0.0%

Source: Edison Investment Research


Exhibit 2: Financial summary

$'m

2014

2015

2016

2017

2018

2019e

2020e

2021e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

18.3

19.2

17.2

24.4

35.3

53.0

70.0

80.9

Cost of Sales

(4.1)

(4.0)

(3.2)

(2.3)

(2.5)

(8.8)

(12.4)

(15.0)

Gross Profit

14.2

15.2

14.0

22.1

32.8

44.2

57.6

65.8

EBITDA

 

 

(9.6)

(11.4)

(12.3)

(2.3)

6.3

9.5

22.3

29.7

Normalised operating profit

 

 

(9.8)

(12.4)

(13.8)

(4.0)

4.8

6.8

20.2

27.6

Amortisation of acquired intangibles

(0.8)

(1.9)

(1.7)

(1.3)

(1.3)

(1.3)

(1.3)

(1.0)

Exceptionals

(2.1)

(0.1)

(2.4)

(2.2)

(1.4)

0.0

0.0

0.0

Share-based payments

(1.7)

(1.8)

(2.1)

(1.5)

(4.6)

(4.7)

(4.7)

(4.7)

Reported operating profit

(14.4)

(16.2)

(19.9)

(9.0)

(2.4)

0.8

14.2

21.8

Net Interest

(0.6)

(0.4)

(1.2)

(2.4)

(0.6)

(0.8)

(0.7)

(0.6)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

(17.1)

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

(10.4)

(12.8)

(15.0)

(6.4)

4.3

6.0

19.5

26.9

Profit Before Tax (reported)

 

 

(15.0)

(16.6)

(21.1)

(28.5)

(3.0)

(0.0)

13.5

21.2

Reported tax

(0.4)

(0.4)

0.5

(0.1)

(1.3)

0.0

(1.3)

(3.2)

Profit After Tax (norm)

(7.8)

(9.6)

(11.2)

(4.8)

3.4

4.7

15.4

21.3

Profit After Tax (reported)

(15.4)

(17.0)

(20.6)

(28.7)

(4.3)

(0.0)

12.1

18.0

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(7.8)

(9.6)

(11.2)

(4.8)

3.4

4.7

15.4

21.3

Net income (reported)

(15.4)

(17.0)

(20.6)

(28.7)

(4.3)

(0.0)

12.1

18.0

Basic ave. number of shares outstanding (m)

21.3

27.4

140.1

150.3

217.1

238.7

254.5

255.2

EPS - basic normalised ($)

 

 

(0.36)

(0.35)

(0.08)

(0.03)

0.02

0.02

0.06

0.08

EPS - diluted normalised ($)

 

 

(0.36)

(0.35)

(0.08)

(0.03)

0.02

0.02

0.06

0.08

EPS - basic reported ($)

 

 

(0.72)

(0.62)

(0.15)

(0.19)

(0.02)

(0.00)

0.05

0.07

Dividend ($)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

#DIV/0!

4.7

(10.4)

42.0

44.5

50.3

31.9

15.6

Gross Margin (%)

77.6

79.1

81.4

90.7

92.9

83.3

82.3

81.4

EBITDA Margin (%)

(52.5)

(59.2)

(71.4)

(9.5)

17.9

18.0

31.8

36.7

Normalised Operating Margin

(53.2)

(64.4)

(80.0)

(16.5)

13.7

12.9

28.9

34.1

BALANCE SHEET

Fixed Assets

 

 

32.7

30.8

26.8

26.9

23.0

50.7

47.9

45.8

Intangible Assets

32.5

30.1

25.7

25.8

22.5

47.3

46.1

44.9

Tangible Assets

0.2

0.7

0.5

0.4

0.3

2.7

1.4

0.0

Investments & other

0.0

0.0

0.6

0.7

0.3

0.7

0.5

0.8

Current Assets

 

 

72.5

53.0

48.9

79.3

84.0

102.1

134.7

171.1

Stocks

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Debtors

59.7

43.3

37.1

59.1

51.7

67.8

80.0

88.5

Cash & cash equivalents

12.0

9.0

11.3

18.7

31.1

33.0

53.5

81.4

Other

0.7

0.6

0.5

1.4

1.3

1.3

1.3

1.3

Current Liabilities

 

 

(69.6)

(65.5)

(61.0)

(78.0)

(79.6)

(95.9)

(108.7)

(117.8)

Creditors

(64.6)

(60.4)

(54.9)

(75.5)

(77.4)

(91.4)

(105.4)

(115.6)

Tax and social security

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Short term borrowings

(5.0)

(5.1)

(6.1)

(2.5)

(2.2)

(4.5)

(3.3)

(2.2)

Other

0.0

0.0

0.0

(0.0)

0.0

0.0

0.0

0.0

Long Term Liabilities

 

 

0.0

(0.3)

(15.2)

(0.2)

(0.8)

(0.8)

(1.3)

(3.8)

Long term borrowings

0.0

(0.2)

(15.1)

(0.0)

0.0

0.0

0.0

0.0

Other long term liabilities

0.0

(0.1)

(0.1)

(0.1)

(0.8)

(0.8)

(1.3)

(3.8)

Net Assets

 

 

35.5

18.0

(0.4)

28.0

26.6

56.1

72.6

95.3

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

35.5

18.0

(0.4)

28.0

26.6

56.1

72.6

95.3

CASH FLOW

Op Cash Flow before WC and tax

(9.6)

(11.4)

(12.3)

(2.3)

6.3

9.5

22.3

29.7

Working capital

9.3

11.6

(3.4)

1.0

7.2

(2.1)

1.9

1.7

Exceptional & other

(1.6)

1.1

4.2

(5.5)

0.2

(0.7)

(0.4)

0.0

Tax

(0.0)

(0.0)

(0.0)

0.0

(0.2)

(0.4)

(0.7)

(1.0)

Net operating cash flow

 

 

(1.9)

1.3

(11.5)

(6.8)

13.5

6.3

23.1

30.4

Capex

(1.1)

(3.6)

(1.5)

(0.3)

(0.3)

(1.0)

(0.7)

(0.7)

Acquisitions/disposals

5.9

0.3

0.0

0.0

(0.2)

(1.0)

0.0

0.0

Net interest

(0.3)

(0.3)

(0.3)

(0.9)

(0.6)

(0.6)

(0.6)

(0.6)

Equity financing

0.2

0.1

0.1

19.8

0.5

0.0

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.6

(0.0)

0.1

(1.1)

0.2

0.0

0.0

0.0

Net Cash Flow

3.3

(2.2)

(13.1)

10.6

13.1

3.7

21.8

29.1

Opening net debt/(cash)

 

 

(4.9)

(7.0)

(3.6)

9.9

(16.2)

(28.9)

(28.5)

(50.2)

FX

(1.2)

(0.8)

(0.4)

0.4

(0.5)

(0.3)

(0.2)

(0.1)

Other non-cash movements

0.0

(0.4)

(0.0)

15.1

0.0

(3.8)

0.0

0.0

Closing net debt/(cash)

 

 

(7.0)

(3.6)

9.9

(16.2)

(28.9)

(28.5)

(50.2)

(79.2)

Source: Boku, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Boku and prepared and issued by Edison, in consideration of a fee payable byBoku. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Boku and prepared and issued by Edison, in consideration of a fee payable byBoku. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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