Boku |
Upgrading FY20 EBITDA |
Trading update |
Software & comp services |
2 December 2020 |
Share price performance
Business description
Next events
Analyst
Boku is a research client of Edison Investment Research Limited |
Boku has released a trading update confirming that EBITDA is likely to be ahead of consensus expectations for FY20. As most of the upside is due to COVID-19-related cost savings, we have upgraded our FY20 EBITDA and EPS forecasts by 10% and 15%, respectively. We leave our FY21/22 forecasts unchanged, pending a more detailed trading update in January that will cover the busy December holiday season.
Year |
Revenue ($m) |
EBITDA* |
Diluted EPS* |
DPS |
P/E |
EV/EBITDA |
12/18 |
35.3 |
6.3 |
0.016 |
0.0 |
105.8 |
72.1 |
12/19 |
50.1 |
7.4** |
0.012 |
0.0 |
136.5 |
61.6 |
12/20e |
55.4 |
13.5 |
0.025 |
0.0 |
65.5 |
33.7 |
12/21e |
66.4 |
17.7 |
0.032 |
0.0 |
52.1 |
25.8 |
12/22e |
77.7 |
21.1 |
0.040 |
0.0 |
41.0 |
21.6 |
Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Excludes one-off revenue recognition.
Cost savings boost FY20 EBITDA
Boku has announced that as a result of continued strong trading in the Payments business and the benefit of COVID-19-related cost savings, the board now expects group EBITDA of at least $13.5m for FY20, at least $1m higher than current consensus. It will provide a more detailed trading update in January that will cover the peak December trading period. This may also provide some evidence of the stickiness of customers signed up during recent lockdowns.
Upgrading FY20 forecasts
We have made a small upward revision to our FY20 revenue forecast (+0.5%) to reflect slightly stronger trading from the Payments business. We have reduced operating costs by c $0.9m and reflected a higher share count from the recent vesting of restricted stock units and the exercise of options by management. We raise our FY20 EBITDA forecast by 10% (from $12.3m to $13.5m) and our normalised diluted EPS by 15%. We make no changes to FY21/FY22 revenue or EBITDA forecasts at this point.
Valuation: Reflects lockdown boost to Payments
Having gained 35% since reporting H1 results in September, Boku is trading at a discount to the average of payment processor peers on an EV/sales and EV/EBITDA basis, and at a small premium to identity management peers on both multiples. Reflecting the different growth and profitability dynamics of the Payments and Identity businesses, we use a sum-of-the-parts approach to assign value to each separately, generating a group equity value of 127p per share (previously 124p per share). Excluding the Identity business entirely, Boku would be worth 120.5p per share. In addition to clarity over the longevity of new Payments customers who signed up during lockdowns, key catalysts for the share price include a return to revenue growth in the Boku Identity business, new major merchants being signed up and a growing contribution from wallets.
Exhibit 1: Financial summary
$'m |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020e |
2021e |
2022e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||||
Revenue |
|
|
18.3 |
19.2 |
17.2 |
24.4 |
35.3 |
50.1 |
55.4 |
66.4 |
77.7 |
Cost of Sales |
(4.1) |
(4.0) |
(3.2) |
(2.3) |
(2.5) |
(5.6) |
(5.4) |
(7.3) |
(10.5) |
||
Gross Profit |
14.2 |
15.2 |
14.0 |
22.1 |
32.8 |
44.6 |
50.0 |
59.1 |
67.2 |
||
EBITDA |
|
|
(9.6) |
(11.4) |
(12.3) |
(2.3) |
6.3 |
10.7 |
13.5 |
17.7 |
21.1 |
Normalised operating profit |
|
|
(9.8) |
(12.4) |
(13.8) |
(4.0) |
4.8 |
4.5 |
10.0 |
13.5 |
16.8 |
Amortisation of acquired intangibles |
(0.8) |
(1.9) |
(1.7) |
(1.3) |
(1.3) |
(1.6) |
(1.7) |
(1.5) |
(0.4) |
||
Exceptionals |
(2.1) |
(0.1) |
(2.4) |
(2.2) |
(1.4) |
(0.3) |
(0.8) |
0.0 |
0.0 |
||
Share-based payments |
(1.7) |
(1.8) |
(2.1) |
(1.5) |
(4.6) |
(6.8) |
(7.0) |
(5.5) |
(5.5) |
||
Reported operating profit |
(14.4) |
(16.2) |
(19.9) |
(9.0) |
(2.4) |
(4.1) |
0.5 |
6.6 |
10.9 |
||
Net Interest |
(0.6) |
(0.4) |
(1.2) |
(2.4) |
(0.6) |
(0.4) |
(0.8) |
(1.3) |
(1.2) |
||
Joint ventures & associates (post tax) |
0.0 |
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 |
0.0 |
||
Profit Before Tax (norm) |
|
|
(10.4) |
(12.8) |
(15.0) |
(6.4) |
4.3 |
4.1 |
9.2 |
12.3 |
15.6 |
Profit Before Tax (reported) |
|
|
(15.0) |
(16.6) |
(21.1) |
(28.5) |
(3.0) |
(1.3) |
(0.3) |
5.3 |
9.7 |
Reported tax |
(0.4) |
(0.4) |
0.5 |
(0.1) |
(1.3) |
1.7 |
(0.0) |
(0.5) |
(1.5) |
||
Profit After Tax (norm) |
(7.8) |
(9.6) |
(11.2) |
(4.8) |
3.4 |
3.2 |
7.3 |
9.8 |
12.5 |
||
Profit After Tax (reported) |
(15.4) |
(17.0) |
(20.6) |
(28.7) |
(4.3) |
0.4 |
(0.3) |
4.8 |
8.2 |
||
Minority interests |
0.0 |
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 |
0.0 |
||
Net income (normalised) |
(7.8) |
(9.6) |
(11.2) |
(4.8) |
3.4 |
3.2 |
7.3 |
9.8 |
12.5 |
||
Net income (reported) |
(15.4) |
(17.0) |
(20.6) |
(28.7) |
(4.3) |
0.4 |
(0.3) |
4.8 |
8.2 |
||
Basic ave.number of shares outstanding (m) |
21.3 |
27.4 |
140.1 |
150.3 |
217.1 |
246.8 |
269.9 |
287.6 |
287.6 |
||
EPS - basic normalised ($) |
|
|
(0.36) |
(0.35) |
(0.08) |
(0.03) |
0.02 |
0.01 |
0.03 |
0.03 |
0.04 |
EPS - diluted normalised ($) |
|
|
(0.36) |
(0.35) |
(0.08) |
(0.03) |
0.02 |
0.01 |
0.03 |
0.03 |
0.04 |
EPS - basic reported ($) |
|
|
(0.72) |
(0.62) |
(0.15) |
(0.19) |
(0.02) |
0.00 |
(0.00) |
0.02 |
0.03 |
Dividend ($) |
0.00 |
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 |
42.2 |
10.5 |
19.8 |
16.9 |
||
Gross Margin (%) |
77.6 |
79.1 |
81.4 |
90.7 |
92.9 |
88.9 |
90.3 |
89.1 |
86.5 |
||
EBITDA Margin (%) |
(52.5) |
(59.2) |
(71.4) |
(9.5) |
17.9 |
21.3 |
24.4 |
26.6 |
27.2 |
||
Normalised Operating Margin |
(53.2) |
(64.4) |
(80.0) |
(16.5) |
13.7 |
9.0 |
18.0 |
20.4 |
21.6 |
||
BALANCE SHEET |
|||||||||||
Fixed Assets |
|
|
32.7 |
30.8 |
26.8 |
26.9 |
23.0 |
52.2 |
95.7 |
93.9 |
92.1 |
Intangible Assets |
32.5 |
30.1 |
25.7 |
25.8 |
22.5 |
46.8 |
91.2 |
89.8 |
89.5 |
||
Tangible Assets |
0.2 |
0.7 |
0.5 |
0.4 |
0.3 |
3.5 |
2.1 |
1.1 |
0.1 |
||
Investments & other |
0.0 |
0.0 |
0.6 |
0.7 |
0.3 |
1.8 |
2.5 |
3.0 |
2.5 |
||
Current Assets |
|
|
72.5 |
53.0 |
48.9 |
79.3 |
84.0 |
89.2 |
104.9 |
147.4 |
180.5 |
Stocks |
0.0 |
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 |
53.6 |
65.8 |
92.6 |
106.9 |
||
Cash & cash equivalents |
12.0 |
9.0 |
11.3 |
18.7 |
31.1 |
34.7 |
38.2 |
53.9 |
72.7 |
||
Other |
0.7 |
0.6 |
0.5 |
1.4 |
1.3 |
0.9 |
0.9 |
0.9 |
0.9 |
||
Current Liabilities |
|
|
(69.6) |
(65.5) |
(61.0) |
(78.0) |
(79.6) |
(81.8) |
(93.2) |
(124.7) |
(143.6) |
Creditors |
(64.6) |
(60.4) |
(54.9) |
(75.5) |
(77.4) |
(78.0) |
(87.9) |
(120.9) |
(139.6) |
||
Tax and social security |
0.0 |
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) |
(2.1) |
(3.3) |
(3.3) |
(3.3) |
||
Other |
0.0 |
0.0 |
0.0 |
(0.0) |
0.0 |
(1.7) |
(1.9) |
(0.5) |
(0.6) |
||
Long Term Liabilities |
|
|
0.0 |
(0.3) |
(15.2) |
(0.2) |
(0.8) |
(2.6) |
(17.4) |
(16.1) |
(14.9) |
Long term borrowings |
0.0 |
(0.2) |
(15.1) |
(0.0) |
0.0 |
0.0 |
(16.2) |
(14.9) |
(13.7) |
||
Other long term liabilities |
0.0 |
(0.1) |
(0.1) |
(0.1) |
(0.8) |
(2.6) |
(1.2) |
(1.2) |
(1.2) |
||
Net Assets |
|
|
35.5 |
18.0 |
(0.4) |
28.0 |
26.6 |
57.0 |
90.1 |
100.4 |
114.1 |
Minority interests |
0.0 |
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 |
57.0 |
90.1 |
100.4 |
114.1 |
CASH FLOW |
|||||||||||
Op Cash Flow before WC and tax |
(9.6) |
(11.4) |
(12.3) |
(2.3) |
6.3 |
7.4 |
13.5 |
17.7 |
21.1 |
||
Working capital |
9.3 |
11.6 |
(3.4) |
1.0 |
7.2 |
3.0 |
(2.4) |
6.2 |
4.4 |
||
Exceptional & other |
(1.6) |
1.1 |
4.2 |
(5.5) |
0.2 |
(1.3) |
(1.1) |
0.0 |
0.0 |
||
Tax |
(0.0) |
(0.0) |
(0.0) |
0.0 |
(0.2) |
(0.1) |
(0.7) |
(1.0) |
(1.0) |
||
Net operating cash flow |
|
|
(1.9) |
1.3 |
(11.5) |
(6.8) |
13.5 |
9.0 |
9.4 |
22.9 |
24.5 |
Capex |
(1.1) |
(3.6) |
(1.5) |
(0.3) |
(0.3) |
(2.1) |
(2.5) |
(2.7) |
(2.8) |
||
Acquisitions/disposals |
5.9 |
0.3 |
0.0 |
0.0 |
(0.2) |
(0.7) |
(43.0) |
0.0 |
0.0 |
||
Net interest |
(0.3) |
(0.3) |
(0.3) |
(0.9) |
(0.6) |
(0.4) |
(0.6) |
(1.2) |
(1.1) |
||
Equity financing |
0.2 |
0.1 |
0.1 |
19.8 |
0.5 |
0.6 |
24.8 |
0.0 |
0.0 |
||
Dividends |
0.0 |
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 |
(1.5) |
(1.9) |
(2.1) |
(0.6) |
||
Net Cash Flow |
3.3 |
(2.2) |
(13.1) |
10.6 |
13.1 |
4.857 |
(13.9) |
17.0 |
20.0 |
||
Opening net debt/(cash) |
|
|
(4.9) |
(7.0) |
(3.6) |
9.9 |
(16.2) |
(28.9) |
(32.6) |
(18.7) |
(35.7) |
FX |
(1.2) |
(0.8) |
(0.4) |
0.4 |
(0.5) |
(1.1) |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
(0.4) |
(0.0) |
15.1 |
(0.0) |
(0.0) |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(7.0) |
(3.6) |
9.9 |
(16.2) |
(28.9) |
(32.6) |
(18.7) |
(35.7) |
(55.7) |
Source: Boku, Edison Investment Research
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