Currency in GBP
Last close As at 17/03/2023
GBP1.40
▲ −4.00 (−2.79%)
Market capitalisation
GBP425m
Research: TMT
Boku expects to report FY22 revenue and EBITDA slightly ahead of our forecasts and closes the year with stronger than expected net cash. Total payment volume (TPV) was 20% higher y-o-y in constant currency and year-end monthly active users (MAUs) grew 28% y-o-y, helped by the growing contribution from local payment methods (LPMs). We revise our forecasts to reflect stronger revenue growth, with more limited upgrades to EBITDA as we expect gross profit upside to be invested in further expanding and supporting the company’s network of LPMs.
Boku |
Local payment method growth accelerates |
FY22 trading update |
Software and comp services |
17 January 2023 |
Share price performance
Business description
Next events
Analyst
Boku is a research client of Edison Investment Research Limited |
Boku expects to report FY22 revenue and EBITDA slightly ahead of our forecasts and closes the year with stronger than expected net cash. Total payment volume (TPV) was 20% higher y-o-y in constant currency and year-end monthly active users (MAUs) grew 28% y-o-y, helped by the growing contribution from local payment methods (LPMs). We revise our forecasts to reflect stronger revenue growth, with more limited upgrades to EBITDA as we expect gross profit upside to be invested in further expanding and supporting the company’s network of LPMs.
Year |
Revenue ($m) |
EBITDA* |
Diluted EPS* |
DPS |
P/E |
EV/EBITDA |
12/20 |
56.4 |
15.3 |
0.032 |
0.0 |
56.1 |
27.5 |
12/21 |
62.1 |
22.9 |
0.047 |
0.0 |
38.3 |
18.3 |
12/22e |
63.3 |
20.0 |
0.040 |
0.0 |
44.6 |
20.9 |
12/23e |
72.1 |
23.0 |
0.045 |
0.0 |
39.9 |
18.2 |
Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. FY20 includes Identity business (sold Q122).
FY22 revenue +14% in constant currency
Boku expects to report FY22 revenue of at least $63.3m versus our $62.5m forecast, implying reported revenue growth of 2% and 14% in constant currency (H222 +19% y-o-y in constant currency). Adjusted EBITDA of at least $20m is slightly ahead of our $19.7m forecast, with revenue upside invested in Boku’s mobile-first network. TPV of $8.9bn was in line with our forecast and the 0.71% take rate was ahead of our 0.70% forecast. Year-end cash of $116.3m benefited from slower settlement with merchants over the Christmas period. Average daily cash in December 2022 was $98.8m, up from $63.3m in June 2022; $50.4m of year-end cash is Boku’s ‘own cash’ with the balance being merchant cash in transit.
Local payment methods driving volume growth
MAUs increased 28% y-o-y to close the year at 52.3m, of which LPMs made up 7%, up from 5% at end-H122 and 3% at end-FY21. Boku saw an eightfold increase in volumes processed from LPMs year-on-year, helped by c 50 LPM launches in the year, including Alipay and WeChat Pay in China for a global gaming merchant. Boku now has LPM connections in 19 countries. The recently signed agreement with Amazon should start to contribute to LPM volumes in FY23 with a more material effect in FY24. We have revised our forecasts to reflect FY22 trading, with revenue upgrades for FY22–24, while EBITDA forecasts reflect increased investment in Boku’s mobile-first network, particularly to support LPMs.
Valuation: LPMs key to upside
The stock has recovered from its low of 77p in September 2022 and now trades on an EV/EBITDA multiple of 20.9x FY22e, a 16% discount to its payment processing peer group. Applying the average multiple for FY22e would imply a share price of 169p. In our view, evidence that strong constant currency revenue growth can be sustained will be the main catalyst for the share price, with a growing contribution from LPMs and new major merchants signing up key indicators of progress.
FY22 trading update
The table below summarises the key metrics for FY22 trading. The company’s mobile-first network now covers 7.3bn end-user accounts, of which 45% are non-DCB (direct carrier billing). During FY22, the company launched 150 connections for merchants, with c 50 for LPMs and more than 30 for bundling programmes.
Exhibit 1: FY22 trading highlights
FY22a |
FY22e |
FY21 |
Growth y-o-y |
Growth constant currency |
|
TPV |
$8.9bn |
$8.9bn |
$8.2bn |
8% |
20% |
Take rate |
0.71% |
0.70% |
0.75% |
-0.04% |
|
Revenue |
$63.3m |
$62.5m |
$62.1m |
2% |
14% |
Adjusted EBITDA |
At least $20m |
$19.7m |
$22.9m |
-13% |
|
Monthly active users (MAU) |
52.3m |
41.0m |
28% |
N/A |
|
New users |
56.7m |
58.1m |
-2% |
N/A |
|
Local Payment Methods (LPM): |
|||||
MAUs |
3.8m |
1.1m |
230% |
||
New users |
8.4m |
2.8m |
200% |
||
LPM MAU/Total MAU |
7% |
3% |
|||
LPM new users/total new users |
15% |
5% |
|||
Net cash |
$116.3m |
$82.8m |
$48.8m |
138% |
Source: Boku, Edison Investment Research. Note: For continuing operations only (Identity business sold in Q122 accounted for in discontinued operations).
Changes to forecasts
We have revised our forecasts to reflect the FY22 trading update. We have increased our FY22 revenue forecast by 2% to reflect a slightly higher take rate. We assume that operating costs were slightly ahead of our forecast, resulting in EBITDA of $20m.
During FY22, the company saw a large negative effect on revenue and TPV from the strength of the US dollar against the main currencies that Boku trades in (Japanese yen, euro, UK sterling, South Korean won and Taiwan dollar). US dollar exchange rates peaked in September/October 2022 and have since declined by more than 10% for most currencies, which should result in a more limited currency effect in FY23.
We have increased our revenue forecasts for FY23 and FY24, reflecting slightly higher take rates due to the growth of LPM volumes, which earn take rates above the group average. We assume that revenue upside is reinvested in the business, particularly to strengthen the company’s regulatory position, which in our view is a key competitive advantage. Boku already has regulated payment capabilities in more than 50 markets, having recently been granted a payments licence in the Philippines, and is in the final stages of obtaining a licence in Malaysia.
We have increased our net cash forecasts to reflect the stronger position at the end of FY22, assuming that working capital (particularly merchant settlement) follows similar patterns to FY22 in FY23 and FY24.
Exhibit 2: Changes to forecasts
$'m |
FY22e |
FY22e |
FY23e |
FY23e |
FY24e |
FY24e |
|||||||
Old |
New |
Change |
y-o-y |
Old |
New |
Change |
y-o-y |
Old |
New |
Change |
y-o-y |
||
Revenue |
62.5 |
63.3 |
1.3% |
2.0% |
69.6 |
72.1 |
3.6% |
13.8% |
76.9 |
82.0 |
6.6% |
13.8% |
|
Gross profit |
60.4 |
61.2 |
1.3% |
1.1% |
67.1 |
69.5 |
3.6% |
13.6% |
74.2 |
79.1 |
6.6% |
13.8% |
|
Gross margin |
96.6% |
96.6% |
0.0% |
-0.9% |
96.4% |
96.4% |
0.0% |
-0.2% |
96.4% |
96.4% |
0.0% |
0.0% |
|
EBITDA |
19.7 |
20.0 |
1.6% |
-12.6% |
22.7 |
23.0 |
1.3% |
15.0% |
26.4 |
26.9 |
2.0% |
16.8% |
|
EBITDA margin |
31.5% |
31.6% |
0.2% |
-5.3% |
32.7% |
31.9% |
-2.2% |
0.3% |
34.3% |
32.8% |
-4.4% |
0.9% |
|
Normalised operating profit |
15.7 |
16.0 |
2.0% |
-13.8% |
17.7 |
18.0 |
1.7% |
12.5% |
20.9 |
21.4 |
2.5% |
18.7% |
|
Normalised operating margin |
25.1% |
25.3% |
0.2% |
-4.6% |
25.5% |
25.0% |
-0.5% |
-0.3% |
27.1% |
26.1% |
-1.1% |
1.1% |
|
Reported operating profit |
8.6 |
8.9 |
3.6% |
-16.6% |
10.3 |
10.6 |
2.9% |
19.4% |
13.5 |
14.0 |
3.9% |
31.9% |
|
Reported operating margin |
13.7% |
14.0% |
0.3% |
-3.1% |
14.8% |
14.7% |
-0.1% |
0.7% |
17.5% |
17.0% |
-0.4% |
2.3% |
|
Normalised PBT |
15.2 |
15.5 |
2.0% |
-13.3% |
17.4 |
17.7 |
1.7% |
14.5% |
20.6 |
21.1 |
2.5% |
19.1% |
|
Reported PBT |
8.0 |
8.3 |
3.8% |
-15.9% |
10.0 |
10.3 |
3.0% |
23.6% |
13.1 |
13.7 |
4.0% |
32.9% |
|
Normalised net income |
12.1 |
12.4 |
2.0% |
-13.3% |
13.8 |
14.0 |
1.7% |
13.1% |
16.2 |
16.7 |
2.5% |
19.1% |
|
Reported net income |
31.7 |
32.0 |
0.8% |
410.4% |
8.5 |
8.7 |
3.0% |
-72.7% |
11.2 |
11.6 |
4.0% |
32.9% |
|
Normalised basic EPS ($) |
0.041 |
0.042 |
2.0% |
-14.3% |
0.046 |
0.047 |
1.7% |
12.0% |
0.054 |
0.055 |
2.5% |
17.9% |
|
Normalised diluted EPS ($) |
0.040 |
0.040 |
2.0% |
-14.2% |
0.044 |
0.045 |
1.7% |
12.0% |
0.052 |
0.053 |
2.5% |
17.9% |
|
Reported basic EPS ($) |
0.107 |
0.108 |
0.8% |
404.6% |
0.028 |
0.029 |
3.0% |
-73.0% |
0.037 |
0.038 |
4.0% |
31.6% |
|
Net debt/(cash) |
(82.8) |
(116.3) |
40.5% |
138.1% |
(106.0) |
(134.2) |
26.6% |
15.4% |
(126.2) |
(158.4) |
25.5% |
18.1% |
|
TPV ($bn) |
8.94 |
8.87 |
-0.8% |
7.7% |
10.00 |
9.91 |
-0.9% |
11.8% |
10.99 |
11.12 |
1.2% |
12.2% |
|
Take rate |
0.70% |
0.71% |
0.02% |
-0.04% |
0.70% |
0.73% |
0.03% |
0.01% |
0.70% |
0.74% |
0.04% |
0.01% |
Source: Edison Investment Research
Exhibit 3: Financial summary
$'m |
2017 |
2018 |
2019 |
2020 |
2021 |
2022e |
2023e |
2024e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
||||||||||
Revenue |
|
|
24.4 |
35.3 |
50.1 |
56.4 |
62.1 |
63.3 |
72.1 |
82.0 |
Cost of Sales |
(2.3) |
(2.5) |
(5.6) |
(4.9) |
(1.6) |
(2.1) |
(2.6) |
(2.9) |
||
Gross Profit |
22.1 |
32.8 |
44.6 |
51.5 |
60.5 |
61.2 |
69.5 |
79.1 |
||
EBITDA |
|
|
(2.3) |
6.3 |
10.7 |
15.3 |
22.9 |
20.0 |
23.0 |
26.9 |
Normalised operating profit |
|
|
(4.0) |
4.8 |
4.5 |
11.6 |
18.6 |
16.0 |
18.0 |
21.4 |
Amortisation of acquired intangibles |
(1.3) |
(1.3) |
(1.6) |
(2.2) |
(1.9) |
(1.4) |
(1.4) |
(1.4) |
||
Exceptionals |
(2.2) |
(1.4) |
(0.3) |
(21.1) |
0.4 |
(0.8) |
0.0 |
0.0 |
||
Share-based payments |
(1.5) |
(4.6) |
(6.8) |
(4.9) |
(6.4) |
(4.9) |
(6.0) |
(6.0) |
||
Reported operating profit |
(9.0) |
(2.4) |
(4.1) |
(16.7) |
10.6 |
8.9 |
10.6 |
14.0 |
||
Net Interest |
(2.4) |
(0.6) |
(0.4) |
(0.6) |
(0.7) |
(0.6) |
(0.3) |
(0.3) |
||
Joint ventures & associates (post tax) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(17.1) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
(6.4) |
4.3 |
4.1 |
11.0 |
17.8 |
15.5 |
17.7 |
21.1 |
Profit Before Tax (reported) |
|
|
(28.5) |
(3.0) |
(1.3) |
(17.3) |
9.9 |
8.3 |
10.3 |
13.7 |
Reported tax |
(0.1) |
(1.3) |
1.7 |
(1.5) |
1.9 |
(0.9) |
(1.5) |
(2.0) |
||
Profit After Tax (norm) |
(4.8) |
3.4 |
3.2 |
8.8 |
14.3 |
12.4 |
14.0 |
16.7 |
||
Profit After Tax (reported) |
(28.7) |
(4.3) |
0.4 |
(18.8) |
11.8 |
7.4 |
8.7 |
11.6 |
||
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 |
(5.5) |
24.6 |
0.0 |
0.0 |
||
Net income (normalised) |
(4.8) |
3.4 |
3.2 |
8.8 |
14.3 |
12.4 |
14.0 |
16.7 |
||
Net income (reported) |
(28.7) |
(4.3) |
0.4 |
(18.8) |
6.3 |
32.0 |
8.7 |
11.6 |
||
Basic average number of shares outstanding (m) |
150.3 |
217.1 |
246.8 |
273.8 |
294.0 |
297.4 |
300.4 |
303.4 |
||
EPS - basic normalised ($) |
|
|
(0.03) |
0.02 |
0.01 |
0.03 |
0.05 |
0.04 |
0.05 |
0.05 |
EPS - diluted normalised ($) |
|
|
(0.03) |
0.02 |
0.01 |
0.03 |
0.05 |
0.04 |
0.05 |
0.05 |
EPS - basic reported ($) |
|
|
(0.19) |
(0.02) |
0.00 |
(0.07) |
0.02 |
0.11 |
0.03 |
0.04 |
Dividend ($) |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
||
Revenue growth (%) |
42.0 |
44.5 |
42.2 |
12.5 |
10.1 |
2.0 |
13.8 |
13.8 |
||
Gross Margin (%) |
90.7 |
92.9 |
88.9 |
91.3 |
97.5 |
96.6 |
96.4 |
96.4 |
||
EBITDA Margin (%) |
(9.5) |
17.9 |
21.3 |
27.1 |
36.9 |
31.6 |
31.9 |
32.8 |
||
Normalised Operating Margin |
(16.5) |
13.7 |
9.0 |
20.5 |
29.9 |
25.3 |
25.0 |
26.1 |
||
BALANCE SHEET |
||||||||||
Fixed Assets |
|
|
26.9 |
23.0 |
52.2 |
69.8 |
71.9 |
67.0 |
67.2 |
66.7 |
Intangible Assets |
25.8 |
22.5 |
46.8 |
65.6 |
63.1 |
58.4 |
59.2 |
59.7 |
||
Tangible Assets |
0.4 |
0.3 |
3.5 |
3.8 |
5.7 |
5.5 |
5.4 |
5.4 |
||
Investments & other |
0.7 |
0.3 |
1.8 |
0.5 |
3.1 |
3.2 |
2.6 |
1.6 |
||
Current Assets |
|
|
79.3 |
84.0 |
89.2 |
155.2 |
145.0 |
216.5 |
241.6 |
275.0 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
59.1 |
51.7 |
53.6 |
92.5 |
82.6 |
94.4 |
101.6 |
110.8 |
||
Cash & cash equivalents |
18.7 |
31.1 |
34.7 |
61.3 |
56.7 |
116.3 |
134.2 |
158.4 |
||
Other |
1.4 |
1.3 |
0.9 |
1.4 |
5.8 |
5.8 |
5.8 |
5.8 |
||
Current Liabilities |
|
|
(78.0) |
(79.6) |
(81.8) |
(139.7) |
(122.1) |
(160.1) |
(170.6) |
(185.9) |
Creditors |
(75.5) |
(77.4) |
(78.0) |
(136.8) |
(119.6) |
(158.6) |
(169.1) |
(184.3) |
||
Tax and social security |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Short term borrowings |
(2.5) |
(2.2) |
(2.1) |
(1.4) |
(1.1) |
0.0 |
0.0 |
0.0 |
||
Other |
(0.0) |
0.0 |
(1.7) |
(1.4) |
(1.3) |
(1.4) |
(1.5) |
(1.6) |
||
Long Term Liabilities |
|
|
(0.2) |
(0.8) |
(2.6) |
(13.6) |
(12.3) |
(5.7) |
(5.7) |
(5.7) |
Long term borrowings |
(0.0) |
0.0 |
0.0 |
(10.8) |
(6.7) |
0.0 |
0.0 |
0.0 |
||
Other long term liabilities |
(0.1) |
(0.8) |
(2.6) |
(2.8) |
(5.7) |
(5.7) |
(5.7) |
(5.7) |
||
Net Assets |
|
|
28.0 |
26.6 |
57.0 |
71.8 |
82.4 |
117.8 |
132.5 |
150.1 |
Minority interests |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Shareholders' equity |
|
|
28.0 |
26.6 |
57.0 |
71.8 |
82.4 |
117.8 |
132.5 |
150.1 |
CASH FLOW |
||||||||||
Op Cash Flow before WC and tax |
(2.3) |
6.3 |
7.4 |
15.3 |
22.9 |
20.0 |
23.0 |
26.9 |
||
Working capital |
1.0 |
7.2 |
3.0 |
20.1 |
(7.1) |
33.3 |
(2.9) |
6.1 |
||
Exceptional & other |
(5.5) |
0.2 |
(1.3) |
(3.8) |
0.8 |
(1.0) |
0.0 |
0.0 |
||
Tax |
0.0 |
(0.2) |
(0.1) |
(0.3) |
(0.4) |
(1.0) |
(1.0) |
(1.0) |
||
Net operating cash flow |
|
|
(6.8) |
13.5 |
9.0 |
31.3 |
16.2 |
51.2 |
19.2 |
32.0 |
Capex |
(0.3) |
(0.3) |
(2.1) |
(3.4) |
(5.8) |
(5.6) |
(6.0) |
(6.3) |
||
Acquisitions/disposals |
0.0 |
(0.2) |
(0.7) |
(36.6) |
0.0 |
26.2 |
6.1 |
0.0 |
||
Net interest |
(0.9) |
(0.6) |
(0.4) |
(1.0) |
(0.6) |
(0.5) |
(0.2) |
(0.2) |
||
Equity financing |
19.8 |
0.5 |
0.6 |
26.2 |
1.1 |
(1.6) |
0.0 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(1.1) |
0.2 |
(1.5) |
(2.6) |
(6.1) |
(1.2) |
(1.2) |
(1.2) |
||
Net Cash Flow |
10.6 |
13.1 |
4.857 |
13.8 |
4.8 |
68.6 |
17.9 |
24.3 |
||
Opening net debt/(cash) |
|
|
9.9 |
(16.2) |
(28.9) |
(32.6) |
(49.0) |
(48.8) |
(116.3) |
(134.2) |
FX |
0.4 |
(0.5) |
(1.1) |
1.3 |
(0.6) |
0.0 |
0.0 |
0.0 |
||
Other non-cash movements |
15.1 |
(0.0) |
(0.0) |
1.2 |
(4.4) |
(1.1) |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(16.2) |
(28.9) |
(32.6) |
(49.0) |
(48.8) |
(116.3) |
(134.2) |
(158.4) |
Source: Boku, Edison Investment Research
|
|
Research: Healthcare
Midatech has announced that following the completion of one month of treatment for the first patient enrolled in the MAGIC-G1 study (at a dose of 60uM), the Data Safety Monitoring Board (DSMB) has recommended dose escalation to 90uM (expected to be the target therapeutic dose for MTX110). MAGIC-G1 is an open-label, Phase I study designed to evaluate the feasibility and safety of MTX110 in recurrent glioblastoma (rGBM) using a convection-enhanced delivery (CED) system. However, we note that continued progression of this study will be contingent on the successful conclusion of the announced Bioasis deal and US$9.6m fund-raising, both of which require shareholder authorisation. Approval and completion of these is critical path for Midatech. The company states that it has a cash balance of £2.6m (as of 5 January 2023), which is only sufficient to fund operations to mid-March 2023.
Get access to the very latest content matched to your personal investment style.