Boku — Strong underlying revenue growth in H124

Boku (AIM: BOKU)

Last close As at 01/11/2024

GBP1.80

0.00 (0.00%)

Market capitalisation

GBP542m

More on this equity

Research: TMT

Boku — Strong underlying revenue growth in H124

In H124, digital wallets/account-to-account (A2A) adoption continued, with revenue growth of more than 50% y-o-y. Carrier billing revenues were robust with double-digit growth. The adjusted EBITDA margin is expected to be broadly flat versus FY23 as Boku invests to support core back-end infrastructure. We have raised our revenue forecasts while trimming our EBITDA forecasts to reflect this investment, which should support stronger growth in the medium term. The company has appointed a new CFO, Rob Whittick, with immediate effect.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Boku

Strong underlying revenue growth in H124

H124 trading update

Software and comp services

18 July 2024

Price

182.5p

Market cap

£552m

$1.30/£

Net cash ($m) at end FY23*

*Excludes restricted cash of $21.1m

129.7

Shares in issue

302.3m

Free float

80.3%

Code

BOKU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(1.6)

0.8

33.2

Rel (local)

(2.8)

(4.0)

19.8

52-week high/low

193p

133.5p

Business description

Boku operates a billing platform that connects merchants with mobile network operators and local payment methods in more than 70 countries. It has c 450 employees, with its main offices in the US, UK, Estonia, Germany and India.

Next event

H124 results

September 2024

Analyst

Katherine Thompson

+44 (0)20 3077 5700

Boku is a research client of Edison Investment Research Limited

In H124, digital wallets/account-to-account (A2A) adoption continued, with revenue growth of more than 50% y-o-y. Carrier billing revenues were robust with double-digit growth. The adjusted EBITDA margin is expected to be broadly flat versus FY23 as Boku invests to support core back-end infrastructure. We have raised our revenue forecasts while trimming our EBITDA forecasts to reflect this investment, which should support stronger growth in the medium term. The company has appointed a new CFO, Rob Whittick, with immediate effect.

Year
end

Revenue
($m)

EBITDA*
($m)

Diluted EPS*
(c)

DPS
($)

P/E
(x)

EV/EBITDA
(x)

12/22

63.8

20.2

3.9

0

60.0

29.0

12/23

82.7

25.8

5.6

0

42.6

22.7

12/24e

96.2

30.6

6.7

0

35.6

19.2

12/25e

106.8

35.8

7.6

0

31.2

16.4

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

H124 revenue growth at least 23% y-o-y

For H124, Boku expects to report revenue of at least $47m, up 23% y-o-y (30% constant currency (cc)). Total payment volume (TPV) of $5.8bn was 17% higher yo-y (26% cc) resulting in a take rate of 0.81% versus 0.76% in H123, reflecting the increasing proportion of digital wallet transactions. Revenue from digital wallets/A2A increased more than 50% y-o-y, helped by the launch of a Google/BLIK connection in Poland during H1. Carrier-related revenue (direct carrier billing and bundling) saw double-digit growth year-on-year. Monthly active users grew 30% yo-y/18% h-o-h to 79.6m. Adjusted EBITDA is expected to be in line with market expectations with margins broadly flat versus 2023. Net cash including merchant cash in transit was $148.5m at end H124 ($150.8m end FY23).

Revised forecasts reflect investment for growth

The company noted that through FY24 and FY25, it is focused on building the core infrastructure required to support scalable growth of A2A volumes and cross-border transactions as well as preparing for some significant market and customer launches later this year. We have raised our revenue forecasts to reflect stronger- than-expected performance in H124, while also revising up our operating cost assumptions to reflect the ongoing investment. We expect this investment will allow the company to better exploit the growth of cross-border e-commerce.

Valuation: LPM adoption to drive upside

Boku is trading at a premium to its peer group on FY24/25 EV/EBITDA multiples. Via a reverse discounted cash flow that uses our forecasts to FY26 and a WACC of 9%, we estimate the share price is factoring in revenue growth of 4.5% and average EBITDA margins of 34% for FY27–33, which in our view is conservative considering the potential of the digital wallet/A2A market. A growing contribution from Amazon, continued adoption of local payment methods (LPM) and new major merchant sign-ups would be the main drivers of longer-term growth and profits.

Changes to forecasts

Exhibit 1: Changes to forecasts

$'m

FY24e

FY24e

FY25e

FY25e

FY26e

FY26e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenue

95.0

96.2

1.2%

16.3%

105.0

106.8

1.7%

11.0%

115.0

117.1

1.8%

9.7%

Gross profit

92.7

93.8

1.2%

16.3%

101.8

103.6

1.7%

10.4%

111.6

113.6

1.8%

9.7%

Gross margin

97.5%

97.5%

0.0%

0.0%

97.0%

97.0%

0.0%

-0.5%

97.0%

97.0%

0.0%

0.0%

Adjusted EBITDA

31.7

30.6

-3.4%

18.6%

36.9

35.8

-3.1%

17.0%

43.3

40.5

-6.5%

13.1%

Adjusted EBITDA margin

33.3%

31.8%

-4.6%

0.6%

35.2%

33.5%

-4.7%

1.7%

37.7%

34.6%

-8.2%

1.1%

Normalised operating profit

24.9

23.8

-4.3%

16.8%

29.0

27.8

-3.9%

16.8%

34.5

31.6

-8.2%

13.6%

Normalised operating margin

26.2%

24.8%

-1.4%

0.1%

27.6%

26.1%

-1.5%

1.3%

30.0%

27.0%

-2.9%

0.9%

Reported operating profit

15.4

14.3

-7.0%

47.6%

19.8

18.6

-5.7%

30.0%

26.0

23.1

-10.8%

24.1%

Reported operating margin

16.2%

14.9%

-1.3%

3.2%

18.8%

17.5%

-1.4%

2.6%

22.6%

19.8%

-2.8%

2.3%

Normalised PBT

27.5

26.5

-3.9%

20.0%

31.6

30.5

-3.6%

15.1%

37.1

34.3

-7.6%

12.5%

Reported PBT

18.0

17.0

-6.0%

48.8%

22.4

21.3

-5.0%

25.4%

28.6

25.8

-9.9%

21.2%

Normalised net income

21.8

20.9

-3.9%

20.0%

25.0

24.1

-3.6%

15.1%

29.3

27.1

-7.6%

12.5%

Reported net income

14.8

13.9

-6.0%

38.0%

17.7

16.8

-5.0%

20.8%

22.6

20.4

-9.9%

21.2%

Normalised basic EPS ($)

0.073

0.070

-3.9%

19.8%

0.083

0.080

-3.6%

14.0%

0.096

0.089

-7.6%

11.4%

Normalised diluted EPS ($)

0.069

0.067

-3.9%

19.8%

0.079

0.076

-3.6%

14.0%

0.092

0.085

-7.6%

11.4%

Reported basic EPS ($)

0.050

0.047

-6.0%

37.7%

0.059

0.056

-5.0%

19.6%

0.074

0.067

-9.9%

20.0%

Net debt/(cash)

(175.9)

(178.3)

1.3%

37.4%

(211.1)

(213.7)

1.2%

19.9%

(250.7)

(252.1)

0.5%

18.0%

TPV ($bn)

11.88

11.94

0.5%

13.6%

13.00

13.07

0.5%

9.5%

14.10

14.18

0.6%

8.5%

Take rate

0.80%

0.81%

0.01%

0.02%

0.81%

0.82%

0.01%

0.01%

0.82%

0.83%

0.01%

0.01%

Source: Edison Investment Research


Exhibit 2: Financial summary

$'m

2019

2020

2021

2022

2023

2024e

2025e

2026e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

50.1

56.4

62.1

63.8

82.7

96.2

106.8

117.1

Cost of Sales

(5.6)

(4.9)

(1.6)

(1.8)

(2.1)

(2.4)

(3.2)

(3.5)

Gross Profit

44.6

51.5

60.5

62.0

80.7

93.8

103.6

113.6

EBITDA

 

 

10.7

15.3

22.9

20.2

25.8

30.6

35.8

40.5

Normalised operating profit

 

 

4.5

11.6

18.6

15.8

20.4

23.8

27.8

31.6

Amortisation of acquired intangibles

(1.6)

(2.2)

(1.9)

(1.0)

(2.2)

(1.9)

(1.6)

(0.9)

Exceptionals

(0.3)

(21.1)

0.4

(1.6)

(0.9)

0.0

0.0

0.0

Share-based payments

(6.8)

(4.9)

(6.4)

(5.2)

(7.6)

(7.6)

(7.6)

(7.6)

Reported operating profit

(4.1)

(16.7)

10.6

8.0

9.7

14.3

18.6

23.1

Net Interest

(0.4)

(0.6)

(0.7)

(0.5)

1.6

2.6

2.6

2.6

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

(3.5)

0.1

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

4.1

11.0

17.8

15.3

22.1

26.5

30.5

34.3

Profit Before Tax (reported)

 

 

(1.3)

(17.3)

9.9

4.1

11.4

17.0

21.3

25.8

Reported tax

1.7

(1.5)

1.9

0.2

(1.3)

(3.1)

(4.5)

(5.4)

Profit After Tax (norm)

3.2

8.8

14.3

12.2

17.4

20.9

24.1

27.1

Profit After Tax (reported)

0.4

(18.8)

11.8

4.3

10.1

13.9

16.8

20.4

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

(5.5)

24.6

0.0

0.0

0.0

0.0

Net income (normalised)

3.2

8.8

14.3

12.2

17.4

20.9

24.1

27.1

Net income (reported)

0.4

(18.8)

6.3

28.9

10.1

13.9

16.8

20.4

Basic ave. number of shares outstanding (m)

246.8

273.8

294.0

298.3

297.9

298.6

301.6

304.6

EPS - basic normalised ($)

 

 

0.01

0.03

0.05

0.04

0.06

0.07

0.08

0.09

EPS - diluted normalised ($)

 

 

0.01

0.03

0.05

0.04

0.06

0.07

0.08

0.08

EPS - basic reported ($)

 

 

0.00

(0.07)

0.02

0.10

0.03

0.05

0.06

0.07

Dividend ($)

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

42.2

12.5

10.1

2.7

29.7

16.3

11.0

9.7

Gross Margin (%)

88.9

91.3

97.5

97.2

97.5

97.5

97.0

97.0

EBITDA Margin (%)

21.3

27.1

36.9

31.7

31.2

31.8

33.5

34.6

Normalised Operating Margin

9.0

20.5

30.0

24.7

24.7

24.8

26.1

27.0

BALANCE SHEET

Fixed Assets

 

 

52.2

69.8

84.4

77.2

77.3

78.1

77.5

77.1

Intangible Assets

46.8

65.6

63.1

56.2

56.6

57.5

56.9

56.4

Tangible Assets

3.5

3.8

5.3

3.9

3.5

3.4

3.4

3.5

Investments & other

1.8

0.5

16.0

17.0

17.1

17.1

17.1

17.1

Current Assets

 

 

89.2

155.2

145.3

212.8

299.5

349.3

404.2

460.5

Stocks

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Debtors

53.6

92.5

82.9

90.5

148.5

149.7

169.3

187.2

Cash & cash equivalents

34.7

61.3

56.7

99.6

129.7

178.3

213.7

252.1

Other

0.9

1.4

5.8

22.8

21.2

21.2

21.2

21.2

Current Liabilities

 

 

(81.8)

(139.7)

(122.1)

(157.8)

(234.9)

(262.6)

(292.6)

(320.5)

Creditors

(78.0)

(136.8)

(119.6)

(156.3)

(233.0)

(260.7)

(290.7)

(318.6)

Tax and social security

0.0

0.0

0.0

(0.2)

(0.5)

(0.5)

(0.5)

(0.5)

Short term borrowings

(2.1)

(1.4)

(1.1)

0.0

0.0

0.0

0.0

0.0

Other

(1.7)

(1.4)

(1.3)

(1.3)

(1.4)

(1.4)

(1.4)

(1.4)

Long Term Liabilities

 

 

(2.6)

(13.6)

(12.3)

(8.7)

(8.4)

(8.4)

(8.4)

(8.4)

Long term borrowings

0.0

(10.8)

(6.7)

0.0

0.0

0.0

0.0

0.0

Other long term liabilities

(2.6)

(2.8)

(5.7)

(8.7)

(8.4)

(8.4)

(8.4)

(8.4)

Net Assets

 

 

57.0

71.8

95.3

123.6

133.5

156.4

180.8

208.8

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

57.0

71.8

95.3

123.6

133.5

156.4

180.8

208.8

CASH FLOW

Op Cash Flow before WC and tax

7.4

15.3

22.9

20.2

25.8

30.6

35.8

40.5

Working capital

3.0

20.1

(7.1)

27.9

17.9

26.4

10.4

10.0

Exceptional & other

(1.3)

(3.8)

(3.5)

1.8

(2.7)

0.0

0.0

0.0

Tax

(0.1)

(0.3)

(0.4)

(0.3)

(0.3)

(3.1)

(4.5)

(5.4)

Net operating cash flow

 

 

9.0

31.3

11.9

49.7

40.6

54.0

41.8

45.1

Capex

(2.1)

(3.4)

(5.8)

(5.3)

(5.9)

(8.1)

(7.7)

(8.1)

Acquisitions/disposals

(0.7)

(36.6)

0.0

26.5

5.6

0.0

0.0

0.0

Net interest

(0.4)

(1.0)

(0.6)

(0.2)

1.6

2.6

2.6

2.6

Equity financing

0.6

26.2

1.1

(1.4)

(7.1)

1.4

0.0

0.0

Dividends

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

(1.5)

(2.6)

(6.1)

(12.7)

(5.6)

(1.3)

(1.3)

(1.3)

Net Cash Flow

4.857

13.8

0.5

56.6

29.3

48.6

35.4

38.4

Opening net debt/(cash)

 

 

(28.9)

(32.6)

(49.0)

(48.8)

(99.6)

(129.7)

(178.3)

(213.7)

FX

(1.1)

1.3

(0.6)

(5.6)

0.9

0.0

0.0

0.0

Other non-cash movements

(0.0)

1.2

(0.1)

(0.3)

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

(32.6)

(49.0)

(48.8)

(99.6)

(129.7)

(178.3)

(213.7)

(252.1)

Source: Boku, Edison Investment Research


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United Kingdom

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Baker Steel Resources Trust — Interim revaluations bring H124 NAV TR to c 5%

Baker Steel Resources Trust (BSRT) has released its end-June 2024 NAV (following the usual half-year valuation review of its unlisted holdings), posting a 1.8% NAV increase versus end-May 2024, which resulted in an H124 NAV total return (TR) of 4.9%. Major positive drivers included Cemos, a Morocco-based cement producer, and BSRT’s royalty over the Bilboes gold project in Zimbabwe (owned by Caledonia Mining Corporation, CMCL). This was partly offset by the fair value reduction of Kanga Investments and share price declines of some listed holdings. Importantly, BSRT’s half year revaluations did not capture some recent positive developments at Futura Resources, its largest holding. BSRT’s shares currently trade at a c 34% discount to NAV.

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