Boku — Wider payments reach drives underlying growth

Boku (AIM: BOKU)

Currency in GBP

Last close As at 26/01/2023

GBP1.52

0.50 (0.33%)

Market capitalisation

GBP454m

Research: TMT

Boku — Wider payments reach drives underlying growth

Boku reported H122 revenue and adjusted EBITDA in line with its July trading update. During H122, payments made via local payment methods (LPMs) grew significantly y-o-y and, since the end of H1, the company has signed a multi-year contract with Amazon for its LPM services and rolled out eWallets in China for another major merchant. We maintain our forecasts and highlight that underlying growth for the business remains strong, despite currency headwinds.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Boku

Wider payments reach drives underlying growth

H122 results

Software and comp services

29 September 2022

Price

102.5p

Market cap

£306m

$1.09:£1

Net cash ($m) at end H122

67.8

Shares in issue

298.1m

Free float

93%

Code

BOKU

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

4.6

1.5

(47.6)

Rel (local)

11.6

7.2

(44.6)

52-week high/low

197p

77p

Business description

Boku operates a billing platform that connects merchants with mobile network operators and alternative payment methods in more than 90 countries. It has c 350 employees, with its main offices in the US, UK, Estonia, Germany and India.

Next events

FY22 trading update

January 2023

Analyst

Katherine Thompson

+44 (0)20 3077 5730

Boku is a research client of Edison Investment Research Limited

Boku reported H122 revenue and adjusted EBITDA in line with its July trading update. During H122, payments made via local payment methods (LPMs) grew significantly y-o-y and, since the end of H1, the company has signed a multi-year contract with Amazon for its LPM services and rolled out eWallets in China for another major merchant. We maintain our forecasts and highlight that underlying growth for the business remains strong, despite currency headwinds.

Year
end

Revenue ($m)

EBITDA*
($m)

Diluted EPS*
($)

DPS
($)

P/E
(x)

EV/EBITDA
(x)

12/20

56.4

15.3

0.032

0.0

34.8

17.4

12/21

62.1

22.9

0.047

0.0

23.8

11.6

12/22e

62.5

19.7

0.040

0.0

28.3

13.5

12/23e

69.6

22.7

0.044

0.0

25.2

11.7

Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. FY20 includes Identity business (sold in Q122).

H122 underlying revenue growth of 7%

Boku reported a 1% decline in revenue y-o-y for H122; in constant currency, growth was 7%. Total payment volume (TPV) was 8% higher y-o-y on a reported basis. Adjusted EBITDA of $9.5m was 15% lower y-o-y due to currency headwinds and increased investment in building out its global mobile-first payments platform. End-H1 net cash of $67.8m included the receipt of $26m from the sale of the Identity business in February. Having recently revised our forecasts to reflect currency moves, we maintain our revenue, EBITDA and normalised operating profit forecasts for FY22–24. We note that as Boku earns a percentage of the value of transactions it processes (take rate), this provides an inflation hedge.

Local payment methods business accelerating

Both new users and monthly active users (MAUs) of LPMs grew significantly in H122 (six times and eight times respectively versus H121), with TPV from LPMs increasing 11 times y-o-y. Post period end, the company announced further progress in this area, signing up Amazon in five countries in Asia/Africa and launching Alipay services for a major merchant in China. Five major merchants now use Boku for both direct carrier billing (DCB) and LPMs.

Valuation: Sustained growth to drive upside

Down 38% year to date, Boku is trading on EV/EBITDA multiples of 13.5x FY22e and 11.7x FY23e, at a 47% and 32% discount respectively to the payment processing peer averages (which are down on average 29% year to date). Applying the average multiple for FY22e would imply a share price of 175.3p and 142.0p for FY23e. In our view, evidence that strong 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.

Review of H122 results

Exhibit 1: Half-yearly results highlights

$m

H122

H121

y-o-y

Total payment volume (TPV) - $bn

4.3

4.0

8%

Take rate

0.70%

0.77%

(0.07%)

Revenue

30.3

30.7

-1%

Gross profit

29.4

29.5

0%

Adjusted EBITDA

9.5

11.2

-15%

Normalised operating profit

7.5

9.0

-16%

Reported operating profit

4.1

4.6

-11%

Normalised net income

5.7

6.9

-18%

Reported net income

28.0

4.0

597%

Normalised diluted EPS ($)

0.019

0.023

-18%

Reported basic EPS ($)

0.094

0.006

1495%

Net cash

67.8

40.2

69%

Gross margin

96.8%

95.9%

0.9%

EBITDA margin

31.3%

36.4%

-5.0%

Normalised EBIT margin

24.7%

29.2%

-4.4%

Reported operating margin

13.4%

14.9%

-1.4%

Source: Boku, Edison Investment Research

Boku reported H122 revenue and adjusted EBITDA in line with its July trading update. As we wrote in July, while Boku reports in US dollars, the vast majority of its revenues are generated in other currencies. Asian currencies (most significantly the Japanese yen, Taiwanese dollar and Korean won) make up more than half of revenues, followed by the euro (c 15%) and sterling (c 7%). In H122, the US dollar strengthened by roughly 10% against these currencies. H122 TPV of $4.3bn was 8% higher y-o-y but would have been higher in constant currency (c 14%). While revenue was down 1% y-o-y on a reported basis, the company estimates that it was 7% higher on a constant currency basis. As a reminder, H121 was always going to be a tough comparison period as the company benefited from a boost in Q121 due to another COVID lockdown. The take rate in H122 was 0.70% compared to 0.77% in H121 – this was a function of the mix between settlement and transaction volumes (ie faster growth of the lower take rate transaction business). The company noted that it had not reduced rates for any of its merchants and had not lost any material merchants or connections.

While there is some natural hedging for costs in the UK and Europe, a material proportion of costs are generated in the US and India, resulting in a currency headwind at the adjusted EBITDA level. Without this, the company estimates that EBITDA would have been more in line with the prior year. The company also increased investment to support its LPM strategy. Excluded from adjusted EBITDA were an FX gain of $61k, income from providing accounting services to the Identity business post disposal ($385k) and a write-down of the Fortumo brand intangible asset as the brand is no longer in use ($1,264k).

This is the first time that Boku has reported the sold Identity business in discontinued operations. The business was sold on 28 February and the company received net proceeds of $26.0m (after working capital adjustment). During H122, the Identity business generated a loss of $1.1m up to the date of disposal. Overall, discontinued operations contributed $24.6m to reported net income ($26.6m profit on disposal less $1.4m disposal costs, $0.5m share-based payments expense reversal and $1.1m losses for the period). Proceeds were used to pay down remaining debt of $8.1m. A further $6.5m of contingent consideration is receivable in August 2023, of which $5.6m represents an indemnity against future possible claims. The $5.6m is included on the balance sheet as a ‘financial asset at fair value through profit or loss’.

Net cash at the end of H122 of $67.8m was 69% higher y-o-y and 39% higher h-o-h. The company no longer has any debt other than finance leases. To smooth out the effect of carrier and merchant payments, average daily cash in June was $63.3m, up from $38.0m in June 2021 and $50.8m in December 2021. The company suggested that it could use some of this cash for M&A.

Local payment methods gaining traction

The company’s mobile-first payment network covers more than 7.1bn user accounts in 92 countries. Of this total, 3bn are for LPMs such as eWallets and real-time payments. LPMs offer consumers an alternative to credit cards or cash and are particularly popular in Asia. Merchants need to offer these payment methods if they are to build their customer bases in countries where LPMs are popular. Boku simplifies this process for merchants by taking care of integrations as well as local regulations and taxes. Netflix has already highlighted that in Q122, Asia was the only region in which it grew subscribers, and put this down to its ability to offer LPMs (which are managed by Boku).

Supporting these payment methods also provides the potential for higher transaction values, as LPMs are not limited to digital content.

The table below shows progress the company has made in its emerging LPM business. New LPM users made up more than 10% of group new users in H122, up from only 2% a year ago and were six times higher y-o-y. Monthly active users of LPMs increased eightfold y-o-y and made up close to 5% of group MAUs in H122 compared to less than 1% a year ago. LPM MAUs have increased to 2.5 million in August. Volumes generated by LPMs have increased elevenfold y-o-y.

Exhibit 2: Progress of monthly active users and new users

H122

H121

Growth y--o-y

Monthly active users (MAU)

46.3m

37.9m

22%

New users

28.8m

29.9m

-4%

Local Payment Methods (LMP):

MAUs

>2.1m

0.25m

708%

New users

3.1m

0.5m

520%

LPM MAU/Total MAU

4.5%

0.7%

LPM new users/total new users

10.8%

1.7%

Source: Boku

The recently announced contract with Amazon should make a material contribution to Boku’s LPM business. Boku will process digital wallet and other LPM payments for Amazon Prime Video subscriptions for customers located in certain countries in South-East Asia and Africa (12 wallets across five countries). The contract has been signed for a minimum period of three years, with annual contract renewals thereafter, and allows Boku to provide payment services to any Amazon division. We expect this service to launch in late 2022/early 2023. Via Fortumo, Boku already provides DCB services for Amazon bundling, although this is one of Boku’s less material DCB contracts. This new contract also grants Amazon warrants over up to 11.2m Boku shares dependent on Amazon meeting certain revenue targets over a seven-year period. In our view, this incentivises Amazon to encourage the use of LPMs and creates a closer working relationship with this major merchant.

The company noted that it recently launched its service for another major merchant in China enabling connections to China’s largest wallet, Alipay (according to Statista, Alipay had 640 million MAUs in December 2021). Volumes via this connection are already ahead of expectations.

Of Boku’s existing major merchants, it is now providing both DCB and LPM services to Amazon, Meta, Netflix, Sony and Spotify.

Ongoing progress at a group level

During H122, Boku launched more than 50 new connections for merchants including Apple, Amazon, EA Games, Meta, Netflix, Samsung, Sky and Spotify. The company was also granted a payments licence in the Philippines, entered the ride sharing market and launched services for the first time in Vietnam, Pakistan and Nigeria. Boku’s DCB business has 300 connections globally and, on average, merchants only use 10% of these, providing scope for further growth in DCB volumes.

Outlook and changes to forecasts

In July, we reduced our revenue forecasts to reflect the dollar’s strength versus most of the currencies in which Boku operates. Boku has more sterling-based cost than revenue and euro-based costs match euro-based revenue, going some way to mitigating the currency impact at the EBITDA level. As Boku earns a percentage of the value of transactions processed, it benefits as merchants apply price increases, providing an inflation hedge. The company has not yet seen any evidence of consumer spending reducing in the current tough economic climate. As it is used for transactions that are typically lower value (average transaction value is c $10), consumers may look elsewhere to save money before cutting this type of spending.

We maintain our revenue, EBITDA and normalised operating profit forecasts. Reported operating profit and net income changes reflect H122 one-off items and lower ongoing amortisation of acquired intangibles.

We note that the company started a share buyback programme in July (up to £8m-worth or 5m shares until 30 June 2023), in part to offset employee share awards. To date, Boku has acquired 950,000 shares at a cost of £0.86m/$1.01m.

Exhibit 3: Changes to forecasts

$m

FY22e

FY23e

FY24e

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Old

New

Change

y-o-y

Revenues

62.5

62.5

0.0%

0.7%

69.6

69.6

0.0%

11.4%

76.9

76.9

0.0%

10.5%

Gross profit

60.3

60.4

0.2%

-0.2%

67.1

67.1

0.0%

11.2%

74.2

74.2

0.0%

10.5%

Gross margin

96.4%

96.6%

0.2%

-0.8%

96.4%

96.4%

0.0%

-0.2%

96.4%

96.4%

0.0%

0.0%

Adjusted EBITDA

19.7

19.7

0.1%

-14.0%

22.7

22.7

0.0%

15.3%

26.4

26.4

0.0%

16.1%

Adjusted EBITDA margin

31.5%

31.5%

0.0%

-5.4%

32.7%

32.7%

0.0%

1.1%

34.3%

34.3%

0.0%

1.6%

Normalised operating profit

15.7

15.7

0.1%

-15.4%

17.7

17.7

0.0%

12.8%

20.9

20.9

0.0%

17.8%

Normalised operating margin

25.1%

25.1%

0.0%

-4.8%

25.5%

25.5%

0.0%

0.3%

27.2%

27.1%

0.0%

1.7%

Reported operating profit

9.7

8.6

-11.8%

-19.5%

9.9

10.3

3.6%

20.2%

13.1

13.5

2.8%

30.6%

Reported operating margin

15.5%

13.7%

-1.8%

-3.4%

14.3%

14.8%

0.5%

1.1%

17.0%

17.5%

0.5%

2.7%

Normalised PBT

15.2

15.2

-0.4%

-15.0%

17.4

17.4

0.3%

14.9%

20.5

20.6

0.3%

18.1%

Reported PBT

9.2

8.0

-13.2%

-19.1%

9.6

10.0

4.4%

24.6%

12.7

13.1

3.3%

31.6%

Normalised net income

12.2

12.1

-0.4%

-15.0%

13.7

13.8

0.3%

13.4%

16.2

16.2

0.3%

18.1%

Reported net income

30.8

31.7

2.9%

406.3%

8.1

8.5

4.4%

-73.3%

10.8

11.2

3.3%

31.6%

Normalised basic EPS ($)

0.041

0.041

-0.4%

-16.0%

0.046

0.046

0.3%

12.3%

0.053

0.054

0.3%

16.9%

Normalised diluted EPS ($)

0.040

0.040

-0.4%

-15.9%

0.044

0.044

0.3%

12.3%

0.052

0.052

0.3%

17.0%

Reported basic EPS ($)

0.104

0.107

2.9%

400.5%

0.027

0.028

4.4%

-73.5%

0.036

0.037

3.3%

30.3%

Net debt/(cash)

(82.3)

(82.8)

0.6%

69.5%

(106.6)

(106.0)

-0.6%

28.0%

(127.9)

(126.2)

-1.3%

19.1%

TPV ($bn)

9.06

8.94

-1.3%

8.6%

10.12

10.00

-1.2%

11.9%

11.11

10.99

-1.1%

9.9%

Take rate

0.69%

0.70%

0.01%

-0.06%

0.69%

0.70%

0.01%

0.00%

0.69%

0.70%

0.01%

0.00%

Source: Edison Investment Research

Valuation

Boku is trading on EV/EBITDA multiples of 13.5x FY22e and 11.7x FY23e, at a 47% and 32% discount respectively to the payment processing peer averages (which are down on average 29% year to date). Applying the average multiple for FY22e would imply a share price of 175.3p and for FY23e, 142.0p. In our view, evidence that strong revenue growth can be sustained will be the main catalyst for the share price, with a growing contribution from local payment methods and new major merchants signing up key indicators of progress.

Exhibit 4: Peer group financial and valuation metrics

Share price

Market

Rev growth

EBITDA margin

EV/Sales (x)

EV/EBITDA (x)

P/E (x)

cap (m)

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

Boku

102.5p

306

0.7%

11.4%

31.5%

32.7%

4.2

3.8

13.5

11.7

28.3

25.22

Adyen

€1,265

39,784

35.0%

33.4%

60.8%

62.4%

25.0

18.7

41.1

30.0

63.2

47.2

Bango

199.0p

157

52.2%

58.8%

13.1%

24.9%

5.1

3.2

39.2

12.9

N/A

29.3

Block

$56.27

33,210

(0.4%)

18.9%

4.4%

5.5%

1.9

1.6

42.3

28.5

62.3

36.2

dLocal

$22.62

6,674

72.3%

51.7%

35.7%

36.0%

14.8

9.8

41.6

27.2

54.3

34.7

FIS

$80.29

48,815

5.7%

6.7%

44.4%

45.0%

4.5

4.2

10.1

9.4

11.4

10.3

Fiserv

$97.95

62,647

8.8%

7.3%

42.5%

43.5%

4.9

4.6

11.5

10.5

15.1

13.2

Global Payments

$115.04

31,885

4.6%

8.5%

48.7%

49.4%

5.3

4.9

10.9

9.9

12.2

10.5

PayPal

$86.97

100,579

9.7%

14.3%

23.8%

24.3%

3.7

3.2

15.4

13.2

22.1

18.2

Worldline

€41.6

11,875

16.4%

10.5%

25.2%

26.4%

3.7

3.4

14.8

12.8

18.4

16.1

Average Payment Processors

22.7%

23.3%

33.2%

35.3%

7.7

5.9

25.2

17.1

32.4

24.0

Premium/(discount) to peers

(47%)

(32%)

(13%)

5%

Source: Edison Investment Research, Refinitiv. Note: At 26 September.

Exhibit 5: 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

62.5

69.6

76.9

Cost of Sales

(2.3)

(2.5)

(5.6)

(4.9)

(1.6)

(2.1)

(2.5)

(2.7)

Gross Profit

22.1

32.8

44.6

51.5

60.5

60.4

67.1

74.2

EBITDA

 

 

(2.3)

6.3

10.7

15.3

22.9

19.7

22.7

26.4

Normalised operating profit

 

 

(4.0)

4.8

4.5

11.6

18.6

15.7

17.7

20.9

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

8.6

10.3

13.5

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

15.2

17.4

20.6

Profit Before Tax (reported)

 

 

(28.5)

(3.0)

(1.3)

(17.3)

9.9

8.0

10.0

13.1

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

12.1

13.8

16.2

Profit After Tax (reported)

(28.7)

(4.3)

0.4

(18.8)

11.8

7.1

8.5

11.2

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

12.1

13.8

16.2

Net income (reported)

(28.7)

(4.3)

0.4

(18.8)

6.3

31.7

8.5

11.2

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

0.04

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

0.7

11.4

10.5

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

31.5

32.7

34.3

Normalised Operating Margin

(16.5)

13.7

9.0

20.5

29.9

25.1

25.5

27.1

BALANCE SHEET

Fixed Assets

 

 

26.9

23.0

52.2

69.8

71.9

67.1

67.3

66.9

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

2.7

1.8

Current Assets

 

 

79.3

84.0

89.2

155.2

145.0

183.2

210.8

237.6

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

94.6

99.1

105.6

Cash & cash equivalents

18.7

31.1

34.7

61.3

56.7

82.8

106.0

126.2

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)

(126.2)

(139.6)

(148.8)

Creditors

(75.5)

(77.4)

(78.0)

(136.8)

(119.6)

(124.8)

(138.1)

(147.2)

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

118.4

132.9

150.0

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

118.4

132.9

150.0

CASH FLOW

Op Cash Flow before WC and tax

(2.3)

6.3

7.4

15.3

22.9

19.7

22.7

26.4

Working capital

1.0

7.2

3.0

20.1

(7.1)

(0.8)

2.7

2.6

Exceptional & other

(5.5)

0.2

(1.3)

(3.8)

0.8

(5.3)

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

12.6

24.5

28.0

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

(0.7)

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

30.8

23.2

20.2

Opening net debt/(cash)

 

 

9.9

(16.2)

(28.9)

(32.6)

(49.0)

(48.8)

(82.8)

(106.0)

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)

3.2

0.0

0.0

Closing net debt/(cash)

 

 

(16.2)

(28.9)

(32.6)

(49.0)

(48.8)

(82.8)

(106.0)

(126.2)

Source: Boku, Edison Investment Research

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Frankfurt +49 (0)69 78 8076 960

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London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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United States of America

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This report has been commissioned by Boku and prepared and issued by Edison, in consideration of a fee payable by Boku. Edison Investment Research standard fees are £60,000 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.

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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 2022 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). 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.

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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.

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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

1185 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

1185 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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Context Therapeutics — Cash runway extended to Q124

Management has announced that Context Therapeutics will focus its R&D efforts on onapristone extended release (ONA-XR) in the ELONA trial along with the preclinical Claudin 6 (CLDN6) program while deprioritizing other preclinical activities. The Phase Ib/II ELONA trial, investigating ONA-XR’s use in metastatic breast cancer in combination with Menarini Group’s elacestrant, remains on schedule to begin patient enrolment in Q422 and interim data are now expected in Q423. We estimate reduced operating costs of $17.6m (previously $21.9m) in FY22, as the company cuts other preclinical R&D-related expenses. Importantly, we estimate an extended cash runway into Q124, from Q423 previously, past interim data from ELONA and IND filing for CLDN6 (expected in Q124). Our valuation is largely unchanged at $150m or $9.39 per share.

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