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Bango Upbeat 10 March 2015

 

 

The Cambridge based company focused on mobile payment services and solutions, has this morning delivered its final results for the period ended 31 December 2014.

This sees the company now firmly establishing itself as the carrier billing provider of choice, where it has successfully signed up all the top tier app stores, with the exception of Apple.

This is borne out by the fact that every major app store which has adopted Direct Carrier Billing has chosen to work with Bango.

Speaking with an upbeat CEO Ray Anderson earlier today, he sounded a confident note on future prospects, where End-user spending activity the company’s preferred measurement once more increased, rising from £15.6m to £25.2m representing a healthy 62% jump.

The most significant contribution within the end-user activity was driven by Google Play and would appear to support the trend for further significant growth ahead.

Broker Cenkos has this morning introduced forecasts with a Buy note, where it envisages gross end-user spend to rise from last year’s £25m, to £44.8m this year with £93.2m and £199.7m pencilled in for subsequent years.

 

Speaking on the numbers, Anderson said “we have made excellent progress supported by last year’s commercial success with Amazon, along with a number of activations through Samsung, where we expect great things ahead”.  

 

The company has more than 30 activations lined up for launch in 2015, which are expected to further contribute to end user spend, while there is a pipeline of more than 100 further activation opportunities this year.  

Interestingly, current guidance on end user spend does not include any impact from such additions, or for that matter from its association and business from both Amazon and Samsung.

 

Additionally, Bango is poised to capitalise on growth prospects within regions such as Latin America where Anderson has recently visited, adding that they are “currently merely scratching the surface” while the Middle East also looks extremely promising.

 

The company already has a group deal in place with Etisalat the UAE based telecommunications provider and Anderson talks of further news within the area coming through this year.

 

Although gross profit on end-user spend seemingly dropped to £1.3m this according to the CEO, was down to a shift away from upfront payments with an initial sacrifice as it switched to a monthly payment system.

The company has also successfully launched its Bango grid, which is a connectivity programme described as Anderson as akin to a dating agency. “In the past, when mobile network operators have required clarification on transaction issues relating to apps, it has largely been conducted via email or a conference call”.

 

“The grid,now connects each player via an easy and speedy process which amongst other things can provide advice and information on potential hurdles such as tax issues within app store business across different regions.

Anderson is also particularly pleased with the progress made through its commitment to apprenticeships via the Cambridge Regional College, where a number of employees are now working closely with customers in the Middle East.

 

Although Bango’s share price had been on the slide in recent months, holders can perhaps take confidence from the 8% rise this morning to 84.5p and the revelation from the CEO that the company will not need to go back to investors for further funds.

 

Having successfully concluded an over- subscribed placing and open offer last year, Ray Anderson was unequivocal with his response on the subject, where Broker Cenkos is forecasting positive EBITDA by 2017 and a gross profit of £6.1m.

Those figures, given the current growth rate along with a strong pipeline of mobile network operator /app store integrations scheduled for this year, could even be on the conservative side.

The company now has a stable operating cost base and with the end-user spend accelerating the company should be well placed to benefit as operational gearing kicks in.

 

No doubt, there will be further news flowing throughout this year, of which Ray Anderson says “watch this space”.

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