Bango plc · LSE:BGO
Bango — FY2013 Earnings Presentation
32 slides from Bango's earnings presentation, 2014
Slide 1: Bango FY2013
Bango FY2013 12 months to 31 December 2013 Ray Anderson CEO Gerry Tucker CFO Anil Malhotra CMO © 2014 Bango PLC www.bango.com
Slide 2: About Bango
About Bango Bango customers include: • Founded in 1999 to enable effective collection of mobile payments • Chosen by the worlds leading app stores, merchants and mobile operators • Bango technology, relationships and user data enables – superior user experience Over 120 operator relationships includ
Slide 3: What Bango does
What Bango does 1. Bango powers leading app stores and major brands Provides a massively 2. Unique Bango smooth payment technology automatically experience authenticates hundreds of millions of users 3. Across hundreds of 4. On any device connected to operators worldwide any network – including Wi-F
Slide 4: Benefit of Bango Direct Operator Billing
Benefit of Bango Direct Operator Billing • Direct Operator Billing gives 200% to more than 1,000% sales uplift by reaching where credit cards can’t • The common BangoID across diverse apps boosts that further by enabling one-click operator billing - even on Wi-Fi connections North America Smartphone
Slide 5: Digital market opportunity
Digital market opportunity Digital content and services (includes $26bn in app download sales) Operator Billing 5
Slide 6: FY2013 key highlights
FY2013 key highlights 1. Ramp-up in end user spend at the end of 2013 as a result of initial stages of growth driven by Google Play starting to use Bango to integrate with MNO billing systems 2. Continued expansion of operator billing integrations worldwide - driven by Google, BlackBerry, Mozilla an
Slide 7: Partner with Industry Leaders
Entering growth phase Integrate Mobile Operators 1h2012 2h2012 1h2013 2h2013 1h2014 2h2014 Partner with Industry Leaders Czech Republic USA UK Germany France Spain Germany Canada Canada Australia Germany Spain Mexico Colombia Poland Hungary Indonesia Mexico Canada Strengthened Platform Quality at Sc
Slide 8: FY2013 commercial progress
FY2013 commercial progress • Significant progress integrating leading app stores with MNO during the year: – Google Play: 3 integrations live at year end from 1 – Mozilla: 4 integrations live at year end from 0 – Microsoft: 3 MNO integrations implemented and live from 0 – Pipeline of 40 integrations
Slide 9: Bango powered app store experience
Bango powered app store experience 9 9
Slide 10: FY2013 financial summary
FY2013 financial summary • End user spend increased to £15.6m (9m2012: £6.2m) - increased 150% from Dec 2012 to Dec 2013 driven by app store activity • End user gross profit grew to £0.4m (9m2012: £0.2m) with gross profit margin within the 2-5% medium term target range • Platform fee revenue £1.7m (
Slide 11: Bango as "Principal" business model
Bango as “Principal” business model 100¢ + tax 100¢ 75¢ 70¢ 25¢ 5¢ $1 purchase $1 gross 25% biller fee Bango fee 70% merchant Taxes + tax revenue (varies by biller) 5% earnings e.g. e.g. Month 1 Month 2 Month 3 Month 4 Settlement Transactions Receipts from billers $€£ $ $£$ Bango system collects cas
Slide 12: Bango as "Agent" business model
Bango as “Agent” business model 100¢ + tax 100¢ 78¢ 75¢ 70¢ 22¢ 3¢ $1 purchase $1 gross 22% biller fee Bango fee 75% app store 70% developer Taxes earnings plus tax revenue (varies by biller) 3% earnings e.g. e.g. Month 1 Month 2 Month 3 Month 4 Settlement Transactions App Store receipts $€£ $ $£$ A
Slide 13: Example turnover calculation
Example turnover calculation Turnover $126 $100 $100 End user sale (ex. tax) $100 End user spend as $4 principal margin $300 $200 $10 End user spend End user margin spend 3% Agency fee $6 (3.3% of $300) $6 (KPI) margin $200 $20 End user $20 spend as margin agent Platform fees $30 total $20 margin 13
Slide 14: FY2013 end user spend
FY2013 end user spend Growth in end user spend 10 % change from Q4, 2012 to Q4, 2013 9 8 7 6 Spend 5 £m 2012-m12 2013-m12 4 3 • End user spend £15.6m 2 - base of Blackberry World 1 - new app stores integrations 0 1h2012 2h2012 1h2013 2h2013 • End user gross margin 2.3% End user spend 5.2 3.8 6.6 9.0
Slide 15: FY2013 income statement
FY2013 income statement • End user spend increase (see previous slide) • Total gross profit stable on pro-rated basis • Operating expenses increased (see next slide) • Accelerated £270k of R&D amortization - Relating to platform developments for specific customers • Adjusted LBITDA £3.0m (9m2012: £1
Slide 16: FY2013 operating expenditure
FY2013 operating expenditure • Increased opex by approx. £90k /month (£1m /year) to meet volume and other expectations of the major new customers – leadership and staff to establish 24/7 99.99% capability – upgrade main datacenter and add N. America datacenter – deploy additional redundancy and secu
Slide 17: Operations ready for scale
Operations ready for scale Individual Transaction monitoring Payment Transactions Third Party Monitoring Success/Failure/Error Keynote/Pingdom/NCC Transaction Timestamping Internet Connectivity ISP Provider Upstream monitoring Operator, Bango & Content Web Services Individual Process & Task Response
Slide 18: Balance sheet 31 December 2013
Balance sheet 31 December 2013 • Cash raised 2013 invested in: – infrastructure and operational capacity – developing emerging market opportunities – product development for future deployment (capitalized) • Intangible assets: – accelerated amortization 18
Slide 19: FY2013 cash flow statement
FY2013 cash flow statement • Major hardware and software platform refresh in the primary datacenter to substantially increase maximum transaction capacity – capital expenditure computers and office equipment – capitalization of internal development 19
Slide 20: Emerging market penetration
Emerging market penetration Indonesia • Slow settlement, volatile currency, extensive bureaucracy • Bango platform ideally suited to handling complexity • Attractive margins • More than 12 months experience & presence established in Singapore Brazil • Complex tax rules – with MNO indecision on withh
Slide 21: Growth strategy
Growth strategy • Win and grow partnerships to power payments for world’s largest digital content channels • Intense focus on the biggest mobile platforms (Android, HTML5) and on key app stores partners (Google, Amazon, Microsoft, Mozilla) • Integrating more operators in fast-growth markets as their
Slide 22: Outlook is positive and exciting
Outlook is positive and exciting • Now established as the leading mobile operator billing platform with unique technology and extensive relationships • Google Play spend very encouraging with only 4 operators now live; dozens more in the final stages of testing and implementation • Exciting potentia
Slide 23: Appendix
Appendix 23
Slide 24: The market opportunity…
The market opportunity… Smartphone base growing fast: Global smartphone App revenues growing fast: penetration growing fast: Android iOS Symbian RIM Bada Microsoft Others 250 000,0 200,000,0 150 000,0 100 000,0 50 000,0 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012
Slide 25: Market developments
Market developments • Large, growing and exciting market – Mobile phones are expected to dominate the overall device shipment market* – 1,004.2 million smartphones shipped in 2013, up 38.4% on 2012** – Tipping point reached where smartphones are now majority shipped vs. feature phones – Highest smar
Slide 26: Bango Dashboard
Bango Dashboard • High level summary Customers January 2014 • Unique users • User spend • Payment totals, with – Started – Completed – Cancelled – Failures & errors – Refunds • High level indicators – Conversion rate – ARPU – Refund rate • Month / day views – By day / hour 26
Slide 27: Bango Dashboard (2)
Bango Dashboard (2) Payments completed January 2014 Payments cancelled January 2014 Payment failures January 2014 Errors January 2014 User Spend January 2014 Refunds January 2014 27
Slide 28: Bango's view of competitive options
Bango’s view of competitive options Internal Development Mobile Operator Direct Teams Bango Potential Partner Customer Limited reach, Wi-Fi problem, Service levels, Complexity Customer silos, complexity, no leverage, time to market, weak developer story Alternate Billers PC focussed “Pay by Mobile”
Slide 29: What's so bad about BOB anyway?
What’s so bad about BOB anyway? • Bango provides a high quality operator billing “product” to compare favourably with iTunes and Amazon payments • High performance, secured through direct integrations and Bango-to-Operator contracts • Competitive environment littered with indirect “pyramids” of conn
Slide 30: Harris-Goldberg Model
Harris-Goldberg Model 4a] 6 [em e€ F oc rey ss dT cs Elk Tt hw] wy] oT ep Te 1 Bango Payment Intelligence: App Store Monthly Revenue, Margin and Transaction Prediction tool 2 MNO name 3 ENTER: le What is your Mobile Subscriber Base? (millions): ——-> ~ Current share of Subs Base with App Store Access
Slide 31: Bango Board and key execs
Bango Board and key execs Ray Anderson – Chief Executive Officer and Exec. Director Co-founded Bango in 1999. Previously founded IXI which created the standard Unix GUI, and was an early leader in the creation of WWW. IXI merged with SCO and floated on NASDAQ. Ray co-founded Torch Computers - sold t
Slide 32: Major shareholdings
Major shareholdings Shareholder Shares % LIONTRUST ASSET MANAGEMENT 6,859,947 15.04% MR RAYMOND ANDERSON 6,624,036 14.52% HERALD INVESTMENT MANAGEMENT 6,570,981 14.41% ANIL MALHOTRA 4,022,000 8.82% WELLINGTON MANAGEMENT 2,455,209 5.38% INFLECTION POINT INVESTMENTS 2,089,639 4.58% HARGREAVE HALE 1,95