Bango (LSE:BGO) — FY23 Results Presentation

0:01 Good morning, ladies and gentlemen. Welcome to the BANGO PLC investor presentation. Uate on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where appropriate to do so on the investor meet company platform. And before we begin, as usual, I would just like to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from BANGO PLC. Paul, good morning, sir. Good morning, and thank you everybody for your time this morning. I'm joined here by Matt, our CFO, and then off camera is Sucky who heads up investor relations, who will help guide us through the q and a. And just on that point, we've had quite a few submitted in advance, so thank you very much for that. But please do feel free to add any questions as

1:02 we go through the presentation into the chat window. We might answer some of those as we go. If not, Suky will make sure that we cover as many as we have time for at the end. So without further ado, let's get started. Just by way of setting the bigger picture, our vision really here at BANGO now is to be where people subscribe. We wanna be the place where everybody comes to get control of their subscriptions and to give subscribers like ourselves more choice and more control over the subscriptions that we have and that we manage on a day to day basis. Our product for that is a digital vending machine, and the digital vending machine is a reminder, sits at the heart of the subscription economy. Where a growing number of subscriptions that as users we have the complexity of managing are made simple to manage by those being distributed through a channel and having a single place we can see and view and subscribe and manage all of those subscriptions in one place.

1:53 That's the BANGO digital vending machine, and that's why we're here. And our values that underpin us as a company are underneath that. And if there's anybody any doubt about what we're here to do, we're here to win. And to that point, the v and our thrive values actually stands for victorious.

2:09 If we step back and look at the bigger picture of the subscription economy and see the different players that fit within it, as we said, we have content providers or people who have subscription services. They're looking to access new ways of distributing those subscriptions quite often through a channel. They're looking to reduce the churn on those subscriptions to capture new users and to reduce their marketing costs. And so distributing through a channel such as a telco is an ideal way of doing that. The telco market some of their these third party services along with their first party data services. The the churn, if you talk to any of the subscription providers, the churn of a a subscription coming through a channel is much lower than people who just have a credit card on file. And it's a way of accessing new customers that maybe they didn't have access to before.

2:55 On the telco side, the telco this is a great way of the telco reducing churn and keeping that subscription base. They can also use it to, you know, protect the pricing and the the core pricing of those of those broadband subscription services. It's a great way of finding new users and a great way of generating revenue. So it's really lots of value for the telco. As we touched a little bit on the previous slide, there's great value for the consumer as well in terms of giving more convenience, easier to find new services, easier to pause subscriptions, easier to cancel subscriptions, easier to easier to take out new ones, easier to see how much you're spending. So the DBM sits at the heart of all all these sort of three ecosystem players. And really what you see is this is this is really a win win win solution where everybody in the ecosystem benefits from having subscription services distributed through the BANGO DBM into a channel. It's better for the content provider, better for the telco, gives the consumer more control, more choice, and more flexibility.

3:53 And it's the BANGO DBM that's really at the heart of that.

3:59 At a very simple simplistic level, in the second half of the presentation, I'll I'll go into a little bit more detail. But if you step back and look at what is the power of the of the BANGO DBM, what what is the unique value that the DBM provides? And that's this sort of this, in effect, network effect, this ability to connect multiple telcos to multiple content providers. If you're a telco, you can connect once into the DBM, and you get access to all the different content providers. If you're a content provider, you connect once into the DBM, and you get access to all the telcos. And that means we can launch services more quickly than anybody else. And you can see a few examples at the bottom. With Optus, we launched NBA in less than three weeks. With Verizon, we brought 40 new services to market in twenty months. And Disney, Liberty Global in Belgium, launched in just four weeks. And those times are a step change from from how it's been done previously.

4:48 If you talk to you talk to any of the content providers who've tried to do some integrations directly with telcos, it traditionally takes them between six and nine months. So to be able to compress that interval there from many, many months to just a few weeks gives everybody a massive time to marketing advantage. And if you're a telco and you're launching new services and you're trying to make your existing telco services more often, that time to market is a huge competitive advantage.

5:14 So let's look at the highlights for 2023 and as we as from a from a DVM perspective. Nine new DVM customers taking the total now to to 18. So we doubled the number of DVM customers in 2023. We're now used by three of the top five US telcos, US being one of the largest subscription markets in the world, especially for for video on demand, but also other subscription services. 33 new content providers joined the digital vending machine now in excess of 90 different content providers. You know, it's now moved way beyond just video, music, and gaming, which is historically been the sort of the the center point of subscriptions. They do all sorts of different services from social media with Snapchat Plus to home delivery services with Walmart Plus. A real variety of of different services now in the digital vending machine, and even more merchants than ever before relying on the BANGO digital vending machine to help them distribute these services through a channel.

6:07 We launched the DBM consumer interface in 2023. We expect that to be with first customers in 2024, and that really enables telcos to to basically offer these services more quickly, bring them to market more quickly by offering a product that they can just put their own brand on, put their own color scheme on, figure how it looks and feels. It it makes it a lot faster for them to launch the subscription marketplace and bring that to market. And as we said earlier, time to market is a big competitive advantage in the telco space. The other obviously big element in 2023 was the Dokomo digital acquisition. We completed the 21,000,000 of synergies in the year. There's further optimizations over three see through in in 2024, but that acquisition is now largely behind us. Matt will go into more detail on that as he goes through his presentation.

6:56 We're not just here to build a business for one year. We're here to build a sustainable business in the long term, and sustainability and and sustainability of growth is very important to us. We won the King's award for enterprise, for international trade. Last year, were very proud to be one of the first winners of the King's awards. A record employee engagement score of 79%, which is in you know, way above the industry average, which given the fact that we're now twice the size we were a year before is is real testament to the strong culture in BANGO and the focus that everybody has in being successful in making BANGO the place where where people subscribe. And some great things in there and some great learnings and some great feedback from that survey that allows us to make BANGO an even better company to work for. Can continued our commitment to the carbon neutrality, to be net zero by 2040, put some more rigor around that given the size of the company now with the after the acquisition.

7:46 So adopted the science based targets initiative and really sort of created in 2023 a baseline for our our carbon emissions on a move forward basis. Security remains critical when you're becoming such a critical component for some of the largest companies in the world, be that the subscription providers like Netflix and and Amazon and Microsoft, or be that some of the largest telcos in the world like Verizon and T Mobile, security is very important. And so we maintained and extended our ISO 27,001 security security certificate last year. So it's not just about building a great set of results, and it's about building us results that are sustainable for the future. So with that, I'll turn over to Matt who'll go through some of the financials in more detail. Thanks, Paul, and welcome everyone to the financial review of 2023.

8:33 I think first element to do is to recognize the disappointment from the January trading update, which came from the $321,000,000 of revenues that moved out of the year, the 2,000,000 of additional costs that relate to some of the Dokomo acquired routes and the 1,000,000 of the FX on the intercompany loans. Be addressing those as we go through the meeting, but what I'd also like to introduce also some new metrics that will help and also some better splits of our revenues, which should help improve visibility and understanding.

9:09 So looking now first of all at the financial summaries and the key areas of results for 2023. A 62% increase in revenues, bolstered by an increase in transactional revenues as we took a full year of the Docomo business going up 79%. But also within our new DVM revenue split, a 76% increase in annual recurring revenue, predominantly coming from DVM. And also a 29% increase in adjusted EBITDA, which ended up at $6,400,000 which is slightly ahead of the trading update and in relation to the recognition of the FX on the intercompany loan. So looking at the revenue growth, we still achieved the 62% revenue despite the $3,000,000 of revenue moving out into another year.

10:04 We did that working in December right up until the end, signing contracts between Christmas and New Year. But unfortunately, some of those we weren't able to complete or recognize in that period. However, where we did improve, we had rapid growth in the transactional revenues, which went up 79% from 2022. So this came from not just the organic area of using a full year of Docomo Digital from the acquisition, but also if we annualize that Docomo Digital revenues from 2022, you can see we also had an underlying 5% increase in this DCB payments business. Where we also saw an awful lot of increase was in the DVM, which has been growing very quickly and revenue growth there up 31% and an even stronger increase in our ARR growth, which is up 76%.

11:03 So considering the ARR, the annual recurring revenue, you'll see here that the ARR growth came not only from the existing customers. So we saw that net retention of 137%. This is a new metric that we put in place that shows the increase of between at the beginning and end period of the same cohort of customers. So looking at the cohort of customers at the beginning of twenty twenty two where that revenue ended up at the end of twenty twenty three. But not only seeing that, but also seeing an increase from new customers. We had nine new DBM deals signed in 2023. And during the course of the first quarter of twenty twenty four, we also announced the top five U. S. Telco, which is going to add a minimum of 22,000,000 ARR to this year.

11:53 You'll also see from the graph on the right hand side the progression of that ARR. We've input the March number at $11,000,000 to show that increase is continuing within 2024.

12:07 Looking to expenses for the year, obviously, was an increase in those expenses as we saw a full year of Docomo Digital being acquired. And as we took the $21,000,000 of synergies, obviously, some of those costs continued through part of the year 2023. So during 2024, we'd expect to see those ones decline and we'll continue to get some benefit within 2025 as we close down platforms that are related to the Docomo revenues. Amortization obviously is another key increase where we saw that going up 55% as some of the capitalized R and D that we've used to develop DBM start to become revenue generating. We had some exceptional items as well coming from close down of the discontinued business with Document Digital and write down of some development costs from the old DDL platform.

13:05 In terms of EBITDA, H1 was obviously a negative EBITDA of 200,000 but we moved to a $6,600,000 EBITDA in H2, giving us an overall $6,400,000 as I said, up 29% on 2022.

13:22 Trading update did include the effect of $1,000,000 FX on intercompany loans. We discussed this. These loans are intercompany items that were set up by Docomo prior to our acquisition and our funding items with no fixed term end. And it's after discussion with the auditors, we've agreed that they should be moved those FX elements should be moved to reserves and out of P and L.

13:52 Going back to the synergies and the acquisition elements from Document Digital. You can see that we achieved the $21,000,000 of cost synergies at the end of the year. And at the same time, we expect that there'd be a few more of those ones as we move forward from the DPL platform discontinuation at the end of the year. We're also looking to reduce the number of legal entities, which should reduce admin costs and there'll be further business simplification. During the year right at the end of the year, there was the increased cost of sales from the Document Digital routes that were identified. This came very late in the day and we picked that one up as soon as we could, the contract being signed right at the end of the year.

14:38 We expect that cost to reduce in 2024 and then margins in 2025 to return to the 90 plus percent that we've enjoyed previously.

14:50 Now the new split that we're giving, which hopefully will give some insight into some of the investment in CapEx that BANGO does. Obviously, is all done in line with IAS 38, so we're following all of the correct procedures. But here we're giving a split down between where the investment comes in relation to the migration, EVM development and also the platform development. So you can see the plan is for 2024 for those that R and D capitalization to reduce as obviously the migration work that we've been undertaking during 2022 and 2023 ceases. But there's continued investment obviously in DVM and payments business, the main platform business in there.

15:34 We also take advantage as part of our R and D of the tax benefit that's offered by HMRC. We're conscious that, that one changes its application as of 2024. But within that period, we should see good receipt again from the 2023 investment.

15:55 Looking at cash movement. You see, obviously, one of our main uses of cash is in the investment in R and D, which we referred to previously. You also see that we took we had some reduction in our working capital with working capital movement of negative 3.1%, but still good generation from cash from operating activities. We took the loan from NHN, one of our key investors during the course of the year and at the half year at $7,900,000 which was lower than the indicated $10,000,000 that we noted during the at the time of the acquisition. We've been doing our financial forecast for the year for 2024, and we're in a good position to continue to fund our R and D for that period and also our operating costs.

16:44 And to make sure that we have some form of buffer, we've also agreed with a GBP 3,000,000 overdraft facility with our bank, which is undrawn at the end of the year. Quick run through from the income statement just showing comparatives back to 2018. One of the key areas I think to pick up on here is the associate loss, which you'll see increased during the course of this year.

17:11 This was partly the operating loss that's fairly normal from previous years, but we also impaired that business as the decision was made to wind that business down during the course of 2024, so we impaired in 2023.

17:28 So final summary of the financial elements for this year. We've seen strong revenue growth. We have payments business, which is continuing to grow. The DBM business is rapidly accelerating and ARR is giving a predictable revenue growth stream.

17:49 On our costs, we expect to see the R and D CapEx cost decreasing during 2024, although we continue to invest in DVM. The cost synergies will become more apparent as we get full year advantage of those $21,000,000 of costs. And the payments business will further reduce the costs in 2024 and beyond. We do have sufficient cash to fund the operations and the R and D CapEx that we anticipate to do during 2024. We have an overdraft in place to give us that buffer. And the two to remind people that in those plans as well, we're looking to pay off 2,000,000 of the loan to NHN during the course of this year, starting in September and then payment at the end of the year.

18:35 All of this is covered. So passing back to Paul. Thanks, Matt. So in this final section, I wanted to spend a little bit of time talking about the market opportunity and to give some of the market factors we see and also to talk a little bit about how we're taking that market input, and what it means in terms of DBM from an investment and a and a feature perspective. If we step back and and look at the market, I think there's no doubt that the subscription economy is growing. We probably all feel this as individuals. The number of services we pay for by subscriptions is larger than ever, expected to exceed, $600,000,000,000 in just a few years' time. So very fast growing, fast growing subscription economy. And already, a big portion of that is delivered through channels, and then in particular, telcos.

19:24 And telcos historically have always been a a place to go through for entertainment services. So those entertainment services went over the top, the Services like Netflix and Disney and No TV came out. Telcos remain the natural place for you to go to to get access to those services. And even today, they you know, 17% of those video services are delivered or bundled through a telco, and that's only set to increase. And then you look at the other entertainment services, and and today, there's over $25,000,000,000 worth of of entertainment subscriptions alone being delivered through a telco. And as more and more different subscription services come in, I talked about the the sort of the Walmart Plus and the home delivery services later. Really, the market opportunity for us is that 600,000,000,000 subscriptions. A more portion of that will be delivered through a telco, and their estimates range anywhere from 25 to 50%.

20:11 So it's somewhere between a hundred and fifty and three hundred billion of of subscriptions will be delivered through telcos, and and that's exactly where BANGO on the digital vending machine sits. It's at the intersection of that big subscription economy that's growing and being increasingly delivered through a channel. So why telcos? And I've included here a few clips that you may or may not have seen in the news if you've been following, some of the big telcos, in particular, the large European telco CEOs on multiple occasions, the most recent being, BANGO PLC congress in Barcelona in February this

20:44 year. I've been talking about and I'm talking about Orange and Deutsche Telekom and Telefonica and Vodafone have been talking about the challenges they face in building networks and investing in networks to carry all this traffic that is coming to them from over the top. Most of that from companies like Netflix and Amazon and and and sort of Microsoft. And so they've been campaigning with EU for some time now to how can can they charge for that particular traffic? Can they charge for carrying that traffic? Or will the EU let them merge and and, you know, and combine together so they can save CapEx and and sort of build networks together and share networks? And, obviously, in The UK, discussions ongoing between Vodafone and and three at the moment. So that's been the message from a lot of the European large telco players and and was certainly evident back in mobile currency in February this year.

21:29 We But think there's another alternative, and then these other alternatives have been increasingly adopted, and that's to monetize those that traffic that you're carrying anyway in a different way by entering the value chain. And how you do that, you monetize your nonnetwork assets, your customer relationship, your billing relationship, your ability to market to customers by bundling and selling these third party subscriptions because you're carrying the traffic over your network. So why not play in the value chain and extend your and protect your core network services by playing in the value chain and and selling these subscription services to your customer because we know there's a consumer demand for it. We know that we have too many subscriptions. We know that they're complex to manage. We know from all the surveys we've done that people wanna see them on all the place. So there's a great opportunity to monetize nonnetwork assets, change your position in the value chain. And as you can see here, it's exactly what Verizon have been doing. And you see the comment here alone from the Verizon CEO and about how this bundling reduced their churn by 60 to 70%.

22:23 I mean, telco a while, if you any business case that reduces churn by that that that level of magnitude, business case is very, very positive. So that's why increasingly telcos are looking at bundling and super bundling to really be the the sort of the catalyst for them in terms of changing their position in the value chain helping and them monetize the assets they invested in in a slightly different way. And as the as the rising CEO says, it's also great for the content providers. Well, and as we've seen in in 2020 last year, you see an increasing number of content providers going to the BANGO DBM and relying on the BANGO DBM to find new customers. It's now not just about the movies and the TV, although that still remains the dominant and then those are the services that always get the headlines. It's gone beyond music and audio. It's beyond beyond some of the gaming services like Xbox. We added NVIDIA last year. It's gone to more of the lifestyle services, you know, sporting and health services, security products, product productivity products, reading, you know, routes, different types of e reader services from everything. We do sort of educational services through to different types of services to to education and food and recipes and home delivery.

23:32 More and more services now being delivered by by subscriptions. And we've really got that point now where we have sort of critical mass. I mentioned Mobile World Congress earlier. If I go back to the Mobile World Congress only back in in 2023, We presented the digital vending machine, and a lot of the questions from operators and and and merchants were about what's the business model, how does it work, when you say super bundling, what do you mean? Only a few months ago, so just one year after that, this year, the the discussions have changed. It's now all about how can we launch, how quickly can we launch, how can we do it faster. And so that's really the the the the the message is out there, and more and more operators are now coming up and approaching us. So, you know, sometimes cold. We're in strong position. We have connectivity with most of the operators.

24:18 But we've had a whole host of new customers come up to us even at the trade shows and say, look. I want to do bundling. I've spoken to three different merchants, and they all tell me to talk to you. That's really where we've got to now is that the power of BANGO being associated with the bundling of subscriptions is a very strong message, and that makes us available to sort of convert and to drive this momentum forward even even faster. We have merchants recommending telcos to BANGO. We have telcos recommending merchants to BANGO. And now term super bundling, which is a phrase we coined and and defined only a few years ago, is now widely used across the industry by tech journalists, by analysts, use the term super bundling as if it's always something that's existed. And it's a phrase we adopted to describe this subscription marketplace. We not just have one or two services, but tens of different services together, and it's become an industry standard term. That's exactly what we're trying to do at BANGO is make the digital vending machine the industry standard for the distribution of these subscriptions through a channel.

25:14 And there you have. That's what the BANGO digital vending machine is. It's about the speed to market, being able to get if you go to telco, get access to the grid the world's greatest content providers, be able to put all those in one place in a compelling offer and deliver that speed and scale. There's much more to it than that, and I I sort of talked about the speed and scale, pieces earlier, but the value goes, way beyond that. And for us, there are three key elements that drive our investment in the digital vending machines. It's about helping content providers being even more successful. How do we make sure even more of those subscriptions go all the way through the sign up place? And how do they get more and attract more customers? How do the telcos launch even more quickly? How do you get the they allow even more services even faster than they can already? And how do you give the consumer more control over their experience and a and a better overall experience in terms of how they manage all these variety of different subscription services that we all have today?

26:07 As a technology company, it's innovation in these three areas that will keep us at the forefront and keep us ahead of all of our competitors in this market space. And our alpha commandment is is a sort of a a big envelope of features that we've sort of talked about a little bit about in the past, but just simply the ability to be able to if you're a marketing team and an operator to be able to drag and drop subscription services together, to be able to create those in a drag and drop environment, to be able to, you know, test market bundles by connecting two different subscriptions together. All doing that in an easily configurable way is really, really important. It allows us to launch these subscriptions faster. It allows operators to try new things, and it gives it means we collect even more and more data about what subscriptions are being happening, what bundles are working, what's not working so that we can drive the entire industry faster.

26:54 That's the advantage that we see. It sits in the heart of this ecosystem is we see data from across all these different services. And once you've created those products, you have to create the offer. How is it gonna be, you know, discounted for a period of time? Is it gonna be free for a period of time? And that's why with any operator, there's sort of an approval chain around that. So, again, automating that so you can more quickly and easily try and use discounting, more try new bundles, be able to not only put that in place, get approval for it, and have it published in the digital vending machine automatically through a workflow. It's a really, really important part of of of ongoing sort of product investment. But as we sort of get collect even more data allows us to generate even more recommendations. So we're taking, you know, any guesswork that the marketing teams and the operators have because we have that volume of data, and we know what works, and we know what the right subscription bundles are.

27:43 The user interface is is an important part. We launched the user interface in 2023. We'll expect that to see commercial with customers in 2024. And, really, we did it to create this sort of prebuilt product that the operator could more quickly take to market. Because we were finding that we signed the contract, then there was a large gap while the operator built this user interface and and created their skins, trade, and put all the products in it and and and all pulling data from the BANGO digital lending machine, but it was a lot of work to build this consumer interface. So we decided, actually, what a great opportunity for us is to build that ourselves, allow the operator to brand it. So it's purely a branding exercise. The actual mechanics of the consumer interface are there. And one of the advantages towards that, it allows us to capture even more consumer data.

28:29 We now just don't see what consumers have actually subscribed to. We see what they looked at, how they explored it, how they navigated the user interface. And, again, that there's massive power in that data that allow us to even build an even better product and differentiate ourselves even more moving forward. To wrap up, let's look at the growth drivers. There are four key growth drivers for us moving forward. It's launching the DVM contracts we won in '23. Those nine new contracts getting those live so they can start generating revenue. Growing the existing, customers, being able to generate more success for those those customers so they start to climb up through the license tiers. It's about winning new DVM deals. And it's about exploring other verticals outside of telco where super bundling can really offer value to customers.

29:19 If you've seen in the RNS that we issued this morning, we gave a a sort of a q one update on on all of these. In terms of launching, back in March, we issued the RNS when the third tier one US telco launch that generated an additional 2,000,000 ARR. We now have three of the top five telcos, and the ARR went from 8,800,000 at the end of the year to sort of 10.8 in March. We exited the quarter with that 11. That's partially due to not just launches of existing customers, but growth on existing customers. Matt talked about the net retention figure earlier. So you can see existing customers will start to grow, and that will really be the sort of second phase of the growth in '24 and and 2025 as the those large telcos climb beyond the initial tier into the second, third, and and and fourth tier.

30:06 New DVM wins. We signed four DVM deals in in q one. And given that we're always sort of lots of deals get wrapped up in q four, we saw that last year. Last year, they you know, we signed of the nine deals we signed in the year '5 or in December alone. So q four was a busy time because telcos have budget years and individuals have objectives that they try to wrap up in their calendar year. So q four, lots lots of things get wrapped up in in q four. But that fact that we signed four in q one is testament to the other thing we should talk about in the trading, which was the strength of the sales funnel. Sales funnel is seven times larger than it was a year ago, but not just larger with deals more advanced, and you see that by the fact that four of those dropped out in in q one. And then in terms of other verticals, our first financial services win in in in q one twenty four, again, helping a financial services company put subscriptions as part of their as part of their product offering. Still think really believe that telco will be the largest bundling channel, but clearly, there are other channels where exactly the same technology works as we aim to capture those as we can with that technology.

31:08 Overall, I think a really solid set of results in in 2024 works in 2023. Great start to '24, and we're certainly excited about about the future. So it's probably a good point, I think, to maybe dive into some q and a. So I'll let's let's dive into the q and a. Paul, Matt, that's great. And thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that situates on the right hand corner of your screen. But just while the company takes a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Suki, we obviously received a number of pre submitted questions ahead of today's event. And as you can see there in the q and a tab as well, we received a number of questions throughout your presentation this morning.

31:58 So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Suki, at this point, if I may now hand over to you just to chair the q and a with the team, and then I'll pick up from you at the end. Thank you. Yeah. Thank you to everyone who submitted questions in advance. I'll make a start on these while listeners on the call can also add new questions in the chat window. So there's quite a few questions, but they fall into a few general areas. So I'll group them together into themes. One for you to start with Matt. There are a number of questions on the FX related to the intercompany loan. Questions range from why didn't you hedge currency to what will the impact be moving forward? Can you add some clarity here for people?

32:43 Sure. Thank you. I think first of all, it's important to highlight that these are intercompany loans, which where the FX impacts are noncash impacting. These were set up predominantly with the Docomo companies, and Docomo chose to do investments by way of loans rather than an equity investment. And that means that there's no end date to these loans. Traditionally, hedging looks to a maturity date. You fix a hedging against an end date when the repayment comes into play. Obviously, that's not an applicable or sensible route for the FX that we have here. What we are doing is working with our tax advisers to find the most tax efficient way of reducing these items. Some of them may be converted into equity. We may choose to deal with them in a different way.

33:38 But during that time, obviously, as they are investments effectively and the treatment that we've agreed with the auditors after the end of the year was that that would fall into reserves movement. So that's the element on those ones. So what we're doing is we're looking to convert those at the best way and solve resolve those in the best and most tax efficient way. That's happening during the course of '24. We've already started those discussions. Hopefully, answers the question in relation to the hedging as well. Thanks, Matt. One for you, Paul. There are a number of questions on EUS and why this isn't reported as a KPI anymore. Yeah. Good question. So we stopped reporting and you spent as if it became an unaudited KPI quite a a few years ago.

34:29 And that's the we we last reported it, I think, at the full year results in 2022. And at the time, at the interim results this year, we we said, the reason we don't think that's a valid metrics going forward is because with the the switch to digital vending machine and that being an increasing portion of the business, that link between end user spend and revenue actually is sort of broken. In the payments business where we're taking a percentage of every end user spend, and that's our our sort of fee for processing that transaction, then clearly there's quite a tight correlation. But then the digital vending machine model where operators buy tiers of subscriptions, then that linkage between the two is broken. At a very simplistic level, when a license starts, there will be zero end user spend, but there will be revenue. And so for that reason, it became sort of a KPI that we didn't think was a good indication of the business moving forward. And so we stopped reporting as we explained, back in 2020 in the results for 2022.

35:20 As a as a follow-up to that, Paul, there's a question about previous statements on EUS growth being about 30%. Now we talk about mid single digits. Can you help investors to understand that? Yeah. I think there there's sort of two different measures when we, you know, talk about the the sort of the high growth in spend, a lot of that is coming through the subscription services through the through the digital vending machines. Whatever the end user spend is in the platform, that's not a as I said, not a measure we track anymore. It's growing at a very fast rate. That mid single digits is basically the revenue growth from that payments business. So that large payments business that we have that we know sort of split out, you see that in the numbers that Matt presented earlier, really bolstered by the dot one digital acquisition that took us forward a couple of years in terms of the growth for that for that business.

36:05 Really, we'll continue to grow overall at sort of mid single digits depending on different launches in different app stores, FX, a variety. But it's a growing business for us that generates an increasing amount of cash because the investment, as you see from the CapEx breakdown in my slides, is really focused on the digital energy and not on the payments business. Okay. And switching topics now back to you, Matt. There were a number of questions about the timing of the January trading update and why it wasn't issued earlier. Thank you, Ken. Obviously, it's down to those three key issues that I brought up during the course of the presentation. So the FX impact, which obviously only materializes when we do the revaluation at the end of the period and then that subsequent discussion with the auditors on treatment. So that wasn't completed before we updated the trading update.

36:56 It was completed during the course of the audit. The additional costs from that happened within cost of sales. This really was again a supplier, as I said, a supplier had some associated costs in relation to some of the Dokomo acquired routes, which really didn't crystallize until right at the end of December when the contract was signed. And then we had to look at the treatment of those costs as well to see whether they should be exceptional costs or whether they were just normal trading costs. But again, as we spoke about those ones, they're reducing within 2024 and in 2025, we expect to see those margins going back up to the 90 plus percent that we had before. And the final one was in relation to those revenues, the $3,000,000 of revenues.

37:42 These were, as Paul spoke about when he was talking about some of the contracts that were signed during the course of the year. We were working well into December on contracts that we had in the pipeline. Some of those just didn't complete and moved into moved out of the year. And some of them we were looking at the recognition element of when they could be recognized under IFRS 15 and making sure we were accounting for them properly. So those items just meant that we were slightly delayed in our release. But a lot of those all three of those items you can see really didn't happen right until the end of December. We then obviously assured that there was the right treatment and then updated as quickly as we could after that. And related to the trading update, we've had a couple of questions on the share price reaction and around share options.

38:30 Paul, can you comment on this? Yeah. Sure. So, I mean, a a drop in share price, you know, given the given the space of the profitability, miss, is not is not unexpected. I think what was a surprise was the the level of the drop. And as I said at the time, in our in our view, it was a it really masked what was a a solid year. We grew revenue by 62%. EBITDA grew by 29%. Digital end machine, that key growth item for the business, AR grew by 76%. We delivered another 25% growth on top of that in only a quarter of this year. So it was really the foundations of the business were really, really strong. It's just as Matt said, a few of those events conspired at the end of the year to to basically sort of meant that we we sort of missed that level of expectation. And I think that in some ways, the size of drop was was even more disappointing because we thought it already came from a low level. We never felt the acquisition was fully priced in. We're really focused on the things that we control. We're focused on growing a great business.

39:27 I mean, and and focusing on the digital vending machine and the opportunity that provides us. While in parallel, have this payment business, which grows at mid single digits that generates lots of cash from the from the business that allow us to sort of repay the energy loan, but more importantly, invest in the digital vending machine moving forward. Shared options is something we're very focused here. BANGO, I I put our we saw our employee engagement score a little bit earlier before. A good big data there's everybody in the company gets options twice a year just after we issue results. Options are a big motivator for for the BANGO team and they're very much we want everybody in BANGO to be, you know, act as a shareholder of the business and help drive that growth forward. And you see that in our employee engagement results, and you see that in the energy and the teams and the innovation that the team's creating and driving the business forward.

40:16 Thanks, Paul. A couple of questions on BANGO audiences and purchase behavior targeting. What are the prospects for that business moving forwards? Yeah. So I always believe there's huge potential in in purchase behavior targeting and be able to use the data that we have to help people find new services and and and find new paying customers, for for subscription services and as as well as for other services. And we sort of we productize that through BANGO audiences, which was our way of doing taking this purchase behavior targeting technology as as we called it and making that available to app developers to help them find the next paying customers. And we were very successful in that for a few years. Some big app developers sort of got some some great results. And the potential was literally there, but I think what what was clear to us is that the potential of the digital vending machine with this switch to a subscription economy was absolutely just was was really there, and it was live, and it was real now. As a company, we wanna make sure we focus. Wanna put all our efforts behind behind this a single project.

41:18 That's the digital vending machine. And so we took the decision to take the audience team and the the technology and fold that into the digital vending machine. And that's that's already starting to to get results in something in discussions we're having with merchants. Because actually many of those app developers that that we that we customers on BANGO audiences, they're launching subscription services for their games and and and their different apps. So it makes sense to bring the two together, and, really, it's all about focus and making sure we can drive the business forward. A question now on our position in Japan and the opportunity there. Matt, do you want to take that one? Yes, sure. Japan has always been and already is an important market for us. We're the exclusive integrator for Amazon, and we're allowing customers of the three telcos, so that's Dokomo, KDDI and SoftBank to purchase physical goods from the amazon.co.jp store.

42:10 These they then charge to their phone, which is slightly unusual compared to the European and Western markets. Obviously, in parallel with the DOCOME acquisition, we also signed a long term multiyear deal to support all of NTT DOCOME's carrier billing. So that means we now process all their App Store transactions along with airline tickets and some items from Shopify shops. This has increased relevance and opened up sort of more DCB opportunities with the other two carriers in what's the largest DCB market in the world. And also more importantly, it's also helped us in several DVM opportunities are now ongoing and we're exploring. A number of questions on the DVM opportunity.

42:56 Paul, can you comment on how big this could get? Yeah. I mean, I think we see it's late, and I I spoke about it a little bit in the presentation. Right? We have this subscription economy that's going to, you know, over $600,000,000,000 increasingly delivered through a channel, estimates anywhere between 2550% of that being delivered through the telco channel alone. And that's really where the BANGO digital menu sits. It sits the heart of those subscription services being delivered through a channel. So for those of the, you know, the potential issues, you don't need to take many cents per subscription to to really, you know, create a significant business. Now if you from the telco space alone, this is a 100,000,000 ARR business. We exited the year at 8.8. We exited the quarter at eleven. We're on a path clearly to get there, but that's really the path we're on to capture this really high growth market.

43:43 A question on costs. Other costs are up from $3,000,000 to $11,000,000 Why a sharp increase? And what can be done to get better control of them, Matt? Hopefully, I covered that a little bit during the presentation. We've got the first year of the full year cost of Docomo during the course of 2023. And also the synergies that we had, the $21,000,000 of synergies, obviously, they started partway through each of the year. During 2023, we still had some of those costs that we've subsequently got rid of. So in conversation about the control going forward, you'll have we should expect to see the synergies, the 21,000,000 synergies having more of an impact in 2024. We've already covered the fact that from some of the R and D aspect that R and D capitalization will drop down.

44:36 And also at the end of twenty twenty four, when we close the Docomo platforms that are still running, that should help us see some further cost savings from there as well. And we have other triggers if we need to, but that should then help us to control those costs and lead to that high level of EBITDA profitability. Similar theme, revenue growth is good, capitalized development cost rose to 17,600,000. Please can you explain why this is so high and what is being obtained for this high investment? It's obviously we're a technology company, and as a software company, that investment is all in in sort of what we intangibles as as as finance people call me is the it's a software development and the innovation in software that form part of the BANGO platform that allows us to launch these services in a matter of weeks.

45:28 It allows us to, you know, use the data that we collect to make the merchants even more successful, to allow telcos, to to offer this service more quickly using the consumer interface. Those are all the things we we we sort of invest in. As you saw in maths the graph in maths chart, investment in the digital vending machine has continued to increase in the CapEx sort of peaked in in in 2023 because on top of that, we had some investment we needed to do in tools migration to migrate the the DOCOMO digital routes over onto the BANGO platform. And what you see is in 2024, that that migration, the level of investment disappears, and actually the investment in the payment and the CapEx and the r and d we need in the payments business to keep that business moving forward is slightly less means that business generates even even more cash. So, really, the investment for us is important. It's important that we stay ahead of the market, we stay ahead of the competition.

46:15 That time to market is is really a a big differentiator at the moment that nobody can match. But moving forward, it's moving beyond that sort of time to marketing to the value using the data we have to make people more successful. And that's why folding in in the audiences business really made sense. Question on consolidation. Are you looking at consolidation or just focusing on our own strategy without distractions? We've always been a a company that's that's really focused on sort of organic growth. Where we've done acquisition, it's been to, you know, scale up the business very quickly. The Dogma Digital was sort of the perfect acquisition, you know, very low purchase price, only 900 k net when you took you took sort of the cash out of the business that they had in at the time. Know, gave us that long term contract with NTT Dokomo, the largest operator in Japan, and it really gave us critical mass in that payments business, which allows you to be very cash generative moving forward while still growing at a sort of a, you know, mid single digits per year. So it gives that it really gave us that that sort of scale. Prior to that, the acquisition that we did with from Italy was to bring some technology labors to be able to segment data and be able to use that in marketing platforms. And, again, that big that became a key part of the product, and it is really important in the BANGO digital vending machine. So we'll we'll do acquisitions where it can help us accelerate our organic strategy, but we're not about just acquiring semi related businesses just to grow. As you can see from the results, we have enough organic growth opportunity ourselves without having to do all these acquisitions and the complexity that that come with acquisitions

47:47 put something to our multiple on on somebody else's revenue. So organic is really where we're focused, but we'll always do acquisitions that can help accelerate our organic growth even more. A follow-up question on strategy and focus. This is quite a different presentation compared to previous with the emphasis on DVM. It's clearly impressive technology with great growth potential. Should we infer that the payments and marketplace revenue streams are now seen as legacy cash flow elements? I think I think that I think it's calling the the payments business legacy and cash flow is maybe a bit it's ultimately you know, we did the acquisition to get critical mass in that business. You can see that we now break out that separately. That's quite a mixed single digits. Doesn't require a lot of investment to keep it going. So it generate does generate a lot of cash. So that element of the of the statement is is clearly true. But it's an important part of the business because it generates that level of cash that allows us to fund in the in the in the future growth elements.

48:41 But itself is still growing at sort of mid single mid single digits a year. And as I said, that BANGO PLC's business, we took the decision to really fold the teams and the technology into the digital vending machine. Lot of value in that purchase behavior targeting technology. But for us, we we felt the better there was a better return by really doubling down on the digital vending machine and focusing all our technology and all our growth on the subscription economy and that being distributed through channels. Great. We've, we've had a question on the consumer interface. When in 2024 do we expect it to go live, and what are the tangible benefits in terms of potential revenue increase? Yeah. So we we expect the consumer interface, to go live probably early in the second half, of the year. It's in in sort of discussion and trial with a number of customers, at the moment.

49:33 The way we charge for that is there's a there's a setup fee. So it's actually follows the model that we do for our original DBM business. The setup fee to do that initial customization and that initial branding, and then there's an additional license fee on top. So we add another license fee on top of the ARRT tiers that we get for the for for basically managing those subscriptions. So it's sort of a ARR incremental as well as sort of a a set of revenue incremental. That's the that's the way we monetize that. Thank you to everyone who's asked a question. We we've, we've answered all that have come in so far. So if there are any additional ones, we can address those after the presentation. I will hand back to investor me company. Perfect. Suki, Paul, Matt, thank you very much indeed for addressing all of those questions that came in for investors. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the platform.

50:32 But, Paul, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. Firstly, I'd like to thank everybody for taking the time and for submitting the questions. It's much easier to do this when it's engaged and there are questions, so we really do appreciate that. And as mentioned, if you have follow ons, then please do get in touch. You can always get in touch through our investors the BANGO investor website or emailing us at investors@bango.com. Twenty twenty twenty three was really a transformational year. We completed the integration of that acquisition. Challenges are right at the year end, which led to us missing that expectation and really mass, which was a really solid year. You know, revenue growth of 62%, EBITDA growth of 29%, really positioned for for accelerated growth this year.

51:19 Recurring revenue, that DBM stream as we see continues to grow, not just from the 8.8 ARR end of last year to through to the 11,000,000 at the end of q one. And we're in a position in a position where we have, you know, the the the enough cash to see us through to to cash transfer. We're cash flow positive this year. We'll use some of that to pay down the NHN loan. So we're not gonna come back to the market to raise money. We the business is structured well. The sales pipeline is really strong. The DVM opportunity is clear with that 600,000,000,000 subscription market, and we're here to execute on that. Thanks everybody for your support, and look forward to reporting the progress as we go throughout the year. Thank you. Cool. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations?

52:12 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of BANGO PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.