Bango (LSE:BGO) — Interim Results

0:01 Good morning, ladies and gentlemen, and welcome to the BANGO PLC interim results investor presentation. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated 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 received during the meeting itself. However, the company can review all questions submitted today, and we'll publish our responses where it's appropriate to do so. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand you over to CEO, Paul Laby. Paul, good morning, sir. Good morning, and thank you everybody for joining. We appreciate your time this morning as we talk through the results of the first half of twenty twenty six and give you a bit more context and color around the business. I'll start with a quick overview and reminder of the business and and the highlights for the half before turning over to Matt to review the financial sections in a lot more detail. And then I want to end by sort of giving some real world examples of how the DBM is being used in all sorts of different applications, before talking a little bit about the outlook, and we'll then turn it over for q and a. And Suky will guide us through the q and a. Thanks for everybody who submitted questions in advance.

1:09 And as we just heard, you can submit them using the panel, at the side of the screen. So throughout the presentation today, we'll talk about the two business segments that we operate within BANGO. That's payments and subscriptions. And as a reminder, payments basically is a way of allowing users to purchase both digital and physical goods and to charge it to their mobile phone, and they can purchase those goods from people like Amazon or Google or a whole host of other merchants. They pay for using the mobile phone in one of two ways. It can be charged directly to their bill, and we call that direct carrier billing or DCB as we go through the deck, or also to the potentially to the balance held in a mobile wallet. It's a simple, robust, trusted payment mechanism that's very popular in developing markets where especially where there's a large unbanked population, but also in developed markets such as Japan, where there's really a customer preference to pay for things with their with their telco, whether that be things they're buying online or purchasing a new sandwich or a coffee from the seven Eleven store on their way to work in the morning.

2:06 We're one of only two global DCB players and the largest integrator for the Google Play Store. And we first launched with Google back in 2012, so a long history with Google. We're the leading provider in Japan. And in Japan, we started with Amazon back in 2017, adding carrier billing for the amazon.co.jp store, initially with the largest operators, NTT and KDVI. In 2020, we added SoftBank to that, so covering the three largest operators. And then when we acquired Dokomo Digital in 2022, we signed a long term agreement with NTT Dokomo to provide their remaining DCB services from app stores through to Shopify shops through to airlines, in addition to the Amazon, business that we were already supporting for NTT Dokomo. If we look at subscriptions, the role of the telco shifts from being a purely a payment instrument, so a way of of of accessing the funds, to to the actual reseller of the service in subscriptions. So so it's the telco's way of attracting, retaining new users by bundling a third party service with their first party telco services.

3:10 Our product for that is the digital vending machine, which supports over a hundred and fifth 30 different subscription services, allowing those providers to distribute their product not only to telcos, but to new verticals such as banks, retailers, and connected t p connected TV providers. Subscriptions is a great business because everyone in the ecosystem benefits. The telcos, as we said, use that to attract, retain customers, and generate more revenue. For the content partners, it's their way of reaching new customers and new consumers and having somebody else market their content. And as consumers, we get a better deal and more control over our subscriptions. We look at the DVM in more detail and and the and the platform that we operate within BANGO. Across both payments and subscriptions, this platform approach allows everybody in the ecosystem to connect once and access many and access a broad ecosystem of partners.

4:04 So if you're a telco such as Verizon, One Connection gets you access to over a 130 different subscription services. If you're a subscription service like Disney, One Connection allows you to resell your service through a growing network of over a 150 telcos, banks, and retailers. What makes the DVM really unique is that end to end life cycle management. This is not just about the connection. It's about that end to end life cycle of a subscription. From test environments and tools that allow people to connect into the into the DVM and and and validate their connection through to tools to allow you to migrate existing subscriptions over onto the DVM, to partner discovery, which allows content partners and resellers to to find each other, to discover each other. And if you one of our pre stock partners where we have existing commercial terms, that's the fastest way to to find and resell, and launch a new bundle service.

4:57 The offer capability, and we'll see some great examples of that at the back end of the presentation, allow these bundles to be defined and managed and the complex rules to be applied. Is there a free period? Does how long does the free period last? Can you upgrade the subscription to a premium tier? What happens if you downgrade? All of those rules are addressed within the offer management capability that we provide within the digital vending machine. And that's functionality functionality that historically may have been done in the telcos, OSS, or BSS system. The CX or user interface provides a white label capability for any brand to take what we have and embed it within their existing, you know, app or website, giving a a really fast way to launch new services and launch the DBM to their customers. Once the offer's live and the consumer's activated, the DBM really shifts into performance and taking actions to drive success. And this is where AI really helps us differentiate, both in looking at the data within the platform to understand how we can drive improved subscription success, but also embedding that into agentic workflows, which automatically will start to take action to drive increased subscription.

5:59 And remember, the revenue model we have for this business means that as our customers grow, so does the BANGO revenue. And that really is the the benefit of the platform approach, and that's where the r and d that we're investing in the platform and have invested over a number of years is really helping to drive the growth. If we take that end to end solution, which really is unique in the in the market, it itself creates a very significant barrier to entry for competition. But that's actually compounded by that when you consider that we're connected into know, identity systems and billing systems of organizations such as telcos and retailers. So very sensitive systems that they trust us to connect into. And it's that trust that we built with the world's largest media companies and telcos and banks that that's really, really important and sort of adds to the differentiation because they're relying on BANGO to support their growth.

6:49 And actually, that trust they place in us and their reliance on us to support their growth only increases as adoption of the platform grows. And this this growth itself gives us unique insights into how all these subscriptions are performing and how we can drive more success, which further goes to accelerate the growth of the platform. So this defensible position we have, the the comp competitive differentiation only grows as more people join the platform and as people use the platform more. And its, you know, its foundation is that platform and the trust that some of the world's largest companies place within BANGO. We look at the first half, results. You can see that existing customers saw some great growth in the first half, adding more and more subscriptions, which generates more revenue because of that revenue model that I discussed earlier. And NRR of 119% is a clear indication of that, and it's one of the big drivers behind the the overall ARR growth.

7:42 Sales momentum momentum continued into fiscal twenty six. We had six new DVM wins at the end of the half. That number is now eight. But I think importantly, there's a lot of there's a lot of head there's a lot of white space ahead of us. There's a lot of untapped opportunity. We have over tracking over a 100 telcos each with more than 4,000,000 customers, and let alone the opportunity in new verticals which are only just starting, such as banking, retail, and connected connected TVs. The improving revenue quality and payments, coupled with the growth in the DVM is very evident in the increasing gross margin, which increased to 87% in the half. And in the half, I think one thing that's really clear is you see the benefit from the operational gearing in the platform and the cost efficiencies that we took over the past, over the past year or so. With a significant reduction in both OpEx and CapEx, the growth in revenue starts to increasingly drop to to the bottom line. You saw that particularly in the subscriptions cash EBITDA number. We saw a 224% increase and remains on track to be positive next year. Payments maintained its strong cash EBITDA position as he up slightly on last year despite the top line decline as we improve that quality of revenue.

8:49 So let me now pass to Matt to walk through some of those in more detail. Thanks, Paul. Good morning, everybody, and welcome to our financial results for first half twenty twenty six. So starting with, slide eight, I think a powerful slide to begin with, which shows the significant progress we continue to make across our KPIs. Before we unpack the numbers, the core message I want you to take away is simple. The quality of our growth is improving and this is now translating into cash earnings and profit. Four numbers I draw attention to in particular. Firstly, our annual recurring revenue. Momentum continued in H1 growing 31% year on year and surpassing $20,000,000 Secondly, net revenue retention also remained strong at 119%.

9:43 This demonstrates the continued expansion we are seeing within the existing customer base as their platform adoption increases. Third, adjusted EBITDA. Our higher quality revenue growth is increasingly translating into operating leverage. Adjusted EBITDA increased 34% year on year to $9,000,000 and our EBITDA margin was over 800 bps higher moving from 27% to 35%. And perhaps the most important progression and fourth on the list, cash EBITDA. As Paul mentioned, last year we achieved 2,300,000 in cash EBITDA over the twelve months roll forward to fiscal year twenty six in the first six months of this year we've already achieved 3,700,000 So put simply, we've achieved 60% growth in cash earnings in half the period of time.

10:43 This really demonstrates the attractiveness of the platform economics and I'll unpack each of those drivers over the next few slides. So if we break that performance down by segment, the evolution of the business is particularly clear. Payments headline revenue reduced 5%, but this was expected and reflects the continued restructuring of low margin routes. The underlying growth in the core of the portfolio was up 3% year on year and you can see that clearly in the profitability. Despite that headline revenue reduction, both adjusted EBITDA and cash EBITDA increased year on year.

11:29 Subscriptions is then where we're seeing the operating leverage really emerge. Revenue increased 13% but adjusted EBITDA more than tripled at 224%. Cash EBITDA saw a 4,300,000 improvement year on year moving from negative territory twelve months ago to 3,700,000 and that's strategically important. The earnings mix of BANGO is changing materially. Payments remains a highly cash generative engine, but subscriptions is rapidly scaling towards its own positive standalone cash EBITDA business and one that is supported by high net revenue retention, strong ARR growth and to date zero customer churn.

12:18 So moving to the next slide and looking specifically at ARR, we grew from 15,600,000 to 20,400,000, an increase of 31% year on year. What is particularly important is where that growth came from, with over 60% coming from existing customers. We're seeing customers add subscriptions, increase usage and move through DVM license tiers as their propositions scale. This highlights the quality of the model. We don't need to replace ARR base every year to grow. The installed customer base itself provides a meaningful source of expansion and that's reflected in the 119% net revenue retention.

13:06 Turning to payments on the next slide. As I mentioned, whilst headline revenue reduced that reduction is driven by actions we've taken to remove high cost of sales routes. Underneath, our core payments portfolio, which to remind everybody is the strategically more valuable, more profitable and more reliable earning stream grew 3% year on year in line with expectations. You can see the resulting mix shift on the chart on the left. Call routes now represent around 90% of payments revenue compared with 83% last year. So, we're deliberately exchanging lower quality revenue for a smaller but more profitable cash generative payments business, and that's reflected in the cash EBITDA increasing year on year despite that headline revenue reduction and the increase in adjusted EBITDA margin to 43%, well ahead of our 40% target.

14:05 The restructuring of those remaining high cost of sales routes is progressing ahead of plan, and we expect to be completed by the end of the year. As you may have picked up in the RNS, depending on the final outcome of those restructuring actions, there may be a low single digit variation to the payments revenue, but that will have negligible impact on adjusted EBITDA. On Slide 12, within subscriptions, revenue grew 13%, but that headline includes lower one off DVM revenue as you can see in the chart, reflecting the timing and mix of new business. Underneath that, the subscription based recurring revenue, so that's revenue that is non one off and is the majority of the mix, grew significantly faster at 39% year on year And that shift is important because it improves both the quality and the visibility of the subscriptions revenue base and that's now producing significant operating leverage.

15:14 Slide 13, looking at costs. The second major driver to the improvement in profitability is the work we've done on the cost base. This cost reduction is structural. It's not simply a temporary squeeze on spending. Core administrative expenses in the first half reduced $3,300,000 a reduction of 15%. If you go back two years, we've taken 5,500,000 or 23% out of the first half cost base. That's the result of deliberate action to simplify the organization and establish a cost base appropriate for the business today. And importantly, we're doing that while continuing to invest behind the DVM opportunity. If you look at the chart on the right, we've then applied the same discipline to capital investment.

16:06 Capitalized development costs reduced to 5,300,000 year on year, 31% below the level two years ago. And to be clear, that's not about reducing ambition for the DVM and we continue to invest in product development. It's about becoming much more disciplined around where development resource is deployed, reducing friction and improving time to market. And that matters financially because the combination of lower cost and lower capital intensity is what ultimately drives the significant improvement you're seeing in cash EBITDA. On Slide 14, the improved economics are beginning to translate into the balance sheet.

16:52 So we ended the half at $8,700,000 net debt, down 500,000 from December and in line with our expectations. This bridge is important in understanding how the significant improvement in cash EBITDA is translating into deleveraging. So as we mentioned, 3,700,000 of cash EBITDA in the first half. This was partially offset by 1,400,000 of exceptional cash costs and these relate to the fiscal year twenty five efficiency initiatives together with working capital lease and interest costs and tax. The key point is that a meaningful part of these cash outflows relate to actions taken in 2025 rather than the ongoing operating cost base so those exceptional cash costs will fall away while the impact of working capital normalization is also expected to moderate.

17:47 So as a result, we expect an increasing proportion of that cash EBITDA to translate into net debt reduction supporting continued deleveraging as we go through fiscal year twenty twenty seven. Slide 15, I'll briefly take you through the remainder of the income statement where the emphasis is on a much much cleaner reporting period. So, we've already covered the key operating movements gross margin increasing 87%, core administrative expenses reducing 17 and adjusted EBITDA increasing 34%. Below EBITDA, D and A increased as historic investment continues to move through the amortization cycle, but D and A is set to peak in fiscal year twenty twenty seven and then it will fall in line with capitalized development costs.

18:40 We had zero exceptional costs in the period compared with $1,800,000 last year. Overall operating profits turned positive compared with a loss of 2,900,000 last year and adjusted profit after tax also turned positive. Those are two important milestones in particular and profit at the bottom line is a signal of the growing maturity of the business. So, 16 last from me stepping back. I think the first half demonstrates three important changes in the financial profile of BANGO. First, growth quality is strengthening and an increasing proportion of our revenue is recurring. Second, operating leverage is coming through.

19:27 Gross margin improved by more than 300 basis points, costs reduced and cash EBITDA margin reached 14% compared with a negative position last year. And third, we're building a stronger financial model. Payments remains highly cash generative, subscriptions is rapidly moving towards positive standalone cash EBITDA and at the same time we're continuing to delever. So looking beyond H1, I think our financial priorities are therefore very clear: continue growing ARR, convert that growth into cash EBITDA, complete the payments optimization, and continue strengthening the balance sheet. The important point is those aren't independent objectives.

20:14 Higher recurring revenue drives operating leverage, operating leverage drives cash EBITDA, and stronger cash EBITDA gives us greatest capacity to deleverage while investing in growth. I'll hand back over to Paul to take us through the progress in the DBM. Thanks, Matt. And as a reminder for everyone, there are four sort of pillars to our our strategy. One very much focused on the on the payments business, and that's that's the extract pillar, and that's about making sure we continue to maintain that high level of of profitability and cash generation from that business. And that doesn't mean it doesn't grow. You'll have seen we signed two new deals already this year, on the payment side with Telen in Hong Kong and LLMT in Latvia, new customers bringing their Google, Play Store business over on over on to BANGL. So it continues to grow. But as we you know, we're selective about that business. We're selective about the routes that we will do where we can see the scale and profitable and where there's there's high quality revenue. And that means from, you know, blue chip merchants that's predictable, that's sustainable, that we can see good growth into.

21:20 The remaining three are really focused, on the on the DBM. And expand is really all about telcos, and I'm gonna go into some real examples of how telcos are using the DBM on the next few slides. Explore takes that into other verticals. I think we've talked previously about the bank that we signed, at the end of last year that's currently in in friendly user trial, and we'll launch that service more more broadly, in the coming months. And then Enhance is is how we take that data and the knowledge we have in the platform to drive even more success, and I touched a little bit on that at the start of the presentation. But let's focus on expand and where we see some real real examples, and and and I'll give you some examples from all over the world of how telcos in particular are using the digital vending machine. So let's move to Belgium. So Proximus is the largest operator in Belgium and has over 3,000,000 customers.

22:07 So when people ask about, you know, the opportunity ahead in DBM, I think there are two elements. You have to look at the number of customers within the telco, but also the number of subscriptions that those those users could potentially take. So in Proctimus, you know, 3,000,000 customers, a percentage of those will take a bundle. And, you know, as as we more services become available within the digital vending machine, then the average number of subscriptions per customer increases. And all of those, because of the revenue model we have, drive increased revenue for BANGO with very minimal incremental cost, and that's why you see that dropping down, to the bottom line of the income statement. In Proximus, the DBM is used being used to replace an in house platform. So I think I've spoken before that most customers have already done some level of integration with OTT providers, but quite often doing that themselves.

22:52 But as they want to scale and want to offer more complex services and more complex bundles that takes two or three different services and puts them together into one offer, they really need a platform to do that. And the best platform to do that is the digital vending machine. And so Proximus have have sort of adopted the digital vending machine. We used it to launch new services. We then migrated their existing services over so they can offer these these bundles and new offers to customers. And then the final stage is to launch even more services on top. So I think a great example of how the DBM is is commonly used within telcos because this is not pure greenfield space. Every telco has done some level of bundling, but they've done it in a very simple, very vertically integrated, very sort of low functionality way. As they wanna offer more services and more complex bundles, they need a platform to do that, And that platform is the digital vending machine.

23:43 We move to Turkcell now. You can see we see a different level of scale here. Turkcell have 50,000,000 customers, so significant customer base. And they're using bundling really as an integral part of the five g rollout. As they launch five g services, it's not just about launching a five g service with a sort of a higher data rate headline number. It's about how can you as a consumer you use that service and consume the the data rate and the bandwidth that five g offers. And so there as an, you know, as an existing DCB customer that's now moving over to increasingly offer bundling, they've offered a very with their five g services, a very heavy bundle. It's HBO. It's Netflix. It's YouTube. It's Amazon Prime, all packaged together with a few local entertainment services. So a very heavy bundle of services that can not only give the customer better value, but actually use that five g capability that the customer's always purchasing.

24:33 So I think a a a different, but I think really interesting example of how you can use bundling, you know, to to really promote and and launch those telco first party services, which is exactly what Turkcell's doing with five g services. Quite often we spoke, and I I just did that myself on on the last slide. I think it's very easy to get caught up on the major SVOD services, your Netflix, your Disney, your HBO's, etcetera. But I think LinkedIn is a great example of the the flexibility and the variety of services that the digital vending machine can support. LinkedIn Premium is now available through the digital vending machines to to customers in The Netherlands, and we have further launches planned. And LinkedIn selected the digital vending machine so they could quickly expand this offering across multiple markets and across multiple verticals, not just in telcos.

25:24 Look at MVNOs. So MVNOs are basically brands that offer a mobile service but using somebody else's underlying network. Sometimes they're owned by the major mobile operators themselves to and used to target a digital vertical, a different vertical. That's the example here with KDDI. So KDDI, again, an existing DCB customer that is using bundling for their Povo. So Povo is their MVNO brand that's very much targeted at younger digital savvy customers. And they're using bundling in a really interesting way. If you think about how prepaid generally works, it's people topping up. So it's a very unpredictable revenue stream. There's very little sort of customer loyalty. What Volvo were doing is using bundling to extend that and almost convert a a prepaid customer into someone as loyal or or as as as valuable over a lifetime as a as a postpaid customer. And they're doing that by getting extracting one year commitment from prepaid customers in exchange for a very, very compelling bundle.

26:18 So, again, a very different use case for how the DBM can be used. In Turkcell, we saw it really part of their five g service launch offering, you know, big big heavy bundles to to attract new customers to adopt five g. And POVO and KDDI are using it to basically extend the loyalty of customers and extend the relationship out beyond the traditional top up interval over to a full twelve months. Move to Belgium, look at Mobile Vikings. Mobile Vikings, again, another MVNO very much targeted at younger digital savvy customers, and they're using the offer capability in the DBM to launch a flexible sort of bundling solution, allowing them to tailor their offerings to the additional different demographics of customers and different demands of customers that they have within their network. So really taking advantage of capability within the digital vending machine to provide more personalized services.

27:09 So I'm now with an outlook to next year. So as we as we look forward, as of to date, we have eight new DVM wins. The strong ARR growth, especially from existing customers that we saw in the first half, is continuing into the second half. The revenue quality is continuing to improve, and the restructuring, as Matt mentioned, of those those high cost of sales routes is progressing ahead of plan and will complete this year. The benefit in the business in Clear and the platform economics, I think, are very clear and increasingly coming out in cash EBITDA, and we'll see that continue moving forward with the progress we've made in subscriptions cash EBITDA moving again into the second half, and that business is still expected to be cash EBITDA positive in fiscal twenty seven. And at that point, we'll have both a two cash EBITDA businesses, the payments business as well as the subscriptions business.

27:59 Trading remains in line with full year market expectations. The opportunity for subscriptions continues to build, and we're very excited about the future, opportunity and look forward to answering your questions, but also updating you on future earnings calls. So with that, I'll turn it back, we'll go to q and a. Perfect. Paul, Matt, if I may just jump back in there. 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's situated on the right hand corner of your screen. Just while the company take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A, can all be accessed via your investor dashboards. Guys, as you can see there, we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions.

28:48 But Suky, at this point, if I may just hand over to you to chair the Q and A with the team. And if I pick up from you at the end, that'd be great. Thank you. Thanks, Jay. Yes. And if you have any questions for management after today's presentation, we have a Q and A feature on our investor center at bangoinvestor.com. So please get in touch. For today, Paul, we'll start with you. Given the success in signing up new DVM licenses, when do you forecast that active users will reach 100,000,000? Yeah. Good question. I think what we've seen is the opportunity and hopefully in those examples of of the digital vending machine. If you look at, you know, Turkcell alone with with 50,000,000 customers offering a bundle with five, six, seven different providers in there. You can see the take up of that really, really starts to scale.

29:38 And so the growth we will see in terms of number of subscriptions is very dependent on when customers operate and unlock these services. So it tends to be a little bit seasonal. It tends to be either timed around sort of big product launches like we've seen in Turkcell with with sort of five g or around the start of new sports seasons or around the Christmas period. So it tends to be it tends to be seasonal, and and it it varies it varies globally. But I think what's really clear is the opportunity ahead and the ability to grow into that space both with existing customers, and you see that growth in the ARR growth in the in the first half, but also in new customers that come on board. And when those new customers come on board, there's a little bit of a, you know, there's little bit of a lag in the time. It takes it takes customers time to ramp up, not only in terms of testing the proposition and doing some AB testing or in the proposition that they're gonna take to customers, but in bringing on additional content providers into into the digital vending machine. So the ambition is very much still there. The opportunity is very clearly there. It will arrive over time, as operators launch new bundles, and that's why we're investing in the capability in the DBM to make it even easier for them to launch their bundles so we can get to that point earlier.

30:42 Lots of companies are moving from AIM to the main market. What what are BANGO's thoughts on this? Yeah. I think you see you see that increasingly. There's just been changes to the new AIM rules in particular to try and encourage companies onto AIM and and to maintain companies on AIM. I think as a board, we're continually looking at what's the right and the best listing venue for BANGO, but really our focus is on execution and delivering results. And ultimately, the share price the share price will correct. But listing venue is something where we continually talk about on a regular basis, but have no plans as of today. Matt, one to you. When is the net debt forecast to be cleared and turned to net cash based on internal forecasts? Sure. So I think we covered the net debt movements scheduled for this year. You saw the $3,700,000 of cash EBITDA being offset by the exceptional costs from the prior year, lease and interest costs and some tax and working capital.

31:42 As we said, the key point is a lot of that refers to to to the year before, which is why the movement in net debt forecast for this year is lower. So if I guide people to, the analyst forecast, you can see net debt achieving a similar reduction in the second half as it has in the first half. As we move into fiscal year twenty seven, the picture is a lot more different. So you the increases in cash EBITDA that will come through, you'll no longer have those exceptional costs because as you can see so far, year to date, the exceptional cost is zero, and you'll also have the normalization of working capital. So in fiscal year twenty seven, you'll see meaningful deleveraging within the business. And, again, if I point to those analyst forecasts, forecasting net debt sort of low single digits around sort of 2,000,000 to to end fiscal year twenty seven. So you can see that clear deleveraging coming through from where we are today.

32:39 Amortization, what does the amortization profile look like over the next five years? Is there a significant step down in terms of the annual charges hitting the P and L in future years? And if so, when? Yes. I think we covered this a little bit in the financial slides. So just to be clear, D and A is set to peak next year in fiscal year twenty seven, and then you will start seeing a reduction in D and A coming through the income statement. And that reduction will follow what you've seen happening in capitalized development costs, which continue to come down year on year. Question on AI pool. Presumably, the speed of growth and popularity of AI has the potential to drive revenues and lower costs and overheads in terms of using AI tools within BANGO.

33:29 Are we seeing either of these trends in practice today? Absolutely. And I I think there are three sort of key sort of elements of of AI as as they apply to BANGO and and the digital vending machine. First is is the question points out. There's an increasing number of AI services, which are natural subscription services, and we are seeing these increasingly be included as part of telco and other other vertical bundles. So AI services is probably our fastest growing category in terms of the number of subscribers that are signing up. SVOD still is the highest in terms of volume, but AI subscriptions like Gemini and and specialist services such as some language translation services are growing very fast. So AI is a great, if you like, customer for the digital vending machine in terms of being a subscription service that we can help content partners and AI providers resell and telcos and and other verticals bundle.

34:21 Second element is on use of AI within BANGO. We're very heavy users, of all the different tools that are available, across the entire, the entire company, to the point where, Amazon asked us to speak at one of their summits about our adoption and usage of AIs in a in a research and development environment because I think the way we use that the way we use that into in both testing as well as development is was recognized by Amazon as being very advanced. So we were, you know, fortunate for them to, to ask us to speak at their conference, and that allows us to be more efficient and to deliver more faster. And the final element, which sort of really wasn't touched on in the question, is how AI becomes embedded as part of the product. I think I probably talked previously about it at Mobile World Congress with a demo that had sort of an AI chat interface into the digital vending machines that you can say, hey. I'd like to watch, you know, stranger things. And rather so rather than click on a Netflix tile, you you sort of interact in a in a chat way with the digital vending machine.

35:15 But as we start to look at the data of the things in within the platform and how we can drive more adoption of subscriptions, that really is where AI really helps us both in terms of the analysis of that data, but also in converting the actions into agentic workflows that happen automatically in the background. So, yeah, absolutely, AI is an important part of the digital vending machine, and then we fully embrace that across BANGO, across across all the three different elements that I just discussed. Question on payments where revenue is normally heavily weighted to the second half of the year. So even after allowing for the restructuring, why does this no longer appear to be the case? Let me take that. Yep. I'm not sure where where where it's visible that it's no longer the case. There's a there's a seasonal basis for this payments business as we've talked about before that is weighted to h two. What I would say, though, is with the restructuring of the low margin routes that's coming through, that business has predominantly been more weighted than the rest of the portfolio to h two. So you probably will see a slight reduction off the back of that restructuring happening.

36:24 But fundamentally, there should still be a weighting towards H2 within the payments business. And what level of recurring revenue can the DBM ultimately support before growth becomes increasingly dependent on winning new customers? Yeah. Good question. I mean, think hopefully, you saw in the sort of examples that I gave, and I I just touched a few of the 40 something sort of customers that that we have this year potentially. If you look at, you know, across Turkcell and Proximus alone, 53,000,000 customers. If half of those have three subscriptions, that's 75,000,000 subscriptions. And clearly, we're a we're a way away from that. So the headroom is is is really there. And the the great thing about the model is the model scales as our customers go. So our customers bring new customers into bundling. And as those customers within bundling take on more services, our revenue our revenue naturally grows. And what what we've historically, I think, seen if you go back quickly is is a lot of the growth in the business was depending on bringing in new customers, and so adding more customers that started on the sort of the base tier of the license.

37:27 And what you see very much this year is the growth in those existing customers really starting to dominate. There's still, you know, revenue coming in from new customers, but the growth in those existing customers is very clear this year. And that trend will move year by year depending on what new customers come in and how existing customers grow. But I think that's a very clear indication this year that we have the right revenue model. We have the right business model, and existing customers are increasingly using the DBM to drive their own success, which ultimately drives our success. And how how do you incentivize the retail consumer in order that they will demand bundling from their reseller? That's a good question. I think the fortunate thing is we don't have to. If you if you follow us on LinkedIn or look at you can keep in touch with our website, you'll see we do quite a lot of, consumer research into consumer behavior and and consumer trends, and and the open of that research is very, very clear. People are demanding these services and are expecting these services by default.

38:21 And that level of demand and expectation increases as you sort of drop down the generations. And when you get to sort of Gen Z, more than 50% of the people expect to get a video service from their telco and expect to get some sort of other benefits from their from their bank. So that that demand, I think, is is already there, and that's the great thing about about about these businesses. The consumer demand is there. And as we said, not only is it benefiting the reseller, but not the telco or the bank and the content provider, the consumer's benefiting as well. On the on the subject of of of growth and more subscription, what what are the major future growth engines? Which sector sectors? And are there any specific regions? Yeah. So telco remains, you know, our our primary focus, I think, as we've talked about before. It's we're we're very well known as a brand. We have trusted you know, that's where the the payments business really supports, the subscriptions business.

39:13 So really and that's really the focus and and to be seen from, you know, the the answer I gave to the question a few questions ago. There's there's massive headroom both in existing customers, but also in terms of new customers. Say, we're tracking a 100 telcos globally, each of which have more than 4,000,000 customers. That's, you know, 400,000,000 new customers potentially that could be could be bundling through the DVM. So a lot of opportunity for us to still to grow both in existing as well as in as well as in new customers. And things like banks and and retail and connected TV are all interesting verticals where we have, you know, small numbers of wins that where we're starting to launch. And we'll see how those verticals those verticals bond. I think there are a a few few things to sort of bear in mind and and that reinforce why the focus remains telco. It's firstly, telcos are very used to bundling these services, banks and retailers less so. So those are the natural drive within the telco sector that's not necessarily in some of the other verticals.

40:06 Secondly, the content providers are very much focused on telcos and see telcos as a very valuable channel, and and they're doing something very similar to us. They're experimenting some of these other verticals. So there's sort of less pull from the reseller because they're more uncertain about the business, and there's a a sort of less demand, but there's big opportunity. So they will develop slower. They'll they'll we will grow more slowly over time, but there's certainly opportunity there. And so telco remains the big focus. On payments, who took over the payment routes that BANGO exited as nonprofitable, and how will they make profit from them? Yeah. I I got I mean, I think when we talk about quality of revenue as as as sort of Matt touched on it, it really is everything from sort of the way that margin is structured through to the merchant that is ultimately delivering the delivering the service. And where we've seen those those routes exit, they've just disappeared completely because, you know, if you think about the way the BANGO platform work, if it's really not working for us, it's probably not working for the telco either, and it's probably, you know, borderline for the merchant. So where those have exited, they've just they've just been turned off.

41:08 Matt, when will the growth in DBM ARR reflect in growing group revenues? Yes. I think it's starting to come through, but naturally, there's a lag between ARR growth and reported revenue growth. Right? So ARR is a point in time measure, whereas revenue is recognized over the life of the contract and as the customers launch and scale. So when we add ARR during the year, particularly towards the latter part of the periods, we'll only recognize a a proportion of that in reported revenue. So I think the key point is that ARR growth we've already delivered provides increasing res revenue visibility going forward for future periods. And then if you look at the group revenue, the group reported revenue level, clearly, that's being masked by the reduction that you see within the payments business, which, you know, as we covered during the the presentation, you've gotta look one level below that and see what's happening underneath because that reduction is low quality revenue that doesn't drive anything further down the the income statement. It's the core payments portfolio that is driving the profitability within payments, and that revenue is growing.

42:20 So it's the answer to, you know, a long winded way of saying it's starting to come through, and it's it's that leading indicator for the future. Is there any ambition to grow payments, the payment segment, and why? Yeah. I mean so absolutely. And as I say, we'll we'll do that, but we'll do it in a in a way that we, you know, that maintains high quality revenue and we we think can grow and and has opportunity. And let's say as I mentioned, I think, earlier, you know, we announced both LMT and Latvia and and Telenin Hong Kong as as new adopters of the platform to support their Google Play service. So, absolutely, we're just selective because we wanna maintain that sort of quality of revenue and the and the blue chip merchants that are connected into that platform and remove the lower quality revenue that have the tendency to be to be very volatile.

43:06 On back to subscriptions, do do subscriptions ever pay upfront cash ahead of the service? Yeah. Question on the license tiers. Yeah. So I'm I'm I'm I'm looking here as well. There's also a question around how sort of the DVM license tiers work. So why don't we take a little time to talk about sort of the revenue model? So when we when we sign a new DVM customer, we sort of split the the revenue into two components. So you'll have a one off setup fee to begin with that kicks in, obviously, before the license. And then the license is revenue that covers the the period of the contract. So you we think about that DVM revenue in in two components. And what you're seeing in the mix is that's increasingly shifting towards the license revenue. So that's the more sustainable revenue, provides greater visibility, and we're no longer having to replace the level of one offs that we did historically.

44:04 Obviously, when this digital vending machine launched back in sort of 2020, those one off revenues were a larger part of the mix, but they're increasingly now becoming a lower proportion of the mix as that quality of revenue improves. And we we've we've moved between the the growth drivers between payments and DBM subscriptions. Is it possible to get payments business from DBM partners and vice versa? Yeah. I would say, generally, it tends to happen the other way around, right, because we have that trusted relationship. And I think DCB is a very established market. So there are, you know, there are not operators launching DCB for the first time. There are people who wanna bring in services like we saw with with Telen and LFT. But generally, it's sort of, I would say, the other way around.

44:51 And you saw that in the examples, right, Turkcell and and KDDI, both DCB customers have that trust in BANGO, understand the platform economics, understand the benefit of the platform. And so as they move into bundling and look to offer bundled services, you know, naturally look for BANGO to extend the the relationship that we have with them. Matt, on financing, do you face any issues in financing the debt or rolling it over in a higher interest rate environment? Sure. So we talked about, I think, deleveraging, sort of a few questions ago. So with the cash generation in the business, net debt is clearly gonna reduce. So we have to remind people, we've got two sort of debt financing sources. We've got a shareholder loan from from NHN.

45:37 That's a fixed interest rate, and that will start to amortize quarterly from the end of this year. And then we have our revolving credit facility with NatWest, where the interest margin on that facility is actually linked to the leverage. So the cost of that facility is going to come down as the business continues to delever. And that facility was put in place a little over twelve months ago and still has a little under two years to run. So no to answer the question, and hopefully, sort of those dynamics are sort of clear in terms of the way forward from here. The 119% net revenue retention suggests you're seeing quite meaningful expansion within the existing DBM customer base. Could you give a little more color on what's driving that expansion, whether it's primarily more subscribers, customers adding more content partners or broader adoption of the platform?

46:31 And then how do you think about the runway for growth within the installed base? Yeah. Good question. We've touched on the list little bit of this, I think, as as we've gone far. I think it's a combination of all of those, and there's no one single answer that applies everywhere. It's very different customer by customer. You saw in Turkcell where they're launching five g with a, you know, bundle that immediately includes includes five, six, or seven subscriptions. So there, the growth is very much drive by users coming in, but each user coming in brings five or seven subscriptions into into the platform. In other operators, it's where they of adding additional content into the office. So we're working with pay TV operators who bring in additional OTT content as part of the bundle. And so there is driving it's been driving about, you know, the addition of these new content provider bundles. But, hopefully, as you've seen, if you look at the sheer number of telcos that we cover and the sheer number of customers and then compare that with subscription, there's a lot of headroom to go, right, both in terms of, know, if everybody only had one, there's significant headroom to grow. And the great thing about the revenue model is it scales with with that growth.

47:33 This this question includes a nod to a powerful presentation, so well done. On share price, until today, it's been it's been dull. Cash is flowing as predicted. So what excuses have institutions in ignoring BANGO? Yeah. Good question. Probably, I think, a a nice one nice one nice one to end on. So I I think there's a I think there's a couple of I think, preferably, people want to see the results, and we're doing what we said we're doing. I think you can see that very clearly in these results. I think proving that platform economics on the digital vending machine that have driven that huge increase in cash EBITDA that's on track to become profitable next year dramatically changes the nature of the business. And if you look at the improvement year on year, 4,300,000 improvement in cash EBITDA on the subscription side in the first half, which is a combination both of that growth and the pro growth of the platform leverage plus the structural cost reductions that we took action on in fiscal twenty five. So think that's the sort of next proof point people were looking for, and I think that's very clear, in these results.

48:36 We also had the the Saba, sort of overhang sort of created. I think the good thing about that, that's now that's now played out and is over, and then there are new institutions who sort of taken a starting position on the register. So I think everything's sort of arriving at the right time. I think our delivery, things cleaning up outside of our control in the market. And I think you you know, the proof points, I think, are very clear in these results, and we'll be increasingly clear as we move towards full year '26 and and into fiscal year '27. And so with that, I think, you know, thank you thank you very much for everybody's time. We really do appreciate your questions and your engagement. As Suky mentioned earlier, if you have any follow-up questions, can submit those very much by the investor website. We do appreciate, the the engagement. Thank you for your ongoing support. Hopefully, you see, the results of the actions that we've been taking in the results, and we look forward to updating you with more news flow as we move throughout the year. So thank you very much indeed.

49:31 Perfect. Paul Matzik, if I may just jump back in there. Thank you very much indeed for addressing all of those questions that came in this morning and for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback? 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.