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Sales in FY 2023 are $46.1 M, they were $28.5 M in FY 2022 and $20.7 M in FY 2021. I cannot see sales in FY 2024 being less than $46.1 M and with few of the Docomo costs in FY 2024 there should be decent profits next year.
The forecasts put out for 2024 look like a BoD with an average age of 12 could achieve them. Bango have invented their own form of conservatism!
The 8bn payments business is said to be growing at mid single digits - that’s extra revenue. Add the Tier 1 deal to be launched mid-‘24. The DVM deals concluded in ‘23 (including those signed in Dec) will add to the total. 7x new DVM deals in the pipeline compared to one year ago - aso extra there. And Ani Malhotra indicated he’d probably have been ok with the original ‘24 targets, which have been set to “restore credibility”. I think they’ll comfortably beat the consensus forecasts.
Indeed - so much inertia here it’s hard to see what all the short term fuss is about.
Don’t forget the global tech company that shall not be named going live after the integration being completed in 2023
The narrative that seems to be doing the rounds is that sales will increase in FY 2024 and costs will increase at a greater rate. The majority of Bango's costs are employee related and they do not seem to have been recruiting since they acquired the staff from Docomo. Some of the extra staff will have been gainfully employed and some 'let go'. I suspect that they had staff in excess of their requirement for a while but they held on to these to save recruitment costs at a later date. Can anyone enlighten me as to where the additional costs are going to arise ?
Pen167
I’m with you, I haven’t seen anything in the TU or the Proactive interview that indicates that costs will increase in 2024, also my understanding on staff reduction following the Docomo deal is the same as yours and I’m of the understanding that the costs associated with the staff reduction (redundancy payments ) have been covered in 2023 so it’s all a bit of a mystery as why the narrative is as you mention, maybe they are planning to pay the NHN loan in full this year thus the increase in costs and the statement in the TU that with the its strong cash generation the group is well placed to return to a positive net cash position in FY 2025
Stifel are forecasting EBITDA of $16.6m from revenue of $53.1m in ‘24, compared to $5.2-6.2 from $46.1m in ‘23. If the additional revenue falls mostly (90%) to the bottom line that would explain $5-6m of the $10-11m EBITDA increase. The remainder might be explained by synergy savings, though BGO have said this will be reinvested back into the DVM business - perhaps not all of it will be? So EBITDA is increasing nicely but cash is not. I don’t believe it’s due to repayment of the NHN loan other than just a couple of $m in H2 (per the CFO). So what’s going on? If operational costs were increasing they’d be included in EBITDA. Is the cash being used for exceptional outgo? Or paying for work that is being capitalised rather than go through the income statement? Or is some revenue being booked without cash being received?
I wouldn’t rule out they are paying off the NHN loan early, Bango made it clear at the time of the RNS for the loan that there is no penalty for early repayment so if they are generating the cash why not save themselves 6% on US$ 8m
Iwant,
With many of the contracts there will be an integration element before the product goes live. The integration costs may be partially funded and the funding can be invoiced when milestones are achieved. Without invoicing no revenue will normally appear in the accounts but the costs will.
If a liability arises, for instance if there is a very large loan say in Swiss Francs, then it would be normal to provide in the accounts if the exchange rate had gone against the company. The provision would not alter the cash but would alter the profits in say 2023. The cash outflow would appear in 2024 when the loan is settled.
Docomo had a number of loss-making contracts which Bango said they were going to terminate. This is easier said than done and I suspect there are still some which are live. Again, these should have been provided for prior to 2024 but the cash will be impacted in 2024. I suspect there are very few of these contracts.
Revenue is generally taken at the time of invoicing rather than when cash is received. I suspect that some of the newer large contracts have extended payment terms.
Thanks pensioner, yes I agree, and there will be more of this in ‘24 than previously - work being done and costs incurred before revenue recognition, which in turn may be before cash is received. Example - I know in Dec ‘23 that a new DVM contract had reached revenue recognition point but it wasn’t put into the accounts because a signature was needed and the individual was absent on holiday. Again, costs incurred, revenue not included, cash not received.
Over the years I have encountered a number of instances of the stock market apparently being irrational. If one compares the numbers for Bango in 2017 to today, sales have increased by a factor 10 and the company is now making decent profits compared with losses. In spite of this the share price is less than half of what it was in 2017. The level of sales and profit for Bango is very difficult to forecast. What is certain is the numbers are improving rapidly. Had the forecasts been lower so that they were met then I would expect the share price would now be more than double what it is now.
Pen167
I suspect the market boys are not convinced they have a a handle on the spend and insufficient cash in the bank, if they can demonstrate this then I think the value will increase as per your suggestion as this would only make sense, maybe Bango just need to take a breather on the road to world domination of the super bundling and DCB and show what cash they can generate with limited development spend and only then start to invest, they are running to close to the bread line as the recent TU demonstrated, a couple of unforeseen costs and there is insufficient buffer in the bank for comfort and the market will react as it did,
Hopefully the Bango management are educating the market and we are now on the recovery on the run up to the full year results
Excellent day in a real down market day. Is there something coming tomorrow or has the re-rating begun already 🤔🤔
Hopefully the re-rate has begun and rinse and repeat over the coming weeks back to a justified valuation
Some big buys early doors. Looking good 👍