Adjusted earnings soar at Boku, identity division struggles

Mobile payments technology company Boku reported a 107% improvement in adjusted EBITDA in its audited results on Tuesday, to $15.3m (£11.04m).

The AIM-traded firm said group revenues grew by 20% in 2020 to $56.4m, while its net loss before tax widened to $17.3m from $1.3m.

It put that down to a $20.8m goodwill impairment for its identity division, with the total including a net profit before tax from the payments division of $9.2m.

Cash generated from operations before working capital changes during the year came in at $11.5m, rising from $6.1m, while its closing cash balances as at 31 December increased to $62.7m from $35.6m a year earlier.

On the operational front, Boku noted the acquisition of carrier billing company Fortumo Holdings into its payments division during the year, for a maximum enterprise value of $41m.

Payments division revenue rose 17% to $51.2m, while its adjusted EBITDA came in at $19.2m, including $1.5m from Fortumo, and rising from $12.7m in 2019.

Monthly active users for payments was 48% higher at 28.8 million, including 4.6 million users from Fortumo, while its total payment volume rose to $6.9bn in 2020, from $5bn in 2019.

It said e-wallet transactions were processed from 13 accounts across 11 wallets in seven countries in the year, with further investment in 2021 set to capture the “significant” e-wallet opportunity.

In the identity division, Boku said revenue fell to $5.2m from $6.7m, due to the impact of the Covid-19 pandemic and local US supply headwinds, resulting in a reappraisal of the carrying value of its asset.

The division narrowed its adjusted EBITDA loss to $3.9m, however, from $5.3m in 2019, while the firm expanded its identity carrier network, now reaching more than 200 carriers in 60 countries.

Contract wins for the division included GDC, LexisNexis, and FIS, which owns Worldpay.

“Boku performed strongly in 2020 with revenues up and adjusted EBITDA more-than-doubled compared to 2019, driven by the performance of Boku payments, but the central fact of 2020 was Covid-19,” said chief executive officer Jon Prideaux.

“It has changed the way that we work and live and had an adverse impact on our identity business, requiring its value to be re-assessed.

“Restrictions have affected the way that we travel, communicate and get entertained.”

Prideaux said the coronavirus crisis had depressed spending, but had also changed the things people buy and the ways consumers pay.

“Industries dependent on face-to-face contact have been decimated.

“Some - hospitality, for example - will bounce back when restrictions are released, but for others, the pandemic has accelerated pre-existing trends.

“It turns out that many people didn't really like driving into town to go shopping and for many types of goods the switch to online will be permanent.”

The way in which people found entertainment had been changing for some time, Prideaux said, as consumers switched to digital consumption.

Games, especially mobile games, were already growing rapidly pre-pandemic, he added.

“The Covid-19-related lockdowns have accelerated these trends, and Boku's customers have benefited, but since the transition was already well developed, what we've seen is a boost, not a transformation of our business.

“Boku has long benefited from the tailwinds of mobile adoption and digital disruption and 2020 was no different.”

Prideaux said the company was looking to 2021 and beyond with confidence.

“Boku identity looks poised to grow as new customers are connected with unrivalled levels of supply.

“For our payments division, we expect to cross-sell wallets into more of our existing customers - with each launch, revenue will start to build, more materially in 2022.”

The company would also invest in its platform, Jon Prideaux explained, so as to be in a position to capture non-digital revenues.

“All this is underpinned by a DCB business which is poised to continue its multi-year record of strong growth with exceptional operational gearing.

“We have made a flying start to 2021, with trading in line with our aggressive plans and I am confident in our ability to meet expectations.”

At 1020 GMT, shares in Boku were down 0.55% at 162.1p.