Boku's revenues leap to squash losses

Boku Inc's shares leapt on Tuesday after increased volumes and active client numbers led to soaring revenues, helping the direct carrier billing company narrow its annual losses.

The AIM-listed technology group saw existing clients such as Apple, Spotify and Sony expand their use to help increase revenue 45% to $35.3m in 2018, which resulted in loss before tax being being slashed 90% to $3.0m.

Adjusted earnings before interest, interest, tax, depreciation and amortisation improved from a loss of $2.3m to a gain of $6.3m.

The jump in revenue came after total payment volume doubled to over $3.6bn from $1.7bn in 2017, while the number of active monthly users up to 13.5m from 8.0m as customers like Netflix and Rakuten started to use the company's platform and existing customers expanded their use.

Jon Prideaux, chief executive of Boku, said: "2018 has been a transformational year for Boku; two major milestones include reporting our maiden positive Adjusted EBITDA for the whole year and the acquisition of mobile identity business, Danal Inc. We've delivered growth on all of our KPIs illustrated at both the top and bottom lines."

The acquisition of Danal, now renamed Boku Identity, was completed on 1 January and has customers including PayPal, Square, Western Union, MoneyGram, JP Morgan Chase, BNP Paribas, Uber and the US Government's Internal Revenue Service.

After an "encouraging" start that has seen Identity secure a significant contract in February, the AIM traded company anticipates the ongoing year will see investment in Identity and continued growth in its Payments Business that will deliver revenues of at least the current analyst consensus of $52m, with 15% to 20% of this coming from Identity.

"We believe that 2019 will be another year of exceptional growth as we continue to build upon our strong Payments business, growing Identity business, and our state of the art platform to deliver further products and services to our customers," said Prideaux.

Analysts from Peel Hunt commented on the company as they noted that the digital content world is moving to a subscription economy, while digital device giant Apple announced its pivot to a services model.

"We think what was announced is broadly positive for Boku given the potential for an enlarged pool of paid content consumers. That said, as a supplier also to Apple's content services competitors like Spotify and Netflix, Boku, like any payment pick-and-shovel play, will benefit regardless of who the ultimate winners are. We also think Apple's announcement of a credit card might open the door for Boku to provision its Identity product to Apple Card in better securing it while reducing friction," said analysts.

Boku's shares were up 15.85% at 95.00p at 0908 GMT.