Bango (LSE:BGO) — Final Results for the twelve months ended 31 December 2024

0:01 Good morning, ladies and gentlemen. Welcome to the BANGO PLC final results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's 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 receives 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 on the Investor Meet company platform. Before we begin, we would just like to

0:33 submit the following poll. And if you could 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, everybody, and thank you very much, for taking the time, to join us this morning. I'm joined here by Matt Wilson, our CFO new CFO who joined at the start of the year. We'll spend quite a lot of time going through the results for '24 in quite a bit of detail. And then Suki is here as well who will guide us through the q and a at the end. Thanks to everybody who submitted questions in advance. We've had a great number of questions in advance. We'll try to answer all of those at the end. But if you have any, as we go through, please, please do add them into the, into the online tool. So today, we're going to go through, the reminder of the sort of the business model, a bit of a summary of of 2024, and then I'll turn it over to Matt to go into the financials in quite a lot of detail.

1:25 I then wanna talk about the DV opportunities, some of the signposts we've seen in the market for the size of the opportunity and how we're planning it and how we're progressing against our ambitions in that particular market. We're then going to talk about sort of where we've been investing. So a lot of our investment in r and d CapEx, which is started to come down, sort of peaked in '23, was down in '24, decreased further in '25 and '26. But I wanna really give you a bit more flavor of where we're investing that, why we're investing that, and the benefits that we're we're seeing from from that investment. And then we'll talk a little bit about the outlook, how you can find out more about BANGO, and then we'll move on, into into the q and a. So a lot to go through, so please do continue to ask questions, as as we go through. Just as a reminder, if you ever visit one of our bank offices, you'll see this sort of everywhere. We're here to be the place where people subscribe to give power and control for customers. Our values are thrive. You can see those at the bottom. They power everything we do in terms of how we how we strive to behave and how we go about sort of driving ourselves towards that vision.

2:28 And I thought that was a nice link before we sort of dive into the results to talk about the ESG. Well, certainly, the ENS aspects of the of of ESG. And I think the social ones are, you know, for us is all really all about people. You know, we've we've had a very big spike in sort of the employee base as you can see from the graph. The line on the graph on the right hand side shows you the with the doc of my position. You know, we went from over sort of one twenty people, immediately peak to sort of three sixty, and then we sort of come down continually from that. And you see you can see that in the sort of the the graph on the right, which is basically our employee engagement survey. It's something we do annually. The line shows you the number of respondents, and we always get sort of in excess of 95% of employees responding that, which again is a is sort of a a really good sign of employee engagement. And what you've seen is throughout that period, we've continued to have really sort of best in class positive responses. That's the sort of the blue bar in terms of people who respond positive to the the 80 or so questions we ask them once a year, and a declining number of negative answers. And so, obviously, the the gap between the two are sort of people in that sort of neutral zone. So throughout the journey that we've been on, we continue to maintain really strong employee engagement. That's important for recruitment. It's important for retention, and it's important for the productivity. Right? Because fundamentally, engaged employees give, you know, discretionary effort, allows us to do some pretty extraordinary things.

3:47 And we also like to support the charities that our employees support. So we supported 11 different charities last year. Those are all employee led activities. We don't have a company charity that we support. We support what our employees are passionate about, and that's really sort of, you know, core part of our our sort of values here at BANGO. And finally, on on the environmental, we've been talking about measuring our carbon emissions for a number of years now. We've recently changed to a new service, which we think is is really the best and allows the sort of the the lowest cost way of measuring the emissions and our carbon footprint in a great deal of detail, a lot more detail than we'd ever had before. And, really, we're driving for that net zero in 2040. And we have a whole host of actions to sort of drive down

4:28 our carbon footprint as we continue to grow the business. There's lots of detail online in our sustainability report, as well as in the annual report, which was always also published today. Just a reminder of our our strategy, there are four key pillars to our strategy of growth. You'll see these featured very heavily in the annual report, and in the CEO statement. Firstly, on expand, it's all about dominating the distribution of subscriptions through the telco channel. You can see we've made some great progress on that as we'll talk we'll talk about as we go through this presentation. Explorers, right, looking at new verticals. The announcement with continent in Portugal at the end of last year, you know, Portugal's largest high street retailer adding Disney plus into their loyalty program, I think, is a great example of that. And there's a healthy pipeline building behind that in both financial services as well as in as well as in bank as well as in retailer.

5:19 And, increasingly, we're seeing content providers look to create their own bundles. So people put in complementary content with their own content. So SiriusXM in The US have just launched a bundle with Fox Nation that puts that Fox Nation SVOD service alongside their music streaming service to to create sort of a unique content offer. And the digital of NmGene is really at the heart of all of those sort of transitions and all of those different mechanisms of bringing bundles to market. And the nice thing is for all of those use cases, it's exactly the same products. When I talk about the investments, when I talk about the features, you'll see it's exactly the same no no matter what the vertical is. The enhanced, this is probably the, I think, the least developed. We're in sort of very much in that experimental phase. If you think about it, we sit between content providers and sort of distribution channels, and we sit sort of between the two. We bridge or the platform that bridges those two worlds together.

6:08 And and we're paid in effect by the people at the bottom, by the the sort of the reseller at the bottom who's distributing that content in most cases. But, really, what we have is a whole host of valuable data in the platform, and all our experiments in this enhanced focus are really how can we monetize that data, how can we use that data to deliver more success, to allow more subscriptions to convert, to allow more people to upgrade, to allow content providers to better target customers. And so lots of opportunities to, in effect, look to monetize both halves of the marketplace with exactly the same product just with using some of the information that's in that product in a different way. So very much experimentation certainly for the future, but really for us, sort of a a key area of development. And it's one of the reasons that Marissa joined us as chief product officer is to really spearhead, the work in that particular area. And and finally, on extract, that's all about managing, the payments business for cash profit. We continue still continue to see growth. We still continue to add new routes in that business, but it's a lot more disciplined now. We will turn off routes that were not profitable.

7:08 Matt will go through some more detail on that later, but it's really a very disciplined approach to that that payments business, which following the Dokomo digital acquisition is really sort of a at the scale where it can be a significant, cash engine for the business. And, again, Matt will cover more on that as we go through the presentation. Just a reminder, we sort of do have, and we'll talk about these as we go through the presentations, two halves of the business. So we have sort of the payments business, which we book a sort of that in that transactional revenue stream. Carrier billing is the best example of that. So you purchase something in, and you pay for it on your phone bill, whether it's a a bag of Pokecoins here from the Google Play Store or whether it's some physical goods, for the from the amazon.co.jp store, in Japan. It really doesn't matter. You go and you make that purchase rather than pay for it on a credit card, you charge it to your mobile phone bill. We've accessed the bridge between those global content providers and the telcos of bill who who basically have the bill on which that charge is placed.

8:04 And on the other side, we have the digital vending machine. That's that bridge in the subscription world in content providers and people who wanna distribute and resell those content providers. And that's where the digital vending machine comes in, and we'll spend a lot of time talking through that as we as we move through the presentation. Both of those fundamentally benefit from a sort of a a very simple and single value proposition. And certainly, the benefits and the the technology differentiates if you're having the product go way beyond this. But if you boil it down into the simplest words, it's that you connect once and you access many. So we bridge wells between content providers and channels and telcos, and you connect into us once and you get access to everybody on the other side. And we make the those connections very quick and very seamless. That's fundamentally what we do. We're bringing those two wells together, that's the same for the digital vending machine, and it's the same for the payments business. On the digital vending machine, we, you know, we ended the year with a 110 content providers.

8:56 If you look across the DCB and DBM together, we have a 115 content providers and a 125 sort of people, if you like, on the south side of that platform, you know, mainly telcos, but obviously moving beyond that, who had connected into us to get access to all those different content providers. And we can launch all those people very quickly, and I'll talk a little bit more later on about why that's possible a little bit later on. But that's sort of the core value. Connect once, you access many, we can bring these services live, very quickly indeed to market. So 2024 was a a really strong year. I think a year of both growth and optimization. If you look at sort of the the CAGR for the sort of the three revenue, both the group revenue as well as the the divisional split. See, we've over the last few years, where CAGR has been around sort of mid thirties percent.

9:43 You start to see, in last year, a big step up in in EBITDA. You see that, in the graph on the right hand side, and Matt will talk a little bit more about about why that is. But that's really because of the the operational leverage we have in the platform that showed that growth in the top line coupled with some disciplined cost management allow it to drop to the bottom line. And we'll talk a lot a bit lot more about profitability as we go through this deck. The digital vending machine obviously gives us this recurring revenue stream, so we started to report ARR a few periods ago. That saw good growth of almost 60% to 14,000,000 last year. A part of that within that, again, we started to report a new metric, net revenue retention. That's the growth in in the same cohorts of customers from one year to the next. Anything above a 100% means those customers are growing.

10:28 And so you see the 125%, and that's as existing customers start to support more subscriptions and to climb through those license tiers. We'll we'll show a few different splits, on how you can interpret that as as we go through the presentation. We've got nine new DVM deals in 2024, and I just wrap up at the end. I'll talk about what we've seen in 2025 so far, which is certainly an acceleration, but, but, you know, continued momentum in terms of bringing new customers onto the platform, as well as content providers. So we again, we added a whole host of new content providers who are using the digital vending machine to distribute their subscription services to a variety of channels. So a really strong year. I'd say a combination of both growth and optimization. You see that big step in step up in EBITDA. And I think that's a good point to sort of turn it over to Matt who can both introduce himself and also walk you through some more detail.

11:15 Thanks, Paul. Good morning, everybody. A really exciting time for me to be joining BANGO, and and thrilled to be here and and looking forward to walking you through the results for fiscal year twenty four. So overall, as Paul outlined earlier, I think we can consider it a transformational year for BANGO, delivering double digit revenue growth, a significant EBITDA improvement of 139% and a strong second half performance, I think, that underscores our continued progress and resilience. So starting with the top line, momentum continued, group revenue up 16% on the year and a compound annual growth rate of a little under 40% over the last three years. Annual recurring revenue, up 59% on the year to GBP 14,000,000 and ten new partners starting to generate ARR in fiscal year twenty twenty four.

12:09 As well as new business growth, we saw continued growth in our existing customer base. And by way of reminder, we measure this through our net revenue retention metric, and that's the ARR from existing customers at the end of the period divided by the ARR from those same customers at the beginning of the period. And in keeping with last year, we saw this metric continuing about 100% with 125% delivered in FY 2024.

12:39 So looking at each segment in turn and starting with transactional, a strong year overall, up 11% on fiscal year twenty three and fourteen percent at constant currency. For transparency, I've broken out the revenue bridge here into the various components to provide a little bit more color on the performance. So as we continue to optimize and improve the profitability of the portfolio, we exited some loss making routes and you can see that in second bar on the chart. During the Docomo Digital acquisition, we acquired some routes with quite low margin and a high cost of sales. These routes grew by 3,800,000 during the year, which was much higher than we forecast. Important to note though because these routes have very low margin, they have minimal impact to adjusted EBITDA.

13:30 Growth in what we call the core transactional business, which is basically everything aside from those exit routes and the higher cost of sales routes I've just mentioned, gross margin there is typically a lot higher, so circa 90%. We saw good growth there in fiscal year twenty twenty four growing by $2,000,000 We then experienced some FX impacts, particularly in Japan on the back of a strong U. S. Dollar against the yen, and you can see that in the penultimate bar. But overall, a strong year for the transactional business. Moving on to DVM and one off revenue. We saw growth from both existing customers and new contract wins, so up 28% overall. If we then exclude the Audiences business, which we discontinued in Q1, underlying growth was an impressive 40%.

14:22 We ended the year with 27 DVM customers, 24 of which were generating ARR. And based on feedback and interest around our customer mix, I've included some cohort analysis for ARR, which you can see on the right hand side. The top chart breaks those 24 DVM customers down by size. So at the low end, we have customers generating less than 500 ARR and the top end for ARR greater than 2,000,000. And I think the key point really to bring out here is the ARR increasing as the customers move through the license tiers. And you can see that with the appearance of the yellow bar in fiscal year twenty four, where we now have two customers generating ARR greater than 2,000,000 as their subscription growth increases.

15:11 The bottom chart then shows ARR by contract date. So customers added pre December 23 in the purple bar and then the turquoise bar those added in fiscal year twenty four. As we covered with the net revenue retention, you can see the strong growth in that pre December 23 cohort. So moving on to the next slide, looking at costs. So I think 2024 marked a year where we were very disciplined on expenses. So, again, to support transparency, I've tried to isolate our core administrative expenses, which you can see in the blue highlighted line in the table. I think this is a better indicator of the controllable expenses in our business, and it

15:54 removes items such as DNA, capitalized R and D, and exceptionals, which can effectively distort the overall picture. So as you can see, between fiscal year twenty three and '24, we actually delivered a 7,000,000 reduction in core admin expenses over the period. And part of that is driven by people costs as the rapid scaling we undertook following the Docomo digital acquisition has since been rationalized back. And you can see in the bottom chart,

16:25 which shows the average headcount over the year decreasing from fiscal year twenty three, and we expect it to further decrease this year by another 14% to around 200. Outside of the core admin expenses, you will see increased d and a expenses. That's natural. As you'll recall, we've done a lot of investment, in capitalized R and D. As that begins to generate revenue, it will start to amortize. We had 4,200,000 of exceptional items over the period, 2,000,000 of which was a noncash impairment, and those relate to assets within the audience business, which, as I mentioned earlier, we ceased in Q1 last year.

17:13 Moving on to the next slide and covering sort of R and D CapEx. So overall, capitalized R and D reduced by 2,300,000, and we expect further reductions this year in 2025 and then further reductions in 2026. And I think by 2026, we'll be targeting that capitalized r and d being 20% of sales.

17:37 We've seen the complexity of the Docomo digital integration, and, you know, I think Paul's touched on that previously, which which has effectively extended the timeline. But migrations, I'm pleased to say, have now largely completed with 98% of traffic acquired having been migrated to the BANGO platform. As a result, we expect that transactional R and D CapEx to be $1,000,000 going forward from FY 2026, and that really supports healthy cash generation in that segment with adjusted EBITDA margins approaching 50%. It really is sort of the cash generative engine of our business. So with development of the core digital vending machine now complete, continued in investment in the product is there really to underpin future growth.

18:25 So whether that be new features to increase revenue per user, so for example, the customer, CX interface or increasing the stickiness of customers through enhanced offer management or really reducing the internal effort to integrate on the BANGO side. We can do that through the the sandbox environment that we've created.

18:48 So pulling that altogether for the period, strong adjusted EBITDA increase, for the year, up a 139% on fiscal year twenty three to 15,300,000.

19:01 You'll see in the gross margin line, we saw a slight dilution there, and that was driven by the higher mix of those higher cost of sales routes in the transactional business I talked about earlier. Excluding these routes, the transactional business as a whole will have gross margin of approximately 90%. We saw a benefit in other income last year of 2,200,000. This relates to the recovery of costs from the NTT from NTT Docomo for periods pre the acquisition of Docomo Digital. It's very difficult to predict what these will be. We do expect there will be other recharges in future, but not at the same level that we saw in fiscal year twenty twenty four.

19:47 So following the strong revenue growth and overall disciplined cost control, EBITDA margin now improving to just under 30%. And given the operational leverage we have in the platform, we expect to further build on that going through this year and into FY 2026. Overall loss for the year narrowed this year to minus GBP 3,700,000, so GBP 5,000,000 improvement on fiscal year twenty twenty three. And I expect BANGO to generate a profit at that bottom line from fiscal year twenty twenty six onwards.

20:24 Moving on to cash flow. We ended the year with a reduction in cash of 300 k versus the prior year. The step up in cash flow from operations driven by that increase in adjusted EBITDA as well as a positive inflow from working capital. That working capital benefit coming from the timing of receipts and payments within our transactional business, and that's for routes where where BANGO effectively sits in the middle of the payment flow between telco and merchant. And as that cash moves through, we take our revenue share. We expect that inflow that we that we, achieved in fiscal year twenty four to fully fully unwind in fiscal year twenty five.

21:10 Last year, the business used this working capital benefit to fund cash flow with limited buffer. I think this year, a real part of my initial focus has been to really proactively address that and really derisk the position. And the new financing facilities that we put in place, and I'll I'll talk about that on the next slide, have supported that approach.

21:34 The increase in cash flow from operations was then largely offset by investment in r and d, which continues to be the main use of cash, although as we've said, that will come down as we move through fiscal year twenty twenty five and fiscal year twenty six. From a financing perspective, we made two repayments on the existing shareholder loan with NHN, and the 3,000,000 overdraft facility we have at Barclays remained undrawn at the end of the year.

22:01 Culminating together, net debt improving to $1,800,000 which is a $2,200,000 reduction on fiscal year twenty twenty three. As I mentioned just now, a large part of my early focus BANGO has been on the capital structure, and I'm pleased to announce two new financing facilities in conjunction with our fiscal year results. One, an enhanced loan facility with NHN as well as a new revolving credit facility with NatWest, and that will replace the existing overdraft with a much larger committed facility. I think both financings demonstrate the strong confidence in BANGO's business and strategic plan both from our shareholders and our banking partners.

22:48 And I'm pleased to say this really materially strengthens the balance sheet as we as we move through FY '25.

22:55 So under the enhanced loan from NHN, the existing loan will be topped up by 2,850,000, essentially returning the loan to the original balance when the loan was put in place. And those loan repayments will be deferred until the end of twenty twenty six, and the interest rate on the entire balance will move from 6% to 7%. In conjunction with that, new warrants will be issued, and the warrants on the existing loan will be canceled. Under the NatWest facility, we've secured a multi currency three year RCF of $15,000,000 with a step down to $12,000,000 in year three. Our facility will obviously come with standard financial covenants, and those will be tested from from September 2025 quarterly.

23:42 But we're confident of having significant covenant headroom in all those metrics. As I say, those facilities will

23:50 really provide significant flexibility to accelerate the initiatives we want to put through this year and into FY 2026.

24:01 So lastly from me, sort of looking ahead. So with a much stronger balance sheet and committed financing, my priorities now turn to revenue growth and really driving that profitability. In terms of where we are to date, so core transactional revenue, so again, that's excluding those high cost of sales routes we talked about earlier, currently trading in line with expectations.

24:26 The strategic investment in the digital vending machine and overall growth in super bundling are driving a strong sales pipeline with plenty of opportunity this year. And I'm pleased to say DVM is on track once again to really deliver high double digit revenue growth for this year in line with consensus.

24:45 The high cost of sales routes in transactional have had a more volatile start to the year and are currently behind expectations, and that's driving some of that working capital outflow I sort of touched on earlier. But I think it's really important again to stress, given the low margin profile of these routes, there is very limited impact to adjusted EBITDA. As a result, we expect to report adjusted EBITDA for '25 in line with consensus. We're also progressing with a series of efficiency initiatives this year, and those are expected to deliver a $1,000,000 upgrade to fiscal year twenty twenty six adjusted EBITDA versus consensus. We've taken actions to reduce costs of sales and improve gross margin, and the high cost of sales routes that remain will be under continuing review to see if we can further optimize.

25:38 I mentioned earlier, R and D CapEx is also forecast to reduce versus consensus, 500,000 this year and a further GBP 1,000,000 next year. As the bulk of our expenses are people,

25:52 there are restructuring costs associated with those efficiencies, which will have a cash impact this year. And those exceptionals, coupled with the unwind in working capital and also the one off costs that we've incurred in conjunction with putting the financing facilities in place will result in a cash outflow in fiscal year twenty twenty five. However, the NHN loan and revolving credit facility with NatWest will provide more than adequate headroom to manage that transition effectively. So these efficiencies, savings and continued revenue growth underpinned by a strengthened balance sheet will result in significant cash generation as we go into fiscal year twenty twenty six. We can really look forward to the future with a lot of confidence.

26:38 And with that, I'll hand back to Paul. Thanks, Matt. So let's zoom in on the the DBM opportunity in a in a little bit more detail and just sort of try to give some signposts of sort of where we are and and and where we're going. So if we step back and look at the broader subscription economy, we can see that that economy is continuing to grow as a six year CAGR of just over 6% with an estimation of three and a half billion paid digital subscriptions by 2029. So a clearly massive market. What's important for us is is the there's an an even faster growth in the in the portion of those subscriptions that started being bundled. This is some data for Omnia, and you can see the the growth of bundled subscriptions and just through telcos is actually significantly higher than the growth of the overall subscription market. So you can see almost 10% CAGR with almost, you know, over 600,000,000

27:26 total subscriptions bundled through telcos alone by 2029. And that's really where the the digital vending machine platform fits. It's the bridge between people people have that subscription service and those that wanna bundle it and distribute it through a channel. So that's entirely our market is is that that growth in in bundled subscriptions. And and here, this is just talking about telco. Obviously, we include the other channels as well. It goes it goes it goes significantly higher than that. We step back and look at why is that happening. So this is from some data. If you follow us on LinkedIn or anything, you'll see the various reports that we we publish. It's probably a good place to mention I would encourage you to join and register for our new investor website where you will get automatically notified by some of the some of the work and some of the research that we do, which is primarily to support some of the commercial activities.

28:13 But I think as an investor, you you find it very interesting. One of the surveys we've done is understanding why people buy subscriptions and where they buy subscriptions for. And you can see here there's an increasing number of people buying multiple subscriptions through channels. And they're doing that because they want a better value, they want more control, they want to make it easier to sign up, but almost sort of above the 5.4 average subscriptions that people have, two of those are now coming through a channel. So you can see that, and that's a significant change versus some of the research we did a year or so ago. And now, you know, almost two thirds of customers that were buying, you know, multiple subscriptions through a channel. And I say that's that's where the digital vending machine sits. It's that bridge between subscription services and channels that wanna distribute those subscription services. And the nature of the bundles is changing as well. And this is this is also good news because there's certainly the value and the importance of digital vending machine increases as you go from sort of left to right.

29:06 If we look historically, bundles were, I think, very simplistic. You bought a particular mobile plan, and you got one service free as part of that. And we sort of call that sort of basic bundles. It's a very simple thing. So you sign up for this. You get Amazon free as part of that or Amazon as a discount as part of that telco subscription. So really not much choice, very sort of fixed offers, but, you know, clearly giving the customer sort of value add. And, you know, we we that's that's a lot of what we do already is is embedded bundles and the digital vending machine supports it. But where it really starts to come into its own is we move into what we call multi party bundles and into super bundling. A multi party bundles are bundles where maybe there's choice, maybe there's multiple different piece of content put together, maybe there's some discounting that you can then add on additional services on.

29:52 So it's giving consumers more choice about how to create these bundles, what services they pick, how they put them together, which level of subscription people got. Don't forget Netflix now is not just one subscription. There are multiple different tiers from an ad supported tier to a regular tier to a premium tier where you get sort of the four k and the Dolby Atmos, etcetera. So multiple different tiers. And giving the customer that choice about how they put those together is becoming increasingly important. We call that multiparty bundles. And then the final stage is that move to sort of super bundling and think of that as the almost the app store for subscriptions. Optus sub hub being one of the best examples where you can go in, pick all these subscriptions, try them easily without having to give you credit card details, experiment with them, maybe pause them, bundle them together, get discounts for buying multiple ones. It's sort of the ultimate choice to bring in all your subscriptions in one place. And let's say, while digital vending machine serves all three of those, the value that we can provide and the differentiation we have really ramps up as you go from from left to right.

30:51 And that's what we see sort of happening in the the sort of the telco bundling market. We sort of take that telco bundled chart that I I showed a while ago and look at how do we think that's moving. If you look at the conversion from basic to super bundled, you can see at the moment today, most subscriptions are sort of simple bundled, but there's an increasing growth of these these either multi party bundles or super bundled subscriptions. And and so we see that growth being, know, really, really high close to 80% CAGR. Let's say and that's where that's where the digital vending machine really adds significant value. And sort of an indication of sort of where we are. So we talked about, you know, these hundreds of millions of of subscriptions. I think if you read, through the annual report, and we've said this previously in the past, you know, today on digital vending machine, we're generating tens of millions of dollars of revenue from tens of millions of subscriptions.

31:42 Well, here's the first time we're giving you sort of a bit more detail and flavor on the number of subscriptions that were that are managed through the platform. So we ended, 2020, four with about 15,000,000 subscriptions on the platform. We're now just in excess of sort of 18. So you can see we're in that sort of tens of millions in terms of the number of subscriptions that are managed through the platform. And these are active subscriptions. This is where there's a user who's actively using that. In most cases, the way subscriptions are managed, if you pause a subscription, it still counts towards a subscription license tier. But I think I think it's best just to talk about the active ones because I think that's that's a so it's a better and and sort of a clearer metric. But quite often, we the in the in the subscription license tiers that operators have their current subscriptions in other states other than other than active. So you can see we've we've seen good really good growth over the past over the last twelve or eighteen months, taking us into that sort of, you know, close to 20,000,000 active subscriptions.

32:35 And if we think about sort of our ambition, I think we talked about before is, and then we're doing tens of millions of revenue from tens of millions subscriptions. You can sort of see that we wanna do hundreds of millions of revenue from hundreds of millions subscriptions. And that ambition, I think, is supported also by the likes of the telcos like Verizon. You can see quotes here from the CEO of different investor conferences, in particular talking about how they want 50% of their customers to be on MyPlans. So if you look at the size of Verizon's customer base, it's about, I got a 100 and plus million customers, of which probably 20 to 30,000,000 are probably eligible for sort of the the the MyPlans type services. You can know we're talking tens and tens, if not hundreds of millions subscriptions just from one operator alone. So you can see the real you know, our when we talk about our ambition to get to hundreds of millions of revenue for a 100,000,000 subscriptions, you can see the operators equally have ambitions that very, much support that, and that and we're in a really strong place of sitting at the heart of all these different subscription services supporting some of the world's largest telcos like Verizon who have really lofty ambitions in terms of generating more and more of their revenue and generate delivering more value to their customers by bundling third party subscriptions together.

33:47 Looking a bit more on investment for the future. I talked about this a little bit at the start. Gonna want one of the things that the digital vending machine does is make the bridging of these two worlds easy. And this is a a simplistic example that shows on one side on the right hand side of what what a content provider looks like. And you can see most content providers have multiple APIs. Some have a mixture of synchronous, asynchronous. They upgrade and update those APIs regularly as they add new plans, add supporting tiers, etcetera. And so it's very complex to to to keep pace and also to do the first integration. And what the digital vending machine does is because we access that connect once, access many, it allows us to do that work once and make it available to hundreds of telcos without any effort on the telco part. So it really is that sort of connect once, access many. And a lot of the investment that we've been doing so far in building the core platform is to make this as simple as possible. So there's no you know, we can upgrade a one content provider and all our telcos immediately get access to all the new features that are available with that new telco API. So the telcos don't have to integrate to these 67 APIs and do bespoke integrations on a per content provider basis.

34:59 They can do one integration to BANGO and get access to the 100 and so content providers that are on the other side of the platform. And that's really the the the the sort of the the core platform and the core benefit of the platform as I as I talked about earlier. And and you see that in terms of the ability of just to bring services to market and bring services to market very rapidly. That's the value that the the platform delivers. But increasingly, we're moving and extending. And certainly where the the r and d CapEx is focused now is is on managing that subscription over its entire life cycle. So if you think right at the start, you know, if you're if you operate in a sort of a bundling or a multiparty bundling or a super bundling platform, how do I find content providers? How do I get them on board? We build things called partner portals so you can sit and go ahead and self discover content providers that you want to add to your to your bundle.

35:50 Our eDisty program where where we act as a distributor for those services is a is a core part of that. And already, we've launched a couple of services this year where partners have self discovered themselves without us necessarily having to do sort of any introductions or any any sort of ongoing discussions. And you bring that partner in. How do you integrate it? How do you test it? As Matt mentioned, well, a lot of one of our drivers for our needs where we can reduce the effort that's required on our side. So tools like a sandbox so that people can self certify into the platform, can self test, can self connect are really, really important about driving down the overall cost that BANGO has, maintaining the digital vending machine and and bringing on new partners. Then And we get into sort of the complex world of offers and and how these bundles are put together. And I'm gonna move and delay that a bit to the next slide because that there's that that's where really a lot of the a lot of the lot of the value and a lot of the intelligence really sits within the platform that we've delivered over the past twelve months or so. But right at the end, you sort of have the maximizing growth. That's how we we can use the data, the dashboard, and the insights that we have in the platform to make sure that subscriptions are renewed.

36:55 We're looking at features using AI to things like automatic and proactive renewal messages. How do you target the right customer base. There's lots of opportunity for using the data along with AI in the platform to really ensure we can maximize the growth. So it's not just about bringing the offers to market, it's about how you make them successful once they're in that market. The offer management and offer orchestration is is is is is extremely complex, and it's I've I've tried multiple times to create a simple slide and and sort of gave up. So and I think, really, that's because what that feature does is take something complex and try to make it simple. So let's let's take something that intuitively seems very simple. You wanna take a single telco subscription. So, I don't know, so many minutes or so many, gigs of data per month. I want to offer my customers with that this unique piece of content that I'm gonna bundle Netflix and HBO Max together, and I'm gonna give them that as part of that that tier of package.

37:49 And then I'm gonna allow them to pick one or more other things that they can add on top, so sort of perks that they can bundle on top. Sounds pretty straightforward. Sounds like the sort of thing that should be very easy to do. But if you break it down into the constituent components, it gets very complex very quickly. You know, simply activating all those at the start could be in excess of sort of 30 different API calls. Right? It's a very complex workflow. You've because you've got to create the telco subscription. You've then gotta create the Netflix subscription, the HBO Max subscription, and then the Perks subscription. So so it's a it's a lot of work to where you can sort of get that set up. So what we've done with offer management and offer offer orchestration is make that a lot simple. It's a templated approach. So you can describe that offer, publish that offer to BANGL, and we take care of all the all the orchestrations. We've taken all that complexity away from the sort of telcos back office system and absorbed it within the digital vending machine.

38:39 And the benefits now, it allows these services to launch a lot quicker. The the faster we bring these services to market, obviously, the faster we start generating recurring revenue and the faster subscriptions going towards the license tiers. It allows us to reduce the effort because actually helping an operator through these 30 different API calls and the different error cases is very, very complicated. So it allows us to to actually reduce the effort of bringing these services to market at the same time as bringing them to market faster. And it creates a very sticky relationship because, historically, that complex business logic that might have been done in the telco's back office is now done within the digital venue sheet. So it creates a very sticky long term relationship with the customer. And that complexity goes way beyond just initial integration. It goes into the life cycle of that subscription. So what happens if I want to change my Netflix to get the premium tier? What happens if I want to change the perk? What happens if I want to pause a subscription? What happens if I want to change my overall mobile plan? Every event where there's a sort of any change is has a ripple effect with these multi party bundles. They're a great consumer offer, but the complexity of managing those, if you're not careful, consume become overwhelming. And that's what we that's a lot of the work we've done over the past last twelve months or so. And continue to do is to take these complex scenarios and make them extremely simple so you can deliver incredible consumer value very, very quickly indeed.

39:55 And that that's where the that's where our CapEx and our r and d investments come, and that's where it goes moving forward. The the sort of the core platform investment now is is pretty minimal. I talked about sort of a million for payments. It's probably a couple million for the digital vending machine. And the rest of that investment is on these features that either generate new revenue, create a stickier customer, allow us to get services faster, or reduce our own integration effort. And that's that's entirely where our focus is. So coming to the end, and then we'll move into sort of q and a. If you look at sort of Outlook, and you will see a lot of this if you we've been through the trading update we've put out before today. The bulk of the digital traffic is now migrated. That transforms the the the profitability of that, that payments business, allows it to be the cash engine it is for the business. It's supposed to say it's taken us longer than we we like or thought, to have done those migrations, but that that's largely behind us, and we're really sort of unlock that business in terms of being the profitability and the cash generation engine for the business that we know it can be. The core transactional business is growing as we as, you know, as we would have expected.

40:58 As Matt said, some of those higher cost of sales routes that we acquired from digital, there's a there's a volatility in those. So they're sort of currently behind expectations. But I said there's minimal impact to EBITDA because of the the the margin nature of those routes. And we continue to look at how we can take additional cost of sales out of the channel and how we can potentially restructure those routes, which maybe result in less revenue, but at a with a higher quality sort of margin. On the digital vending machine, we've had a great start in 2025. You know, I said earlier, we've done nine customers nine new customers in 2024. That's about the average over the last two or three years. It's about nine a year. So we have 27 customers. We started sort of back end of sort of 20. So, you know, about nine or so customers a year is on average what we've done. But already in the first five months of this year, we've added six new customers.

41:46 That's a great step forward. It's a big acceleration in that business. I've talked previously about open mic frustrations in this the long sales cycle. I think we're now benefiting from deals that have been around for a while now coming out of the bottom of the of the sales funnel. And we're also seeing a sort of increased momentum. And if I sort of pick sort of three different geographies and sort of give three different examples, in The US, we've had for a number of years now three out of the top five telcos. We now have six out of the top eight. So that's a great position to be in. In The US, it's an interesting market. You sort of have five very large providers and then a then a a large sort of second tier, and tier two is a big root cause. Some of them have tens of millions of customers, They're quite sometimes regional broadband providers or regional cable providers.

42:31 They are looking to use bundling increasingly to reduce sort of churn and stop people cutting the cord for their cable TV subscription by putting third party subscriptions on top. The launch we did with Altice had in Disney plus as part of their package with Hulu a few weeks ago that you will have seen in the r and s is a is a good example is is a good example of that. So The US is a great position now in that sort of that sort of tier two, and there's lots of opportunity for us to expand in the in in in that marketplace in The US. Moving into Asia, we signed our first contract ever in South Korea. We were all leaving telcos. They're coming over here to Cambridge to do a formal ceremony and announcements for the next week. So you'll see more details on that, over the next week or two. And I think that's really, really important. Korea is a very it's a market in many ways like Japan. And Japan's a market we've been in for a long time. And through building up trust and developing slowly, we've built a very strong and dominant position in Japan. And and Korea and Japan are show very similar, trades. It's a very difficult market to enter.

43:33 Once you're in and you've proven as a trusted partner in that market, you know, the business opportunities given how people pay for goods, how people subscribe to services are really, really exciting. So for us, that's a that's a that's a fantastic position to be in. And certainly, you know, NHN as a shareholder have been very supportive in terms of helping us develop in that business in Korea, and we're really, really proud and and pleased to get that first that first sort of contract over the line. And finally, in Europe, which is, I think, might be my biggest personal frustration. I think I've shared that in the past. We've seen the first sort of green shoots, if you like, from deals that have been the sales funnel for some time. We started our first deal in Eastern Europe at the back end of last year. We had a deal in the Benelux region, in the start of this year. And I say that's the the first green shoots of a a well developed sales in Western Europe are really starting to to flower, and, hopefully, we'll see more success as we move throughout the year.

44:27 And as Matt mentioned on on, you know, big focus on efficiency, profitability, sort of cash generation, you'll see we upgraded, 2026 EBITDA versus consensus by a million. And we've taken 500,000 out of our r and d CapEx this year, 1,000,000 out of CapEx in 2026. And so you add that sort of EBITDA increase with the reduced r and d CapEx. You can see, obviously, the cash generation of the business is significantly improved. 2026 is really a year of of significant cash generation. Finally, we really appreciate everybody joining today. There's lots of other ways you can you can keep in touch. We've launched a new investor website called Investor Hub where you can log in, ask questions, see questions of the people who asked, comment, like things. It's much more sort of social media engaging. It makes us it us it easier for us to to manage and answer questions. So please do encourage you to to sort of join that with the way of staying up to date with what's happening. It's also a good way of engaging with us in a in a very simple and easy to use way. So really encourage everybody who's on the call to to join that.

45:29 A lot of what we do for sort of our commercial marketing activities, as I said earlier, I think it's very relevant for investors. And a lot of that is through LinkedIn, and you can follow BANGO. You can follow me. I post some videos and comments and and post some things like that. And there's a lot of all the research and the core research that we put in BANGO is on the BANGO LinkedIn. So, you know, LinkedIn, while those channels are really for us to help us drive business, I think there's a lot of value in there for investors as well. So I'd encourage you to all to, to take a look at those. And with that, Jake, I'll turn it back to you, and we'll we'll head into q and a. Perfect. Paul, Matt, 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. But just while the team take a few moments to review those questions that have been submitted already, I'd 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 dashboard.

46:22 Guys, as you can see there, we have received a number of questions that were both presubmitted ahead of today's event as well as those that have made their way through throughout your presentation this morning as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, 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 would be great. Thank you. Great. Thank you. Thanks, Jake. And a big thank you to everyone who submitted questions. We're, we're always keen to to engage and improve understanding of the business, so a big thank you. We've actually we've had so many questions, some covering very, very similar themes that I've grouped those that that are. So we can we'll we'll ask those to Matt and Paul now. However, just to note, if you do feel that your specific point from your question was missed or or wasn't answered to the degree you'd like, then please use the q and a top right hand side and and make sure you, know, you ask and you get the answer that you Yeah.

47:30 I'll start with a question around costs and ask that of you, Matt. It's around the Docomo digital acquisition and further action on costs that we're likely to see with the acquisition or other areas. Sure. So I think in the presentation, I touched on that core admin expenses metric, right, which, you know, we saw really good reduction last year between 23 and '24, a little over 7,000,000, and r and d CapEx also reducing in conjunction with that. I think that core admin cost metric, as I said, as I mentioned earlier, is a better way of viewing the cost base. Obviously, admin expenses as it's reported in the statutory accounts can get distorted by DNA and those noncash items.

48:24 And and hence, core admin cost is is a better reflection. I think with the efficiency initiatives that we plan to put through this year, you know, we expect another 2 to 3,000,000 savings in that core admin expenses in FY '25 with a further 1,000,000 of savings in FY '26. And an r and d CapEx over that period, I expect to reduce by 3,000,000. So you can see the you can see the real emphasis being placed here on really driving profitability and ensuring we're deploying capital and resources in in the appropriate areas. Thanks. And on Docomo digital acquisition, Paul, there there's questions around how the acquired business is developing and when when the benefit will drop through to the bottom line.

49:18 Yeah. Good question. Well, I firstly, I think you start to see it dropping through to the bottom line. Right? If you look at the step up in EBITDA in the second half of last year, I think that becomes very evident. I I understand it's been sort of a a gradual thing because we sort of gradually been reducing costs over the period since we did the acquisition. As a reminder, we did that only at the back end of twenty twenty two. It was an acquisition we did for customers. It was never a technology acquisition. We did it particularly for the customers that Dockmo Digital had, but specifically for that long term engagement with NTT Dokomo, who's the largest operator in the largest carrier billing market in the world. So we did it to scale. It immediately made us the number one integrator for the Google Play Store, the number one integrator for for Amazon. We were already the sole integrated for Amazon DCB in Japan, and then it gave us that. So they say that's exclusive relationship with NTT DOCOMO for DCB of sort of online services in in what is a is a huge market. So that's what we're doing. So the plan always was to take these customers and move them on to the BANGO platform. I think it's certainly taken longer than we we said at the time or than than we anticipated.

50:21 Most of those are not technical challenges. It's logistic and coordination challenges across the, you know, the hundreds of routes that we've now migrated onto the onto the bang onto the BANGO platform. Once we're on the BANGO platform, the cost of any incremental transaction is is relatively small. That's why we sort of get the you know, traditionally a very high margin from the DSP outside of where there's sort of this channel arrangement that Matt talked a little bit about earlier with these sort of high cost of sales routes. And and, really, the cost of that acquisition, if we look at where it is, it wasn't an acquisition where we paid tens of millions to acquire the business. The cost of the acquisition has been on the inflated cost base that we've had since that. And so it's an unusual acquisition. It's not and there's a big one off cost, for the acquisition that sort of appears on the balance sheet. It you know, the cost of this acquisition has really been the inflated expense. And they'll say, so our headcount go from $1.20 up to $3.60. You'll see in my slides, we we're gonna average this year at around 200.

51:16 That means we'll exit the year at around $1.80, which is, you know, around the right sort of size for us moving forward. So, you know, it takes time to do that. You can you can do that at a certain pace, but I think we're getting you know, we you're starting to see that have come out, but it's maybe come out a bit more gradually than people would necessarily have seen. But, certainly, you can see it in the in the, you know, the EBITDA step up. You certainly see it as increasingly moving forward as that that the the cash and the profitability generated from that transactional business, we get towards sort of 50% EBITDA margins, very minimal CapEx, you know, that you'll you'll certainly start to see that moving forward. But just, you know, appreciate it's taking a bit longer. But for sure, it was absolutely the right acquisition. I think in hindsight, maybe we didn't explain it naturally well or or sort of explained some of the challenges at the time, but it's been absolutely the right thing to do to give us scale in that payments business.

52:06 Question on outlook and when when greatness will be fully achieved by BANGO. So the number of the question is is when we will see real profits, not adjusted EBITDA. Do you want do want me to just take that one? Yep. So I think I I mentioned in the in the in the in the presentation when we were going through the p and l as a whole. So I think the the key message really is that that bottom line profit, we expect BANGO to make a profit from fiscal year twenty six onwards. Obviously, we saw a big narrowing in the loss this year, which will continue, but profitability will will emerge we expect, in FY twenty six.

52:51 I think with the reductions in both OpEx and CapEx, I I just touched on cash EBITDA is set to be positive in '25, and then we'll see a meaningful step up change in FY '26 in that metric when the efficiency initiatives we're putting through come to come to fruition. Right. On communications and progress, there's there's there's feeling of of little communication around deals and financial I mean, financial forecast is difficult. So going forward, what are the expectations around this and improvements you're looking to add? Yeah. So so it's on the deal, but I I think we share your frustration.

53:40 There there are you know, obviously, see we did nine deals last year. We didn't do nine announcements. And that's quite often because we're prohibited from doing that by the partners. Right? Because they're trying to launch competitive service and differentiate themselves in a in in a competitive market and and so somewhat reluctant to, you know, highlight the means by which they're doing that to to the market. So I sort of show your frustration. We've we've had some debate about whether we should announce without names. I think the the our consensus is that's not the right thing to do, and so we tend to bundle those numbers up into into the results presentation. But to say, with career, in particular, you'll see lot more detail on that on that particular win in the next in the next week or so as as they as they look to make that public. There's lots of news flow around general audio subscriptions here on the LinkedIn channel, so I I continue to follow those. I think we have, over the last of the year or two, particularly got a lot more transparent and added a lot more KPIs. We added ARR in. We added net revenue retention.

54:37 Matt gave a lot of breakdown today on the different financials. We had a cohort analysis for ARR. We have the transactional split and the the growth in the different elements of the transactional business and then show the subscription counts. All I hope you see you see and appreciate that we we've added a lot more visibility into the business over time because we appreciate that's important. We have to do that at a pace that makes sense. Some of it is commercially sensitive so we can we we make it available at a pace where there's sort of enough scale in it so that it sort of avoids highlighting any particular customers or revealing accidentally sort of any customer status. But there's definitely been nothing progress on that. And you'll see that as an increasing trend moving forward. So if you've any particular thoughts or feedback, then the investor hub is a great way to send those in. On access to forecast, there are two analysts that cover BANGO. It's Canaccord and Singer.

55:26 I appreciate that you may not have access to those because of some of the rules in The UK. I think there is a a summary of the reports on certain of the research tree websites. You can see part, if not all of the reports, if you're a research tree subscriber. But what we try to do is put the consensus on the website. So you'll see the consensus on the website with the across those two analysts. And so we we try to give as much as we can, and we'll look to continually add and improve that. But, yeah, understand that that could be a frustration. A number of questions around share price. How do you explain the valuation difference between BANGO and BOKU to you, Matt? Sure. So I think, like, I think if you if you take a step back, I think some of the share price performance will be market driven. You know, it's well documented that the overall lane market has has has had its challenges. And, obviously, there's a there's an element of it that's sort of self inflicted on BANGO. I think in the past, you know, we've we've, you know, we've done a lot of upfront investment in the the digital vending machine, but it's about finding that balance between long term investment and sort of near term stability. And I think it's my job really to to help focus the company ensuring we've got that balance right and deploying, as I said before, you know, the capital and and resources in in in the right areas. So I think with with a strengthened balance sheet and these are the measures that we've that we've sort of put

56:57 in place with the financings, and I think with the financings, it's important to also add that, you know, the the revolving credit facility, this is not a term loan. You know, the business just hasn't suddenly taken on $5,050,000,000 of debt. It's a facility that we could draw as and when we need to, and it provides sort of a lot of flexibility. And with those both in place, you know, we've got significant liquidity headroom and really the financial firepower to address what we want to address going forward. And, you know, again, sort of to touch on those efficiency initiatives, they will they are there to deliver cash generation in in in future years. And putting it all together, we really see an uplift in in that in that cash EBITDA and cash generation going through FY '26.

57:45 And we've reflected that, I think, in in in the forecast and what we're saying around the benefits to to adjusted EBITDA in in in in next year. And a a related question. Do you consider AIM to be the best listing for BANGO No. Good question. I think I think Matt touched on a bit. I mean, AIM performance has certainly not helped. I think the uncertainty we had over IHT around the budget certainly didn't help. And, obviously, the the the IT benefit was reduced in the budget. Don't think any of those help. At the same time, regulation on the mid market, we're reducing. It was not reduced. If anything, it's got slight slightly harder in terms of the regulation. So the the you know, it's it's I think its future is unclear.

58:33 I I think it there's there's certainly some structural changes, I think, needed to to to best position name. Well, we've it used to be a great market for, you know, fast growing companies to to raise capital, and that's certainly why BANGO listed on him in the first place. And certainly, that's one of the the areas that Ray has shared is is specifically spending some time on. He spent a lot of time with the with the QCA. He was down the street a few weeks ago in a forum that was reported on the news of discussing the future of AIM and some of the structural changes that required. In the meantime, we continue as a board to look at other listing alternatives. You know, we I don't have any firm decisions or or plans at this time, but we continue to look at the options. At the same time, let's say, Ray is spending quite a lot of time, you know, helping people understand, you know, some of the benefits and and get engaged in the discussions that kinda make, you know, aim a a sort of a better market.

59:20 And with the with the current share price, has BANGO had any recent takeover approach to this? Yeah. I mean, I think I think it gets linked to last bit. Right? You've seen lots of companies come off AIM and and sort of go private. I think we firmly believe that's not in the best interest of anybody, any of our stakeholders, shareholders, employees, sort of all customers. We really don't think it's in in the best interest. As a management team, we're not supportive of any of those things. I think it's pretty easy to go and take yourself private at the 40% premium. I think we're we're significantly more undervalued than that. The DBM is making massive progress. We have a balance sheet for growth. DCB was down to generate significant cash. We're not interested in a 40% increase on the on the current share price. That doesn't increase. None of us are here for that. We're here for the you know, to to deliver something great and and big and and exciting. And and and, you know, I think at the moment, AIM is AIM is where we are to sort of deliver that.

1:00:17 You know, I think I guess then you get to the upside, well, what if there's a hostile takeover? I think hostile takeovers are quite rare. You judge most private equity companies. They're all all about bringing the management team along along with them. And so takeover that are not supported by the management team are you know, do happen with a rare I think we're in the fortunate position where we have a a strong shareholder register with both the founders, NHN, as well as long term holders like Harold who have been, you know, very supportive of the business. So I think that provides us an element of protection as well. Matt, any question on why why are receivables so high? Yeah. Good question. I touched on it a little bit, I think, during the presentation. The certain routes in transactional, BANGO sits in the middle of the payment flow. So payment passes from telco to BANGO.

1:01:08 BANGO takes its revenue share, and that then passes on to the underlying merchant. So the receivables is naturally inflated because that dynamic. For us, this one, do you, why were annual results published later than previous years? Yeah. Good. So I think I think it's a combination of factors. Firstly, I'm gonna blame Matt. Right? So so we had a new CFO. We obviously appointed a new auditor. That's BGO, we appointed as new audit partner. That always creates a champion. We've been through an audit. We'll know. The the first audit is always a little more problematic as they get to know and sort of understand the business. And on top of that, we had a new audit chair on the board. Right? And Tony we appointed Tony Perkins who took on the of the audit committee in this role. So we sort of had the the three key actors, if you like, in in delivering the auditor or something usually. It's taking a little more time.

1:01:56 And, obviously, the the part of Matt coming on board, one of the first things we we focus on was delivering sort of a stronger balance sheet, That's what he's he's really been working on. We felt it made sense to bring it all together at the same time, and that's resulted in, you know, why you've seen it sort of all the next in Montana because we thought it's best to bring and and and and and explain all in one goal rather than sort of dribble out sort of bits and new bits of news as they as they as they go past all the time. So a combination of all those those points together. A number of questions on competitors. Who are who are the main competitors? How do we differentiate, And do we have pricing power? Yeah. Good question. So let's take each half of business. So I think if you look on the on the on the payments business, I mean, that's there are two global players in that market. It's ourselves and BGO. I think our footprint's very different, but we're so but there is sort of certainly some overlap, and we but we are the two global players that I think are are in that market. We've both done various bits of M and A to to sort of consolidate those positions. But it's a very stable market.

1:02:52 Right? So there is growth. There is things that happen, but it's a very stable stable market and that's why it becomes sort of a a cash engine certainly for us moving forward. On the digital vending machine side, then our our biggest competitor remains sort of people trying to do it themselves. And certainly, lot of those simple bundles, remember I talked about them moving from simple to multipart. It's a super bundle. A lot of the simple bundles were done by telcos themselves because it's one it's one content provider, providers, one set of integrations. When the when the value of the DBM really shows is when you wanna go from one to two to three to five to 10. Right? That's where that's where we we we really differentiate. And so we've seen increasingly some of those DIY subscriptions migrate onto the platform. So we did actually half a million subscriptions migrated onto the platform a couple of weeks ago that an operator previously done directly, but they wanted them all integrated on a on a single platform.

1:03:40 So that continues to be, I think, the biggest sort of competitor. We also got Amdocs out there who rebranded the sort of market what used to be called market one solution for subscription bundling. I say, think they're, you know, the the people we see most and and I also say the only and if you like, let's say, a a product to to compete with us, I use it with a little bit loosely because I think we are very much a product company. We don't like doing customization. We don't invest on things specific for customers. We build products, and we build features for everybody to use. With end ops, obviously, the the business model is is quite different. It's very much more of a professional services customization model. But that continues to to be where it is. I go back to the T Mobile story I may have told before. T Mobile in The US is a combination of of Sprint and T Mobile. They were two of Amdoc's largest customers. They emerged. They became Amdoc's second biggest one of Amdoc's largest customers sort of overnight. We competed head to head in an RFP process for bundling, and we won that. And we integrate back into the the legacy Amdoc stack. And I think why do we why do we win? It's because of the the motes that we have and that have by the sheer number of content providers that are connected into the into the platform.

1:04:42 And, also, the advanced features that we have like the user interface, like the software management. Right? Those are those are really differentiating features. Praise for our DNI commitments. However, given the hostility of the Trump government to this concept, are you concerned it will cause problems for US business conditions? Yeah. I mean, I I think the answer is no. I mean, I think Trump's Trump's anger is aimed elsewhere, especially over the last sort of twelve twelve to eighteen hours or so. No. I think I mean, I think fundamentally, I think we've we've with all the initiatives we've we've done what's right and what's the right thing to do. I think, you know, the some of the the the churn in The US is people who've over rotated and are doing things that are sort of detrimental to the business. We've always done the right thing that's right for the business, and a big part of that is diversity inclusion. It's a core part of our values. We believe the diverse team is the best way to get the best results, And so we're focused on delivering the best results. And so I think I think we've we've sort of we've sort of managed it, I think, in the right way that's right for the business rather than it just being something nice to put on a website to to claim to investors. For us, it's about doing the right thing for the business.

1:05:46 One for you. There's a question on the high percentage of development cost and how that percentage of revenue that takes up. How many years will it take to recover the cost in margin earned? Yeah. So, like, the if we if we take a step back, the digital vending machine is a relatively nascent product. You know, it came it came on to the market in 2020. And I think what BANGO has been very good to do is obviously invest upfront and underpin sort of that future growth. So there's been a lot of investment in this product. As Paul mentioned before, you know, initially, that investment is to establish the core products, and now it's about investing to really fine tune, increase revenue per user, improve efficiency on our side to to to integrate new partners.

1:06:45 And, you know, that that that's that's what we expect to happen. You know, we talked a little bit about the revenue opportunity that we see here. There are big secular trends towards subscriptions, towards bundling, towards super bundling. And Paul's outlined in the past, you know, what we see is the ARR opportunity here. So, you know, we can see a a payback and a return on that of that CapEx once that comes through. But, naturally, as the product develops more and more, then, you know, the pipeline increasingly begins to build. And we've seen that this year with the momentum in in in the in the early customers that we've that we've added to the platform at the start of the year. So, you know, it's a it's it's a gradual process. But as I said, you know, going back to what I said before, it's ensuring that we just get the balance right in terms of that investment future versus versus near term.

1:07:39 Is there is there follow on question about what what is the steady state development expenditure that should be Yeah. Expected going forward? So I think with the migrations completing, we touched on that a little bit earlier around, you know, from fiscal year twenty six onwards, we see sort of the capitalized R and D for the transactional business being roughly 1,000,000 per year. So that's really sort of driving healthy cash generation in in that segment. And then on the DVM side, you know, if you were to strip back all the investment for sort of future growth, I think Paul touched on it on touched on it earlier. You know, it's it you're looking you're looking at single single to mid digit spend. But, you know, the the key thing here is really sort of future proofing that future growth, and so that's why the investment is is is higher than that. I think it's fair to say just building on that.

1:08:34 Think the reason that DBM margins are high is because we've invested to build a product that's suitable for everything. And because we're investing to build a product that's suitable for everything, and all the rules we capitalize it, and then it amortizes sort of out over time under the financial rules. But, you know, we're not building a product for one customer. If we did, there would be expense and the and the cost of sales will be higher and the margin won't be at the level it is. So I mean, if you look at the the sort of the the structural finance of that business, the reasons it's high margin is because of the investments and because of the the technology we built within the platform itself. And just the final one on that note, how how much cost is expensed each year in r and d that does not qualify for capitalization under IAS 38. Yeah. We will we will capitalize anything that qualifies under the standards to capitalize, and anything else we will expense.

1:09:21 You want on the the the loan announcements? How did you determine that the total cost of the NHN loan is a good deal for the company and non related shareholders? Let me let me do that, and I'll I'll sort of turn it over to Matt. So I think so for the NHN have been a supportive shareholder. Clearly, as a result, it's a related party. And so we did a full analysis for the Nomad on on what's the were the terms fair and reasonable for all shareholders, and we strongly believe there are. So I think, you know, the question talks about the warrants and and two and a half percent of warrants. I think there's a couple of interesting points to point out. Firstly, obviously, the warrants with the previous loan were canceled. The new warrants will when exercised, results in a cash inflow into BANGO. And there were no arrangement fees with the loan, no setup fees, there's no covenants, no other repayment fees.

1:10:12 It's very flexible, and that's very, very unusual in in in in in term loan financing. And so when we looked at other, you know, up you know, other solutions or other opportunities for for term loans, the the terms of the nature loan and the flexibility gives us a business, I think, for us, it was a it was a no brainer. It's absolutely the right the right thing to do. And you know, say, we went through a very detailed analysis with our Nomad and resulted in it being, you know, the firm reasonable opinion. I I yeah. I I don't have I don't have very much to add to that. You know, this ultimately, it's a it's a fixed cost. It's a rate that's very reasonable when you compare it to to other financings with a with a base rate and a margin. On the 110 content providers that are connected, are we seeing any network effects or increased stickiness among telco partners given with there's a 110 now and as a result of the deeper integrations with that those cohort?

1:11:13 Yeah. Abs absolutely. So firstly, we're you know, we while we've been in this business about three or four years, then we we once once the customers and telcos have launched subscriptions, we've never seen that could a churn from a telco. Right? We we just don't see customer churn once these services are are launched. They're they're like you said, they're very sticky. They're very deeply integrated. I think for us with the network effect is inside, it is sort of in the referrals. So think we are known now as a company of super bundling. I reach out on LinkedIn and people have said, I've been talking about bundling, and everybody I talked to mentions BANGO. Can we discuss it? That's not an unusual thing, to happen at both trade shows as well as through direct mails. Continent in Portugal, I think another great example of that, that was a referral from Disney. Right? So, you know, there's there's definitely a network effect from from from within this. We have telcos who very much support our business with all to all the telcos, reference calls.

1:12:06 So, you know, it's it's in you know, fundamentally, the nice thing about where we sit is in everybody's interest that there's a, you know, there's a platform there that makes that bridge between the the subscription world and the channel easy. And so it's in everybody's interest to make that platform successful until there's a a natural network effect. And I think that allows us to build this business and grow it with a, you know, relatively model modest sales and marketing investment. So for sure, there's absolutely a network effect. Matt, back to you. What's the risk of the weakening US dollar to BANGO's results? Yeah. Good good question. There's obviously quite a bit of volatility in in the dollar at the moment. So in terms of our cost base, obviously, a lot of it is people. A lot of it is based here in The U. K. So there is naturally some impact between the U. S. Dollar and the pound.

1:12:56 But I think it's also important to to highlight, you know, there's there's a natural hedge given the number of currencies that that that that we earn in in the regions that we generate. So it's it's it's a balance. We currently don't hedge, but it's something that we are that we always keep under review and can continue to evaluate. And back to the high cost of sales routes you you mentioned at the beginning of your section. Can you provide more info on them, what they are, how much of revenue do they account for? Yeah. So I the so if you have a if you have we we we call them routes in terms of, you know, telco and and and merchant, and BANGO obviously takes, you know, a revenue share in in in that transaction.

1:13:49 In these high cost of sales routes, BANGO actually sits in the middle of the payment flow. And so, you know, cash moves from from from telco to BANGO to merchant as as as I sort of talked about before. We acquired we acquired these routes when we when we bought Document Digital. The margin on them is very low. Again, picking up what I said before, the gross margin in that core transactional business is typically very high, of circa 90%. The margin here is is is very low, and it's it's driven by a number of factors. I think in these these particular routes, you know, there's also a cost that we incur working with third parties who help us deliver that service service into those markets. So that's, you know, a primary factor that drives a higher cost of sales.

1:14:47 And one on revenue growth. Revenue growth in 2024 was much lower than the CAGR figures in the presentation. Given the consensus are low still, how do you see growth over the medium term? Yeah. Let let me let me try and let so I let's talk the digital vending machine. Right? Because that's really where the where the where the growth is. Right? The the payments business is stable and grows as as as the market grows, and the the real growth is in that digital vending machine business. As Matt said, that that segment that we reported in included in 2023, a full year of the audiences business that was only discontinued in q one twenty four. And if you strip that out, the growth of that BBM business was was 40% last year, which is higher than the sort of the CAGR over the the previous time. So I think, you know, it's and, again, we'll we'll do a better job of making making that sort of growth clearer. The thing is in a business that's, you know, quite early on in the stage, it's necessary it's by default lumpy.

1:15:39 You know, one or two big customers can make a material impact. A big customer, you know, you know, delaying a launch by two or three months can make a big impact. So there's lots of there's lots of lumpiness at the start. So eventually, as with these business scales over the next two or three years, the lower averages will help out, and we'll start to see more predictable growth. But for us, DBM is a growth engine. We see it's it's easily double digit growth in terms of DBM moving forward. In terms of the numbers in the market, I'd say we've tried to guide, you know, somewhat on the conservative side knowing that this level of lumpiness and, you know, the impact of one or two customers shift in a quarter can have a can have a big impact on the overall overall financials. But, ultimately, that will play out once we want, you know, once we get a lot of averages and scale kicks in. Question from a a relatively new shareholder.

1:16:24 Simply put, what is the business model? How do you make money from transactional business and DVM? What CapEx is involved for new clients on DVM? And are there exit costs for you in recovery? Just before it for you answer, I would point you to the annual report. There's some really good content in there that breaks out the two business models. So it's quite a good reference point to Yeah. No. Definitely. And there's I think there's lots more on the on the investor website as well. And I'll I'll try I'll try to answer all these sort of very quickly. So on the transactional business, we make money by taking a percentage of the retail price of the process in that transaction. That's anywhere from, you know, one to 3% for digital goods down to sort of about a 30% for physical goods. So that's on the on the transactional business. On the DBM, then we charge the reseller a license fee. There's a setup fee for the initial integration.

1:17:11 There's then a license fee. That license fee scales based on the number of subscriptions we manage. So not the number of users, but the number of users times the number of services that they have, and that's done in sort of tiers. So that's so that's what creates this recurring revenue model business. There's really no new CapEx for new clients. That's not the way we operate. I think I said a while ago, we're not a services company. We're a product company. And so the reason is CapEx is because we're building a product. That's what the accounting rules say. We treat it, and then it's amortized over time. And so we build wherever the even if there's something specific for a customer, we will try to build it in a way that gives everybody benefit and build it in as part of the overall product roadmap. So there's no there's no CapEx for new customers. Contracts for the VM are typically three plus years, many of which also renew, some also renew for a year, and all to actually roll over. Some, you know, renew in every three years for a further three years. It it really does vary.

1:18:05 But we say we've really never we've had experienced any churn. You know, all our all our contracts have continued to renew once the once those services have been live. Question on the the need for such a large finance funding facility. Given the heavy lifting on the platform has been done, why is CapEx why is CapEx not slated to fall more significantly? So on so I think on the on the funding facility, yeah, this this this is a revolving credit facility that BANGO can can dip in as and when it needs to. So whilst the size of it is $15,000,000, it's not a case that BANGO draws on the facility for $15,000,000, in a year one. It's there to provide the flexibility to do the things that we need to do over the course of the next couple of years.

1:19:03 And then in terms of the the the the the CapEx points, you know, we've I think a good analogy is akin to, you know, we've we've built the core core products. We've we've built the car, essentially. It's about fine tuning that car to optimize the car. And, you know, we talked about the the the the the three drivers there around increasing the stickiness of customers, increasing the revenue per user, and reducing the integration effort on BANGO side, and that's where that CapEx is being deployed. Back to The U. S. And Trump. Do you see any impact from U. S. Tariffs? Yes. I can take that one. The answer is no. The tariff policy targets primarily physical goods, and and it's not targeting digital services. So no impact to BANGO.

1:20:00 And what are the broker expectations which you expect to meet and then beat in '25 and '26? Think we'll we'll you will make sure that you'll see those on the on the on the website. So they're they're certainly from a top line from from a DVM perspective, you know, conservative, but you'll see the consensus as we publish on on the website. Matt, can you discuss how you see free cash flow developing over the next two years? Yeah. We've touched a lot of the themes during course of the presentation and how we expect to see meaningful cash generation in in FY '26, I think I can I'll guide people to sort of the broker coverage and and the consensus forecast that are that are in those reports.

1:20:48 Last question. Have you considered increasing the equity research coverage of BANGO? Yeah. I mean, of course, we have two analysts coming at moment. Obviously, our Nomad and Broker, Singer, and, obviously, Canaccord. It's you know, generally, getting PC analyst coverage generally comes with a fee. We're happy we we will talk to and we do talk to lots of analysts in the hope that they will initiate coverage on, but more they're actually trying to initiate the business relationship and come with a fee. There are various companies that do research very much focused at private investors, but, again, it's sort of paid for research. And I think it'd be interesting to hear your feedback on that, and maybe that's one to comment on on the on the on the new investor hub. We we never thought that's the best use of our of our our resources is to pay us and need to do research necessarily on those. I'm not you know, there's a question of how independent that is, although all the analysts will tell you they're completely independent.

1:21:43 But it's just it's not obvious that's the best use of our resources. But, you know, interesting to hear your feedback. Let's say we we do try to make the consensus available. So and I say if you use Research Tree, you will see at least part, I think, of both the singer and the Camcode reports. Great. Thank you. I'm aware we've run over slightly, but thank you for letting us get through all the questions. I will hand back to Jake now to wrap up. Perfect, guys. That's great. And thank you very much indeed for being so generous of your time then, addressing all of those questions that came in from 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. But Paul, perhaps before really now, 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 just to wrap up with, that'd be great.

1:22:31 Yeah. So thanks again for for everybody's time. Obviously, we've we've overrun. I really appreciate you staying on. I really, really appreciate the questions. We really do appreciate the investor engagement. I know sometimes it's it feels like we don't want the we really want the questions. We really want the feedback. We really want your thoughts. That's why we've obviously invested a whole. That's why we spent the time here this morning. We're really excited about the business. Dokomo acquisition certainly distorted the sort of the financial profile for the business over the over the past few years and made the story maybe a little difficult to explain to the equity market. I think we're coming way beyond that now. I think the progress in digital vending machine is clear. We've got Matthew who is a great addition in terms of driving that sort of strong financial discipline, introduction of the new strengthening of the balance sheet. Great for sort of first step, focus on profitability.

1:23:19 You know, couple all that together with the market opportunity, you know, we're really excited about the future. It's a it's a it's a really interesting space that we we operate in. The sales funnel looks really exciting. We've seen that acceleration of deals already in the first half of this year, and, yeah, we look forward to seeing what else will be delivered over the next, over the next few years. So thanks again for your time. Really do appreciate it. And, Tim, please get in touch through the through the website. Perfect, Paul. That's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session? 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. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management team of BANGO PLC, we would like to thank you for attending today's presentation.

1:24:08 That now concludes today's session. So good afternoon to you all.