Bango (LSE:BGO) — Full year results for the year ended 31 December 2025

0:01 Good morning, ladies and gentlemen, and welcome to the BANGO PLC Full Year Results Investor Presentation. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish our responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to submit the following poll. And as usual, 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, and welcome, everybody, and thank you for taking the time to join us this morning. And thanks to everybody who submitted questions in advance. And as Jake mentioned, you can submit additional ones as we go through the presentation today.

0:52 We'll start with a quick highlights, then I'll I'll turn it over to Matt to go through the financials in more detail. And then I wanted to basically to run through the DBM opportunity a little bit more from sort of end to end describing sort of the market opportunity, giving some customer examples, where we are today, and the opportunity ahead. And then we'll wrap up with current trading and outlook before diving into the into the q and a. So a lot to get through. So without further ado, a reminder of the segments that we operate in, and you will have seen we have renamed those, and restructured those better to match how we operate the business internally as well as better to match the sort of the market dynamics of of each sort of business. So we now have our our payment segment, which is exclusively sort of DCB, wallets, and that's where the telco acts as a payment instrument. So you can buy something, whether it be digital goods or physical goods and charge it to your phone bill, the telco acts as a the sort of the payment instrument in sort of lieu of a credit card, for example. And on the other side, we have the subscription segment, which is dominated by our digital vending machine, which is really that platform that allows subscriptions to be bundled and resold by telco. So it's a very different proposition from a telco perspective.

1:58 Although telcos appear on on sort of both halves in the digital vending machine, they're actually reselling those and combining those subscriptions with their first party products to create a really compelling, user and, you know, customer proposition. No matter whether you're sort of payments or or sort of subscriptions, really, we act as a platform that bridges two worlds. It bridges some of the largest content providers in the world. And on the DBM, for example, there are over 130 different subscription services that integrated into the platform with people who in from a DCP perspective, wanna act as a payment instrument or from a DVM perspective, who wanna resell them. So we bridge those two worlds together. People who have goods to sell with different ways of sort of taking those to market, and that connect once and access many is a key part of the value proposition.

2:44 But increasingly, especially on the DVM side, the ability to manage those subscription life cycles full full, you know, full cycle from from start to end, including all the intermediate steps and upgrades and downgrades and price changes is really a level of complexity that the DBM really makes simple. And that's really what we're all about is taking really complex use cases and making them particularly, simple moving forward. Our strategy for growth is dominated around those these sort of four e's. You'll see that features very heavily in the annual report, and in and in the RNS, and it's about expanding and and creating to to dominate the subscriptions in the telco channel. Enhancing is all about using the data we have in the platform so that everybody in the ecosystem benefits. Explore is about new verticals beyond telcos. And, yes, we talked about a bank. We'd won that was gonna launch in 24 countries across Europe. That's And part of that explore vertical.

3:36 And extract is that that payments business and managing that institutionally for for cash and profit. And I think with the new segmental reporting that, that really comes out, sort of loud and clear, here in the results. If we look at fiscal twenty five, and I think three three sort of key messages. If you look at top line momentum, we had a record number of new DVM wins, 12 new customers versus an average of nine for the prior two years, continuous growth in subscriptions, growth in ARR, no churn in live customers, and the payment the core payments business continues to grow as well. And if you sort of take that there into a profitability perspective, that quality of revenue, I think, has significantly improved, become a lot more predictable, but also with a higher gross margin because of the nature of that core growth in payments and the DBM growth.

4:23 CapEx and OpEx continue to reduce as we've been talking about for for some time. And you put those together, and that means we were cash EBITDA positive for the first time since, the Dorkmoor digital acquisition, which is obviously key milestone. And because of the platform nature of the business, you're seeing that trend, you know, starting to accelerate and and more and more, drop down to that cash EBITDA line, and and Matt will talk through a little bit about that later. Fundamentally, And what we've done over the past year, and it has sort of been a year in transition, is sort of building the structural efficiencies that allow that platform scaling moving forward. The continued benefit of the economics that we finished the migration over to the Frankfurt data center, we went through a significant headcount reduction, which you see in the OpEx and CapEx reductions in in in '25 that will continue into '26. And at the same time, we've continued to be the go to place for bundling and increasingly becoming the de facto platform for subscription bundling. And with, you know, eight out to the top, seven out to the top eight telcos in The US, I think that's a that's an incredible place to be. I think add on to that that you have a 130 content providers including the world's largest video streamers.

5:25 And really, I think the importance of the BANGO digital vending machine as a as a platform for the subscription bundling ecosystem, it is becoming increasingly clear. So really, really, really solid year. So with that, I'll I'll turn over to Matt, and we'll walk through the financials. Thanks, Paul. Good morning, everybody. I'm pleased to walk through the financial performance for fiscal year twenty five. So over the coming slides, I plan to focus on three areas: the increasing quality of our revenue, the progress we've made on profitability and generating positive cash EBITDA and the financial profile of the business, particularly with the introduction of segmental reporting. The key takeaway I want people to leave with is this was a year where the model starts to become much clearer both operationally and financially.

6:13 So, on the following slides starting with the headline metrics, I'm pleased to say these show strong underlying performance almost across the board. We delivered 60% growth in active subscriptions, 30% growth in ARR. These are both core to long term value and support the scalability of the proposition. Net revenue retention at 117% underlines growth within our existing customers. And as a reminder, this compares ARR of the same cohort of customers at the beginning and end of the period. Anything above 100% highlights year on year growth. Importantly, profitability improved both in terms of gross margin, plus six percentage points to 84%, and adjusted EBITDA margin, up three percentage points to 31%.

7:04 We continue to maintain a rigorous focus on costs, which dropped by nearly GBP 3,000,000 year on year, and critically, we achieved positive cash EBITDA, marking a key inflection point for the business. So while overall reported revenue is relatively flat year on year and I'll come on to the drivers of that over the next few pages, the key point is the underlying mix and quality have materially improved. So, moving to the next slide. ARR grew 30% from 14,000,000 to 18,200,000. As you'll see from the chart, growth is also balanced across both new and existing customers. To date all live DVM customers have sustained or increased their subscription tiers meaning an increasing commitment to the digital vending machine over time.

7:54 This is a core feature of the model. As our partners grow subscriptions, our recurring revenue grows with them. There are three drivers behind that. First, existing customers expand as they bundle more subscriptions our recurring revenue increases. Second, new customers joining the platform add additional recurring revenue and strengthen that network effect and third, that revenue base is very durable so we've had zero churn from live customers so growth compounds over time Together these factors create predictable and progressively expanding revenue base underpinning the platform's investment case. On to the next slide.

8:39 This year we've introduced a new segmentation to better reflect how the business operates and provide more clarity for investors. BANGO previously reported transactional revenue and DVM and one off revenue at the left hand side of this chart. Transactional included all transactions charged as a percentage of the retail price. This predominantly included DCB and wallets but also some older subscriptions related revenue that adopted the same pricing model. All one off revenue regardless of whether it was DCB or DBM was also included in DBM and one off revenue. So going forward, we will now separate into two clear segments per the right hand side. Payments will include DCB and wallets and any associated one offs and subscriptions, which is DBM and subscription related revenue and any associated one offs.

9:34 Whilst there are a couple of movements between the old and new categorizations, the overall net impact is small. Importantly though, this now better aligns with strategy and also improves transparency for investors and how you should think about valuation. We will come on to this later. So moving to payments. As covered previously, the payments portfolio is a mix of what we refer to as core routes and high cost of sales routes. Both have different characteristics which drives the overall segments revenue and profitability. The core routes are higher margin, simpler cost structures and core to strategy. They now make up more than 80% of the portfolio. A high cost of sales routes are a legacy number of routes acquired from Docomo Digital.

10:24 These typically have more complicated cost structures and much lower profitability. There is some further detail in the appendix of these materials that highlights this further. Overall payments revenue reduced from 35,000,000 to £30,000,000 during the year, however, that headline drop does not tell the full story and the drivers here are deliberate. Growth in core routes was a healthy plus 5% year on year. The reduction occurred in the high cost of sales routes as planned. Importantly, has minimal impact on profitability because of their low margin. We also saw lower one off revenues where fiscal year twenty twenty four was distorted by additional work relating to the Docomo digital acquisition. Historically, the overall quality of the payments business has been less visible when merged with the rest of the group.

11:14 However, the new segments reporting highlights the underlying strengths, which I'll come on to later. And you can clearly see this on the next slide, core routes increasing from 67% to 82% of the mix, and as a result, gross margin improving by over 600 basis points. Going forward we will continue to optimize this mix prioritizing profitability over lower value volume. Moving on to the next slide seems to have got stuck. So moving on to the subscription segment. Subscriptions grew 22% year on year to 22,200,000.

12:03 Underlying subscription based revenue, so this is revenue that isn't one off, grew 30% year on year backed by a 60% increase in active subscriptions. One off revenue, which relates to DVM setup and onboarding fees, was broadly stable year on year, becoming a lower part of the overall mix, and net revenue retention remained strong at 117%. This reflects the scaling nature of the platform. As customers onboard they expand and deepen over time. This is the clearest indicator of scaling platform economics. And that scaling can be shown clearly on the next slide if we look at various cohorts of DBM customers.

12:49 So the left hand chart breaks down the number of DBM customers by ARR quantum. You can see clear movement into higher ARR bands over time, particularly in the above 2,000,000 bracket which is highlighted in yellow. And on the right hand side, one can see cohorts launched in earlier years are also all continuing to grow with each vintage expanding. This reflects the typical lifecycle onboarding, launch, scaling, monetization. So growth is not just new logos, it's about existing customers also scaling significantly over time. Moving now on to costs. So last year we launched a number of further efficiency initiatives, which delivered GBP 3,800,000 of underlying cost reduction.

13:42 Overall these costs have reduced GBP 10,000,000 over the last twenty four months and we expect to see further reductions in fiscal year twenty twenty six from the annualization effect. Key point is these are structural changes, not one offs, and this is what underpins the increase in profitability. As well as OpEx, R and D investment continues to reduce down to GBP 13,600,000, a 4,000,000 reduction over the two years. Investment is now more focused, targeting at reducing friction in the subscription life cycle and accelerating time to market for bundles. So importantly, we're becoming more efficient while still investing in the platform.

14:31 Looking at cash flow, the main use of cash, as I just mentioned, remains investment in R and D. Net debt increased to GBP 9,200,000, reflecting the planned working capital movements and the one offs from the exceptional items during last year. However, with cash EBITDA now positive, we expect leverage to reduce going forward. And importantly, we're moving from an investment phase into a cash generative phase and the balance sheet is materially strengthened following last year's refinancing. So bringing everything together at group level, gross profit increased with margin improving over six percentage points to 84%. Adjusted EBITDA grew 7% year on year to GBP 16,400,000.

15:19 That was despite a 1,000,000 reduction in other income, which relates to the recovery of costs from the Docomo Digital acquisition. Below EBITDA, the increase in D and A reflects prior investment coming through. We expect the peak in the D and A cycle over the next twelve to eighteen months, at which point it will begin to reduce. Exceptional costs relate to the efficiency initiatives launched during last year, including workforce reductions and the simplification of the group's corporate structure. Exceptional costs have been elevated in previous years following the acquisition. They are expected to significantly reduce now going forwards. So we touched on the introduction of segmental reporting earlier, This separation is important in understanding both performance and valuation and is a key milestone for BANGO.

16:13 As the slide will show, we now operate two distinct complementary engines. Payments is our cash generative business, high EBITDA margins at 46%, low CapEx generating nearly £11,000,000 of cash EBITDA. Subscriptions is our growth engine, recurring revenue and expanding margins. It became profitable in fiscal year twenty twenty five and whilst it remains investment led it is expected to become cash generative next year in fiscal year twenty twenty seven with a move to positive cash EBITDA. We believe this clearer separation helps investors better assess the growth, margin and cash profiles of each segment.

17:04 So to summarize fiscal year twenty twenty five, we delivered higher quality revenue growth driven by ARR and subscription and solid growth in our core payments portfolio. The DVM is showing growth in new customers, in existing customers and churn of live customers remains at zero. We improved profitability both through gross margin and cost reduction and we've reached positive cash EBITDA. So I'm pleased to say the business is now structurally stronger with clearer visibility and solid foundations for growth. I'll now hand over to Paul to talk through the DVM opportunity and the growth ahead. Thanks, Matt. So I thought it'd be useful to step back just to think and and some of this you may have heard before, but I thought it's good just to look at the ecosystem and the drivers from all the different parties included.

17:55 But if we start with consumers, right, us as individuals, why why do consumers want bundling? And one of the big drivers there is is sort of cost pressure and up to 23% report that they're spending more on subscriptions they can really afford. When you drop to Gen z, that rises pretty dramatically. And to put it in context, on average, most people when surveyed say they have around six subscriptions. Subscriptions. I think they're probably underestimating it a little bit and spend, you know, in excess of 70, sometimes up to a $100 per month. So it's becoming an increasing portion, of our discretionary spend and and that's because more and more services are moving towards a subscription service. It's now not just video and gaming and music. It's everything from coffee to food delivery to, you know, newspapers. Everything is becoming a subscription service. And that creates a, you know, certain level that we've described it before in the press on subscription fatigue.

18:43 And that that's one of the things bundling helps address because it makes it significantly easier for customers to manage those subscriptions. In a recent survey we we did, we saw that up to 31% of respondents said that they were done with standalone subscriptions, and they're not gonna take any more standalone subscriptions. They're only gonna subscribe when it says part bundled or or or sold as alongside something else. And that significantly increased, from what it was sort of a year or or sort of two years ago, which is sort of making bundles the new normal, and almost half of people expect at least some level of video subscriptions to be included in their in their Internet or their or their TV plan. So there's sort of a not only an expectation, there's a desire for simplicity and a desire to get a better deal, which, you know, you know, is is continuing to to sort of increase, driving more and more consumers to want to watch bundling.

19:30 And then if you ask who do they want to do the bundling, and this has been pretty static over the the last few years. And if you can sort of telcos, if you, you know, to me, telcos is TV cable, sort of mobile network operator. You put that together, it remains the dominant channel that people are looking to for their subscription services. And again, that makes sense because we've always bought our content from telcos. Historically, it was packaged as part of a set top box. Now it happens to be delivered by third parties, but it still makes sense for the telco to sort of put it all together. And you can see that up to, you know, almost two thirds of people will be more loyal to the telco that helps them save those money on subscriptions and half would look to switch. Right? So it's a big big driver and a big thing on on consumers' mind when they're thinking about who they want to do that funding. When you move past there, you see retailers and banks, and I think that's very much forms part of that sort of sort of loyalty aspect. So with MNOs and telcos, it's a lot about bundling, it's about churn reduction, it's about generating ARPU.

20:28 If you start to move moving more into a loyalty angle, then the retailers and banks it's a really strong play for both retailers and banks as well. Flip to the side, right, content is always king. So what are the what are the content providers looking for and why why are they wanting to bundle? And that's because they're having to spend an increasing amount of marketing costs to get access to consumers. They've they've done the sort of the easy bit, if you like, with their first level of marketing. They have the the customers that were gonna subscribe anyway. As they try to expand further into that market, having additional marketing channels like telcos, like banks, like retailers who are marketing their services to their customers is additional way of of bringing on new people to the platform and driving down those the the direct marketing costs. And churn continues to be a problem, and churn in in services continues to rise as people get more cost savvy and start to switch between services and turn services off when they finished a particular series, for example.

21:24 And the ability to bundle that into a service and reduce that churn is a big value out there to any content provider, especially when they're driving more and more towards profitability. And on top of that, a lot of them are already indirect. Right? So it's a channel that already exists and is becoming increasingly significant. And all, you know, 37%, of Americans sort of have their totals of, you know, 4.9 of those subscriptions bundled through somebody else. So it's becoming an increasing share of that market. It helps them drive down the marketing costs and it fundamentally reduce the churn. So it opens up new markets at a lower cost and keeps create stickier customers, which all drive profitability and that that's really what the content providers are focused on. And then why did telcos want the bundling? Well, for telcos, it's a growth lever. It's a way of strengthening loyalty. It's a way of reducing churn, stopping people switching, being able to sort of step people up some of the telco tiers by bundling on third party services on the side. You can see on the churn side alone, sort of Verizon saw a 60 to 70% reduction in churn. Telenet, since they launched the marketplace, seen a 26% reduction in churn.

22:28 These are significant numbers. Right? The cost of a new customer acquisition is several $100 and starts to become, starts to become really significant. So that reducing churn is a big element. And on top of that, you put the loyalty upside, and then you put the increased ARPU. It's a really compelling value proposition for telco. It's really struggling in a in a very capital intensive, very competitive market where it's hard to differentiate. The telcos that are differentiating are the ones that are bundling third party services. Bundling is in existence already and it takes form in in many different ways. I put just some sort of examples down here. You can see the the the sort of these sort of fixed bundles with multiple services together. So as an example there from Rogers in Canada and an example from Comcast in The US putting multiple streaming video services together as part of one of their packages.

23:17 You have the sort of the subscription marketplaces, the likes of the Optus sub hub and then the Telenet marketplace, which more a la carte allows you to pick the different services that you want and and add those and and really sort of pick the ones that are more relevant to you and add those onto your service. Yeah. Things like sort of super bundling where packages get increasingly large. You look at what Charter are doing with the Spectrum packages. There's a whole host of different services bundled into there. It really is sort of a almost a supermax bundle. Moving sort of cross categories or somebody bundling a subscription delivery services for a retailer along with sort of a a Disney SVOD subscription. So that cross category bundling is continues to increase. And they have what Verizon do. Verizon with their MyPlan and the it's very much more of a perk based selection. So you select the perks that are more relevant to you and and incorporate those as part of your plan. So lots of different ways of taking bundling to market, and the digital vending machine basically sits behind all these and makes these easy easy to operate and easy to manage. And that that's fundamentally what what the BANGO platform does is make these complex customer propositions really simple to take to market.

24:26 I thought it'd be useful just to talk through quickly a few real world, examples. You have here a tier one customer. This is in the millions of number of subscriptions, and you can see the red line indicates the growth in the number of subscriptions. You can see it's pretty sort of steady. It's generally driven by people converting onto a mobile plan. And as they convert onto the mobile plan, they start to take perks as part of that. And so they gradually, you know, it as people's plan refreshes, it sort of creates a very sort of linear linear sort of growth. And you see that more or less all the way through that red line, apart from that little step up in the middle. And that step up in the middle is where we migrated existing an existing service that they had into the digital vending machine. And I think we've talked about this before. Many telcos when we when we deploy the digital vending machine have at least one or two services that maybe they've integrated directly or integrated with somebody else.

25:18 And what happens is over time, those migrate onto the DBM because then you can bundle them as part of the other services. Because the only way you can create these cross content bundles is to have them all in the same platform. And so that migration element is becoming increasingly common. And it's it's a pretty standard part of our our DBM deployment. We'll deploy the DBM, launch new services, then look to migrate the existing ones later. What you see here is there there are pretty large tiers. So the the the customer has pretty large tiers. So there's not many, you know, this is over four years. There's only a couple of tier increases over that four year period, but it tends to be more significant in terms of in terms of the increase. This is a customer that's grown increased their ARR about five x over four years, and that's largely because of these sort of large large tiers. So it takes a while to move through the through those tiers, but the tiers are pretty large when you do.

26:07 Look at an example almost to the opposite end of the scale. This is a sort of a smaller customer when they're talking hundreds of thousands of subscriptions. You can see we've added around sort of five x growth in ARR over fifteen months. And if you look at the red line, I think the red line is really interesting. You sort of see, you know, the services initially deployed and launched, being tested. They're looking at marketing campaigns, looking at how they take the services to market, doing AB tests. You get to about month eight. They're happy with the proposition, they start to launch it more aggressively in month eight and then launch it even more aggressively in month 10, and that's driven a very significant increase in the number of subscriptions once it goes into that sort of full scale marketing launch. So this really for me is a sort of a marketing driven growth. And you can see, because it's a smaller customer, the tiers tend to be smaller. You can see we've crawled climbed through a tier almost every month for the past, sort of six months or so. And again, this is a customer that's seen a five x growth in ARR, but in fifteen months, but admittedly at a at a smaller scale. So these are these are real world examples of the success that customers are having using the digital vending machine for bundling subscriptions, as part of their first party telco services.

27:17 Then if you look at why are we winning in in bundling, and I think the first part is the the DBM is the only end to end full subscription life cycle bundling product. There are lots of people who offer services, will integrate thing from as a services, as a sort of one off bespoke work. This is the only product that does it out of the box. And increasingly, it's taken on more of the functionality that the telco maybe did in their back office system as part of the DVM. So these ability to combine multiple services together, handle all the price change, handle the upgrades, handle the downgrades, handle what happens if somebody wants to swap one of the perks in for something else. So all those end these those use cases are really, really complex. And that's the investment we've been doing in the platform is to make those simple and to make those automatic. So So they they really give that that telco the ultimate flexibility in the consumer proposition and removes any restrictions that they may have from what is in most telcos cases, a very legacy and inflexible billing system that that's a core part of their, core part of their infrastructure.

28:16 Speed and scale has always been a big part of it. You can see that we can launch these services, bring them to market very, very quickly. There's a couple of examples there. As you start to sort of offer more complex services, the the the the end to end life cycle I talked about very much links into speed and scale because now not only are we launching single connections very quickly, we're launching very complex bundles with multiple partners together. Each partner potentially has a subscription with multiple tiers, really bringing those two together to make sure we can launch more complex solutions at speed and scale again is is core part of the the investment. And then finally, I think we, you know, we're becoming increasingly synonymous with bundling. We're very well known across the industry. There's a nice network effect. I think we talked before about how Continente was referred to us by Disney.

29:03 We've been in past couple of weeks had already two two referrals from another content provider who's referring telcos into BANGO as part of their their ongoing their ongoing proposition. So there really is a a nice network effect and the expertise we have, the ecosystem knowledge, the place we have as that platform where everybody comes to to connect creates a growing sort of a growing momentum behind it in terms of in terms of subscription bundling and more and more will become in the place that people go to, for subscription bundling. Look at the opportunity head, the the the circles in the in the top right, look at that sort of a top down sort of market assessments. We have a a digital subscription market that's continuing to grow around 6%. An increasing portion of that is is becoming bundled primarily through sort of telcos. The telco bundle subscription, which is obviously a a key part of our addressable market is growing even faster.

29:58 And increasingly, those services are being being bundled in a more complex way. And and at that point, the value of the DVM really becomes clear. Right? And that's that big move from sort of simple bundling where you're connecting one service to really complex bundling where you're bringing multiple services together. And in that way, that's where the the value of the digital energy is is is super clear. And if we start to look a bit more sort of bottoms up rather than top down, you can sort of see the the growth in in in existing customers, the cohort analysis that Matt showed. You know, I think we'll clearly talk through how customers continue to grow. Examples I just went through show again how customers continue to grow. So significant headroom for existing customers continue to grow. And with zero churn in live customers, we continue to maintain a net revenue retention above, above a 100%.

30:45 Now outside of the telco market, we have over a 100 of the telcos that have been targeted. Each of those tar those telcos have greater than 4,000,000 customers. So there's, you know, hundreds of millions more customers that that, you know, are an addressable market for us as part of the digital vending machine. Now admittedly, it's very geographically dispersed. The US, we've already done seven out of the top eight. So while there's still opportunity there in some of the smaller telcos, you can see the opportunity very much is is sort of global. So big opportunity with the within the telco vertical. And then we have the the interest in other verticals as well. So we've talked about the banking and retail sectors before. One of the customers in '25 that we signed was a bank which operates across 24 countries in Europe. And very recently, we've seen an increasing pipeline in connected or smart TVs, as those sort of device manufacturers that historically sold as a bit of hardware as a one off device look to generate a recurring revenue stream and an ongoing digital relationship with the customer beyond the initial device sales. So that's to be a market that will be interesting to watch and and see how that develops over the coming months.

31:52 If you put that together and then we talk about sort of the the the market position that we're in, and this is the platform that we've been invested in. And we've invested, as you'll see, you know, a significant amount of capital in in sort of building a platform that creates this position. We have a 130 content providers on one side, all the telcos, retailers, and banks on the other. And we take out that technical complexity by having that deep integration right into the telcos core services. So if you think of a telco we're integrating into the identity and the billing services, these are core services. And the integration into those services creates a very high barrier to entry. So there's a level of technical complexity that continues to sort of differentiate us and becomes harder to copy. And when you add on sort of the established relationship, those network effects, the fact that we're powering the world's largest companies, the the level of knowledge we have and the people we have and then and all of that baked into the platform and the functionality of the platform creates an even deeper an even deeper barrier to entry. Then when you take the data that you can generate from all those relationships and look at how everybody can optimize the way the system works, then it really becomes almost a an incredibly powerful platform. And that really is the value of the d DBM is the platform that bridges these two worlds together And increasingly, it's becoming the de facto platform for those. There's always different ways of connecting services together, but it's not just about connecting services. It's about connecting them in a in a complex way and increasingly a very personalized way and driving those services to be as successful as possible. And that's that's the the platform that

33:23 we have, and that's the the motes that we continue to build. So let me skip. And Matt and I will just talk through the sort of the current trading and outlook, and then we'll we'll we'll move to the q and a. But q q one has got off to a really good start in in 2026. We have three DBM deals already this year. The revenue grew by 13% in in q one, and then you you see that you have that increasing rev revenue visibility because of the core payments growth, because of the ARR base, and because of the net revenue retention always been no more a 100. The the predictability and visibility of that revenue continues to increase. So 13% growth in q one, getting the the benefit of not only that that quality revenue growth, but also the cost savings and the annualized version of those cost savings that we did in, in fiscal twenty five come through, which drove adjusted EBITDA to be 39% positive. And then in q one, we're positive cash EBITDA again. So not only actually, we're positive for the entire year. We're positive already in in sort of q one. As we talked about before, the the subscriptions business, we're expecting to be cash EBITDA positive in fiscal year twenty seven.

34:33 So when you get to the end of fiscal twenty seven, you have sort of two cash EBITDA businesses, one of which is generating a significant percentage of of revenue as cash EBITDA, the other of which is generating significant revenue growth. So you can see the two businesses together form a very nice combination. So with that, why don't we move towards the q and a? And Jake, I'll turn it back to you. Perfect, guys. That's great. And 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, just like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can all be accessed via your investor dashboards.

35:18 Guys, we have received a number of questions that were both presubmitted ahead of the event as well as those that have come in throughout your presentation this morning as well. So thank you to all of those on the call for taking the time to submit their questions. But guys, at this point, if I may just hand back to you to address those questions where appropriate. And if I pick up from you at the end, that would be great. Thank you. Yes, sure. So as I said, we have quite a few questions submitted in advance. So what we've tried to do is group them themes and we really do appreciate the engagement and the questions have been asked. But we've tried to group them into themes and then we'll try to answer each in themes. In some themes, there's one question and some themes, there's there's multiple questions. We're going to sort of put them all together and and and be able to sort of address them all and address as many of the questions as we can on the call, and the others, obviously, will will follow-up with off offline afterwards. So before we get to the questions that people are submitting, and and thanks for those that continue submitting online, let's go through the the the few slides we've got on the questions that were submitted in advance.

36:11 The on the left, you see the question that was submitted for BATEM. There's been zero editing from us, so that's exactly the question. As we received it, what we've done, as I say, is is group them into theme. So there's a question first on the the Docomo digital acquisition. And in height, you know, was it the right thing to do given the focus? It's been a little bit of a distraction, and given the focus on subscriptions. And I think I guess I'll I'll give you my answer, I'll I'll let Matt but I think in my case, it's absolutely yes. It was one of those once in a lifetime opportunities to to acquire a business where it was a sort of a pure cost synergies. You're not relying on any revenue synergies to make the business case make sense. It was a pure cost synergy acquisition. Now, it's been more complex than than we thought, that but was sort of reflected in the purchase price, right? The world's really a very minimal purchase price for this business. So it's not one where we had to invest a lot of capital to acquire the business. The cost to us has been a swollen cost base over that interval. That's now behind us.

37:04 The migration away from Frankfurt was completed last year. You see already in the segmental financials, the the level of cash that payments business is generating. I know that payments business has scaled. We're the largest provider for Google DCB, the only provider for DCB for Amazon for physical goods, and the sole provider for DCB end to entity Dokomo, which is the largest operator in the largest market in the world. So for me, absolutely was the right thing to do. It's, it's given us a real a real scale in that payments business and allows you to turn into the cash engine that it really is. Yeah. I guess the only the the other point I'd add to that is then we've actively reshaped that portfolio. Right? So we've reduced the exposure to the lower margin routes that came with the acquisition while continuing to grow the the higher margin core the higher margin core routes. And you can see the impact of that clearly in the numbers as as Paul mentioned. So you've got a business now where it's generating nearly 11,000,000 of cash EBITDA and and multiples can be assigned to that, right, to provide a sense of a sense of valuation. So I think the acquisition the acquisition gave us scale and reach, but we've since optimized the quality of that revenue, and you can see the the the benefit of that in the in the cash EBITDA figure being generated today.

38:22 And then there are a whole host of questions, I think, you might expect talking about share price, market value, market perception, investor sentiment, etcetera. And I think it's it's fair to say there is there is a clear disconnect between the market value and and the the value of the business and the the the state of the business as it stands today. Think Mike might show up pretty earlier that the the financial progress we've made in fiscal fiscal twenty five alone. But I think it's a it's it's a it's a multiyear it's a multiyear journey. If I look back what's happened over the past past few years, we've done the digital acquisition that gives us scale in the payments business. We we talked about that. Yes. It was more difficult and a bit more complicated than we thought, but absolutely the right thing to do to give us that payments business with scale.

39:09 And at the same time, we built, the digital vending machine business. And and just if you step back and look at the digital vending machine business that has a 130 content providers connected to it on one side, many of whom are referring customers to us. It includes the likes of Netflix and Disney and Microsoft and Google and Amazon and all the big companies and all the big subscription providers in the world. And on the other side, has some of the largest telcos where we have seven of the top eight telcos in The US, presence in Japan, now Africa, and Korea. We noticed with Mobile Vikings in in Belgium last week. Latin America continues to be a good market. So it's a global footprint, really strong foot footprint in The US with seven out of the top eight telcos, 130 operators, content providers on one side. I think that's that's a platform business that that anybody would anybody would die for. And if you were setting up a company, you were building a company that was looking to to create that, you said, look, four or five years on, if you can have seven of the top eight telcos in The US and 130 content providers, I think we'd all take that.

40:07 I think, admittedly, it's been a you know, it's a it, you know, isn't maybe we've we've been a bit off with forecasts and a bit aggressive with forecasts. We take that. That's ultimately, my responsibility. But I think if you step back and look at the progress the business has made, both on the payment side with that acquisition, now that complexity is behind us and the position we have with the digital vending machine, then the business is in an incredible position. And, hopefully, the segmental reporting will really help drive and close that disconnect between the market valuation and the business valuation. Yeah. And I think on we we touched on forecasts a little bit there, and, yeah, I can I can speak for myself for the for the last twelve months? I think, look, following the integration of any acquisition forecasting is naturally is naturally difficult. I think we're coming through that now and in a I'm in a much stronger position to to help guide.

41:00 And I think if you look at that digital vending machine business, which, don't forget, started in 2020, it's reaching a maturity, new logos and new revenue was a greater proportion of that revenue mix historically. Now what we're seeing, and you can see that clearly in the the ARR growth, is the existing customers becoming a bigger share of that pie. And the existing customers, that revenue is based on subscriptions they generate that we can monitor in real time, so they become a lot easier to predict future revenue from those customers. So you become less exposed to frustrations in the sales cycle for new customers that we've that we've talked about before. So I think I think the key point on forecasting is the predictability predictability of of that that revenue is becoming easier and easier and easier once those customers come into come into the pool.

41:59 The other thing I'd add on that is a few comments in here about sort of investor comms. We've spent quite a lot of time really trying to open the level of of investor comms. We've introduced investor meet a few years ago now. That's the the platform we're on now. We introduced our investor hub website, which anybody can ask answer questions through. And if you ask a question for that, then either Matt or I will will will respond to that and we'll do we get an answer accordingly. And some of those are published, online as well. And we really do value that that sort of ongoing engagement. And then on the on the broad on the sort of institutional side, then I think it's fair to say we're operating in a in a difficult market where a lot of the institutions have seen outflows. We added Canaccord as a second broker, again, to give us broader coverage in The UK, but also access to those US institutions. We have a pretty intense roadshow over the next three or four days. These are not, you know, new investment new investments in a company and not decisions that that these institutions make overnight.

42:49 It's an ongoing process. And part of what we've been doing is getting the clarity of the story and the segmentation is the next part of that in terms of helping the institutions really understand, again, that that disconnect between the the valuation and and the value that we believe is is is inherent and built in within the business. Next slide on there's quite a few questions on outlook for DVM and the the the subscriptions growth and the and the potential within there. And I I think, hopefully, I've just covered a lot of this. I think just to just to step back, we talked about 60% growth in the number of subscriptions in the platform last year, you know, record new number of customers. We have zero churn of live customers that keeps that net revenue retention well above a 100%. Big growth in ARR, looking to expand beyond, sort of telcos with that that bank across 24 Europe countries in Europe. That's super exciting.

43:42 We have that sort of fundamental sort of network effect, and that within within the platform. So the the more it the more it moves forward, the more sort of momentum it has. So I think our our ambition, our drive, the visibility we have into the opportunity for the DBM remains completely unchanged. It's an opportunity we're super excited about. You know, it these things take time, to build. But let's say, 70 to the top eight telcos in The US, I think, not be better evidence that we've built the right platform, and ultimately, it's becoming the platform for bundling. There's a there's a comment here on the the contracts that we referenced Oh, yeah. To the January trading update. Do you wanna go about That's that's a good one. So one of the we we mentioned, I think, and we referred to it again in the in the results. There was a number of, number of contracts that slipped out to fiscal sort of '25. So these were deals that were very well advanced.

44:33 In one case, in particular, we had sort of agreed agreed sort of paperwork. And the customer decided they were gonna pause, and they put a basically a pause on those right at the end of the year, which is sort of why we were slightly under the expectations on on EBITDA, etcetera, for for for fiscal twenty five. And they deferred them to the next fiscal year. The next fiscal year started a few weeks ago at the beginning of beginning of April. So those discussions are ongoing and moving forward. And I think this has been one of you've heard me say this before, and my ongoing frustrations is the length of the sales cycles. And especially with telcos, which traditionally move slowly. When you have a group function and regional operating companies, it adds another level of complexity. And then I think, obviously, to be to be prudent and, again, talk a little bit of forecast, I think we're cognizant of the macro environment that we live in at the moment. The Middle East is a, you know, just not really a sort of a big impact directly on on our business, but it would be naive, think, to not think there's gonna be a bigger macroeconomic impact.

45:27 And that can have one or two things. You can firstly drive people to look at different create more value and get more value from the subscriptions that that squeeze on consumer wallet, and that's ultimately positive for the for the DBM as a as a business, but it could also potentially lengthen what are already a long sales cycle. Now we haven't seen that already in q one as you see from the results of q one, but I think it's something that's on our mind. Yep. I completely agree. So we've gone on competitive market opportunity and the the competition into that market and the the threat of AI. And I think there's been lot lots written about the the threat of AI. And I think we see AI as really a key part of what we do on a day to day basis for for many reasons. Firstly, it's a potential huge new subscription service. Right?

46:14 Less than 5% of ChatGPT's monthly active users are monetized. That will only increase. That's likely to be through a subscription. That's a great opportunity, for us to build as a business. So it's a sort of a positive from a sort of a subscriptions market perspective. We use AI incredibly intensively internally everywhere from sort of code generation to testing to through to marketing, through to finance, through to you know, every every function has AI embedded in the way we work, but it makes us more efficient. So that's one of the reasons we've been able to do some of those of initiative improvements that have driven down both our OpEx and CapEx over the past couple of years that will continue into into sort of into sort of 26. And so we usually need deliver more features to the market faster and and deliver better value get better value and more output on the capital that we're investing into that into that digital vending machine platform.

47:01 But fundamentally, if you look at where that platform is embedded and where it's integrated, it's a it's a point of sort of deep trust. And so it's a creates a very high barrier to entry when you're talking to a telcos core billing and identity services, it's a it's a position of trust and that the history we have and the the nature of the product and how the product is integrated and that add on to the the ecosystem that sits around that. It's established relationships. It's trusted relationships. It gives a really defensible more position. So it's not just about the technology and the platform, which only continues to increasing value. It's about all the trust and the ecosystem and the network affairs that sits alongside that. You can try to go? No. You got it. There's one for you, I think. Yeah. So a few questions coming here through on capital allocation and and levels of investments. A few points I'd make. So I think focus here remains on discipline ultimately to to drive shareholder value.

47:57 We take a balanced approach to allocation, but clearly, there's a clear hierarchy in place currently. So firstly, we I mean, as you can see from the levels of CapEx investment, we prioritize investing in the platform, right, where we see high return opportunities to drive growth and expand the ecosystem. You're seeing the benefit of those coming through with the level of subscriptions growth and the ARR growth that that we reported in in at the end of last year. As Paul just discussed on the last slide, obviously, that investment is acting to naturally build the moat around the business and give it that defensible market position. I think secondly, in terms of sort of uses of capital allocation, obviously, priority is to maintain balance sheet efficiency, including reducing leverage over time. So this will be particularly apparent in the next twelve, twenty four months.

48:52 And finally, any surplus capital generated beyond those priorities, you know, then could be considered for other options. But I think given the opportunities we see to invest in the platform today and focusing on reducing leverage, those remain the best uses of capital today. Thanks, mate. And there's quite a few questions on governance and and leadership. So I'll I'll sort of give the key points to sort of answer some of the some of the concerns or questions that have been been raised in the in the pre submitted questions. So firstly, both founders are starting in the business. So a question about the role that Ray and Anna are playing both are active in the business. Both remain significant shareholders in the business. Right? You can see that very clearly, on on our website. So both very much, you know, invested in in the future and and the future growth and the future opportunity, of BANGO. There's a couple of questions on stock options, and aligning stock options with the interest of shareholders. And I think maybe here there's some misunderstanding.

49:48 I'd encourage you to take a look in the in the annual report. It now has a full rent policy included in there. That will be subject to a vote at the AGM this year. But there's a lot of detail in the annual report about the mechanisms and then the compensation structure that that the the the the rent cost sort of put together. But actually, these stock options are exactly aligned with the interest of shareholders. So prior to 2024, all options were issued at the market value. So basically, unless the market value increased from the point at which the stock option was interested, it's not worth anything. And that very clearly aligns employee and shareholder interests. In 2024, we changed that slightly, following advice from some consultants and in consultation with some major shareholders, which reached to more of a nominal value, stock option, but at a very much reduced quantity, and that reduces the dilution impact. And you see that a little bit on the share based payment, charge that, that's on the p and l.

50:39 But it from from that point onwards, all director options have basic performance conditions. And so if we don't meet the performance conditions, the options don't vest and the options disappear. Those performance conditions are targeted around share price increase and revenue growth. So that very clearly aligns the interest of directors and shareholders. And as directors, we very rarely exercise options unless they're coming to expiration. You'll see that because all those options option exercises are notifiable. So it's not like there's lots going on that you don't see. Every director's share option exercise, you you get to see an RNS for. I'd the interests are very much aligned. And on top of that, there's been a whole flurry of sort of directors share purchases, outside of the option scheme over the past month. So I wanna make sure that everybody's clear that really the interest we hold is very much aligned with the interest of everybody in BANGGO. Right? We're all here to build a great company, and employees join BANGGO or not just for a salary, actually to get the capital gain, from from the few stock options in the future, and that's a that's a key part of our employee proposition and employee retention scheme.

51:40 Couple of questions on financial reporting. You wanna take this one? Yeah. Look. I think the the segmentation is clearly about realizing the value of each each business. Right? And I think this is a this is a key milestone for us introducing this, but the strengths of each underlying business have been masked in the past by being part of the group. But, you know, to to reiterate, we've got two very complementary businesses here. We've got very cash generative payments business showing very high margin, throwing off nearly 11,000,000 of cash EBITDA. And the subscriptions business, though, again, we're going through key stages of its evolution, became EBITDA profitable in fiscal year twenty five.

52:25 And whilst we've got, you know, negative 8,700,000 cash EBITDA today, because of the fixed costs and the operational gearing in this business, that very quickly will will will turn positive. And we've we've we've guided here to, you know, this this segment becoming cash EBITDA positive in fiscal year twenty seven. So this is gonna help investors assess the different growth margin and cash profiles for the benefit of the business. Okay. So I think we've come to the end of the pre submitted one. So thanks for everybody who submitted online. We'll get through as many as we can, on the call. And then for those that we don't get through, we'll we'll submit afterwards. But, Sukie, you wanna you wanna walk us through and guide us through the q and a because there's there's quite a few in there.

53:10 So Yes. Yes. Thank you. And please continue to submit questions as we as we go through. A question, can you please advise on total headcount including any contract slash temporary headcount? Do you me to say that? Yeah. So you we put some we put some commentary in the the r and s that you can see sort of permanent headcount reducing materially over the course of last year. So that landed a little north of of $1.60. In terms of sort of contractors and temporary headcount, we're obviously flexible in this and and have the have the assets to to flex as we need it. As a proportion of the overall payroll spend, it's probably about fifteen fifteen or so percent to give to give people an idea.

54:02 It's not on the balance sheet. The director seemed to misunderstand the term balance sheet strength. While securing financing facilities provides liquidity, it does not give balance sheet strength, profit and cash flow does. Please explain why you think it adds balance sheet strength. So that's probably another another one for me. So so a couple of points in there. So, yes, I agree with the distinction sort of being made there. So liquidity and and balance sheet strength are are fundamentally, you know, two different things. I think addressing each in turn, so the refinancing materially improved liquidity and flexibility last year. And as you say, some of the balance sheet strength ultimately comes from sustainable profitability and cash generation. And I think what's important is we're now seeing both of those. Right? So through the metrics that we've walked through on the call, we've reached positive cash EBITDA. You're seeing improving gross margins. You're seeing structurally reduced costs.

54:59 So that is lending itself to the strengthening of the the balance sheet over time. Have we seen the end of restructuring and exceptional costs post Docomo acquisition? Not one for me. So, yes, look. So there's there's been elevated levels of exceptional costs following the Docomo digital acquisition. But, yes, I can confirm that we don't expect future exceptionals with regards to this to occur. So exceptionals should significantly drop and become become negligible going forward. Another one for you, Matt. Please explain the average gross margins on DVM and the range. Yes. Look. We we don't give this explicitly, but I can guide. You know, this is very, very high margin business while it's the 90%.

55:52 And a follow-up question from the same person. What or you can take, what sorts of customer deals are typical of the bundles your customers offer? Well, yeah. Good question. And you you saw some real examples there in the in the presentation, and those are real examples from your customers. You can see the exact way they market it, you know, to to their customers. I don't think there is a typical typical way doing each operator has their own different way of taking those to market. As we saw, it can vary everything from a a pure super bundling. So the store, we can have a la carte. So very much a perk based, to very heavy multi party bundling, some of which sometimes only have two services, some of which have five or six services all put together into a very large sort of package for those high ARPU users. So I don't think there is a typical and I don't think it's really for us to define what that typically is. Our our role is really to build a platform that can support the go to market strategies and the go to market plans of our customers. And that's what we're here to do is to build a platform to make that simple. So the flexibility that we create in the platform is really important to to our customers. Now with that level of flexibility comes comes the complexity, and that's the investment we've been doing on the platform is to take that complexity out and give all that flexibility back to our customers without the complexity that comes with it.

57:08 Question, an interesting suggestion. Have you thought about using consumer peer group recommendations and sales like Telecom Plus for your services could materially speed up market penetration now that the product is optimized? Yeah. It's a good question. So I think I mean, you you hopefully, you've seen with the verticals, you know, we're not ruling out any verticals. And the nice thing about the platform that, again, that we've built is very much agnostic to the vertical that's happening as part of that reseller because something like Telecom Plus, in effect, it's sort of a bundling company already almost, and then it's bundling sort of different utility services together. So the net you know, it would be a natural next step to add third party services to do that. Likewise, we're seeing, sort of telcos and banks, so there's almost start to cross over a bit, a number of banks launching MVNOs and therefore becoming telcos.

57:55 Again, that brings sort of bundling with it, not just as part of their banking services, but from a loyalty perspective, also as part of their telco MVNO services. So there's lots of ways these services can can take to market, I say, everywhere from banks to retailers to telcos to, you know, basically anybody who has a consumer brand, anybody who has consumers who pay is in a great position to bundle and whether to enable all of those different customers. Matt, back to you. Has the process of discontinuing the low margin routes completed? Yeah. I can take that one. So the we we included a slide in here that showed the, you know, the mix of the core routes becoming more than 80% of the of the payments portfolio. But the ambition here is to take those high cost of sales routes to become zero part of the mix. So we're not done.

58:44 You know, focus will be over the next sort of twelve, twenty four months taking converting those high cost of sales routes into more profitable core groups. Paul, you touched on this, but a specific question. Would a tougher macro environment stimulate growth for you in terms of growth drivers looking to save money? Yeah. Well, I think generally, it does it it does it in two ways. Firstly, you know, all those consumers were all looking for additional ways to potentially save money, but also as it puts sort of pressure on use the telco segment, it puts pressure on on monthly spend. And quite often, telcos will be more flexible and more creative about the bundles they take to market to protect their core revenue because the telcos looking to protect that core revenue that they're generating for those telco services because there's a lot of CapEx spend that the telco has to do in building out base stations and and and core network infrastructure to support that. And then they generally will discount on the third party services they offer, which is perfect for us in that level of complexity and one off bundles and special offers is is absolutely, you know, that that's what really drives growth in the BBM.

59:48 Great. We're we're coming up for time. So I'll ask one final question, and then we can we can answer the rest offline. Do you show a reconciliation of cash EBITDA to adjusted EBITDA? Yeah. I I can take that one. So just to be clear, when we when we refer to cash EBITDA, so that this is adjusted EBITDA less capital expenditure. So the capital expenditure can come in two forms. It can be capitalized r and d, and it can be tangible fixed asset CapEx. Now as we discussed in the slides, the vast majority of of CapEx in the business is capitalized r and d. The tangible fixed part of CapEx is typically negligible, a couple of 100 k at most. Now through the movement of relocating our head office in Cambridge, you'll see an elevated level of fixed asset CapEx last year because of that head office move. But going forward, as I said, you can expect it to be negligible.

1:00:44 So hopefully, that clarifies the bridge between the two. So I'm conscious of time now. So, Jake, we'll turn it back to you, and then I'll I'll wrap up at the end. Absolutely, guys. And thank you very much indeed for being so generous of your time there, addressing all of those questions that came in. And, of course, we'll give you back any further questions that do come through immediately after the presentation has ended. But, Paul, just before really 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. Yeah. Absolutely. And thank you again for for everybody's time. We appreciate the time you spent with us this morning. We do love the engagement. You can go to the BANGO investor hub and sign up there and and ask us questions there. We we really do take time to read and answer, all of those questions. But hopefully, what you've seen as a result of the fiscal year twenty five wrapping up, it really was a year of transition that moving to cash EBITDA positive as a group is a major milestone.

1:01:40 The completion of the, the restructuring means that sort of that exceptionals drop off, and that cash EBITDA will continue to grow as the plat as the the network effect and the and the platform effect really take account and all that top line starts to drop increasingly through to the bottom line. So fiscal twenty six, you know, will be a be an interesting year to report on, but really we've we've turned a big corner in fiscal twenty five. And we entered fiscal twenty six with, firstly a great start to the year in terms of how quarter one's gone off. But fundamentally, a very profitable cash cash generative payments business that's showing off almost 11,000,000 of of cash EBITDA last year. And a DVM platform that has a position in the market that I think is unenviable, that, is really in adjusted EBITDA positive last year, said to be cash EBITDA positive in 2027.

1:02:27 So business really in great strength. Really appreciate your continued support, and more importantly, the, the continued engagement. And thank you again for your time, and I look forward to speaking again soon. Perfect, Paul. That's great. Thank you once again for updating investors, this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide, your feedback. On behalf of management team of BANGO PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.