TIDMBOKU
RNS Number : 9055K
Boku Inc
07 September 2021
Boku, Inc.
("Boku" or the "Company" and, together with its subsidiaries,
the "Group")
Interim results for the six months ended 30 June 2021
Strong performance across the Group
Boku, a leading global mobile payment and mobile identity
company, is pleased to announce the following unaudited interim
results for the six months ended 30 June 2021.
Highlights
Group
-- Group Revenues for H1 2021 up 38% to $34.2 million (H1 2020:
$24.7 million*)
o Organic Group revenue growth strong at 21.0% (excluding acquired
Fortumo revenues)
-- Group Adjusted EBITDA(**) for H1 2021 of $10.3 million is 61%
higher than H1 2020 (H1 2020: $6.4 million)
-- Operating Profit increased to $2.3 million for H1 2021 (H1 2020:
$0.2 million)
-- Net Profit before tax increased to $1.9 million (H1 2020: $0.09
million)
-- Twelve-month earnout period relating to the 2020 acquisition
of Fortumo Holdings Inc ("Fortumo") completed on 30 June 2021.
$5.4 million has been held in escrow during the earnout period.
o The earnout payment, based on Fortumo Adjusted EBITDA** performance
for the 12 months period ended 30 June 2021, is expected to
be $2.16 million, subject to final confirmation, which will
be paid to Fortumo's former shareholders by 5 October 2021,
with the balance of $3.24 million returned to Boku.
-- Group cash of $48.6 million at 30 June 2021 (30 June 2020: $36.2
million***)
o $11.25 million of the $20.0 million debt used to acquire Fortumo
paid down by 30 June 2021 with $3 million of the revolver
and $0.9 million of the term loan paid down since the year
end.
-- The average daily cash balance - a measure which smooths out
the effect of carrier and merchant payments, was $38.0 million
in June 2021 (June 2020: $25.7 million)
Payments division
-- H1 2021 Payments revenue increased by 40% to $30.7 million
(H1 2020: $22.0 million)
o Organic Payments revenue* growth of 20% to $26.3 million
(excluding Fortumo revenues acquired 1 July 2020) compared
to $22.0 million in H1 2020
-- Payments Adjusted EBITDA (**) increased by 33% to $11.2 million
(H1 2020 $8.4 million (*) )
-- Total Payment Volume ("TPV")**** of $4.0 billion in H1 2021,
an increase of 29% on H1 2020 ($3.1 billion)
-- 20.8 million new users made their first transaction with the
Group during the first half of the year, 91% up on the same
period in the previous year (H1 2020)
o At Group level the number of new users increased materially
due to the inclusion of transactional merchants from Fortumo;
excluding Fortumo data, new users increased by 8% to 11.7
million
-- 29.7 million Monthly Active Users ("MAU") of the Boku platform
in June 2021 (June 2020: 20.3 million), a 46% increase.
o Organic growth in Monthly Active Users (excluding Fortumo)
of 28%
-- H1 2021 take rate (Total Payments revenue divided by TPV) stable
at 0.77%, in line with H2 2020 (including Fortumo volumes)
-- Launches in H1 2021 with Google, Netflix, Apple, DAZN, Spotify,
Epic Games, Amazon, Riot Games and Tinder across both Direct
Carrier Billing ('DCB') and eWallets.
-- Boku has materially expanded its regulated payment activities
and is currently authorized to process regulated payments in
49 countries in Europe and Asia.
Identity division
-- Identity revenues increased by 30% to $3.5 million in H1 2021
(H1 2020: $2.7 million) and Adjusted EBITDA** losses reduced
to $0.9 million from H1 2020 ($2.3 million loss), in line with
the Board's expectations. H2 2021 costs expected to increase
as further investment is made.
-- Identity connections added in Spain, Italy and Indonesia, together
with a strengthening of the global partnership with Vodafone
Group
-- Strong growth from key existing customers complemented by a
ramp up in transaction volumes from new mobile wallet customers
in Indonesia
* 2020 H1 comparative excludes any revenues from Fortumo Holdings
Inc ('Fortumo') which was acquired on 1 July 2020
** Adjusted EBITDA (Earnings before interest, taxation, depreciation
and amortization): Adjusted for stock option expenses, Forex
gains/losses, Exceptional items and 'other income' item in 2021.
See reconciliation to profit per the income statement
*** Comparative group cash balance at 30 June 2020 of $80.7 million
included $44.5 million of cash held to pay for the acquisition
of Fortumo on 1 July 2020. Excluding this cash, the balances
were $36.2 million
**** TPV is the US$ value of transactions processed by the Boku platform
***** Adjusted operating expenditure is Gross Profit less Adjusted
EBITDA
Jon Prideaux, Boku's CEO, commented :
"Our short run performance has been strong, we think our
long-term future is brighter still. With positive momentum in both
the Payments and Identity businesses, I am confident in our ability
to meet the revised, increased expectations over the full
year."
Enquiries:
Boku, Inc.
Jon Prideaux, Chief Executive Officer +44 (0)20 3934
Keith Butcher, Chief Financial Officer 6630
Peel Hunt LLP (Nominated Adviser and Broker) +44 (0)20 7418
Edward Knight / Paul Gillam / Nick Prowting 8900
IFC Advisory Limited (Financial PR & IR)
Tim Metcalfe / Graham Herring / Florence +44 (0)20 3934
Chandler 6630
Notes to Editors
Boku Inc. (AIM: BOKU) is a leading global provider of mobile
payment and identity solutions. Its Mobile First Payments Network
'M1ST' features 330+ mobile payment methods, including mobile
wallets, direct carrier billing, and real-time payments schemes,
reaching 5.7 billion mobile payment accounts in 90 countries - all
through a single integration.
Customers that trust Boku to simplify sign-up, acquire new
paying users and prevent fraud include global leaders such as
Apple, Facebook, Google, Microsoft, Netflix, PayPal, Sony, Spotify
and Tencent.
Boku Inc. was incorporated in 2008 and is headquartered in
London, UK, with offices in the US, India, Brazil, China, Estonia,
France, Germany, Indonesia, Japan, Singapore, Spain, Taiwan and
Vietnam.
To learn more about Boku Inc., please visit:
https://www.boku.com .
Chief Executive Officer's Report
Into the M1ST
The Language of Selling
Willy Brandt the German Chancellor once said, "If I'm selling to
you, I speak your language. If I'm buying dann müssen sie Deutsch
sprechen". It's all very well to take your Visa card when you go on
holiday to Thailand, but, if you want to sell to Thais, accepting
Visa is not enough, you need accept PromptPay, Rabbit LinePay and
TrueMoney. That's how they want to pay.
Since 2009, approximately 1.7 billion people have joined the
global middle class and every year approximately 160 million more
join them. These people, this new middle class, are to be found
mostly in Asia, but also in the Middle East, Africa and Latin
America. In some respects they are like the traditional middle
class - they want to accumulate the same consumer goods, wear the
same branded clothes and get the latest gadgets and services. Their
accumulation of this stuff will be the prime motor of global growth
- it's estimated that whilst middle class spending in North
America, Europe and Japan will grow by an average of 0.5% per year,
the new middle class will increase their spending by 6%
annually.
Whilst the new middle class want the same things, they are also
different: they are Mobile First (or M1ST). This new middle class,
which we at Boku call the M1ST consumers, did not come to the
internet through the keyboard and the PC, they tapped on the glass
screen of a smartphone. 45% of consumers in the key emerging
markets have such devices. Importantly for our business, though,
they don't tend to pay with credit cards - card ownership is only
approximately 10%.
In China, for example, in 2020, 72% of all online spending was
on mobile wallets, specifically Alipay and WeChatPay. Credit and
debit cards combined accounted for just 17%. Globally mobile
wallets are the most used way that people buy things online, with
the 50% point passed in 2020. Wallets are also the most popular
payment method for the M1ST consumer. What's true in China is also
the same in India, with mobile wallets accounting for more payments
than cards. But India also illustrates another phenomenon: the
growth of Real Time Payments ("RTP"). India's UPI (Universal
Payment Interface) is the world's biggest RTP network; Thailand
with PromptPay and Brazil with PIX are other examples of countries
that have rapidly adopted such methods. Local payment methods are
complex, fragmented and unstandardised.
So what are merchants to do? The old playbook of supporting
international business on the back of Visa, MasterCard and perhaps
Amex and PayPal will no longer hack it. To reach the M1ST consumer
they need to accept the payment methods that they use.
It's the hard that makes it great
In the 1992 film A League of Their Own, the character of Jimmy
Duggan, a baseball coach (played by Tom Hanks) says to a player:
"It's meant to be hard. If it was easy everyone would do it. It's
the hard that makes it great".
Boku started its business by providing Direct Carrier Billing
("DCB") services and we have emerged as the market leader, with a
profitable growing cash generative business. It was hard to do. It
took a decade and considerable expenditure. To grow the Company
further we have also been focusing on implementing other more
mainstream payment methods like e-Wallets and Real Time
Payments.
Connecting to these different payment methods is not easy
either. There are no standards to follow. The tax, commercial and
regulatory issues are complex. To operate, a provider needs the
right combination of entities, licences, knowledge and
infrastructure. Merchants come to Boku because we provide these,
and through us they can access the consumers that they can't reach
any other way and will pay a premium over cards to do so. Because
it's hard.
With Boku now expanded beyond DCB, we now support a total of 330
payment methods in 89 countries. We call it the M1ST or Mobile
First Network. On Boku's M1ST network, users can be reached through
both eWallets and Real Time Payments, not just through mobile
operators. We have also implemented a unique multi-jurisdictional
regulatory framework, with appropriate licences obtained allowing
regulated payments to be processed in 49 countries. The M1ST
network allows us access to a Total Addressable Market (TAM)
conservatively estimated at 20 times that for DCB alone.
This is the Big Pond in which we are now swimming.
We differentiate ourselves through our mobile expertise and by
focusing on the consumer. We support the payment methods that the
M1ST consumer uses. With our decade-long heritage in supporting
mobile payments, we are well qualified to provide excellent
solutions for merchants looking to reach these high growth
consumers.
That mobile expertise is reflected in our dominance of Direct
Carrier Billing. It's a hard payment method to master, yet it's one
in high demand from merchants. DCB was the first mobile-first
payment method. Being the master of this technology has given us
payment connections to all of the planet's leading digital
companies. Apple, Amazon, Epic Games, Facebook, Google, Microsoft,
Netflix, Sony, Spotify, Tencent: all of them use Boku. We have the
most complete set of digital content merchants of any payment
provider.
Our challenge now having landed these customers is to expand the
relationships to achieve their potential. We need to cross sell
other M1ST payment methods. We've made a good start with a number
of merchants, including four of our tier one merchants, using Boku
for non DCB payment services, a figure that will grow over the
coming months.
The average international Boku merchant today uses about 30 out
of the 330 potential payment methods available worldwide through
Boku. To make a connection requires bespoke work, through
investment we will implement new tools that allow us to connect
merchants and payment methods more quickly.
In summary, our strategy is to build the best network for
reaching M1ST consumers, in our selected countries. We will go wide
enough to cover the critical payment methods and deep enough to
solve problems that others do not; these deep connections will
attract new merchants. Once landed we must expand their usage of
our network and, to do that, we must develop our systems to be plug
and play.
Wide and Deep; Land and Expand; Plug and Play.
We have built this strategy on a firm foundation of delivery
over our life as a public company, during which time we have
consistently grown revenues and Adjusted EBITDA**.
This six-month period has been no different. The fundamental
strengths of our model have shown through with strong performance
in both divisions.
In Identity, revenues increased by 30% to $3.5 million on the
back of increases in both the core market of North America and also
internationally, especially within Asia, where mobile wallets are
using Boku's Authenticate service to confirm the phone numbers of
users. New connections have also been launched in UK, France,
Spain, Italy and Germany.
The Payments business, accounting for about nine tenths of the
Group's revenues and all of its profits, has performed particularly
well. Considering that the comparison is to the first half of 2020,
when the initial COVID lockdowns stimulated demand for digital
services, an organic year-on-year revenue growth rate of 20% is a
creditable performance. The Fortumo Holdings Inc business
('Fortumo'), acquired in July 2020, performed in line with
expectations, but below the top end of the challenging Adjusted
EBITDA** earnout target.
Launches have been made across a wide variety of customers
including Amazon, Apple, Tinder, DAZN, Netflix, Spotify, Google and
Epic Games.
Payment volumes increased to $4.0bn in the half year and, most
importantly, the number of monthly active users of our services
increased by 28% on an organic basis against the first half of 2020
and by a whopping 46% when you include Fortumo users. The number of
new users also increased, with just under 21 million users making
their very first transaction at a Boku Group platform. Once again,
this figure is flattered by the contribution from Fortumo -
nevertheless the organic growth in new users was 8%.
These improving non-financial KPIs have fed through to improved
financial performance in the half year. More detail is provided in
the CFO report, but I am pleased to report revenues up 38% to $34.2
million (20% growth on an organic basis). Group Adjusted
EBITDA**was also up by 61%. These results generate the funds that
we will need to continue our journey in the Big Pond.
Outlook
Our short run performance has been strong, we think our
long-term future is brighter still. With positive momentum in both
the Payments and Identity businesses, I am confident in our ability
to meet the revised, increased expectations over the full year.
Jon Prideaux
Chief Executive Officer
6 September 2021
Chief Financial Officer's Report
The first half of 2021 was a strong period for Boku with
revenues and Adjusted EBITDA** increasing in both its Payments and
Identity divisions.
Our Payments division again performed strongly with organic
growth increasing by 20% when compared to the same period in 2020
as we saw growth from existing and new DCB and e-wallet connections
to international merchants. When Fortumo revenues are added
(Fortumo was acquired on 1 July 2020) that revenue growth increased
to 40%. Fortumo has performed well since we acquired the business
on 1 July 2020 which consolidated our dominance in the carrier
billing market. It's more SME focused merchant base and platform
complements Boku's focus on the world's largest digital merchants.
Fortumo's platform and relatively low-cost Estonian base will allow
the Group to grow its headcount to take advantage of the many
opportunities in front of us, at a lower cost than prior to the
acquisition.
Boku's Identity division also performed strongly with revenues
growing by 30% and Adjusted EBITDA** losses continuing to reduce to
$0.9 million. The business had primarily a US footprint when
acquired and we are particularly pleased to see the growth coming
from new merchants in markets outside of the US as the supply
network we have been building out begins to bear fruit.
The strong revenue growth from both divisions, up 38% to $34.2
million (2020 H1: $24.7 million) has resulted in 61% growth in
Group Adjusted EBITDA** in H1 2021 to $10.3 million (H1 2020: $6.4
million) and we report an increased net profit before tax of $1.9
million and strong operating cashflows of $8.4 million before
working capital movements - see note 7. Cash used in operations of
$8.9 million (after working capital movements) is primarily due to
timing (cash collected early from carriers in prior period and paid
to merchants in current period).
Financial review - Strong revenue and Adjusted EBITDA** growth
in both divisions
Group Income Statement to Adjusted EBITDA**
We are pleased to report another significant increase in Group
Revenues up 38% to $34.2 million and Adjusted EBITDA**, up 61% to
$10.3 million for the first half of 2021, (H1 2020: $6.4
million).
Group revenues for H1 2021 included a full six months of Fortumo
revenues (acquired 1 July 2021). Excluding Fortumo revenues, growth
was 21% higher than the same period in 2020 (H1 2020 $24.7
million).
Group Adjusted operating expenditure***** of $21.0 million for
H1 2021 is higher than H1 2020 due to the inclusion of Fortumo
costs, additional headcount in Sales and Operations along with
annual pay rises and slightly higher platform costs as we completed
our migration from two physical data centres into a cloud based
environment (AWS). Identity payroll costs remained low in H1 2021
as the business refined its headcount base but are expected to rise
modestly in H2 2021. Coronavirus restrictions again kept our travel
and entertainment and marketing spend down, which we expect to
return to pre-pandemic levels in the longer term.
Payments division
Payments division revenues, including Fortumo revenues (acquired
1 July 2020) increased 40.0% to $30.7 million.
Excluding Fortumo revenues, the Payments division revenues
increased by 20.0% to $26.3 million (H1 2020 $22.0 million). Total
Payment Volume ("TPV")**** increased by 29% to $4.0 billion (H1
2020: $3.1 billion). Gross margin of 95.9% remains high, but was
slightly lower than H1 2020 as we included Fortumo revenues which
have a slightly lower gross margin. These results were driven by a
46% increase in monthly active users to 29.7 million as we
completed multiple new connections with major merchants worldwide
in H1 2021 for both carrier billing and e-Wallets.
Average weighted take rate (revenue divided by TPV) for Payments
were broadly stable with H2 2020 rates at 0.7%, if we exclude
Fortumo. The addition of Fortumo revenues, who's merchants
primarily operate on the higher take rate settlement model helped
marginally raise the take rate. Since IPO, Boku has not reduced its
rates to any of its merchants nor has it lost a material merchant
or connection.
Adjusted Operating expenditure***** increased as we added
Fortumo costs, but also invested in operational headcount, sales
and marketing, however operational leverage remains strong and, as
a result, Payments Adjusted EBITDA** increased by 33% to $11.2
million (H1 2020: $8.4 million). This investment is expected to
continue in H2 and into 2022.
Fortumo earnout
Boku completed the acquisition of DCB payments company Fortumo
Holdings Inc ('Fortumo') on 1 July 2020, consolidating Boku's
leading position in the global DCB payments market, for a maximum
consideration of $45.0 million (enterprise value $41.0 million net
of acquired cash). $5.4 million of this consideration was placed
into an escrow account and was subject to Fortumo meeting earnout
targets.
The earnout payment, based on Fortumo Adjusted EBITDA**
performance for the 12 month earnout period ended 30 June 2021, is
expected to be $2.16 million, subject to final confirmation, which
will be paid to Fortumo's former shareholders by 5 October 2021,
with the balance of $3.24 million returned to Boku. The maximum
earnout target was a 'stretch target' Adjusted EBITDA**,
considerably higher than Fortumo was expected to achieve and which
the market was guided to.
The excess amount repayable to Boku over the fair value on the
Balance Sheet at 31 December 2020 of $1.08 million has been shown
as 'Other Income' in the Income Statement. It has been excluded
from Adjusted EBITDA** as a non-trading, non-recurring item.
Fortumo primarily focuses on providing mobile payment solutions
to over 400 small-to-medium sized enterprises, but also services
larger merchants including Google, Amazon, Epic and Tencent.
Identity division
Identity revenues recovered strongly in the first half, growing
30% to $3.5 million (H1 2020: $2.7 million) as we saw strong growth
from key existing customers complemented by a ramp up in
transaction volumes from new mobile wallet customers in new
geographies such as Indonesia. We continued to build out Identity
supply with new connections added in Spain, Italy and Indonesia,
together with a strengthening of the global partnership with
Vodafone Group.
A djusted operating expenditure***** for Identity remained low
in H1 2021 due to continued low travel and marketing spend as a
result of the COVID 19 pandemic although we expect H2 2021
operating expenses to be higher as we continue to invest in the
business. The strong revenue growth and low-cost base resulted in a
significantly reduced Adjusted EBITDA** loss of $0.9 million,
(2020: $2.0 million Adjusted EBITDA** loss). In light of the EBITDA
loss, an impairment review was performed which indicated that that
no impairment was needed for the Identity CGU.
Adjusted Operating Expenditure*****
Unaudited Unaudited
Period ended Period ended
30-Jun 30-Jun
2021 2020
$'000 $'000
Gross profit 31,279 22,448
Adjusted EBITDA** (10,308) (6,441)
Adjusted Operating Expenditure 20,971 16,007
---------------- ----------------------
Group Operating Profit
Group Operating Profit for H1 2021 improved by $2.1 million to
$2.3 million compared to $0.2 million for the same period in 2020.
This can be broken down as follows:
-- Other income of $1.08 million relates to the difference
between the fair value of contingent consideration as determined at
31 December 2020 (Annual report note 26: $3.24 million) and the
actual amount now agreed to be paid to Fortumo shareholders of
$2.16 million. This amount has been excluded from Adjusted EBITDA**
as a non-trading, non-recurring item.
-- Foreign Exchange movements resulted in a small loss of $0.04
million (H1 2020: $0.2 million gain)
-- Stock Option Expenses increased to $5.3 million from $3.0
million in H1 2020 as Boku issued Restricted Stock Units ("RSUs")
to newly joined Fortumo staff for the first time in the period in
line with its policy of offering all staff share based awards
annually. RSU and stock option charges are spread over three and
four years respectively, and in line with their vesting conditions,
from the date of grant.
-- Exceptional Items in the period were $0.03 million (2020:
$0.9 million). The H1 2020 comparative costs were primarily related
to the acquisition of Fortumo which completed on 1 July 2020.
-- Financing expenses increased to $0.370 million in 2021 (2020:
$0.164 million) primarily due to interest on the $20.0 million
loans used to finance the Fortumo acquisition which were taken out
on 30 June 2020. However, it should be noted that $11.25 million of
this debt had been paid down by 30 June 2021 and the interest
payments have been reducing as a result.
Balance Sheet and Cashflow
-- Like for Like Group cash balances were $48.6 million on 30
June 2021 (30 June 2020: $36.2 million***).
-- To part finance the acquisition of Fortumo which completed on
1 July 2020, Boku took on a debt facility of USD $20.0 million with
Citibank in June 2020 which was fully drawn at 30 June 2020. This
facility was split:
o $10 million term loan repayable over 4 years; and
o $10 million Revolving Credit Facility ("RCF") available to be
drawn down in EUR, GBP or USD.
o As at 30 June 2021 the $10 million RCF had been paid down in
full using surplus cash balances, with $3m repaid in the period and
the term loan had been paid down by $1.25 million in accordance
with the repayment terms ($937,500 repaid in the period).
-- The average daily cash balance - a measure which smooths out
the effect of carrier and merchant payments, was $38.0 million in
June 2021 (June 2020: $25.7 million).
-- We assessed our goodwill and intangibles for impairment and
deemed that no impairment exists at 30 June 2021.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Group remain
broadly consistent with the Principal Risks and Uncertainties
reported in Boku's 2020 Annual Report. Since the 2020 Annual
Report, the Board have been monitoring and mitigating the effects
of global events on the Group's business.
Going concern (including consideration of COVID-19)
In carrying out the going concern assessment, the Directors have
considered a number of scenarios, taking account of the possible
continued impact of the COVID-19 pandemic, in relation to revenue
forecasts for the next 12 months. Given the current uncertainties,
it is not yet fully clear when the global economic activity will
fully return to pre pandemic levels, therefore, we continue to
prepare the business for varying levels of performance. To that
end, we have continued to model the effects of differing levels of
sales performance along with the measures we can take to ensure
that the Group remains within its available working capital.
In reaching their going concern assessment, the Directors have
considered the foreseeable future, a period extending at least 12
months from the date of approval of this interim financial report.
This assessment has included consideration of the forecast
performance of the business, as noted above, the payment of
contingent consideration, and the cash and financing facilities
available to the Group. Considering all this analysis, the
Directors are satisfied that, the Group has sufficient cash
resources over the period of at least 12 months from the date of
approval of the interim consolidated financial statements. As such,
the interim consolidated financial statements have been prepared on
a going concern basis.
Looking Ahead
We expect the strong revenue growth in the Payments division to
continue in the second half and into 2022. To fully exploit the
'big pond' opportunity and to build out the Boku 'mobile first'
(M1ST) network to deliver that, we expect Adjusted operational
expenditure***** in the Payments division to increase more quickly
in the second half and into 2022 as we invest in sales and
marketing as well as technology and operational headcount. However,
we do expect Adjusted Operating expenditure***** to flatten again
in FY23 and beyond after this one- time investment.
We also expect the strong revenue growth in Boku's Identity
division to continue in 2022. The Identity business was initially
more adversely impacted by Covid-19 than Payments with volumes from
existing merchants reduced as their businesses slowed and direct
sales and marketing events were difficult. However, costs were
carefully managed and the supply side investments we made delivered
revenue growth in the first half which we look to support in the
second half and into 2022 with modestly increased operational
expenses investment primarily in headcount as the business
continues to grow revenues and moves towards cash breakeven.
With both divisions performing strongly in the first half and
with a substantial opportunity to expand our addressable market in
Payments we are confident for the future.
Keith Butcher
Chief Financial Officer
6 September 2021
* 2020 H1 comparative excludes any revenues from Fortumo Holdings
Inc ('Fortumo') which was acquired on 1 July 2020
** Adjusted EBITDA (Earnings before interest, taxation, depreciation
and amortization): Adjusted for stock option expenses, Forex
gains/losses, Exceptional items and 'other income' item in 2021.
See reconciliation to profit per the income statement
*** Comparative group cash balance at 30 June 2020 of $80.7 million
included $44.5 million of cash held to pay for the acquisition
of Fortumo on 1 July 2020. Excluding this cash, the balances
were $36.2 million
**** TPV is the US$ value of transactions processed by the Boku platform
***** Adjusted operating expenditure is Gross Profit less Adjusted
EBITDA
Consolidated Statement of Comprehensive Income
Note (Unaudited) (Unaudited) Period ended
Period ended 30-Jun 2021 30 -Jun 2020
$'000 $'000
============================================= ======= ============================= ===========================
Revenue 3 34,224 24,690
Cost of sales (2,945) (2,242)
============================================= ======= ============================= ===========================
Gross profit 31,279 22,448
Other Income (non-recurring) 8 1,080 -
Administrative expenses (30,083) (22,227)
============================================= ======= ============================= ===========================
Operating profit analysed as:
Adjusted EBITDA** 10,308 6,441
Other Income 8 1,080 -
Depreciation and amortisation (3,742) (2,455)
Share Option expense (5,297) (3,009)
Foreign exchange (gains)/losses (38) 164
Exceptional items (included in administrative
expenses) (35) (920)
============================================= ======= ============================= ===========================
Operating profit 2,276 221
Finance income 4 14 30
Finance expense 4 (370) (164)
============================================= ======= ============================= ===========================
Profit before tax 1,920 87
Tax expense (190) (51)
============================================= ======= ============================= ===========================
Net Profit for the period attributable to equity
holders of the parent company 1,730 36
====================================================== ============================= ===========================
Other comprehensive losses net of tax
Items that will or may be reclassified to
profit or loss
Foreign currency translation loss (863) (427)
Total comprehensive loss for the period (863) (427)
====================================================== ============================= ===========================
Total comprehensive profit /(loss) for the period
attributable to equity holders of the parent
company 867 (391)
====================================================== ============================= ===========================
Profit/(loss) per share for loss attributable to the
owners of the parent during the year
====================================================== ============================= ===========================
Basic EPS ($) 0.0059 (0.0001)
====================================================== ============================= ===========================
Fully diluted EPS ($) 0.0057 (0.0001)
====================== ========= =================
**Earnings before interest, tax, depreciation, amortisation,
share-based payment, foreign exchange gains/(losses), other income
and exceptional items.
Consolidated Statement of Financial Position
Note ( Unaudited) (Audited)
30-Jun 2021 31-Dec 2020
$'000 $'000
====================================================== ===== ============== =============
Non-current assets
Property, plant and equipment 2,887 3,771
Intangible assets 64,413 65,559
Deferred income tax assets 480 483
====================================================== ===== ============== =============
Total non-current assets 67,780 69,813
============================================================= ============== =============
Current assets
Trade and other receivables 89,270 92,535
Cash and cash equivalents 5 47,887 61,290
Restricted cash 5 734 1,414
====================================================== ===== ============== =============
Total current assets 137,891 155,239
============================================================= ============== =============
Total assets 205,671 225,052
============================================================= ============== =============
Current liabilities
Trade and other payables 115,901 136,779
Loans and borrowings 6 1,125 1,438
Lease liabilities 6 870 1,436
====================================================== ===== ============== =============
Total current liabilities 117,896 139,653
============================================================= ============== =============
Non-current liabilities
Other payables 1,786 862
Deferred tax liabilities 221 228
Loans and borrowings 6 7,250 10,813
Lease Liabilities 6 1,540 1,742
====================================================== ===== ============== =============
Total non-current liabilities 10,797 13,645
============================================================= ============== =============
Total liabilities 128,693 153,298
============================================================= ============== =============
Net assets 76,978 71,754
============================================================= ============== =============
Equity attributable to equity holders of the company
Share capital 29 29
Share premium 244,410 240,053
Foreign exchange reserve (1,170) (307)
Retained losses (166,291) (168,021)
====================================================== ===== ============== =============
Total equity 76,978 71,754
============================================================= ============== =============
Consolidated Condensed Statement of Cash Flows
Note (Unaudited) (Unaudited) Period ended
Period ended 30-Jun 2020
30-Jun 2021 $'000
$'000
================================================================= ===== ================= =========================
Cash (used in)/from operations 7 (8,886) 5,561
Income taxes paid (188) (60)
================================================================= ===== ================= =========================
Net cash (used in)/ from operating activities (9,074) 5,501
================================================================= ===== ================= =========================
Investing activities
Purchase of property, plant and equipment (205) (395)
Purchased of software development (2,348) (1,392)
Restricted cash (net) 680 40
Interest received 14 30
================================================================= ===== ================= =========================
Net cash used in investing activities (1,859) (1,717)
Financing activities
Repayment of lease liabilities (994) (1,077)
Issue of common stock on exercise of options and RSUs 1,031 284
Interest paid on borrowings (191) (15)
Proceeds from issue of new ordinary shares for acquisition - 25,129
Share issue costs - (654)
Proceeds from line of credit - 20,000
Loan issue costs - (501)
Repayment of line of credit (3,937) (2,092)
Net cash (used in)/ from financing activities (4,091) 41,074
================================================================= ===== ================= =========================
Net (decrease)/increase in cash and cash equivalents (15,024) 44,858
Effect of foreign currency translation on cash and cash
equivalent 1,621 259
Cash and cash equivalents at beginning of period 61,290 34,747
================================================================= ===== ================= =========================
Cash and cash equivalents at end of period 47,887 79,864
----------------------------------------------------------------- ----- ----------------- -------------------------
Notes to the Consolidated Financial Information
1. Corporate Information
The consolidated financial information represents the results of
Boku Inc. ("the Company") and its subsidiaries (together referred
to as "the Group").
Boku Inc. is a company incorporated and domiciled in the United
States of America. The registered office of the Company is located
at 735 Battery St, 2nd Floor, San Francisco, CA 94111, United
States.
The Company's shares are listed on the AIM Market of the London
Stock Exchange ("AIM").
The principal business of the Group is the provision of mobile
billing and identity solutions for mobile network operators and
merchants. These solutions enable merchants to accept online
payments, simplify transactions and avoid fraud, especially on
mobile devices.
The Board of Directors approved this interim financial
information on 6 September 2021.
2. Basis of preparation and accounting policies
These interim consolidated financial statements have been
prepared using accounting policies based on International Financial
Reporting Standards (IFRS and IFRIC Interpretations) issued by the
International Accounting Standards Board ("IASB"). They do not
include all disclosures that would otherwise be required in a
complete set of financial statements and should be read in
conjunction with the 31 December 2020 Annual Report. The financial
information for the half years ended 30 June 2021 and 30 June 2020
does not constitute full financial statements and both periods are
unaudited.
The annual financial statements of Boku Inc., ('the group') are
prepared in accordance with IFRS as issued by the IASB. The Annual
Report and Financial Statements for 2020 have been issued and are
available on the group's investor relations' website:
https://www.boku.com/investor-relations/reports-documents. The
Independent Auditors' Report on the Annual Report and Financial
Statements for the year ended 31 December 2020 was unqualified and
did not draw attention to any matters by way of emphasis.
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements as
in its 31 December 2020 annual financial statements, except for
those that relate to new standards and interpretations effective
for the first time for periods beginning on (or after) 1 January
2021 and will be adopted in the 2021 financial statements. There
are deemed to be no new and amended standards and/or
interpretations that will apply for the first time in the next
annual financial statements that are expected to have a material
impact on the Group.
Going concern
The interim consolidated financial statements have been prepared
on a going concern basis. The ability of the Group to continue as a
going concern is contingent on the ongoing viability of the Group.
The Group meets its day-to-day working capital requirements through
its cash balances and has a bank facility that it can use. The move
to remote working and social distancing has increased the
importance of mobile payment solutions to our customers, potential
customers and wider consumer market base and as a result the Group
saw continued revenue growth in the current period.
The Directors have prepared cash-flow forecasts covering a
period of at least 12 months from the date of approval of the
financial statements, with the forecasts and projections, taking
account of reasonable possible changes in trading performance. They
show that the Group expects to be able to operate within the level
of its current cash resources and bank facilities. Further
information on the Group's borrowings and available facilities is
given in Note 6.
Furthermore, in carrying out the going concern assessment, the
directors have considered a number of scenarios, taking account of
the possible the continued impact of the pandemic, including
changes in sales volumes and the timing of settlement of existing
debts together with cost savings associated with these changes and
the directors have the ability to identify further cost savings if
necessary, to help mitigate any impact on cash outflows.
Having assessed the principal risks and the other matters
discussed in connection with the going concern statement, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. For these reasons, they continue to adopt the going concern
basis of accounting and deem there to be no emphasis over going
concern, in preparing the financial information.
3. Segmental analysis
(a) Revenue from operations (Unaudited) (Unaudited)
30-Jun 2021 30-Jun 2020
$'000 $'000
============================= ============ ============
Revenue arises from: 34,224 24,690
============ ============
Provision of services
============================= ============ ============
(b) Operating segments
The Group's main operating segments are based on its main
revenue generating activities. For each of the segments, the Group
CEO and CFO review internal management reports to profit before
taxation, monthly. The following summary describes the operations
in each of the Group's reportable segments.
Payments business segment: provision of a payment platform which
enables mobile phone users to buy goods and services and charge
them to their mobile phone bill or prepaid balance. Boku also
provides connections to eWallets and other local payments methods
for its international merchants.
Identity business segment: Provision of identity services which
are used to simplify transactions or combat fraud.
Operating segment information under the primary reporting format
is disclosed below:
H1 2021 Payments Identity Total
$'000 $'000 $'000
----------------- ------------------------- ------------------
Fee Revenue 30,705 3,519 34,224
Cost of sales (1,255) (1,690) (2,945)
---------------------------------------------------- ----------------- ------------------------- ------------------
Gross Profit 29,450 1,829 31,279
Other Income 1,080 - 1,080
---------------------------------------------------- ----------------- ------------------------- ------------------
Administrative Expenses (25,966) (4,117) (30,083)
---------------------------------------------------- ----------------- ------------------------- ------------------
Operating Profit/(loss) analysed as:
Adjusted EBITDA** 11,171 (863) 10,308
Other income 1,080 - 1,080
Depreciation and amortisation (3,168) (574) (3,742)
Stock Option expense (4,592) (705) (5,297)
Foreign exchange gains/(losses) 73 (111) (38)
Exceptional items (included in administrative
expenses) - (35) (35)
Operating Profit/(loss) 4,564 (2,288) 2,276
Finance income 14 - 14
Finance expense (370) - (370)
---------------------------------------------------- ----------------- ------------------------- ------------------
Profit/(loss) before tax 4,208 (2,288) 1,920
---------------------------------------------------- ----------------- ------------------------- ------------------
H1 2020 Payments Identity Total
$'000 $'000 $'000
---------------- ---------------------- -----------------
Fee Revenue 22,032 2,658 24,690
Cost of sales (391) (1,851) (2,242)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Gross Profit 21,641 807 22,448
Administrative Expenses (18,914) (3,313) (22,227)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Operating loss analysed as:
Adjusted EBITDA** 8,478 (2,037) 6,441
Depreciation and amortisation (2,042) (413) (2,455)
Stock Option expense (2,928) (81) (3,009)
Foreign exchange gains/(losses) 139 25 164
Exceptional items (included in administrative expenses) (920) - (920)
Operating Profit/(loss) 2,727 (2,506) 221
Finance income 30 - 30
Finance expense (154) (10) (164)
--------------------------------------------------------- ---------------- ---------------------- -----------------
Profit/(Loss) before tax 2,603 (2,516) 87
--------------------------------------------------------- ---------------- ---------------------- -----------------
4. Finance income and expenses
(Unaudited) (Unaudited)
30-Jun 2021 30-Jun 2020
$'000 $'000
=============================================================== ================ ============
Finance income 14 30
================ ============
Interest income from bank deposits
=============================================================== ================ ============
Total 14 30
=============================================================== ================ ============
Finance expenses
Interest on bank loans 243 -
Interest on lease liabilities 116 149
Other interest payable (including interest paid for factoring) 11 15
Total 370 164
=============================================================== ================ ============
Net finance expenses 356 134
=============================================================== ================ ============
5. Cash and cash equivalents and restricted cash
(Unaudited) (Audited)
30-Jun 2021 31-Dec 2020
$'000 $'000
Cash and cash equivalents 47,887 61,290
========================== ============ ============
Restricted cash 734 1,414
========================== ============ ============
Total cash 48,621 62,704
========================== ============ ============
The restricted cash primarily includes e-money received but not
yet paid to merchants (in transit), cash held in the form of a
letter of credit to secure a lease agreement for the Company's San
Francisco office facility and a certificate of deposit held at a
financial institution to collateralise Company credit cards.
6. Loans and borrowings
(Unaudited) (Audited) 31-Dec 2020
30-Jun 2021 $'000
$'000
======================================== ============ =====================
Current
Bank loans (secured) net of loan costs 1,125 1,438
Obligations under lease contracts 870 1,436
Total 1,995 2,874
Non-current
Bank loans (secured), net of loan costs 7,250 10,813
Obligations under lease contracts 1,540 1,742
---------------------------------------- ------------ ---------------------
Total 8,790 12,555
======================================== ============ =====================
Principal terms and the debt repayment schedule of the Group's
loan and borrowings are as follows:
On 17(th) June 2020 the Group entered into a Loan Security
Agreement with a financial institution and borrowed $20,000,000
($10,000.000 Revolver facility and $10,000,000 Term loan) which was
used to part finance the acquisition of Fortumo on 1 July 2020
(further information on this borrowing is in the Chief Financial
Officer's report). As at 30 June 2021 the Group had repaid the $10
million Revolver in full (with $3.0 million repaid in the period)
and repaid $1,250,000 of the term loan (with $937,500 repaid in the
period).
The balance of current lease liabilities at period end was
$870,458 (31 December 2020: $1,436,366) and non-current liabilities
$1,540,485 (31 December 2020: $1,742,100).
7. Cash from operations
(Unaudited) (Unaudited) 30-Jun 2020
30-Jun 2021 $'000
$'000
========================================================= ============ =======================
Profit after tax 1,730 36
Add back:
Tax expense 190 51
Amortisation of intangible assets 2,541 1,267
Depreciation of property, plant and equipment 1,201 1,189
Finance income (14) (30)
Finance expense (includes interest on lease liabilities) 370 164
Exchange (gain)/ loss (1,691) 439
Share based payment expenses 4,023 2,899
Cash from operations before working capital changes 8,350 6,015
Decrease/(increase) in trade and other receivables 3,132 (7,952)
(Decrease)/ increase in trade and other payables (20,368) 7,499
--------------------------------------------------------- ------------ -----------------------
Cash (used in)/ generated from operations (8,886) 5,562
8. Post balance sheet events
Fortumo was acquired on 1 July 2020 for a maximum consideration
of $45.0 million (the "Total Maximum Consideration"), which
includes Boku acquiring $4.0 million of net working capital. The
Total Maximum Consideration comprised $37.8 million in cash along
with approximately $1.8 million in restricted stock units payable
to the selling equity holders of Fortumo (the "Vendors") plus
further consideration of up to $5.4 million in cash, representing
12% of the total maximum consideration, held in escrow, subject to
certain Adjusted EBITDA** earnout, working capital and indemnity
conditions being satisfied in the period 1 July 2020 to 30 June
2021.
The earnout payment, based on Fortumo Adjusted EBITDA**
performance for the 12 months period ended 30 June 2021, is
expected to be $2.16 million, subject to final confirmation, which
will be paid to Fortumo's former shareholders by 5 October 2021,
with the balance of $3.24 million returned to Boku. This has
resulted in a $1.08 million decrease in the contingent
consideration payable, reported on 31 December 2020.
The difference of $1.08 million between the expected fair value
of the Fortumo earnout escrow amount as at 31 December 2020 of
$3.24 million and the actual amount agreed to be paid to Fortumo
shareholders of $2.16 million has been shown as 'Other Income' in
the Income Statement. This amount has been excluded from adjusted
EBITDA** as a non-trading, non-recurring item.
9. Cautionary Statement
Boku has made forward-looking statements in this financial
information, including statements about the market and benefits of
its products and services; financial results; product development
plans; the potential benefits of business relationships with third
parties and business strategies. The Group considers any statements
that are not historical facts as "forward-looking statements". They
relate to events and trends that are subject to risk and
uncertainty that may cause actual results and the financial
performance of the Group to differ materially from those contained
in any forward-looking statement. These statements are made by the
directors in good faith based on the information available to them
and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors underlying any such forward-looking information.
INDEPENDENT REVIEW REPORT TO BOKU INC.
Introduction
We have been engaged by Boku Inc. (the "Company") to review the
condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2021 which comprises the
consolidated statement of Comprehensive income; consolidated
statement of financial position; consolidated condensed cash flow
statement; and associated notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial information.
Directors' Responsibilities
The interim financial report, including the financial
information contained therein, is the responsibility of and has
been approved by the directors. The directors are responsible for
preparing the interim financial report in accordance with the rules
of the London Stock Exchange for companies trading securities on
AIM, which require that the financial information must be presented
and prepared in a form consistent with that which will be adopted
in the Company's annual financial statements having regard to the
accounting standards applicable to such annual financial
statements.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity', issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with the rules of the London Stock Exchange for companies whose
shares are admitted to trading on AIM.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants & Registered Auditors, London, United
Kingdom
6 September 2021
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
This information is provided by RNS, the news service of the
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END
IR SSIFAMEFSELU
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