When the mobile payments business Bango listed on the junior Aim market in 2005, only 2 per cent of us owned a smartphone. Founder Ray Anderson, a big name on the Cambridge tech scene, went on investor rounds making what seemed wild promises: the £5 million Bango wanted to raise would capitalise on “the increasing capacity of mobile phones to entertain large numbers of users”. One day, would-be investors were told, phones would be used for shopping and games, not just text messages and calls.
Bango got those early calls right. Its mobile payment platform is now used by all the big app stores, including those of Google, Microsoft, Facebook and Amazon, enabling users to charge purchases made in apps to their phone accounts. Given that $129 billion (£105 billion) was spent on Android and iOS apps last year, according to Business of Apps, this billing area is big business. Bango’s revenues rose eightfold between 2016 and 2022.
Yet the firm has also spread its tentacles by licensing its platform so that clients (now mainly in the telecoms sector) can use it to sell bundles from its “digital vending machine”. A new mobile contract customer might be cross-sold a Netflix or music-streaming deal, for example.
All the payments work has created a huge vault of data, too; Bango makes money out of this via its “Audiences” arm, allowing app developers and merchants to target marketing campaigns at paying users.
The numbers support the firm’s strategy: revenues rose 38 per cent last year to $28.5 million as Bango signed a record level of new “digital vending machine” deals with big brands including McAfee, as well as adding T-Mobile to its bundling platform. Meanwhile, the €4 million (£3.5 million) acquisition of the global payments arm of Japanese mobile operator NTT Docomo last summer will, City analysts forecast, push up gross profit by as much as a third in 2024 to more than $56 million.
Inevitably, Bango’s share price has absorbed some of this positive news. Now trading at 209p, the stock is up 13 per cent since the start of the year.
Caspar Erskine at house broker Singer claims the Docomo acquisition, in particular, “has transformed the investment case. This deal, plus further growth across Bango’s three core business streams, creates a highly attractive valuation opportunity.”
The price to earnings ratio of 13 for 2024’s forecasts offers good value, and the balance sheet remains strong with almost $10 million cash. Despite this year’s surge, Bango shares have further to travel. Buy.
