Boku Inc (LON:BOKU) Chief Executive Officer Jon Prideaux caught up with DirectorsTalk for an exclusive interview to discuss financial highlights, local payment methods, 50 new launches with new merchants in 27 countries, reaching over 7.5 billion end user accounts, and what can we expect to see from the group over the next year.
Q1: Boku released its interim results this morning with revenues up 26%, and that’s from last years’ first half. Could you just talk us through the financial highlights please?
A1: well, it’s all kind of up and to the right and flashing green as they say. To be honest, we’re really pleased with the results we’ve got, revenues were up, as you say, 26% but if you look at that on a constant currency basis, that would translate about 32% up from the previous year.
That growth has come across all of our lines of business, both the direct carrier billing business but also from local payment methods.
Q2: You mentioned strong growth was driven by the local payment methods but could you just talk us through what local payments are and what they mean for the group?
A2: What’s not quite so obvious for us sitting in a world where most payments are undertaken using cards in sort of another is that across most of the rest of the world, and in fact to some extent here in the UK, other methods of payment are gaining traction.
So, a mobile wallet will be something like Alipay in China or PayPay in Japan, and there are literally dozens of these different payment methods all around the world, they’re all unstandardised but they’re very popular in the countries in which they operate. Collectively, the mobile wallets and account to account based payment systems of the world account for more payments than cards do and they’re growing faster.
What Boku has done is effectively taken the skills that we learned in carrier billing for dealing with individual payment issuers and bringing them together in a standardised way for global merchants.
It’s working incredibly well, we managed to post growth in that segment of our business up 350% to $7.2 million, that’s now accounted for just under 20% of our overall revenue. If you think about it, that’s the thing that’s been driving the growth forward for the group in the last period, and particularly showing through in the revenue numbers in this first half. That’s also what’s underpinned the increase in our EBITDA to $12.2 million, once again up by 28% over the period.
Q3:You had almost 50 new launches with new merchants in 27 countries, can you tell us more about that?
A3: It’s dazzling, isn’t it? These launches are really combinations of wallets or account to account or direct carrier billing connections with particular merchants so a particular merchant might’ve been live, one wallet might’ve had two or 3 merchants and so on.
So, nearly 50, I think it’s actually 47, but the fact that it’s in 27 countries really gives you a sense of the breadth that we operate in. Now, most recently, we’ve got ourselves a payment licence in Malaysia, for example, adding to our portfolio of payment licences that we have all around the world. The strength of the group is we are genuinely a global company bringing to the tech giants of the world, these local payment methods wherever they might be.
Q4: The groups’ mobile first payments network expanded to reach over 7.5 billion end user accounts, 46 of those are non-direct carrier billing, what does that mean for the group?
A4: We’ve come from a world in which our history was very much about allowing people to buy things and charge it to their phone bill, but increasingly, as you know, we’ve been going after these local payment methods like wallets and account to account.
These 7.5 billion accounts, many people will be holding more than one; they have a phone bill, they might have one or two wallet accounts or what have you. The fact that the reach of the network is now nearly half on local payment methods, there’s still only 20% in terms of our total revenue, you can see where the revenues are going to come from in the future.
To some extent, that 46% is a leading indicator of where we would expect things to go, and over medium term, we do expect our growth to continue to come from wallets and then subsequently from account to account payments, and ultimately for these means of payments to eclipse what we were doing in direct carrier billing.
At our Capital Markets Day, we set out targets for us to double our revenues in the medium term, and also to achieve EBITDA margins of around 50%, and I’m happy to reiterate those targets to you here today.
Q5: Now, Jon, you’re set to retire as CEO on the 31st of December 2023 but you’ll remain on the Board as a non-exec director, and Stuart Neal, former CFO, is due to take over as CEO on the 1st of January 2024. With that in mind, just looking forward, what can we expect to see from Boku over the next year, would you say?
A5: More of the same, I think.
The group has been on a journey which has involved adding these new payment methods and upselling our existing customers, and that process has started, and has started to show through in results but it’s far from complete.
Growth can continue clearly by selling to the remaining of our large customers who do not take wallets, and we’re very confident we’ll be able to make progress on that over the course of the next 3/4/5 months.
More than that, we expect each of our customers to then take more of those local payment methods, they still only use a relatively small portion of our catalogue.
Finally, growth is going to come from just penetrating more deeply within the different business divisions of our merchants, a good example of that would be with Meta. We originally worked with Meta in a very small part of their business, Facebook Games, and now we are being used by Meta to help purchase ads, the main business of Facebook, and ads in multiple countries with 20 different local payment methods.
So, it really goes to show the story of Boku is going to continue long after I’ve vacated the chair, and I have to say, I’m delighted that we are able to get Stuart to be the CEO to take the business forward.
