Growth and Performance of Boku Mobile Payments Provider
September 9, 2020 (Investorideas.com Newswire) Boku has seen strong growth across the board, and continues to invest heavily in the future of the business. Their prospects for the future also seem good, with earnings forecast to keep growing year on year.
Boku may not yet be a household name, but in recent years they have been pushing hard for brand recognition by expanding into global markets and diversifying their portfolio. Boku is a provider of mobile payment solutions and direct carrier billing (DCB), working with some of the largest digital companies in the world.
During 2019 and 2020 Boku also expanded into mobile wallets, partnering with several high-profile providers and with hope to include more. In effect, they have been building a payment network in parallel with the existing Boku platform. This is an example of how Boku have leveraged their existing merchant base as a springboard for organic growth.
The other side of Boku's growth has been with the help of strategic acquisitions. In January 2019, Boku moved into mobile authentication and identity services with the acquisition of Danal Inc. for just over $25 million. In June they instigated an accelerated bookbuild placing to help finance the buying of Estonian DCB company Fortumo, raising just over half of the $45 million total.
Recent Business Performance
Boku have been operating since 2009, but the business only became profitable in 2019 when they reported a net profit of $0.4 million after tax. At the end of 2019, Boku reported significant positive growth in both revenue and payment volume, as well as the number of active users. Much of the growth took place in the second half of the year.
Overall revenue stood at $50.1 million at the end of the financial year 2019, with payments as the biggest contributor. Identity didn't grow as much as had been forecast, due to the loss of a US mobile carrier. However, despite this the identity side has seen reasonable growth and reported a 26% revenue increase to $6.7 million compared to the previous year. Al though it has had a slower start than anticipated, the identity side of the business represents a long-term investment in growth.
Boku Casinos, Digital Entertainment and Impact of COVID-19
One of Boku's biggest strengths, especially during COVID-related lockdown, has been the growth in digitally-delivered entertainment. Rather than being negatively impacted, demand for streamed movies, gaming and casinos has soared. In the UK, many online casinos have adopted Boku as their provider of choice for direct carrier billing. As more online casino users now prefer to play on mobile, the introduction of DCB as a payment option has created a seamless experience for users. This, coupled with the removal of credit cards as a casino payment method, has helped to boost Boku casino revenues. You can read more here about Boku as a casino payment platform.
Conversely, the impact of COVID-19 on Boku's identity services has been more negative. In June 2020, they reported a fall in identity revenue from $3.4 million to $2.7 million. Despite this, overall adjusted core earnings were around 65% higher than for the previous year, and in line with projections.
Is Boku a Good Investment Prospect?
In terms of investment, Boku is one to watch. On the plus side, the number of active monthly users is growing rapidly, reaching over 20 million in May 2020. A sharp share price drop in March saw Boku quickly bounce back as markets started to stabilise, and the subsequent growth has been encouraging. Boku appear to be in a strong position when it comes to future growth as well, positioning itself as a global leader in mobile payments. Their continued acquisitions suggest that the company plans a program of expansion that could continue for quite some time.
This rapid growth is part of what makes predictions about Boku's future return on investment more difficult. The accelerated bookbuild in June diluted shares considerably - an increase in total shares outstanding of 12.8%. With the exception of the COVID-related dip in March, share prices have remained fairly stable over the past twelve months, standing in September 2020 just shy of what they were in the same period of 2019.
Most professional advice seems to be that Boku stocks are a relatively safe buy. As detailed by the CEO Jon Prideaux in his 2019 report, the results of the efforts made one year are usually reflected in the revenues and transaction volumes the following year. Given that fact, investors can reasonably expect the value of their shares to increase in years to come. As COVID recedes, the identity side of the business may finally start to perform as initially anticipated. Not forgetting the drive to partner with mobile wallets in Asian and other markets, which should boost revenue without the need for major investment.
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