7:59 cut – BOKU

Boku (BOKU) – H1 Update

Boku, the mobile carrier payments and identity provider, provides H1 (to 30th June) revenue figures and confirms that FY revenue and profitability is tracking inline with expectations.

Today’s update seems somewhat lackluster and they are leaving themselves a lot of work to do for H2. Revenue in H1 is 41% of forecast FY of £54.9m versus 48% of actuals for FY2018. YoY growth for H1 was 33% vs 56% required to meet forecast full year. Operational gearing is such that the majority of revenues go straight into the bottom line – a £7m miss would result in significant losses versus forecast profits.

They point to a “normal seasonal bias”, and “further scale up in identity revenues” as reasons to expect to meet their full year.

Last year there was no H2 seasonal revenue bias – on the contrary 48% of revenues in H1 points to an H1 bias in a fast growing company. Nor do I see an obvious cause for seasonal bias – I would expect a surge in December to be at least matched by one in January as end-customers start using their new devices in anger.

The identity business has been owned for the whole of H1 and so there is little obvious comfort from that quarter. However, it would be reasonable to expect cross-selling opportunities to be maturing around now and so higher growth in H2. [Edit: another way they could make the numbers if there were differences in timing with their reduction in gross payment margin – total payment volume was up a much stronger 49% YoY in H1]

There is a strong bull case for this share in the medium term as well as other threats on the horizon that are out of (time) scope for this article.

The company have never reported a profit and are on a PE of 44 on difficult-looking targets. I will be looking to reduce this morning.

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