Good morning, ladies and gentlemen, and welcome to the Bango Plc. investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that is just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we will publish our responses where it is appropriate to do so on the Investor Meet Company platform. Before we begin, we would just like to submit the following poll, and if you could give that your kind attention, I am sure the company would be most grateful. I would now like to hand you over to the executive management team from Bango Plc.
Paul, good morning, sir.
Good morning, and welcome everybody, and thank you so much for your time this morning to go through our first half 2025 results. Myself, we will walk you through an overview of Bango, highlights of the half, a lot more details on the financials, and then I want to talk a little bit more about the DVM opportunity in particular. This time I am going to zoom in on what is happening in each geographic region from a telco perspective. As you can see, the different dynamics of the geographies in which the DVM is gaining great success, and then we will end with a quick highlights and overlook. As always, these are more beneficial, I am sure if they are interactive, so please do submit Q&A as we are going, and we will keep them till the end. We will try and address them all at the end.
If there is any you submitted that we think we have answered, we will address those again if it is not clear. Just as a reminder, when you will see this vocabulary as we go through the presentation, we have been going back on our really two distinct businesses, the transactional business, which is primarily the direct carrier billing business. That is where you can purchase something, pay for it on your mobile phone. Here, the example obviously being a bag of popcorn using the Google Play Store, but also physical goods from Amazon in Japan, for example. On the other side, the subscription business, very much focused on the Digital Vending Machine. That is really our market-leading platform for bundling of subscriptions, allowing anybody who has a subscription service to distribute that through a channel.
Two very different business models, common technology platform in the middle, but on the transactional business, it's where it's a percentage of the retail price. In the Digital Vending Machine, that's that SaaS model with that setup and one-off fee plus the license fee that generates that ARR that we've seen increase through the period. Two businesses, and very much we'll cover both as we go through the deck. Other thing involved in all of it, if you step back and think of a very simple position where we're in the fortunate position where if you look at the customers and the companies that connect to the DVM, it's sort of all the logos you would ever want to see, right?
Some of the biggest companies of the world, some of the biggest telcos, some of the biggest content providers, and actually some of the largest of the West Coast technology providers, all use the DVM to help them share their business, and r eally the fundamental and very simple value proposition is you connect once and you access many. That doesn't matter whether you're on the payment side of the business on DCB or the Digital Vending Machine. By connecting once into Bango, we give you access to hundreds of people on the other side of that equation. If you're a content provider, you get access to hundreds of telcos. If you're a telco, you get access to hundreds of content providers.
You can see there the speed and scale is really how we've been differentiating, especially on the DVM side of the business, where we can launch services quicker than anybody else in the market. Disney there in four weeks, NBA in three weeks, and with Verizon, we launched over 14 in 20 months. Really that speed and scale is what the platform is really about. As we go through the deck, you'll see it's going way beyond that, and the value that the platform provides goes beyond that. I think that's a good element to keep in your mind as we go through the rest of the presentation. We're all about being the place where people subscribe, and our strategy for growth, as you'll see if you've read the RNS, is broken down into what internally we call the four E's.
That's expand, that's continuing that growth in the telco sector. Enhance is about looking at how we use the data we have in the platform to differentiate the content providers. That's one of those strategies that's more in the mid to long-term. We're very early in that enhancement at the moment, where we're looking at what data we have and how we can add value to the content providers. Ultimately, we'd like to monetize both halves of the marketplace, both the reseller as well as the content provider. Explore is all about looking at new verticals. We obviously announced at the back end of last year a company in Portugal, actually retailer, lots more pipeline developing in all the markets, and we certainly see great interest.
I'll share a little bit later some survey results we've done with different content providers, and you can see the sort of verticals we're looking to move to after telcos. Then extract, that's about making sure we manage that payments business. Cash and profit, as you'll have seen in the first half, we obviously finished the migration and integration of the DOCOMO Digital business. That's well and truly behind us now, and Matt will talk about the financial impacts of that a little more as we go through the rest of the deck. Just in summary then, I'll say that we're making here a great set of financials for the half. You see both the total revenue, the transactional revenue continue to see good growth around 38% CAGR over the past three years.
Matt will talk a little bit more about the dynamics of that transactional business between those high cost of sales roots and the core revenue. The core business really continuing to see good growth at around 10%. DVM business, again, continuing to scale, 49% growth, CAGR over the period. That top line growth, coupled with the optimizations we've made in a cost perspective, see that increasing level of EBITDA. Significant EBITDA growth year-over-year from first half 2024 into first half 2025. That DVM business is really driving that growth in the ARR business. That's up 20% year-over-year. Net Revenue Retention, that's a measure of the growth in existing customers that's always above 100%. It's naturally going to be lumpy, especially in a small business, depending where the customers are.
Keeping that above 100% shows that existing customers are growing, and we continue to have no churn once networks and customers are live. That's a really solid part of the business is this continuous growth because of the way the license structure is tiered as we manage more and more subscription subscribers. Momentum is building in the funnel. We had seven new DVM deals in the first half of the year. We added another one, obviously, that you saw with MTN at the back end of last week, and the funnel is really well populated for 2025. Our focus is really getting those deals through the funnel as fast as we can so we can get them live, get them integrated, and get them launched.
That's really what will continue to drive that growth of the business moving forward in addition to the growth in existing customers. With that, I will turn you over to Matt to run through the financials.
Thanks, Paul. Morning, everybody. Welcome to the earnings call for Bango's first half results 2025. Overall, a solid period reflecting both the financial discipline and the continued execution of our growth strategy. We've made strong gains in recurring revenue. Our gross margin has expanded, our operating expenses have reduced. All three of those pillars helping deliver a 66% increase in adjusted EBITDA. Thanks as always to the Bango team globally for making this happen. I'm pleased to now walk you through the highlights of the period. Starting with the top line, revenue grew 5% to $25.2 million, building on a consistent trajectory of growth since 2022. It's important to also highlight the quality of that growth. Our annual recurring revenue increased 20% year-on-year to $15.6 million, Net Revenue Retention remains strong at 108%. That tells us two things.
One, new customers continue to come on board, two, existing customers continue to spend more. Couple that with the fact that churn across live DVM customers continues to be zero, it highlights the attractiveness and sustainability of the DVM model as it embeds itself deeper and deeper into the global subscription economy. Moving to the next slide looking at our transactional business. Revenue held steady at $16.4 million, in line with last year. On the surface, while flat, if we look deeper, I believe the underlying picture is a stronger one. In June, I introduced the split of core transactional routes against those higher cost of sales routes acquired from DOCOMO Digital. Both channels have shown differing trends in the first half, the underlying health of transactional payments remains strong.
Our core transactional business, which is both more profitable and strategically more valuable, grew 10% year-on-year, adding $1.2 million rounding off a strong first half. That sales growth was unfortunately offset by the volatility we've seen in the higher cost of sales routes as we guided to in June. It's important, though, to stress with those routes operating at low single-digit margins, the impact on adjusted EBITDA of those movements is minimal. We continue to actively manage these routes with a clear ambition of improving their profitability, even if that means stepping back from some lower quality revenue. Overall, with the migrations from the Frankfurt data center now complete, the transactional business is back on a firmer footing, providing stable cash flows still growing in its core areas. Moving to DVM and one-offs.
Revenue increased 15% to $8.9 million, reflecting strong momentum in both new customer wins and expansion with existing customers. As Paul mentioned before, we secured seven new DVM customers during the period, including our first in Korea, our first telco in Japan, further expansion in the U.S. and Europe. The number of active subscriptions managed by the platform has also more than doubled to over 90 million. This underlines the scalability of the DVM model why we are increasingly being recognized as the standard in subscription modeling. Turning to slide 11 on costs. We continue to be very focused on discipline and efficiency. Our core administrative expenses, which is a better indicator of the controllable costs in our business, decreased by $2.2 million over the last 12 months, equivalent to a 9% reduction.
On a cumulative basis over the last two years, those expenses have reduced by nearly 20%. Despite the FX headwinds in 2025 from a weaker US dollar, we expect to maintain that year-to-date cost reduction for the full year with a further reduction in fiscal year 2026. Isolating some of the movements in the statutory reporting, we incurred $1.8 million of cash exceptionals. This includes $1.3 million of one-off restructuring costs to deliver our efficiency initiatives, as well as $0.5 million data migration and asset write-down charges associated with DOCOMO Digital. We expect exceptional costs to continue in the second half, but to cease in fiscal year 2026. D&A increased by $1.2 million year-over-year as past R&D investment comes online and begins generating revenues.
We have not reached the peak yet from the D&A cycle as it catches up with historical spend, but this will naturally come down as we reduce our CapEx spend going forward. One can see from the bottom chart, this continues to come down. Consensus estimates forecast a 7% reduction in CapEx this year and a further 14% in fiscal year 2026. Putting it all together across the P&L, gross margin improved by 350 basis points to 84.3%. Driven by strong core transactional performance, savings from procurement initiatives, and an increased weighting of higher margin DVM activity. The strong performance across recurring revenue, gross margin, and operating efficiency drove a 66% increase in Adjusted EBITDA versus the prior year period, reflecting the benefit of higher margin revenue and disciplined cost control. Adjusted EBITDA margin rose from 17%-27%.
Finance charges increased, reflecting the current debt profile as well as lease interest from our new head office in Cambridge. That's a strategic investment to support growth and talent retention for Bango in the future. While we still reported a net loss of $3.2 million, this narrowed by $1 million versus last year. Clear evidence that the operational leverage is delivering. Absent anything unforeseen, we would expect to report positive profit for the year in fiscal year 2026. On cash, the story is very much one of investment and transition. As the DVM matures, we continue to put capital into R&D, though at a lower level than last year. Working capital movements are more exceptionals from the efficiency initiatives and the refinancing this year, impacting cash generated from operations as expected.
We made a big step forward with the refinancing of the capital structure in June, securing a $15 million revolving credit facility with NatWest and an enhanced loan facility with NHN. That significantly strengthened our balance sheet and gives us flexibility to keep investing whilst driving efficiency. Net debt increased to $7.3 million for the half, in line with our expectations, and we ended with $4.6 million of cash on balance sheet. Finally, looking ahead, our priorities are clear. Reduce net debt, continue to expand margins, and deliver recurring revenue growth. With the refinancing in place, liquidity is strong and net debt will start to reduce in Q4 as the efficiency savings and seasonal inflows materialize. Strengthening the balance sheet was a key focus in H1, and with that delivered, attention turns to driving profitability.
Gross margins are improving, core administrative expenses are falling, and R&D CapEx is declining as the investment cycle peaks. Those efficiency gains will keep showing through in adjusted EBITDA, and particularly cash EBITDA, as we look towards 2026. On the top line, the DVM pipeline remains strong and transactional revenue has a natural weighting to the second half. The timing of new DVM launches will be a key driver of the full year results, but the momentum we've built so far gives us confidence. We're currently on track to deliver revenue and EBITDA in line with expectations. I'll now hand over to Paul to walk you through the DVM opportunity.
Thanks, Matt. I thought this is a good place to start. Just a reminder, we've shown this before about the way that bundling itself is evolving. It's moving from, on the very left, what we call sort of a basic bundle. That's where one particular content service is tied to a particular mobile or telco plan, into really the area of sort of multi-party bundling, where there's more choice. You can pick, you can add perks, you can upgrade and downgrade subscriptions, all the way through to what you see with Optus and Telstra, where you have almost that marketplace or that app store for subscriptions that we call Super Bundling. As a reminder, the Digital Vending Machine supports all of these different models, but the value that we add really increases as you move out of basic bundles into those multi-party bundles.
That's where we've seen some great success at the moment, and we'll talk a little bit more about the capability we're adding into the vending machine to make it look even easier for telcos who are looking to launch those services moving forward. If we step back and look at the market size, you can see that the market is continuing to grow. The overall subscriptions market is continuing to grow, and you see that has a CAGR of around 6%. We see that an increasing portion of that is being bundled, particularly through telcos. The CAGR for the telco bundle piece is close to 10% there. The bundling growth is faster than the overall subscription market growth. The final 8% of CAGR, that's that evolution from a simple bundle into the multi-party or Super Bundling, and that's growing much faster.
You see the subscription market's growing, an increasing portion is being bundled through telcos, and those telcos are increasingly moving to more complex bundles, and that's really where the Digital Vending Machine starts to add significant value. That's the market that we're operating in. On the other side of that, you have obviously the content providers. Back in June this year, we published a survey. You may have saw it if you follow us on LinkedIn or any of our materials. We published a report called Gravity Shift, Gravity Shift basically interviewed 200 senior execs from all sorts of content owners and with all sorts of different subscription services to really understand what their plans were for secondary channels or distributing subscriptions through channels. As you see, over 90% of those are looking to use these additional channels.
Rather than just go direct to consumer, looking to grow their base by distributing subscriptions through a channel like a telco. When you look into the channels they're looking to use, you can see it's not just telcos, it's moving into retailers and banks as well, that's a significant step up in both retailers and banks. I think that's largely because we're seeing more and more telcos already having all these services. The subscription brands are looking for alternative channels, that very much aligns with what we see from a sales perspective and in the pipeline, is that move into retailers as well as financial services. You can see the reason why they want to do this, it's largely complexity. It's complex, it takes time. How can I simplify all this?
That's really what the Digital Vending Machine does, is take that complexity, we make it simple, as you've seen from some of the examples I gave earlier, we make it very quick and easy to serve. The speed and scale is really what, as I said at the start, what it's been about so far. You can see all the examples there. You can also see the overriding machine and the benefits that the telco has seen in terms of reducing churn. The ambition that the telcos have to get more and more of their customers using bundles, because for them, it's the best way to grow revenue and reduce their churn.
Back in February this year, we launched what we call the world's first Super Bundling subscriptions hub, that's going way beyond just optimizing that connectivity to the entire life cycle of a product. We continue to innovate all these ways. It's all about from onboarding and having test buttons, so content providers and telcos can come into the platform and self-certify. It's about having a pre-canned user interface. We call that the CX. That went live with Altice in the U.S. this year. That's our version. If you're a customer, that's your way of accessing the Digital Vending Machine through this user interface, which the telco can put their own brands, their own colors, choose their own layout, all through a configurable product. Very much into these offers, the creation of these offers, how do you define these offers? How do you publicize them?
How do you distribute them? How do you manage the complexities that come with those offers in terms of rules, upgrades, downgrades? What happens if you cancel one product? What is the impact on another product? All of that complexity we've been sucking into the Digital Vending Machine. That does two things. It really allows these offers to be launched a lot more quickly, but it also makes customers very sticky. It means we're not just doing the connectivity, we're doing a lot of that complex logic that was historically sometimes done in the telco's back office system. The value that the Digital Vending Machine has delivered is increasing all the time, that's providing the ability to launch services more quickly and making it a sticky relationship with the telco.
Talking about telcos, I thought it'd be good to look at the different geographies, because the dynamics we see globally are very different. I thought it would be useful just to do a bit of a world tour of what we see. We probably need to step back and look at what drives growth. We drive growth in two ways. We drive growth by winning new DVM customers, the logos, the likes of MTN, who we announced last week, and then by existing customers growing. Existing customers grow in two ways. They grow by getting existing customers to take on more bundles and more offers. In effect, moving from maybe having one subscription to two or three as a user, and then by them getting newer consumers to adopt bundles and bring those into the bundling.
You see that the Verizon quarter load demand to get 50% of their customers into that My Verizon bundling. Those are the way that we grow in DVM, is new logos and then more subscriptions on that side, from new customers or from existing customers taking more and more subscriptions. We look at the U.S. and Canada, I think this has by far has been our largest market. That makes sense because it's actually the largest market for digital subscriptions by revenue, so it makes sense that it would be our largest market. Also it's a market where a lot of telecoms, and particularly regional cable operators, are struggling as people look to cancel their cable package, TV package. Cord-cutting, that's called, if you look around in the press, it's people basically taking a broadband-only subscription and then getting their entertainment through third-party services.
It's a natural next step for those guys as they look to differentiate and reduce churn, that they look to third-party subscription bundling as a way of compensating for that. The U.S. is really made up of about 10 major national telcos. There's tens of midsize and there are really thousands of smaller regionals. It's quite a diverse market. Like I said, somewhat similar to Canada, although a little more concentrated where you have three nationals and tens of regionals. We've built a really good position in that marketplace. We have six out of the top eight in the U.S., including the DISH announcement that we made last week and the Altice announcement earlier in the year. In Canada, we do bundling for three of the nationals, as well as a number of the regionals as well.
Really, we have a really strong position there. In the U.S. and Canada, really, the growth in terms of new logos and new wins is largely going to be with those smaller regional telcos. For that's where the all-in-one Super Bundling solution makes sense for having that user interface. That zero-touch access is a way of bringing on these small telcos with less and less work and less and less effort so they can launch more quickly. Really the big growth in Canada is going to come from existing customers. That's six out of the top eight as they look to step through those tiers, bringing on more customers. That's where that offer management functionality really makes sense, allowing us to create these complex bundles.
We're at the start of a new football season, sports bundles are always very popular and big drivers. You saw that in the DISH announcement, and that's really one way of getting these services launched more quickly so we can drive more and more subscriptions through the platform. Shifting south, if we go to Latin America, that's a region very much dominated by large telco groups. It's one of the largest bundling markets for SVOD. There's more SVOD bundled through telcos in that region than in the other regions. Local language content is particularly important, and that's provided sometimes by the global players like Netflix, but also by specialist players like the ViX service from Televisa. If you look at where we are in that market, we've been doing simple bundles in that market for quite a while, haven't we? Particularly with Amazon as well as some other partners.
We have bundling connectivity to 80% of the telcos in that market. The DVM is being very heavily used by Liberty Latin America across the region. We work with TelevisaUnivision to help them scale their local language service ViX across the different telcos. You can see we have a great embedded base, and it's a case of building on that base and converting those simple bundles into DVM and multi-party bundles. That's really where the new logos will come from, is that conversion from the simple bundling we do at the moment into the more complex bundling solutions where the DVM really adds great value.
It's a big prepaid market, so some of the top-up features we've been developing, where we can really manage the top-up, and again, take that top-up complexity out of the telco system, manage that in the DVM, and allows us to launch prepaid bundles a lot quicker and also makes it a very, very sticky solution with customers. If we look across EMEA market, obviously Europe is very much dominated by a few large telco groups. In Middle East, there's very limited complex bundling at the moment in the Middle East. It's very much still a B2C focused market. We're seeing signs that starting to evolve, but it's certainly one of the least developed markets. In Africa, there's huge demand, but the economics are very, very different, and you can see that in the chart at the bottom.
If you look at what the price of a Netflix premium subscription and mobile app between the U.S. and South Africa, and here you can see it changes pretty rapidly. From $25 then to $10 in South Africa, down to sort of $5. The unit economics in Africa are very, very different, but the demand and the volume and the number of subscribers is very, very high. Where are we in those regions? Obviously, in Europe, BT, Safaricom, and Liberty Global were some very early DVM customers. We've seen both of them increasingly look to use the DVM more in sort of a marketplace type offer, so almost moving out of multi-party into sort of Super Bundling. We've seen that with Telenet, marketplace announcements, as well as what EE are doing with some of the marketplace work.
Last week we got our first win in Africa, I'd say, with MTN Group. They operate across 16 different markets in that region. Then we'll start with the rollout of a Global Xbox model in South Africa. Then we'll expand into other markets. Then each market will add on even more content providers. There'll certainly lots of opportunity and growth, a really good entry into a market that has, I'd say, very different economics versus some of the rest of the world for everybody, both for the content provider, the telco, and obviously we're in the middle of that. On track to be ready to continue with Euro telcos, their work in the groups. We're starting to see, along with that, the large telco groups move out of the studying phase into the execution bundling.
We had a win in the first half with an operation in the Benelux region. We're starting to see other opportunities drop through the pipeline. Obviously, we want to drive customers in Africa, see big numbers of customers there, big demands. We want to get those services launched and deployed to as many countries as possible, as quickly as possible. That's where eGifter is quite helpful with some of these marketplace solutions like the likes of Telenet are doing, is to bring in other merchants more quickly. The eGifter solution we have really plays well into those marketplace offers. Finally, in Asia Pacific, obviously, again, a very mixed market. We sort of roughly split it down here into two.
You have the mature markets, Japan, South Korea, and Australia, very highly disposable income, and really a big adoption of digital services and the subscription economy in general. Then growth markets like India and Indonesia, et cetera, where there's sort of a rapidly expanding mobile-first digital-savvy customer. Price sensitivity is really key in those markets, and that actually drives the bundles. In some ways, really, the more price-sensitive markets are, the more creative some of these bundles are that are put together for customers. Generally, that works in our favor. Where are we at the moment? We obviously have a strong B2C position across that market, particularly in Japan, and we have Benefit One, that employee benefits provider we announced a few years ago. We added the first telco in Japan to DVM in the first half of this year.
Really what we want to do with Digital Vending Machine is exactly what we did with B2C in Japan, is establish that position, that B2C position, and grow from it. That's the way that market historically works. You build up that position, you build that position of trust, you become known as a company in that region. Then business continues to grow. Likewise, it's very similar in Korea. That's why we were really pleased to get our first win in Korea with KT. That today launched their first AI subscription service only a few years ago at the back end of that solution. In the growth markets, we've done some launching with great gaming in Indonesia, as well as with a social media platform in India.
Very much even more of that simple bundling sort of level, but certainly with ambitions to grow into that multi-party bundle. That's really how we'll sort of grow in this region, is capturing the prepaid users in the growth markets and looking at AI subscriptions in these developed markets, and basically building a reputation in those countries like Asia, Japan, and Korea. We replicate what we've done in B2C with Digital Vending Machines. Finally, before we shift to Q&A, just a brief look. If we look at sort of the transactional business, we've obviously completed that migration, as we talked about. DOCOMO Digital integration now fully behind us. We have that volatility in those high cost of sales groups that Matt talked about, but the core business really continues to grow well.
Additionally, you'll see the gross margin increase with some of the cost of sales reduction activities that we've undertaken. Business, as Matt said, is very much moving into that sort of strong cash generation business and more. We're very pleased with the growth level that we see in the core and the sort of groups. In DVM, seven new customers in the first half. We now partner with 6 out of the top 8 service providers in the U.S. First customers in Korea, first telco customer in Japan, new Western European customers, and our first ever customer in Africa, literally they've been announced back end of last week. Put all that together using great DVM growth, the ARR growth in particular, that Net Revenue Retention showing the growth from existing customers.
All of that coupled with the cost savings that we have been implementing, delivering good EBITDA growth in excess of 60%, we're really on track to deliver revenue and adjusted EBITDA in line with market expectations. Really moving into 2026, where all those cost savings You get a full year of benefits, even more revenue growth as those beginning wins this year start to move into the growth phase. As you can see, we're in a business that's set for significant cash generation with a very different looking P&L in 2026. With that, I'll stop and turn back, and we'll go back to Q&A.
Perfect. Guys, that's great. If I may just jump back in there, thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. Just while the team take a few moments to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your investor dashboards. Guys, you can see there we have received a number of questions throughout your presentation this morning. Thank you to all of those on the call for taking the time to submit their questions.
Sukey, at this point, if I may hand over to you just to chair the Q&A with the team, and if I pick up from you at the end, that'd be great. Thank you.
Great. Thanks, [inaudible]. I'll start by apologizing for those of you who heard the horn, which you may have heard earlier in the call. That was announcing the sandwich van. It is not a new Bango theme tune or my technique of releasing these two as a slightly random intro. As always, we're really keen to hear from investors and anyone who's interested in Bango. On bangoinvestor.com, we have a Q&A functionality. Thank you to everyone who's been using that. It's proving to be effective. To everyone who's submitted questions today, we appreciate those. Let's dive straight in. We'll start with one for you, Paul. We've had lots of questions about announcing deals and news flow, ranging from there's not enough to there's too many, and comments about the lack of commercial details in announcements.
Could you provide a comment on this, please?
Yeah, sure. I guess the one thing I've learned is that part of communication is where you can never please everybody, and people digest information in different ways. If it doesn't meet the way that you personally like it, I apologize for that, but everybody is different. What we try to do, especially with RNSs, is basically, I would say, it's almost split in two. With deals that are very large initial revenue, for example, you remember, from a few years ago, we had that one of the top three telecoms in the U.S. with a starting ARR was $2 million. We announced that on a no-name basis. Generally, if we're talking about commercials, we will be restricted from talking about the operator that is launching those services as part of the contract.
That's one category of announcement is where it's very large immediate revenue, that's generally announced on a no-name basis. The second category is where I think most of the wins fall into are where deals that have huge potential but generally start off a lot smaller. I know MTN in Nigeria would be a great example of that. Huge potential, but obviously starting with South Africa and one more particular mobile provider in South Africa. Those will be announced as soon as we can. We're restricted often by the timing from the partner that we signed the deal with. We generally announce those as an RNS feature if we think they are of particular interest to investors. If you look at the two we did last week with DISH and Sling TV, I think that was a really interesting start.
Firstly, they're one of the top eight operators in the U.S., that six out of the top eight, DISH is obviously one of those. It was very relevant for that. Also, it's an interesting model because they have DISH TV, they have Sling TV, which is also a content provider, they have Boost Mobile, which is their MVNO. Very different elements to the group. For us, that's quite an interesting model to see how that evolves because in effect, they tick on all parts of the Digital Vending Machine, depending which part of that overall group that you're talking to. For me, that's really interesting. MTN, obviously, was the entry into a new market, into Africa and our first customer win in Africa. We thought that was relevant and interesting to investors.
There will be others which you don't see, where we did a press release with Telkomsel in Indonesia, an announcement with a partner in Nagra to launch Netflix in Hungary. Those are announcements where they're just deal wins, we do general press releases of those because we benefit commercially from that. The reason for announcing deals is not just for investors, it's also to generate the commercial momentum as well. Those we didn't announce as RNSs because we didn't think they were as interesting for investors and want to keep the news flow as far as RNSs go a bit more focused on the deals that we think are interesting. That's the model we follow.
As I say, if you want to find out more, you will have seen on the previous slide, there's tons of ways you can keep in touch with what we're going at. RNS features are just one small part of it. As I say, those we do as and when required and when we think it's interesting.
As a related follow-up, the releases last week had a very positive impact on share price. It increased recently. There were a number of comments about what the board is doing to increase the share price.
Yeah, I think if you look last week, obviously, I think some good news of mostly investing last week was all retail-driven. That tends to be very news flow driven, and I think hopefully the retail market saw, same as we did, is the opportunity with both Dish and MTN in terms of what those can deliver to the business over time, right? Those are both deals that will grow and grow over time. Just a reminder, the board and all employees are very big shareholders overall. We're all invested and interested in the share price. In terms of what actions we've taken, I think we appointed Cavendish as a second broker. We've seen some great traction from that, both in the U.K. as well as in the U.S. One of the reasons we picked Cavendish as a second broker, mostly because of their regions, the U.S. market.
We are obviously adding U.S. sales to the register a year or so ago, and we have a great interest from other investors. This is the start of what is proves to be a very long eight to nine days, where we're meeting not just existing institutional holders, but well in excess of 20 non-holders. We've got a very busy eight to nine days. There's certainly interest from institutions, and I would say more demand than certainly I can remember for many years, and we have a busy eight to nine days ahead of us now.
Moving on to DVM specifically, how many DVM customers are there, and can you comment on where they are in the implementation phase?
Yeah, sure. They're all in different phases of implementation phase. I think we ended last year with 27. We had eight set within the first half. We've just added another one with MTN. I guess 35. It sort of depends where you count from, whether you count a group or a region, country. We were counting MTN as a group in that particular number. They're all very much in sort of different phases. Obviously some are very much in that growth phase where they're starting to move through the tiers. Others are in that implementation phase. We were asked on a call this morning, what's the driver for that implementation phase? Really it's twofold. The technical implementation is sort of a matter of weeks. Getting things technically live is generally a matter of weeks.
The complex part or the things that delay it are two things. Firstly, it's the commercial agreements between the telco and the content provider. Secondly, it's fitting it into the telco's marketing plans. Those two tend to be the driver for launches. That's why we like the things like football seasons and Christmas and things like that, because they're very hard deadlines that are immovable. The DISH launch is a great example of that. Very hard deadline in time for the new football season. We actually saw those things move very quickly from contracting issues to launch because there was that very hard deadline. Sadly, so much of it is outside of our control. The bit that is the technical piece is sort of about a matter of weeks.
On a related note, is near-term growth driven more by new partners or expansion of existing ones? Of the reported reach, what's the conversion rate into active subscriptions?
Matt. Do you want to take first time?
Yeah, I'll take first time. Hello. As I mentioned in the presentation, we're in the privileged position here of being able to have growth coming from both new partners and existing customers, and you can see that in both the metrics that we're reporting. Obviously, important to strike that balance so we're not dependent on one particular lever. The Net Revenue Retention of 108%, the key there is it continues to be over 100%, shows that the customers are growing as they scale the licenses. When a customer scales the license tier will obviously be dependent on the commercial contract with that partner, and that can be quite lumpy. I wouldn't focus on if Net Revenue Retention 159% or 108%, the key is that it's over 100%, that shows that the existing customers are growing.
The ARR growth of 20% year-on-year also supports the addition of new logos. We've got both pillars driving that overall growth, and we're not dependent on any one, which is a great position to be in.
In terms of how that converts into the number of subscriptions, it's very rare, and I don't think there is a standard answer for that. Hopefully, you saw some of the geographic differences that I talked about in the presentation. It's largely, I would say, driven by the telcos sort of marketing campaigns. Things like start of football season, or back to school, Christmas. Generally when we sort of see the growth rate increase, and then maybe after that campaign, it drops back to a more normal level until the next level. It's very hard to predict and very driven by the telco's marketing campaign.
We're trying to give them the product that makes as much information available to the telcos so they can really target those marketing campaigns and make them a lot more direct, and that's the bit that we can influence, and that's what we're focused on now.
There's a question about beyond telcos. How are the non-telco partners progressing?
Well, as you see, or at least you saw from the survey round, there's definitely now an increasing interest from the content providers to move into those verticals. A lot of the telcos are in progress. Banks and retailers are the two that sort of come out the top. We see a good pipeline in both of those. We also have some other more interesting and different verticals that we're talking to customers as well. We'll see which of those is going to be successful. For us, it's telcos remain the priority. That's where the bulk of the subscriptions, the volume will go through. Banks and retailers absolutely are probably the next two, but there are others as well. You'll see more as we go throughout the year, but our primary focus is on the telco.
You can see outside of the U.S., there's lots of green space, and white space for us to expand into and bring new logos onto the platform.
In terms of scaling DVM growth, which regions are the focus? I know you touched on it in the presentation. Which regions are the focus for new partner wins in the next 12 months-1 8 months? How do you see the competitive landscape evolving and the biggest risks within that?
I think for sure, new partner wins we see sort of outside the U.S. where there is a lot of it still. I think there's also a question about we tick the top eight, what about the last two? I think they're certainly not out of reach. One of those doesn't really do that much bundling, so maybe less of a criteria. There's still a little bit to go in the U.S., but really the growth in terms of new logos we see will come in Asia and Europe in particular, and Africa. We'll see how that goes and sort of drive that expansion.
The MTN South Africa announcement, which was issued last week, are the margins comparable to other markets or are they lower given that subscriptions are less expensive in these regions?
I think it depends what you mean by margin. DVM is a high margin business, or DVM Asia will always remain a high margin business, but obviously economics and the deal structure are very different in that particular region, but there's very high volume. The margins will remain high, close to 100% the DVM license. The way they're usually structured and the way deals are put together are slightly different, just given the different economics that people like Netflix, telco, and ourselves sort of feel about region.
Are we expecting to roll out MTN beyond South Africa?
Yes, certainly. We thought that we're going to start with an SVOD service in South Africa, then it will move into other countries, then each country will be adding more and more services. Great opportunities, certainly a lot of demand to get some sort of rolling out in that region and getting, particularly when it's quite heavy pre-pay market, live as quickly as we can.
Question on the pricing model. How does the pricing model work for both segments, transactional and DVM? Are you intending to split out EBITDA reporting for both segments?
Sure. I'll take that one. As we discussed in the past, the transactional segment is based on a percentage of end user spend, that percentage can obviously vary depending on the commercial arrangement or whether it be for physical goods or digital goods. For DVM, this is a mixture of one-off integration fees initially, each partner will then be subject to a recurring license fee stream, that license fee revenue is basically linked to the number of subscriptions to the platform. Typically, we talk about customers scaling the license tiers, each contract would have banding for particular license fees, depending on the number of subscriptions. As those customers grow and more subscriptions come up to the platform, then the license fee will also increase. Then in terms of reporting segments separately, completely agree with this.
We've obviously got two very different business units within Bango, each that have their own different drivers. I think the intention definitely is to start reporting these separately from next year to provide better visibility on the overall business to investors.
On these two different businesses, DVM and transactional, what's the competition you face for each of those?
Yeah, sure. I think certainly we've talked about that transactional, that B2C business. A lot of the core deployments, we think most of our growth, while we're all logging new telcos and new connections, the growth really comes from existing customers. Competition has historically been from operators looking to do it themselves or to use an integrator, which the two global integrators are ourselves and Boku. That's where that market sits. On the Digital Vending Machine and the bundling side, really our biggest competition is people looking to do it themselves. Build versus buy business case is always the first thing we go through with any new customer. Really, as you move from simple bundles to multi-party, as you bring on more content providers, that equation biases very much in our favor, and I think becomes very much a very simple buy decision around that.
There are other companies in the market that have a product that does similar things. Amdocs being the most obvious one with their MarketONE product. They're obviously big OSS/BSS providers and telcos with a bundling of some add-on site. I think it's always good in the market for our competition. We're very different than Amdocs in terms of scale, size, pricing model, product capability, number of merchants integrated, et cetera. I think in some ways it's great to have competition and the rest can be against because we are so different.
How sensitive are the number of subscriptions being managed by DVM to changes in consumer spending?
Yeah, I guess a couple of ways. Firstly, the license fee that we charge is not based on the retail price of a subscription, it's based on just the number of subscriptions. Secondly, I think what we see is generally when there's a squeeze in consumer spending, everybody becomes a bit more creative in terms of the offers that they put together. We drive more data science, more bundling. Somewhat ironically, that sort of works in our favor because telcos get more creative. They want to protect their core telco pricing, and really sort of put some really good offers into the market. Ironically, it's almost the opposite that you would expect.
Question on operating profit margin. Following the first half from FY 2024, what are the expectations of operating profit in future margins?
Sure. As you've seen in the results for this period, we've got a nice balance of growth coming from recurring revenue. We've got gross margins expanding, and we've got costs reducing, and that's really supporting, as I mentioned, the 66% increase in adjusted EBITDA. You've seen the adjusted EBITDA margin move from 17% - 27% off the back of that. There's a high level of operational gearing in the business. As revenue improves, that will all drop through. Whilst we've got an operating profit margin loss for this year, we can expect to be positive next year. I see, just reading the Q&A, there's a separate question on when I mentioned we expect to be profitable next year on all bases.
Just to be clear, bottom of the P&L net profit for the year, absent anything unforeseen, we'd expect the benefits of everything that we've been doing over the last couple of years to show bottom line profit in fiscal year 2025.
We have a question about when Bango will achieve tangible growth.
I can take that one. I think Well, obviously delivering a 66% increase in adjusted EBITDA, I would suggest that that was tangible growth. Look, I think, as I just mentioned in the previous question, the nice thing that we're facing here is that we've got different pillars all supporting growth, be it revenue, be it margin expansion, be it cost reduction. We're not dependent on any one single pillar. We're seeing those all align now, and I think the real benefits will be apparent as we move into FY 2026 because we'll also move away from some of the legacy exceptional costs that obviously have been weighing on the bottom line as well. As we continue to mention the output of FY 2026 should be one of material cash generation growth.
You mentioned having no churn, which is great. How simple is it for customers to cancel contracts in either segment? Would you have advanced notice?
Yeah, we would all have advanced notice. I think the contractual cancellation is one thing. You have the challenge of migrating the services from whatever systems to the other. What we've seen increasingly is on the B2B churn, it's very, very low churn. It's very rare that people. It does happen, but it's very, very rare. On the DVM side, and that's why we're doing things like this offer management and this prepaid in order to get services launched more quickly, but to embed the DVM more deeply in the telecoms back office system. While contractual churn, I think, is sort of a one churn, the actual practical churn is much, much harder than anything that's written in the contract.
That's really the value of the DVM, the more subscriptions that get onto it, the more users that are using it, the bigger you are in the growth curve, the harder it gets.
Why does Bango have such a high cost structure?
Historically, we've obviously had the integration of the DOCOMO Digital acquisition, which has naturally made that cost base elevated. You can see in the numbers, that's part of the reason why we've introduced this core administrative expenses metric that show the level of core controllable costs, that has been coming down 20% cumulatively in the last 24 months and 9% this year. That naturally does get distorted by the things like depreciation and amortization rising and the exceptional costs. As we talked about before, those exceptional costs should peak next year so that we can remove that from the cost base. The D&A is yet to peak. Naturally, we've made a lot of investment historically, so there is that lag effect of D&A to catch up.
We are approaching that peak, I'd like to say, towards the end of next year, you can see the R&D CapEx investment continuing to trend down, the D&A will follow that soon after.
Well, related to the quotes around Verizon in the presentation, what is the timeline for Verizon to reach their targeted penetration of having half their subscribers under the myPlan app?
Yeah, I think that's probably a better question for the Verizon results call. I think the key element there, you clearly see their ambition. You see their ambition impacting other players in the market as we see more and more launches in that market. I think the timing is always very, very hard to predict. I think its endpoint is inevitable, but quickly it's the challenge. If you answer the question, none of us know exactly which it will get there. Clearly, there's a drive on our side, there's a drive from the content owner side, and there's a drive from the telephone side. Everybody's pushing in the same direction. I say it's not a question of if, it's a question of when.
Okay. Thank you. That concludes the Q&A, I'll hand back to [inaudible].
Perfect, guys. That's great. Thank you very much indeed for being so generous with your time then addressing all of those questions that came in from investors this morning. Of course, if there are any further questions that do come through, we'll make these available to you afterwards. Paul, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that'd be great.
Yeah, sure. Thanks again, everybody, for taking your time and for all the Q&A. We had loads coming in there, and I think we've answered certainly all of them. I really do appreciate that level of engagement, and we want to keep that moving, right? That's why we launched our Invest Hub, where you can register, receive updates, and help ask questions against RFPs and see our answers online and see answers to what questions other investors have raised online. I really encourage everybody, especially on the retail side, to join that Invest Hub. It's a great way of keeping up to date. We've got one at the end of the company, and you can see some other ways of doing that as well.
That Invest Hub really should be, I think, everybody's go-to place for asking questions or finding out more about what's going on in the company. That's what we've tried to do today, is lay out not just what happened in the first half and what we're seeing in some of the different geographies, and what we're seeing in terms of the future of the company. I think if you look at that future, as Matt said, we have sort of great top-line growth in the transactional business in those core routes. The DVM growth continues to grow. Cost base is coming down, the R&D CapEx base is coming down, giving significantly improved profitability no matter which line in the income statement you measure on.
That will result in significant cash generation and a reduction in that net debt in 2026 or, I think, come the end of 2026. The business is in a very, very different shape than it is today. I think we're in a great position in the market, and I'm looking forward to what will be a busy 89 days talking to institutions. During that period, please do engage with us on investment if you've got any questions. Thanks again for your time and for those shareholders, thank you for your ongoing support.
Perfect, Paul. That's great. Thank you once again for updating investors this morning. Could I please ask investors not to close this session, as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Bango Plc, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon.