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. The company can review all questions submitted today and will publish those responses where it is appropriate to do so. Before we begin, I 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, everybody, and thanks for your time on what is quite a wintry day, at least here in Cambridge. Really appreciate you taking the time to join us today. Hopefully, you have got a chance to see the RNS that we put out this morning with the results for the first half of the year. Hopefully, the poll that we put up and the slide that you saw when you came in sort of got you thinking about how many subscriptions really do you have, and I think that is a key element on the results are coming in as we speak. I think that really that challenge about actually can you even remember how many subscriptions you have is really what the Bango DVM looks to solve. It will be interesting to see the results on that as they come in.
When we look globally, this is from a U.S. study, and we have done these studies in different parts of the world. We actually have one being published in a couple of days time for Japan, Korea, and Taiwan. On average, people have between four and six subscriptions a year individually. I think that is a bit on the low side. I am looking at the poll here. The bulk of the responses seem to be in six to nine, and there are 4% of people who have 10+ subscriptions. Probably the audience on this call are probably more aware of the number of subscriptions they have maybe than some people when we do some consumer research are willing to admit. One in 10 pay for 10 or more subscriptions.
Again, you can see that slightly higher than here because currently we have, however many, 6%, 8% of people who have more than 10 subscriptions. Very much aligned with that. On average, those people spend almost $1,000 a year on those subscriptions. An increasing portion of our consumer spend and our wallet is moving into that subscription marketplace. That is really what, at Bango, with the Digital Vending Machine, we are here to capture. It does create challenges. That drive for everything to become a subscription does create challenges, and we see very much from a consumer level, subscription fatigue is setting in. Almost half of people find it very difficult to keep track of all the subscriptions that they have. Well over a third have no idea how much they are spending on subscriptions. Over a third pay for a subscription they never use.
I suspect that's the third that are willing to admit that. I suspect the actual percentage is certainly much higher. Two- thirds can't afford all the ones they have, and we've seen people change subscription tiers and introduction of cheaper ad-supported tiers really to try and enable and maintain that viewership with different subscription levels. That subscription fatigue is really a challenge. Really there's a solution to that, and that solution to that is to give consumers more flexibility, more choice, more control. Try and put all those services in one place. See, 70% of people want to see all the subscriptions in one place. Almost three- quarters want to be able to manage all those subscriptions in a single platform.
Ironically, what we see with this is an increasing percentage of people would actually spend more on subscriptions if they had more control, more visibility, and it was easier to try out new services. Now, that's exactly where the Bango Digital Vending Machine fits in, and really what our vision and purpose is around, because we're here to be the place where people come to subscribe, and in delivering that benefit for consumers that gives that control and that choice for subscribers. That's really our purpose and why we exist. All of that underpinned by our THRIVE values, which really are the heart of the company. We look at what's the way to capture that and how are we going to capture this fast-growing subscription economy? There's basically four elements to the strategy for growth. The first is expand.
We want to dominate and lead that bundling within the telco market. Telcos are a great channel for bundling, as we've discussed at the time before, and certainly if you talk to any of the content providers, it's the number one choice. In the consumer research we do, it always comes up as the number one choice in terms of where people want to go for those subscriptions. Really that's our big focus, and we'll talk some more about the progress we've made on that as we go throughout the deck. The second one is to basically give a better experience to content providers. Really, although most of our customers are resellers, the people who are the channel that's reselling that subscription, we're here to serve the content owners, and we've not built a product to sell subscriptions through at telcos.
We build a product that helps people who have a subscription service deliver that to new customers. We're experimenting a lot with new ways to use the data that we have within the platform to deliver a better experience for content providers so they can get better customers and get a better lifetime value from those customers. New opportunities outside of telcos, that's something we continue to look at. We signed our first bank in the first half of the year. That's our first move into that financial services vertical. Again, we'll talk a little bit more about that later, but that's a great opportunity for us in terms of future expansion. Fundamentally, it's underpinned by good growth and good strong growth in the DCB, in that payments business, mid-single- digits or around 5% growth on that, close to 10% in a constant currency environment.
Really that good growth in that business allows us to fund the really high growth Digital Vending Machine business. That's our source of cash to the business. That in itself continues to grow, but really is the engine that fuels the growth in that Digital Vending Machine business. Just a reminder of those two businesses in terms of how we report when we might go through the financials, we talk about a transactional business. The bulk of that is this carrier billing, where you go to either the Google Play Store, purchase a bag of gems or a bag of coins in a game, or maybe a YouTube subscription, we charge it to your mobile phone bill, and we do that for operators all over the world.
We also do obviously the physical goods for Amazon in Japan, and in that model, we take a percentage of the retail price, that's that transactional segment. Then the Digital Vending Machine, which is this, the product we've just talked about, solving that consumer fatigue with subscriptions, giving customers more choice and control, and allowing people like Netflix, et cetera, and Disney to sell their subscriptions through a channel. That's a license model, and the channel pays us a license fee based on the number of subscriptions that we're managing through the platform. You see that in some of our recurring revenue numbers that Matt will talk a little bit about shortly. Really those two halves of the business, payments on the left, really good growth, mid-single-digit percentage. Annual Digital Vending grew at over 60%, half- on- half.
Just look at highlights, from an operational perspective, we added four new DVM customers in the first half, including that bank in Latin America. Since the end of the period, in Q3, in effect, we've already added another three customers. Number of content providers connected to the platform really continues to grow. An increasing number of those are choosing to use not just the technical capability that the platform provides in terms of that connectivity, but also some of the distribution capability. We'll talk a little bit more after Matt's done the results on what we call our eDisti program, which is in effect where we act as a reseller for that subscription, and it allows us to provide a pre-stocked Digital Vending Machine. DVM customers, it's a very sticky solution.
We don't have churn with DVM customers, evidenced by the fact that one of our first customers renewed for a further three years. We'll see how increasingly the Digital Vending Machines are used to offer more and more different consumer propositions. It really becomes embedded in the core ways that telcos are taking their products to market. With people like Uber, helping Uber roll out their new subscription service, Uber One, and get even more penetration for that Uber One service. Disney+ joining the eDisti portfolio. You can see we have the support and the recognition from the content providers in terms of how important the Digital Vending Machine is in their growth strategy. With that, let me turn you over to Matt, and we'll walk through some of the financials.
Thanks, Paul, and good morning, everyone. Just like to run through our financial results for the first half of 2024. In line with the trading update that we put out in early July, the revenues picking up by 19%, or 22% if you include a constant currency basis, where obviously, again, we were affected by Japanese yen weakening. Some of that revenue is driven from our core DCB business, that went up mid-single-digits, around about 5.3%, and this is where we had most of our FX impact, that actually increased to 9.4% if you add back in for that constant currency effect. The main driver, however, is coming from the increase in the DVM, our new business on Digital Vending Machine, both through new customer acquisition, but also growth in our existing customers. That one you can see by the increase in our annual recurring revenues.
That's up 130% to $12.9 million from $5.6 million in the equivalent period of last year. Those revenues, and coupled with the reduction in our core costs, which I'll talk about later on, has seen our EBITDA drive up from a - $0.2 million this time last year, up to $4 million in this year. A $4 million increase in EBITDA. Putting a bit more flesh to the revenue growth of 19%, giving a three-year CAGR growth of 34.4% over the years, you can see from the graph on the right-hand side. That solid growth coming from the DCB business, with the acquired DOCOMO Digital acquisition, giving core revenue growth, but also cash generation that helps fuel the growth within DVM. This underlying DCB growth we expect to continue in the mid-single-digit percentages as we proceed forwards.
The DVM business, driving that strong growth of 63% from H1 2023, with the annual recurring revenue growth at 130%. That one grows as we have more deals and as the existing customers progress through their pricing bands, and Paul spoke a little bit about that, and we'll speak a little bit about it more. We have that growth coming through. The DVM becomes embedded as a customer super bundling offers, so it becomes very sticky, and that is emphasized by our net revenue retention metric that we put through, which this year was up 159%. Remember that at the beginning of the period, the development of those customers that were at the beginning of this one-year period up to their numbers in June 2024.
Those new customer deals, as Paul's referenced before, new DVM deals in the first half of 2024, and a further three wins since we announced those June results. Focusing again on our expense control, and what I've tried to do here is strip out just to show our core controllable costs and the improvement that we've done there as part of the restructuring element of DOCOMO where we said that we would be driving those costs down. That's reduced 10.8% on H1 of 2023, and 6.7% on second half of 2023 as well. Some really good improvements there, and it's reflecting some good skilled cost management, but also the reductions as part of those DOCOMO restructurings. That will continue. We expect to see that one continuing onwards into the second half and as we progress forward. What you'll also see is there's a reduction in our R&D capitalization.
It was a particular high point over the last few periods as we did a lot of investment within DVM. We were also doing work on the migrations elements to move the routes from old DOCOMO data center across onto the Bango platform. That started to reduce, so our R&D capitalization has dropped 14% on H1 and 22% on a sequential basis from H2 of 2023. Expect to see both of those reduce, both the R&D capitalization and the core administrative costs as we move forward. Obviously, the impact of that growing revenues and the reducing costs mean it has had a very beneficial impact on our EBITDA, up $4.2 million on last year, reflecting those good core basic metrics on there. Net loss for the period is $4.1 million.
We have got some increasing depreciation amortization costs as some of the previous capitalization for DVM and for the migrations starts to be realized into the P&L as these new developments are generating the revenue that we expected. Also within this period, we have seen a tax cost that was the result of the DOCOMO acquisition, which we will not expect to continue. On the cash movements, you can see there is some good generation of cash from operating activities, some benefits on working capital movement where, as you know, we have a seasonal nature to our business. 40% in first half, 60% in second half traditionally. Obviously as those revenues that came in towards the end of H2 get converted, the debtors drop down, and we see that improvement in cash coming through.
That, as we have spoken before, is being reinvested in our capitalization of R&D, our investment in DVM and the platform, and also some small amount within interest and leased costs. These increasing revenues and the decreasing core cash costs, they are providing that support for our continued growth, but also for the loan repayments to NHN, and that first one has been completed. We have made the first $1 million repayment on that loan just at the end of September. I will not go through this, but here is for reference for later on. This is some history of our first half results, some comments reflecting to them. I think in summary, what we are talking is our increased revenue, 18.6% year-on-year growth and 130% increase on annual recurring revenue. Our margins are growing in second half as we increase our revenues.
That revenue predominantly coming from DVM, which has extremely high gross profit margins, that is going to drive a GP growth. Our costs are reducing from that aspect, and our R&D capitalization is also reducing. Revenue, EBITDA and cash generation increasing, and we feel as though we are on track to be in line with the market expectations for the year. As I said just previously, we also made the first capital repayment from a cash perspective to NHN at the end of September. With that, I will pass back to Paul.
Brilliant. Thanks, Matt. I thought I'd just remind everybody really what the opportunity is and the size of the opportunity. The Digital Vending Machine sits at that intersection between a growing subscription economy, as we talked about. More and more of us have more and more subscriptions. It's now not just music or games or video. It's lifestyle services, it's relaxing, it's shopping, it's razor blades, coffee, all sorts of different things available via subscription in a market that is set to triple over the next few years to almost sort of $1 trillion in terms of size. The Digital Vending Machine sits at the point where an increasing proportion of those services are being distributed in through a channel. Somewhere between 20% set to go to 25%, particularly of SVOD services, are distributed through that sort of telco channel. That's really where we fit.
As an increasing percentage of this increasing market is delivered through a channel, the opportunity obviously for the Digital Vending Machine is significant. We see that in terms of the different use cases for the Digital Vending Machine is sort of highlighted here on this slide. Verizon are very clear about the reduction in churn that this bundling gives them. It's 60%-70% reduction in churn. What we're seeing is this concept of bundling and putting subscriptions together being used in Verizon in more or less all of their different consumer propositions now. This is why it creates such a sticky solution and why we see that net revenue retention at those sort of levels. myHome is that fixed broadband plan, so fixed wireless loop. You see subscriptions are a key element of the sign-up for that.
You see in the middle on the right-hand side how different subscription services with different sort of standard tiers. You can see on the top right that Verizon put creating new concepts of content by bundling different complementary services together. Netflix with HBO Max, quite often referred to as sort of NetMax. Quite a unique content bundle to again attract and retain customers. Obviously the +play store, which gives you access to the 50 or so different content providers, and all of those are powered by the Digital Vending Machines. You can see the ways in which telcos and resellers can use the Digital Vending Machine. The flexibility that's in the product allows them to really create some unique and compelling opportunities to allow them to differentiate themselves, increase revenue and reduce churn.
It's a very, very powerful solution that's really only possible because of the flexibility and the power within the Digital Vending Machine itself. Our challenge and one of our frustrations, everybody always asks me what's my frustration, m y frustration is I'm impatient. I'm naturally an impatient person. The time to revenue has always been a challenge. We saw that with one of the big Tier 1 telcos in the U.S. last year, where we signed a deal in the midpoint of last year. It didn't launch until early part of this year. That's generally because there's actually quite a lot for a telco to do in launching these sort of services.
For our part of it, the sort of light blue arrow at the top, we have to negotiate a contract, and we have to do the integration, and I think we're pretty good at both of those. Generally, the integration in particular is a matter of weeks. It's not months. It's weeks to bring that together. Generally what happens is we're then ready sitting there, and there's sort of a big gap before we get to launch. That's because there's a lot of other things for the telco to do. They have to build a user interface, the portal, what is the customer experience like? How do they subscribe for these services? Where do they click? How do they manage? How do they see all the subscriptions together? They've got to do agreement with the content providers themselves to allow them to resell those services.
Then they have all the marketing plans and the marketing strategies, which telcos are really, really good at, obviously alongside of that. There's a lot for the telco to do, and quite often that creates this sort of big period where we've done our work and we're ready to go, and we're waiting for the system to launch. All that with patience means we've been looking for solutions. How can we help reduce this interval? It's in everybody's benefit to reduce this interval. It's in the content provider's benefit, it's in the reseller's benefit, and it's certainly in our benefit as well to reduce this as much as possible, to compress that interval so that we can launch the service faster.
Obviously, the Bango user interface has been where we've been investing a good portion of our research and development over previous years to create that user interface into the DVM, which our first contract now with that, CX included, we'll be launching towards the second half of this year and into the first part of next year. Again, that takes that hurdle away for launch. Then this eDisti program, which allows us to deliver the Digital Vending Machine pre-stocked, so mitigates the need of launch being dependent on these content provider agreements. That's what we're doing to compress that interval together. The user interface, looking at each one of those in turn, this is our white label for that sort of content hub.
Allows the operator to put their brand on and their logo, their look and feel and change how offers are presented and what the customer experience is, but all from a configurable product. This is not building professional services to do bespoke work for each telco. This is building a product that's configurable that the telcos can put their look and feel and their brand on, but without having to do all that sort of development work to develop that portal themselves because we already have it, and it's already integrated with the APIs that are part of the Digital Vending Machine. We have different operators looking at things from a sort of full à la carte solution, so you can pick and choose, to prepaid operators who are looking for more sort of an entitlement hub.
Depending on what your prepaid rate is, which services you can sort of get access to as part of your package. It can, again, very flexible and very powerful solution, powering lots of different commercial propositions. eDisti, this is something we talked about before, but I thought it worth just spending a little more time on this. The chart on the left is that traditional model. We have a commercial agreement with the reseller, and we have a technical integration. Then with the content provider, we just have a technical integration. We remove that technical friction, if you like, about bringing on new services. We've talked about this before, how we launched Disney in Belgium in four weeks versus the six months or so it used to historically take. We launched 40-odd different merchants with Verizon in 20 months.
We're very good at solving that sort of technical friction. The fact that this commercial agreement was needed between the telcos and the content providers was one of the ongoing challenges of that. We've been looking at how can we reduce that friction as well. eDisti is one of the solutions for that. That's where we do an agreement with a content provider. We have a standard set of terms and conditions with the ability to, in effect, act and resell that subscription product and make that available to the reseller. That creates this pre-stocked concept of the Digital Vending Machine. For us, that gives us the ability to get to contract faster. It attracts customers in because obviously Bango can provide even more value. It generally speeds up the contracting cycle.
It means we can launch faster because we've just taken away one of those big delays to revenue. It means that generally licenses can grow faster because there's more different services available in the Digital Vending Machine. Those are the benefits to Bango. The nice thing always about the Bango Digital Vending Machine is everybody in the ecosystem has benefited. This is a slide you've probably seen before. We talk about the benefits to consumers, solving a lot of that friction and complexity that we talked about right at the start of the presentation. Gives more choice and control to customers. It gives the content providers new outlets for their subscription services, new channels to market. It gives the telcos a way of increasing ARPU, reducing churn, and attracting new customers. Those benefits only accelerate when you sort of add eDisti on top.
It gives customers an even bigger range of subscription services. It gives both the content provider and the telcos faster time to market with these services without the overhead of the commercial and contract negotiations, et cetera, that can go with that. Back to the original chart. This is my sort of frustration chart. If you look at sort of that really compresses, if your customer takes the Bango user interface, our CX, as well as the eDisti, that launch interval really, really compresses and allows the telco to focus on what they're really good at, which is how they're going to market these services. How they're going to bundle, what are the different consumer propositions that they're going to put together. We've seen an increasing portion of merchants also looking to take advantage.
There's DVM now, sort of 20 or so different merchants as part of that eDisti program. Microsoft have been in there for quite some time with both Game Pass as well as 365. The big merchant that was added in Q1 was Disney+, and that eDisti agreement with Disney+ that allows us to offer telcos a pre-stocked Digital Vending Machine with one of the marquee streaming video providers in the world is really, really powerful. That's what that eDisti program was really missing was this marquee name that attracts people because customers want and resellers want a variety of services, but they want one big name to headline it. Now, we have had that big name with Disney+. Really great traction on eDisti.
Sort of thing that will generally accelerate the business and allow the business to grow faster, but it's a sort of project that we'll see the benefits next year and the year after and the year after that. Looking forward, going back to the strategy that we put on at the start, the four key elements of the strategy. Obviously continuing to sign new DVM customers. You'd say the funnel's strong, three already signed in Q3, and seeing those customers continue to grow. You can see how with the Verizon examples, we get embedded in more and more different propositions. There's more and more different marketing behind the consumer propositions, all of which are powered by the Digital Vending Machine, and it's that flexibility of the Digital Vending Machine that makes so many of those possible.
That's why we'll see growth as existing customers as they start to climb through the license tiers, which is really evident in the net revenue retention figure. Enhance, it's all about trying to monetize more of the content owner side. In most cases, the license is paid for by the reseller, so by the telco, but actually the content owner provider is getting a massive benefit from the Digital Vending Machine. How can we use the data we have in the platform to deliver more value for them and potentially open up a new revenue stream? Aegis is the first part of that monetization of the content providers, but clearly there's steps behind that, and we need a lot of work on the product side now to experiment in terms of the different ways we can use the data to generate that value for the content owner.
It's not just telcos. As we talked about, telcos come up number one generally when you ask a consumer where they'd like to buy the subscription services to. We've already done employee benefits, we'd already done some retailers in the U.S. in particular. The vertical that comes up second every time is financial services, and we won our first contract with a bank in Latin America in the first half, and have a nice funnel of opportunities that should flow through over the next 12 or 18 months or so. The final element, which is as important as ever, is that transactional business, really, really important, continues to grow, say mid-single-digit percentage growth. Q4 is obviously chock-a-block full of shopping events, Black Friday, Amazon Day, Prime Day, Cyber Monday. Christmas really is always the peak business for us from a carrier billing perspective in particular.
Capturing that momentum that we get in the second half of the year, particularly in Q4. Obviously as Matt showed you those costs continue to drop. As we complete the DOCOMO migration, we generate even more cost savings, which you'll see in 2025 and beyond. The ability to generate even more cash from that business. When you put all those four together, hopefully you can see what our focus is and the progress we're making against each of those elements. But the heart of it is the Digital Vending Machine, which is really the growth in that service and our ability to invest in things like the user interface is powered by really solid growth in the transactional business, which throws off the cash that allow us to invest.
Also, as Matt said earlier, to pay the first loan installment back to NHN, we're well set to become net cash positive in 2025. Thank you all very much, I know there's been a number of Q&A submitted, thank you very much for your time.
Perfect. Paul, Matt, 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 top right-hand corner of your screen. Just while the company take a few moments to review those questions that were 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 dashboard. Guys, as 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, if I pick up from you at the end, that'd be great. Thank you.
Thank you. We have the first question is on costs. Could you provide an update on the cost reduction related to the integration of the DOCOMO Digital acquisition, and are there more cost reductions expected?
I can take that one. We've continued. Obviously, we hit the $ 21 million of synergies that we were expecting at the end of last year. You can see actually within the core cost base, it is coming down. Yes, we do expect those ones to continue. As we finish the migrations towards the end of this year, we'll see cost reductions from no longer having to support, for example, the Frankfurt data center for the old DOCOMO routes. Yes, we do expect to see those ones continue.
Second question, given the low share price and the cash generation of the company, would Bango be keen to explore a share buyback, and if so, when would it make sense to initiate?
At the moment, obviously, we have that strong DCB business which continues to generate cash. Our focus is to get back to a net cash positive position and to repay the loan for NHN, we'll be net cash positive in 2025. We think the best use of that capital is to continue to grow and accelerate the DVM business. That's really where our focus is in the short to medium term at least.
Great, thank you. A question on Japan. With the Bank of Japan recently raising interest rates and the potential strengthening of the yen, do you anticipate any headwinds or alternatively positive effects of Bango's operations and revenue in Japan?
Thank you. Obviously, we're having a large element of our DCB business coming through Amazon sales in Japan. We're expecting some improvement in the revenues as the yen strengthened against the sterling. We have seen that slightly deteriorate in the past few weeks as the U.K. GBP starts to gain strength, unfortunately. Still, it's an improvement on where it has been, so we hopefully get more revenues from that one. Obviously that goes straight down to the bottom line by way of margin.
Great, thank you. Then in regards to the seasonality that you mentioned the impact earlier With seasonal events like Black Friday and Christmas driving a significant portion of H2 revenues, what percentage of annual revenues typically come from H2, and do you expect this trend to continue?
No, you go .
We would expect that continuation to still go on. There are those heavyweight events in the second part of the year, it usually does drive the same, I think I referred to previously 40/ 60, I think it was 45/ 55 previously.
We'd expect to see those ones continue to drive on.
Great. Thank you. A question on the NHN loan. When do you expect to repay the loan in full?
That'll be done by the second half of 2026. We've got equal capital repayments each quarter now going on, so our next repayment will be at the end of December, and then quarterly going onwards. We should complete by about June 2026.
Paul, one for you on the consumers. Are consumers resistant to using the Digital Vending Machine because of security concerns?
I think no is the answer. We don't see a resistance for consumers to use the Digital Vending Machine. In fact, all our research points that there's a pent-up demand from consumers that want all the subscriptions in one place. It makes it easier to sign up. It makes it easier to manage and understand how much you're spending, and there's actually, it's in many ways more secure because you don't have to enter your payment details on every site and put your credit card details on every site. You can sign up for them all from one place. No, I think is the answer. We don't see a resistance.
We see a demand for customers, and the telcos that are doing the best and are reducing the churn and growing the fastest are the ones that are capturing them and being more creative with the flexibility that the product provides.
Thanks, and a question on the eDisti program. Are there conflicts of interest to manage with eDisti where Bango is distributing competing subscription services?
I think the answer to that is no. Customers want a broad range of subscription services, and as you see on the Verizon slide that I had earlier, where we see Verizon creating a unique bundle with Netflix and HBO Max. Two very competing services, but putting that together in a single bundle. You can see the content providers really want more customers and stickier customers, and the Digital Vending Machine gets that. They understand they're not the only music service. There's not a single video service that anybody subscribes to. That conflict of interest really doesn't exist. It's a known quantity within the industry, and what differentiates fundamentally these services is the content they can provide, not necessarily what's in the Digital Vending Machine.
Back to you, Matt. Do you expect R&D spend to remain around the same levels?
I think we will do. We'll continue to develop. We are a growth company, so we will continue to develop our platform, and Paul's alluded to some of the areas that we're continuing to enable the speed of revenues to come more quickly, so after people have signed. Whilst using some of the technology and the algorithms that we learned from Bango Audiences, we can hopefully provide greater insights into the use of data as well for the DVM customers. We expect it to remain about that sort of level.
Great, and Paul, you mentioned that Bango works with three of the top five U.S. telcos. As a question, are you working to pick up the other two?
Absolutely. There's lots of activities ongoing, and the U.S. is an interesting market, because actually, the U.S., where there's sort of five very large telcos, there's actually an increasing portion of sort of smaller telcos, some regional companies, some of the old cable companies that are now in sort of groups spread across the U.S. E specially on the fixed broadband side, there's lots of opportunity in the U.S. for future growth, even outside of the top five. Absolutely, our goal is that we want everybody to have access to that Digital Vending Machine.
You mentioned a capability of Digital Vending Machine is the CX user interface. There's a question asking if it's aimed more at smaller telco partners.
I think the answer is it's a mix. I think there are some telco partners who want to develop that themselves, and they integrate directly to the APIs that we have within the Digital Vending Machine. There are even some big ones who want the help about bringing that solution to market. It's a combination of both. I can see the logic where it naturally applies to the smaller ones, but actually we have a number of big telcos who are very interested in taking that user interface. I think a lot of it depends on the telco, their strategy, what technical capabilities they have, what apps and sort of portals they build for their customers already. It's a very mixed bag. There's not a single answer to that question.
Thanks, how quickly do you see the number of DVM customers growing? There's been seven so far this year. How do you see that progressing?
It continues to grow. That sales cycle has obviously always been one of the frustrations. That's why things like eDisti, because that not only shortens the time to launch, but it shortens that sort of sales cycle as well because it means we can deliver it pre-stock. The funnel continues to grow and continues to expand, especially as we sort of look in other verticals as well, like financial services. The opportunity funnel continues to grow. The deals will close. As the deals close, we're doing everything we can to sort of shorten that interval. What we're not short of is demand. Sometimes because of those other elements that the telcos are doing, it just takes a little bit longer before they sort of realize an actual project.
On the transactional side of the business, what are the implications from Google having withdrawn carrier billing in the U.S.?
We did Google carrier billing for Verizon. That was stopped actually a number of years ago. I think the most recent announcement that probably somebody's referring to is with sort of T-Mobile. That wasn't a Google route that we had done the integration for. The U.S. is a very highly credit card- penetrated market. Actually many ways for people like Google, it makes more sense to do credit card because there's a lower cost of payment. Apple, for example, never offered carrier billing, I don't think, in the U.S. for their App Store. It's a mixture. I think the fundamental answer is there's no real impact because the Google carrier billing we were doing in the U.S. We stopped a couple of years ago now.
Where we see the growth is in Middle East in particular, parts of Asia, and particularly in Japan is where we really see the high growth in that Digital Vending Machine. The combination of all those together offsets any decline in other markets. That's where the bulk of our business is in those high growth markets anyway.
A couple more questions on eDisti. Is every content provider who's currently in the Digital Vending Machine willing to go down the eDisti route? If so, will it be a lengthy project to add the 80 + additional subscription providers into the eDisti?
I think from our point of view, I guess we care less whether there's 20 or 80 or 100, or whether everybody's in the eDisti. The big gap that we were missing was these marquee names, which we know with a combination of Microsoft as well as Disney+ we have. There will be other people that continue to join the eDisti program, but especially as you get to that long tail of content, that's not going to be a good driver or leading indicator for how fast we're going to grow the DVM business. The focus is on bringing in one or two more new Tier 1s into the Digital Vending Machine.
They're all interested, but it's a new model for many of these big customers, and so it takes time to understand and align on the principles and align how we're going to operationalize it, and what's the reporting, et cetera. These are long decision cycles for a content owner to now distribute through a channel. Previously, it's something they did direct. By default, for the big guys, it just takes a little bit longer. We saw that with Disney+. Those discussions were going on for quite some time before we managed to get pen to paper. We've seen increased interest from other people as a result of that, of Disney+ joining the program. The success of Bango Digital Vending Machine, eDisti helps that, but it's not dependent on the number of merchants that are eDisti.
For some of the smaller merchants, we're very much of like, if you want to sign up to eDisti, these are the sets and terms and conditions. You can almost do it online. We're almost moving to that point, and really so we can focus the time on the big merchants, which really make the difference.
Thank you. What's the current annual growth on existing contracts on the DVM?
I think really you can see that one best from the existing customers if you look at the net revenue retention side, so 159%. That probably gives you the best indication of customers that were in existence a year ago, what they've done by way of growth, and that's pretty much all DVM business.
In terms of AI, what are the opportunities to leverage AI in regards to Bango data, and is there a good fit with the CX to provide insights to subscription merchants?
It's a really insightful question. I think fundamentally with the Bango platform, we sit in the middle, and we understand what people are doing across the world and across different operators, across different countries, across different merchants, and the platform is uniquely positioned to understand to get that global picture across different channels, across different subscription services. There's a lot of real power in that data, and a lot of what we're doing at the moment is focused on how we harness that data to make everybody in the ecosystem more successful. The folding in of Bango Audiences technology into that was really the first step of that.
The CX gives us the opportunity to capture even more data, gives us the opportunity to capture intent data, because previously, with somebody else's CX, we just see the subscriptions that are activated or the subscriptions that are paused or the subscriptions that are canceled. Now, we get to see what people were looking at, how long they were looking for it. Did they put something in the basket, then add something else? Is that complementary? How can we leverage that intent data to really generate even more value for the merchant and for the reseller in the ecosystem? AI plays a key role in that. I think I probably mentioned in the RNS, we brought on a new chief product officer with a really strong track record in using data and AI to bring these solutions to market.
For us, that's part of that enhanced element of the growth strategy. Yes, really important.
Speaking of Bango and jobs and new recruits, someone's asked a question around that there's only a small number of jobs advertised on the Bango website. Is that due to cost cutting or redeployment within Bango?
No. I think fundamentally, the number of jobs on the website varies depending on where we are in the recruitment and how successful recruitment is. Some jobs never appear on the website. Something like the Chief Product Officer is someone that we'll do a very targeted search for, because that's the best way to recruit, rather than necessarily advertising vacancies. I don't think that's really a measure of anything. We've seen our headcount decline as we deploy those synergies, we're down to sort of around 225, 230 now in terms of headcount, versus if you remember the day we did the acquisition of DOCOMO Digital, we went from around 120 people up to 360. We've certainly come down. That's part of realizing those synergies.
The good thing about the DOCOMO Digital acquisition, it gave us loads of talent that had domain knowledge, which have been redeployed on helping drive that Digital Vending Machine forward. The number of vacancies on the website, honestly, I don't think it's really a measure of anything other than just what the current recruitment activity is.
There's a follow-up question on AI, can we attract talent to work on AI, especially given that we're based in Cambridge? I think as you've just mentioned, [Maurice] is a perfect example of where that's happening.
I think the one thing we know is when we talk to people about the opportunity, they get excited about it, and that itself is a great way of attracting talent. I think you put that together with the culture that we have in the company that is really special. We always get top 5%, 10% in terms of percentiles of employee engagement scores. We have a stock option program that everybody participates in so that when we start to see the success appear in the stock price, everybody can get a capital gain for that. We're working on some really interesting things with some of the largest companies in the world.
If you look at the company rosters, Disney's, Netflix's, Google's, Amazon's, the global technology leader, which we've never named, you put all those together, it's a really interesting space that we work in, we don't have any challenge capturing people's attention. Yes, Cambridge is a hotbed of talent, firstly, we operate globally, so we have offices in different parts of the world. Also what we're working on, I think, is really unique, and people get excited about that when they come for interview.
Question on the telco landscape. How is Starlink going to affect the telecoms landscape over time? Will traditional companies be able to compete with Starlink? Do you anticipate doing business with them?
I think, from our point of view, Starlink are a sort of a telco with a very different access technology and a very different sort of model underneath it. Fundamentally, it's a telco. There's a natural fit that ultimately they're going to want to provide different services on top. It's not something they've necessarily done so far, absolutely they would be a potential customer for the Digital Vending Machine. In terms of how they impact the broader telco market, I think that's a question for the broader telco market, that's one of the reasons we think the Digital Vending Machine is so important because telcos operate in a very capital-heavy environment, 4G, 5G, delivering what is becoming an increasingly commoditized services.
The ability to monetize some of the other assets that telcos have, the customer base, the ability to market customers, the ability to bill customers, for us, is fundamental to sort of telcos' success. I think the telcos that will be more successful are the telcos that are the most creative, and you sort of saw some of the examples earlier that Verizon have put it together in terms of how they're using the Digital Vending Machine to really drive their consumer proposition. I think that's the way I'd look at that point.
Our final question is on DVM. It's a very exciting growth driver. What do you see as the potential size of the DVM market? And as a follow-up to that, who are our competitors in this space?
Good question. Let me answer the second one. Competitors are generally, is always people wanting to do it themselves. That's always the biggest competitor. There are, as well, some professional services companies that do sort of do work for hire, that also compete in this space. But the only one with a sort of a true product with hundreds of content providers connected already is the Bango Digital Vending Machine. And when you go to an operator and they're doing a build versus buy business case, that business case very much pushes you towards buying the Bango Digital Vending Machine once you get past one, two, three or four merchants.
The complexity of not only managing the ongoing maintenance of those merchants as new price plans are added, as new tiers are added to the subscription, as they change their API is really, really significant. And we take all of that pain away. And in addition, deliver a very feature-rich platform that allows you to pull all these different services together in ways that you can't if you sort of just do them yourselves on a siloed manner. I think that's really the way we sort of put that together, really sort of positions us well in that market. I've just come back from a sort of a trade show in Asia, and everybody said Bango, everybody knows Bango about bundling, and it creates sort of a momentum in the sales side. We have content providers referring us to telcos, telcos referring us to content providers.
There's a natural sort of a momentum in that space as we become synonymous with the bundling of subscription services through a channel, and that's really what we're very much focused on. The opportunities and the potential size for that business is really, really significant. You're just in that sort of the core bit of the telco piece. There's no reason that shouldn't be $100 million of recurring revenue in the sort of the medium term. Add on the other channels and the financial services, add on monetizing the content provider services on top, there's tons of opportunity. It's just a case of finding that exact product for the content providers, finding which bit the data is really valuable for them, and then being able to build that into a product and monetizing it.
Finally, getting that traction beyond the first bank that we've signed within the financial services sector. There's lots of different opportunity, lots of irons in the fire. We're very much focused on that Digital Vending Machine piece and how we can make that that de facto platform for bundling.
We have actually one additional question on DVM and the opportunity. What are the irons in the fire? Audiences, it's mentioned as a capability of DVM. How big is that opportunity?
I don't think we know yet, let's put it in perspective. If you think at the moment, we generate our revenue from the reseller. In a traditional model, to keep the math simple, let's take a $10 a month subscription. Of that, the reseller has $1, and the content provider generally keeps somewhere between $7 and $9. The reseller has $1 - $3, the content provider has $7 - $9. It's the reseller that's paying us. The person that's paying us with this Digital Vending Machine is the person with the smallest slice of the pie. You can see if we can find that product to deliver that value for the people who have the biggest piece of the pie, then the revenue should be really significant.
Great. Thank you. That's all the questions we've had so far.
Perfect. Paul and Matt, if I may just jump back in there. Thank you very much indeed for being so generous with your time then addressing all of those questions that came in from investors. Of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review, to then add any additional responses, of course, where it's appropriate to do so. We'll publish all those responses out on the platform. Paul, perhaps before really 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 would be great.
We really appreciate everybody's time today, and if you have any follow-up questions, you can always email us at investors@bango.com. We'll also do our best to address all those questions. Hopefully, we did answer a number of your questions as we went through this particular presentation. Hopefully, you saw the excitement that we have with the Digital Vending Machine and the progress that we've made. If you boil it back to sort of fundamentals, we're in a market where our revenue is growing. We have that solid mid-single-digit percentage growth on that transactional business. We saw 60% growth on that Digital Vending Machine, half of the business, that fast-growing element. We have a fast-growing business in a model where sort of costs are reducing, and you see that as sort of Matt went through that.
All fundamentally, that results in increased profitability and increased cash generation. The maths become very simple, we look forward to showing you our ongoing progress towards that throughout the rest of this year and into 2025. Thanks very much for your time, and speak to you all soon. Thank you.
Perfect, Paul. That's grand. 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 really 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 morning to you all.