Good morning, ladies and gentlemen. 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's 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 will publish those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, as usual, I would just like to submit the following poll, and if you'd give that your kind attention, I'm 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 thank you, everybody, for your time this morning. I'm joined here by Matt, our CFO, and then off-camera is Sukey, who heads up investor relations, who will help guide us through the Q&A. Just on that point, we've had quite a few submitted in advance, so thank you very much for that. Please do feel free to add any questions as we go through the presentation into the chat window. We might answer some of those as we go. If not, Sukey will make sure that we cover as many as we have time for at the end. Without further ado, let's get started. Just by way of setting the bigger picture, our vision really here at Bango now is to be where people subscribe.
We want to be the place where everybody comes to get control of their subscriptions and to give subscribers, like ourselves, more choice and more control over the subscriptions that we have and that we manage on a day-to-day basis. Our product for that is a Digital Vending Machine, and the Digital Vending Machine, as a reminder, sits at the heart of the subscription economy, where a growing number of subscriptions that as users we have the complexity of managing are made simple to manage by those being distributed through a channel, and having a single place we can see and view and subscribe and manage all of those subscriptions in one place. That's the Bango Digital Vending Machine, and that's why we're here. Our values that underpin us as a company are underneath that.
If there's anybody any doubt about what we're here to do, we're here to win, and to that point, the V in our THRIVE values actually stands for victorious. If we step back and look at the bigger picture of the subscription economy and see the different players that fit within it. As we said, we have content providers or people who have subscription services. They're looking to access new ways of distributing those subscriptions, quite often through a channel. They're looking to reduce the churn on those subscriptions to capture new users and to reduce their marketing costs. Distributing through a channel such as a telco is an ideal way of doing that. The telco will market some of these third-party services along with their first-party data services.
The churn, if you talk to any of the subscription providers, the churn of a subscription coming through a channel is much lower than people who just have a credit card on file. It's a way of accessing new customers that maybe they didn't have access to before. On the telco side, this is a great way of the telco reducing churn and keeping that subscription base. They can also use it to protect the pricing and the core pricing of those broadband subscription services. It's a great way of finding new users and a great way of generating revenue. It's really lots of value for the telco.
As we touched a little bit on the previous slide, there's great value for the consumer as well in terms of giving more convenience, easier to find new services, easier to pause subscriptions, easier to cancel subscriptions, easier to take out new ones, easier to see how much you're spending. The DVM sits at the heart of all these sort of three ecosystem players. Really what you see is this is really a win-win-win solution, where everybody in the ecosystem benefits from having subscription services distributed through the Bango DVM into a channel. It's better for the content provider, better for the telco, gives the consumer more control, more choice, and more flexibility. It's the Bango DVM that's really at the heart of that.
At a very simplistic level, and the second half of the presentation I'll go into it a little bit more detail, but if you step back and look at what is the power of the Bango DVM, what is the unique value that the DVM provides? That's this in effect, network effect, this ability to connect multiple telcos to multiple content providers. If you're a telco, you connect once into the DVM, and you get access to all the different content providers. If you're a content provider, you connect once into the DVM, and you get access to all the telcos. That means we can launch services more quickly than anybody else. You can see a few examples at the bottom. With Optus, we launched NBA in less than three weeks. With Verizon, we brought 40 new services to market in 20 months.
Disney with Liberty Global in Belgium launched in just four weeks. Those times are a step change from how it's been done previously. If you talk to any of the content providers who've tried to do some integrations directly with telcos, it traditionally takes them between six and nine months. To be able to compress that interval down from many, many months to just a few weeks gives everybody a massive time-to-market advantage. If you're a telco and you're launching new services and you're trying to make your existing telco services more often, that time to market is a huge competitive advantage. Let's look at the highlights for 2023 from a DVM perspective. Nine new DVM customers, taking the total now to 18. We doubled the number of DVM customers in 2023.
We're now used by three of the top five U.S. telcos, U.S. being one of the largest subscription markets in the world, especially for video on demand, but also other subscription services. 33 new content providers joined the Digital Vending Machine, now in excess of 90 different content providers. It's now moved way beyond just video, music, and gaming, which has historically been the sort of the center point of subscriptions now to all sorts of different services, from social media with Snapchat+ to home delivery services with Walmart+. A real variety of different services now in the Digital Vending Machine, and even more merchants than ever before relying on the Bango Digital Vending Machine to help them distribute these services through a channel. We launched the DVM Consumer Interface in 2023. We expect that to be with first customers in 2024.
That really enables telcos to basically offer these services more quickly, bring them to market more quickly by offering a product that they can just put their own brand on, put their own color scheme on, configure how it looks and feels. It makes it a lot faster for them to launch a subscription marketplace and bring that to market. As we said earlier, time to market is a big competitive advantage in the telco space. The other obviously big element in 2023 was the Docomo Digital acquisition. We completed the $ 21 million of synergies in the year. There's further optimizations we will see through in 2024, but that acquisition is now largely behind us, and Matt will go into more detail on that as he goes through his presentation.
We're not just here to build a business for one year, we're here to build a sustainable business in the long term, and sustainability and sustainability of growth is very important to us. We won The King's Awards for Enterprise for International Trade last year. We were very proud to be one of the first winners of The King's Awards. A record employee engagement score of 79%, which is way above the industry average, which given the fact that we're now twice the size we were a year before, is real testament to the strong culture in Bango and the focus that everybody has in being successful and making Bango the place where people subscribe. Some great things in there, and some great learnings and some great feedback from that survey that allows us to make Bango an even better company to work for.
Continued our commitment to carbon neutrality to be net zero by 2040. Put some more rigor around that given the size of the company now after the acquisition. Adopted the Science Based Targets initiative, really created in 2023 a baseline for our carbon emissions on a move forward basis. Security remains critical when you're becoming such a critical component for some of the largest companies in the world, be that the subscription providers like Netflix and Amazon and Microsoft, or be that some of the largest telcos in the world like Verizon and T-Mobile. Security is very important, we maintained and extended our ISO 27001 security certificate last year. It's not just about building the greatest results, it's about building us results that are sustainable for the future.
With that, I'll turn over to Matt, who'll go through some of the financials in more detail.
Thank you, Paul, and welcome everyone to the financial review of 2023. I think first element to do is to recognize the disappointment from the January trading update, which came from the three two one. $3 million of revenues that moved out of the year, the $2 million of additional costs that relate to some of the Docomo acquired routes, the $ 1 million of the FX on the intercompany loans. I'll be addressing those as we go through the meeting, what I'd like to introduce also some new metrics that will help and some better splits of our revenues, which should help improve visibility and understanding. Looking now, first of all, at the financial summaries and the key areas of results for 2023.
A 62% increase in revenues, offered by an increase in transactional revenues as we took a full year of the Docomo business going up 79%, also within our new DVM revenue split, a 76% increase in annual recurring revenue, predominantly coming from DVM. A 29% increase in adjusted EBITDA, which ended up at $ 6.4 million, which is slightly ahead of the trading update and in relation to the recognition of the FX on the intercompany loan. Looking at the revenue growth, we still achieved the 62% revenue despite the $ 3 million of revenue moving out into another year. We did that working in December right up until the end, signing contracts between Christmas and New Year. Unfortunately, some of those we weren't able to complete or recognize in that period.
However, where we did improve, we had rapid growth in the transactional revenues, which went up 79% from 2022. These came from not just the organic area of using a full year of Docomo Digital from the acquisition, but also if we annualize that Docomo Digital revenues from 2022, you can see we also had an underlying 5% increase in this DCB payments business. Where we also saw an awful lot of increase was in the DVM, which has been growing very quickly, and revenue growth there up 31% and an even stronger increase in our ARR growth, which is up 76%. Considering the ARR, the annual recurring revenue, you'll see here that the ARR growth came not only from the existing customers. We saw there net retention of 137%.
This is a new metric that we've put in place that shows the increase of between the beginning and end period of the same cohort of customers. Looking at the cohort of customers at the beginning of 2022, where their revenue ended up at the end of 2023. Not only seeing that, but also seeing an increase from new customers. We had nine new DVM deals signed in 2023. During the course of the first quarter of 2024, we also announced the top five U.S. telco, which is going to add a minimum of $ 22 million ARR to this year. You also see from the graph on the right-hand side the progression of that ARR, and we've input the March number at $ 11 million to show that increase is continuing within 2024.
Looking to expenses for the year, obviously, there was an increase in those expenses as we saw a full year of Docomo Digital being acquired. As we took the $ 21 million of synergies, obviously some of those costs continued through part of the year of 2023. During 2024, we'd expect to see those ones decline, and we'll continue to get some benefit within 2025 as we close down the platforms that were related to the Docomo revenues. Amortization, obviously, is another key increase where we saw that one going up, excuse me, 55% as some of the capitalized R&D that we've used to develop DVM start to become revenue generating. We had some exceptional items as well, coming from close down of the discontinued business with Docomo Digital, and write down of some development costs from the old DDL platform.
In terms of EBITDA, H1 was obviously a negative EBITDA of $ 0.2, but we moved to a $ 6.6 million EBITDA in H2, giving us an overall $ 6.4 million, as I said, up 29% on 2022. Trading update did include the effect of a $1 million FX on intercompany loans. We discussed this. These loans are intercompany items that were set up by Docomo prior to our acquisition and are funding items with no fixed term end. Just after discussion with the auditors, we've agreed that those FX elements should be moved to reserves now to P&L. Going back to the synergies and the acquisition elements from Docomo Digital, you can see that we achieved the $21 million of cost synergies at the end of the year.
At the same time, we expect that there'll be a few more of those ones as we move forward from the DDL platform discontinuation at the end of the year. We're also looking to reduce the number of legal entities, which should reduce admin costs, and there'll be further business simplification. During the year, right at the end of the year, there was the increased cost of sales from the Docomo Digital routes that were identified. This came very late in the day, and we picked that one up as soon as we could, the contract being signed right at the end of the year. We expect that cost to reduce in 2024, and then margins in 2025 to return to the 90 %+ that we've enjoyed previously.
Another new split that we're giving, which hopefully will give some insight into some of the investment in CapEx that Bango does. Obviously, this is all done in line with IAS 38, so we're following all of the correct procedures. Here we're giving a split down between where the investment comes in relation to the migration, DVM development, and also the platform development. You can see the plan is for 2024 for that R&D capitalization to reduce as obviously the migration work that we've been undertaking during 2022 and 2023 ceases. There's continued investment, obviously, in DVM and the payments business, the main platform business in there. We also take advantage as part of our R&D of the tax benefit that's offered by HMRC.
We're conscious that that one changes its application as of 2024. Within that period, we should see a good receipt again from the 2023 investment. Looking at cash movement, you can see obviously one of our main uses of cash is in the investment in R&D, which we referred to previously. You also see that we had some reduction in our working capital with working capital movement of - $ 3.1. Still good generation from cash from operating activities. We took the loan from NHN, one of our key investors, during the course of the year and at the half year, at $ 7.9 million, which was lower than the indicated $10 million that we noted at the time of the acquisition.
We've been doing our financial forecast for the year for 2024, and we're in a good position to continue to fund our R&D for that period and also cover our operating costs. To make sure that we have some form of buffer, we've also agreed with a $3 million overdraft facility with our bank, which was undrawn at the end of the year. Here is a quick run-through from the income statement just showing comparatives back to 2018. One of the key areas I think to pick up on here is the associate loss, which you'll see increased during the course of this year. This was partly the operating loss that's fairly normal from previous years. We also impaired that business as the decision was made to wind that business down during the course of 2024, so we impaired in 2023.
Final summary of the financial elements for this year. We've seen a strong revenue growth. We have payments business which is continuing to grow. The DVM business is rapidly accelerating, and ARR is giving a predictable revenue growth stream. On our costs, we expect to see the R&D CapEx cost decreasing during 2024, although we continue to invest in DVM. The cost synergies will become more apparent as we get full year advantage of those $21 million of costs, and the payments business will further reduce the costs in 2024 and beyond. We do have sufficient cash to fund the operations and the R&D CapEx that we anticipate to do during 2024.
We have an overdraft in place to give us that buffer. To remind people, in those plans as well, we're looking to pay off $ 2 million of the loan to NHN during the course of this year, starting in September, and then payment at the end of the year. All of this is covered. Passing back to Paul.
Thanks, Matt. In this final section, I want to spend a little bit of time talking about the market opportunity and to give some of the market factors we see and also to talk a little bit about how we're taking that market input, and what it means in terms of DVM from an investment and a future perspective. If we step back and look at the market, I think there's no doubt that the subscription economy is growing. We probably all feel this as individuals. The number of services we pay for by subscriptions is larger than ever, expected to exceed $600 billion in just a few years’ time. A very fast-growing subscription economy. Already a big portion of that is delivered through channels and in particular, telcos. Telcos historically have always been a place to go through for entertainment services.
As those entertainment services went over the top and services like Netflix and Disney and NOW TV came out, telcos remained the natural place for you to go to get access to those services. Even today, 17% of those video services are delivered or bundled through a telco, and that's only set to increase. Then you look at the other entertainment services, and today there's over $25 billion worth of entertainment subscriptions alone being delivered through a telco. As more and more different subscription services come in, I talked about the Walmart+ and the home delivery services later. Really, the market opportunity for us is that $600 billion subscriptions and what portion of that will be delivered through a telco, and their estimates range anywhere from 25%-50%.
Somewhere between $ 150 billion and $ 300 billion of subscriptions will be delivered through telcos, and that's exactly where Bango and the Digital Vending Machine sits, is at the intersection of that big subscription economy that's growing and being increasingly delivered through a channel. Why telcos?
I've included here a few clips that you may or may not have seen in the news, if you've been following some of the big telcos in particular, the large European telco CEOs on multiple occasions, the most recent being back at Mobile World Congress in Barcelona in February this year, have been talking about, and I'm talking about Orange and Deutsche Telekom and Telefónica and Vodafone have been talking about the challenges they face in building networks and investing in networks to carry all this traffic that is coming to them from over the top, most of that from companies like Netflix and Amazon and Microsoft. They've been campaigning with the EU for some time now to how can they charge for that particular traffic. Can they charge for carrying that traffic?
Will the EU let them merge and combine together so they can save CapEx and build networks together and share networks, and obviously in the U.K., discussions ongoing between Vodafone and Three at the moment. That's been the message from a lot of the European large telco players and was certainly evident back in Mobile World Congress in February this year. We think there's another alternative, and this other alternative is being increasingly adopted, and that's to monetize that traffic that you're carrying anyway in a different way by entering the value chain. How do you do that? You monetize your non-network assets, your customer relationship, your billing relationship, your ability to market to customers by bundling and selling these third-party subscriptions.
You're carrying the traffic over your network, so why not play in the value chain and extend and protect your core network services by playing in the value chain and selling these subscription services to your customer? We know there's a consumer demand for it. We know that we have too many subscriptions. We know that they're complex to manage. We know from all the surveys we've done that people want to see them all in one place. There's a great opportunity to monetize non-network assets, change your position in the value chain. As you can see here, it's exactly what Verizon have been doing. You see the comment here alone from the Verizon CEO about how this bundling reduced their churn by 60%-70%.
I've been in telco a while, if you have any business case that reduces churn by that level of magnitude, the business case is very, very positive. That's why increasingly, telcos are looking at bundling and Super Bundling to really be the sort of the catalyst for them in terms of changing their position in the value chain and helping them monetize the assets that they're investing in a slightly different way. As the Verizon CEO says there, it's also great for the content providers. As we've seen in 2020, last year, you see an increasing number of content providers going to the Bango DVM and relying on the Bango DVM to find new customers. It's now not just about the movies and the TV, although that still remains the dominant, and those are the services that always get the headlines.
It's gone beyond music and audio. It's beyond some of the gaming services like Xbox. We added Nvidia last year. It's gone to more the lifestyle services, sporting and health services, security products, productivity products, reading, different types of e-reader services from everything from LEGO who does sort of educational services, through to different types of services to education and food and recipes and home delivery. More and more services now are being delivered by subscriptions. We've really got that point now where we have sort of critical mass. I mentioned Mobile World Congress earlier. If I go back to the Mobile World Congress only back in 2023, we were presenting the Digital Vending Machine, and a lot of the questions from operators and merchants were about what's the business model? How does it work? When you say Super Bundling, what do you mean?
Only a few months ago, just one year after that, this year, the discussions have changed. It's now all about how can we launch? How quickly can we launch? How can we do it faster? That's really the message is out there, and more and more operators are now coming up and approaching us. Sometimes, [Inaudible], we're in a strong position that we have connectivity with most of the operators, but we've had a whole host of new customers come up to us, even at the trade shows and say, "Look, I want to do bundling.
I've spoken to three different merchants, and they all tell me to talk to you." That's really where we've got to now, is the power of Bango being associated with the bundling of subscriptions is a very strong message, and that makes us available to sort of convert and to drive this momentum forward even faster. We have merchants recommending telcos to Bango. We have telcos recommending merchants to Bango. Now the term Super Bundling, which is a phrase we coined and defined only a few years ago, is now widely used across the industry by tech journalists, by analysts, use the term Super Bundling as if it's always something that's existed, and it's a phrase we adopted to describe this subscription marketplace. We not just have one or two services, but tens of different services together, and it's become an industry-standard term.
That's exactly what we're trying to do as Bango, is make the Digital Vending Machine the industry standard for the distribution of these subscriptions through a channel. There you have it. That's what the Bango Digital Vending Machine is. It's about this speed to market, being able to, if you're a telco, get access to the world's greatest content providers, be able to put all those in one place in a compelling offer and deliver that at speed and scale. There's much more to it than that, and I sort of talked about the speed and scale pieces earlier, but the value goes way beyond that. For us, there are three key elements that drive our investment in the Digital Vending Machine. It's about helping content providers be even more successful.
How do we make sure even more of those subscriptions go all the way through the sign-up place? How do they get more and attract more customers? How do the telcos launch even more quickly? How do you get even more services even faster than they can already? How do you give the consumer more control over their experience and a better overall experience in terms of how they manage all these variety of different subscription services that we all have today? As a technology company, it's innovation in these three areas that will keep us at the forefront and keep us ahead of all of our competitors in this market space. Our offer management is a sort of a big envelope of features that we've sort of talked a little bit about in the past.
Just simply the ability to be able to, if you're a marketing team and an operator, to be able to drag and drop subscription services together, to be able to create those in a drag and drop environment, to be able to test market bundles by connecting two different subscriptions together. All doing that in an easily configurable way is really, really important. It allows us to launch these subscriptions faster. It allows operators to try new things, and it means we collect even more and more data about what subscriptions are happening, what bundles are working, what's not working, so that we can drive the entire industry faster. That's the advantage that we see sitting at the heart of this ecosystem, is we see data from across all these different services. Once you've created those products, you have to create the offer.
Is it going to be discounted for a period of time? Is it going to be free for a period of time? As with any operator, there's sort of an approval chain around that. Again, automating that so you can more quickly and easily try new discounting, try new bundles, and be able to not only put that in place, get approval for it, and have it published in the Digital Vending Machine automatically through a workflow is a really, really important part of ongoing sort of product investment. As we sort of collect even more data, allows us to generate even more recommendations. We're taking any guesswork that the marketing teams and the operators had because we have that volume of data, and we know what works, and we know what the right subscription bundles are. The user interface is an important part.
We launched the user interface in 2023. We'll expect that to see commercial with customers in 2024. Really, we did it to create this sort of pre-built product that the operator could more quickly take to market. Because we were finding that we'd sign the contract, then there was a large gap while the operator built this user interface and created their skin thread and put all the products in it and all pulling data from the Bango Digital Vending Machine. It was a lot of work to build this consumer interface. We decided, actually, a great opportunity for us is to build that ourselves and allow the operator to brand it. It's purely a branding exercise, the actual mechanics of the consumer interface are there. One of the advantages to us of that, it allows us to capture even more consumer data.
We now just don't see what consumers have actually subscribed to. We see what they looked at, how they explored it, how they navigated the user interface. Again, there's massive power in that data that allows us to even build an even better product and differentiate ourselves even more moving forward. To wrap up, let's look at the growth drivers. There are four key growth drivers for us moving forward. It's launching the DVM contracts we won in 2023, those nine new contracts, getting those live so they can start generating revenue. Growing the existing customers, being able to generate even more success for those customers so they start to climb up through the license tiers. It's about winning new DVM deals. It's about exploring other verticals outside of telco, where Super Bundling can really offer value to customers.
If you've seen in the RNS that we issued this morning, we gave a sort of a Q1 update on all of these. In terms of launching, back in March, we issued the RNS when the third Tier 1 U.S. telco launch, that generated an additional $ 2 million ARR. We now have three of the top five telcos, and the ARR went from $ 8.8 million at the end of the year to sort of $ 10.8 million in March. We exited the quarter with that $11 million. That's partly due to not just launches of existing customers but growth on existing customers. Matt talked about the net retention figure earlier, so you can see existing customers have start to grow, and that will really be the sort of second phase of the growth in 2024 and 2025 as those large telcos climb beyond the initial tier into the second, third, and fourth tier.
New DVM wins. We signed four DVM deals in Q1. Given that we're always sort of lots of deals get wrapped up in Q4, and we saw that last year. Last year, we signed, of the nine deals we signed in the year, five were in December alone. Q4 was this busy time because the telcos have budget years, and individuals have objectives that they try to wrap up in a calendar year. Q4, lots of things get wrapped up in Q4. That fact that we signed four in Q1 is testament to the other thing we talked about in the trading, which was the strength of the sales funnel. A sales funnel seven times larger than it was a year ago, but not just larger, with deals more advanced, and you see that by the fact that four of those dropped out in Q1.
In terms of other verticals, our first financial services win in Q1 2024, again, helping a financial services company put subscriptions as part of their product offering. We really believe that telco will be the largest bundling channel, but clearly there are other channels where exactly the same technology works as we urge to capture those as we can with that technology. Overall, I think a really solid set of results in 2023. A great start to 2024. We're certainly excited about the future. That's probably a good point, I think, to maybe dive into some Q&A. Let's dive into the Q&A.
Paul, Matt, that's great. 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 company takes a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Sukey , we obviously received a number of pre-submitted questions ahead of today's event. As you can see there in the Q&A tab as well, we received a number of questions throughout your presentation this morning. Firstly, thank you to all of those on the call for taking the time to submit their questions.
Sukey , at this point, if I may now hand over to you just to chair the Q&A with the team, I'll pick up fro m you at the end. Thank you.
Yeah. Thank you to everyone who submitted questions in advance. I'll make a start on these while listeners on the call can also add new questions in the chat window. There's quite a few questions, but they fall into a few general areas. I'll group them together into themes. One for you to start with, Matt. There are a number of questions on the FX related to the intercompany loan. Questions range from, why didn't you hedge currency? To, what will the impact be moving forward? Can you add some clarity here for people?
Sure. Thank you. I think first of all, it's important to highlight that these are intercompany loans where the FX impacts are non-cash impacting. These were set up predominantly with the Docomo companies. Docomo chose to do investments by way of loans rather than an equity investment. That means that there's no end date to these loans. Traditionally, hedging looks to a maturity date, and you fix hedging against an end date when the repayment comes into place. Obviously, that's not an applicable or sensible route for the FX that we have here. What we are doing is working with our tax advisors to find the most tax-efficient way of reducing these items. Some of them may be converted into equity. We may choose to deal with them in a different way.
During that time, obviously, as they are investments effectively, and the treatment that we've agreed with the auditors, after the end of the year, was that that would fall into reserves movement. That's the element on those ones. What we're doing is we're looking to convert those at the best way and resolve those in the best and most tax-efficient way. That's happening during the course of 2024. We've already started those discussions. Hopefully that answers the question in relation to the hedging as well.
Thanks, Matt. One for you, Paul. There are a number of questions on EUS and why this isn't reported as a KPI anymore.
Yeah. Good question. We stopped reporting end user spend as it became an unaudited KPI quite a few years ago. Actually, we last reported it, I think, at the full year results in 2022. At the time, and at the interim results this year, we said the reason we don't think that's a valid metric going forward is because with the switch to Digital Vending Machine and that being an increasing portion of the business, that link between end user spend and revenue actually is sort of broken. In the payments business, where we're taking a percentage of end user spend, and that's our sort of fee for processing that transaction, then clearly there's quite a tight correlation. In the Digital Vending Machine model, where operators buy tiers of subscriptions, then that linkage between the two is broken.
At a very simplistic level, when a license starts, there will be zero end user spend, but there will be revenue. For that reason, it became sort of a KPI that we didn't think was a good indication of the business moving forward. We stopped reporting, as we explained back in 2020, in the results for 2022.
As a follow-up to that, Paul, there's a question about previous statements on EUS growth being about 30%. Now we talk about mid-single digits. Can you help investors to understand that?
I think there's sort of two different measures when we talk about the sort of the high growth in spend. A lot of that is coming through the subscription services, through the Digital Vending Machines or whatever the end user spend is in the platform. That's not a, as I said, not a measure we track anymore. It's growing at a very fast rate. That mid-single digits is basically the revenue growth from that payments business. That large payments business that we have, that we now sort of split out, you see that in the numbers that Matt presented earlier, really bolstered by the Docomo Digital acquisition that took us forward a couple of years in terms of the growth for that business. Really, we'll continue to grow overall at sort of mid-single digits, depending on different launches in different app stores, FX, a variety.
It's a growing business for us that generates an increasing amount of cash because the investment, as you see from the CapEx breakdown in Matt's slides, is really focused on the Digital Vending Machine model and the payments business.
Switching topics now, back to you, Matt. There are a number of questions about the timing of the January trading update and why it wasn't issued earlier.
Thanks again. Obviously, it's down to those three key issues that I brought up during the course of the presentation. The FX impact, which obviously only materializes when we do the revaluation at the end of the period. That subsequent discussion with the auditors on treatment. That wasn't completed before we updated the trading update, but was completed during the course of the audit. The additional costs happened within cost of sales. This really was, again, a supplier, as I said, a supplier had some associated costs in relation to some of the Docomo acquired routes that really didn't crystallize until right at the end of December when the contract was signed. We had to look at the treatment of those costs as well to see whether they should be exceptional costs or whether they were just normal trading costs.
Again, as we spoke about those ones, they're reducing within 2024 and in 2025 we expect to see those margins going back up to the 90%+ that we had before. The final one was in relation to those revenues, $ 3 million of revenues. These were, as Paul spoke about when he was talking about some of the contracts that were signed during the course of the year. We were working well into December on contracts that we had in the pipeline. Some of those just didn't complete and moved out of the year, and some of them, we were looking at the recognition element of when they could be recognized under IFRS 15 and making sure we were accounting for them properly. Those items just meant that we were slightly delayed in our release.
A lot of those, all three of those items you can see really didn't happen right until the end of December. We obviously assured that those were the right treatment and updated as quickly as we could after that.
Related to the trading update, we've had a couple of questions on the share price reaction and around share options. Paul, can you comment on this?
Yeah, sure. A drop in share price, given the profitability of the business is not unexpected. I think what was a surprise was the level of the drop. As I said at the time, in our view, it really masked what was a solid year. We grew revenue by 62%, EBITDA grew by 29%. The Digital Vending Machine, that key growth item for the business, ARR grew by 76%. We've delivered another 25% growth on top of that in only a quarter of this year. It was really the foundations of the business were really, really strong. It's just, as Matt said, a few of those events conspired at the end of the year to basically meant that we sort of missed that level of expectation.
I think that in some ways, the size of the drop was even more disappointing because we thought it already came from a low level. We never felt the acquisition was fully priced in. We're really focused on the things that we control. We're focused on growing a great business, and focusing on the Digital Vending Machine and the opportunity that provides us, while in parallel, we have this payment business which grows at mid-single digits, that generates lots of cash from the business to allow us to sort of repay the NHN loan, but more importantly, invest in the Digital Vending Machine moving forward. Share options are something we're very focused here at Bango. You saw our employee engagement score a little bit earlier before. A big part of it is everybody in the company gets options twice a year just after we issue results.
Options are a big motivator for the Bango team, and we want everybody in Bango to act as a shareholder of the business and help drive that growth forward. You see that in our employee engagement results, and you see that in the energy in the teams and the innovation that the team's creating, driving the business forward.
Thanks, Paul. A couple of questions on Bango Audiences and Purchase Behavior Targeting. What are the prospects for that business moving forward?
I've always believed there's huge potential in Purchase Behavior Targeting and being able to use the data that we have to help people find new services and find new paying customers for subscription services as well as for other services. We productized that through Bango Audiences, which was our way of taking this Purchase Behavior Targeting technology, as we called it, and making that available to app developers to help them find the next paying customers. We were very successful in that for a few years. Some big app developers sort of got some great results, and the potential was clearly there. I think what was clear to us is that the potential in the Digital Vending Machine with this switch to a subscription economy was absolutely just It was really there, and it was live, and it was real now.
As a company, we want to make sure we focus, we want to put all our efforts behind a single project. That's the Digital Vending Machine, we took the decision to take the audience team and the technology and fold that into the Digital Vending Machine. That's already starting to result in some of the discussions we're having with merchants, because actually many of those app developers that were customers on Bango Audiences are now launching subscription services for their games and their different apps. It makes sense to bring the two together, and really it's all about focus and making sure we can drive the business forward.
A question now on our position in Japan and the opportunity there. Matt, do you want to take that one?
Yeah, sure. Japan's always been and already is an important market for us. We're the exclusive integrator for Amazon, and we're allowing customers of the three telcos, so that's Docomo, KDDI, and SoftBank, to purchase physical goods from the amazon.co.jp store. These they then charge to their phone, which is slightly unusual compared to the European and Western markets. Obviously, in parallel with the Docomo acquisition, we also signed a long-term multi-year deal to support all of NTT Docomo's carrier billing. That means we now process all their App Store transactions, along with airline tickets and some items from Shopify shops. This has increased revenues and opened up sort of more DCB opportunities with the other two carriers, in what's the largest DCB market in the world. More importantly, it's also helped us in several DVM opportunities that are now ongoing we're exploring.
A number of questions on the DVM opportunity. Paul, can you comment on how big this could get?
Yeah. I think we see it clearly, and I spoke about it a little bit in the presentation, right? We have this subscription economy that's growing to over $600 billion, increasingly delivered through a channel. Estimates put anywhere between 25% and 50% of that being delivered through the telco channel alone. That's really where the Bango Digital Vending Machine sits. It sits at the heart of those subscription services being delivered through a channel. For us, the potential issue is you don't need to take many cents per subscription to really create a significant business. In our view, from the telco space alone, this is a $100 million ARR business. We exited the year at $ 8.8, we exited the quarter at $ 11. We're on a path, clearly, to get there, but that's really the path we're on to capture this really high growth market.
A question on costs. Other costs are up from $3 million -$ 11 million. Why the sharp increase, and what can be done to get better control of them, Matt?
I believe I covered that a little bit during the presentation. We've got the first year of the full year costs of Docomo during the course of 2023. The synergies that we had, the $ 21 million of synergies, obviously, they started partway through each of the years. During 2023, we'd still had some of those costs that we've subsequently got rid of. In conversation about the control going forward, we should expect to see the $ 21 million synergies having more of an impact in 2024. We've already covered the fact that from some of the R&D aspect, that R&D capitalization will drop down. At the end of 2024, when we close the Docomo platforms that are still running, that should help us see some further cost savings from there as well.
We have other triggers if we need to, but that should then help us to control those costs and lead to that high level of EBITDA profitability.
On a similar theme, revenue growth is good, but capitalized development costs rose to $ 17.6 million. Please, can you explain why this is so high, and what is being obtained for this high investment?
Obviously, we're a technology company, and as a software company, that investment is all in tangibles, as finance people call them, is the software development and the innovation in software that form part of the Bango platform that allows us to launch these services in a matter of weeks. It allows us to use the data that we collect to make the merchants even more successful, to allow telcos to offer this service more quickly using the consumer interface. Those are all the things we invest in. As you saw in the graph in Matt's chart, investment in the Digital Vending Machine has continued to increase. The CapEx sort of peaked in 2023 because, on top of that, we had some investment that we needed to do in tools for migration to migrate the Docomo Digital routes over onto the Bango platform.
What you see is in 2024, that migration, that level of investment disappears, and actually, the investment in the payment, in the CapEx and the R&D we need in the payments business to keep that business moving forward is slightly less, means that business generates even more cash. Really, the investment for us is important. It's important that we stay ahead of the market, we stay ahead of the competition. That time to market is really our big differentiator at the moment that nobody can match. Moving forward is moving beyond that, so the time to market into the value using the data we have to make people more successful, and that's why folding in the Audiens business really made sense.
Question on consolidation. Are you looking at consolidation or just focusing on our end strategy without distractions?
We've always been a company that's really focused on organic growth. Where we've done acquisition, it's been to scale up the business very quickly. The Docomo Digital was sort of the perfect acquisition. Very low purchase price, only $ 900,000 net when you took the cash out of the business that they had in at the time. Gave us that long-term contract with NTT Docomo, the largest operator in Japan, and it really gave us critical mass in that payments business, which allows it to be very cash generative moving forward while still growing at a mid-single digits per year. It really gave us that sort of scale. Prior to that, the acquisition that we did from Italy was to bring some technology that allowed us to be able to segment data and be able to use that in marketing platforms.
Again, that became a key part of the product, and it is really important in the Bango Digital Vending Machine. We'll do acquisitions where it can help us accelerate our organic strategy. We're not about just acquiring semi-related businesses just to grow. As you can see from the results, we have enough organic growth opportunity ourselves without having to do all these acquisitions, and the complexity that come with acquisitions, to put somebody to our multiple on somebody else's revenue. Organic is really where we're focused, but we'll always do acquisitions that can help accelerate that organic growth even more.
A follow-up question on strategy and focus. This is quite a different presentation compared to previous, with the emphasis on DVM. It's clearly impressive technology with great growth potential. Should we infer that the payments and marketplace revenue streams are now seen as legacy cash flow elements?
I think calling the payments business legacy and cash flow is maybe a bit insulting. We did the acquisition to get critical mass in that business. You can see that we now break out that separately. That's growing at mid-single digits, doesn't require a lot of investment to keep it going. It does generate a lot of cash, so that element of the statement is clearly true. It's an important part of the business because it generates that level of cash that allows us to fund in the future growth elements. It itself is still growing at mid-single digits a year. As I said, that Bango Audiens business, we took the decision to really fold the teams and the technology into the Digital Vending Machine. A lot of value in that Purchase Behavior Targeting technology.
For us, we felt there was a better return by really doubling down on the Digital Vending Machine and focusing all our technology and all our growth on the subscription economy, and that being distributed through channels.
Great. We've had a question on the consumer interface. When in 2024 do we expect it to go live, and what are the tangible benefits in terms of potential revenue increase?
We'd expect the consumer interface to go live probably early in the second half of the year. It's in discussion and trial with a number of customers at the moment. The way we charge for that is there's a setup fee, so it actually follows the model that we do for our original DVM business. There's a setup fee to do that initial customization and that initial branding, and then there's an additional license fee on top. It adds another license fee on top of the ARR tiers that we get for basically managing those subscriptions. It's sort of ARR incremental as well as sort of a set of revenue incremental. That's the way we monetize that.
Thank you to everyone who's asked a question. We've answered all that have come in so far. If there are any additional ones, we can address those after the presentation. I will hand back to Investor Meet Company.
Perfect. Sukey , Paul, Matt, thank you very much indeed for addressing all of those questions that came in for 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, and 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 to wrap up with, that'd be great.
Firstly, I'd like to thank everybody for taking the time and for submitting the questions. It's much easier to do this when it's engaged and there are questions, we really do appreciate that. As mentioned, if you have follow-up ones, please do get in touch. You can always get in touch through our Bango investor website or emailing us at investors@bango.com. 2023 was really a transformational year. We completed the integration of that acquisition. Challenges right at the year-end, which led to us missing that expectation, and really mass, which was a really solid year. Revenue growth of 62%, EBITDA growth of 29%, really positioned for accelerated growth this year. Recurring revenue, that DVM stream, as we see, continues to grow, not just from the $ 8.8 ARR end of last year through to the $11 million at the end of Q1.
We're in a position where we have enough cash to see us through to [cash schedule] , but we're cash flow positive this year. We'll use some of that to pay down the NHN loan. We're not going to come back to the market, to raise money. The business is structured well. The sales pipeline is really strong. The DVM opportunity is clear with that $600 billion subscription market, and we're here to execute on that. Thanks, everybody, for your support, and look forward to reporting the progress as we go throughout the year. Thank you.
Cool. 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 that 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. Good morning to you all.