Well, good afternoon, everybody. It's now 5:31 P.M. My name is Tim Metcalfe. I'm Managing Director of IFC Advisory, Boku's Financial PR and Investor Relations advisor. With me today, I've got Jon Prideaux, Boku's CEO, Keith Butcher, the CFO, and Stuart Neal, who's CEO designate. Jon, Keith, and Stuart are going to take you through the presentation that they've been using with analysts and other investors today. And then, at the end of the presentation, we'll have the opportunity for a question and answer session. Given the number of people who are online today, unfortunately, it's not possible to come to you individually, ask you to unmute, and put your questions directly, but we do encourage questions. So if you've got anything you would like answered, please do use the Q&A function at the bottom of your screen.
Type your question in, and I'll do my best to put those to the team at the end of the presentation. I'd also like to thank those who've taken the time to submit questions in advance, really useful, and I'll be putting those to the team as well at the end of the presentation. Okay, so without further ado, I'll now hand over to, to Jon to take you through the presentation. Jon?
Thank you very much, Tim, and as you said, I'm the current CEO. The format for this evening's presentation will be, I will shortly hand over to Keith Butcher, who will take us through the financial and operational performance. I will then just have a quick run through the strategy, and Stuart will then say a few words about the current performance and the outlook going forward, and then we'll be open for questions. So without any further ado, I'm happy to pass the floor over to Keith Butcher to be able to take us through the business highlights. Keith?
Good afternoon, everybody, and thank you for joining. Yes, I'm just gonna run through the financial highlights, then some operational highlights, and then we'll come on to the real growth drivers of our business. Then I'll hand you back to Jon and Stuart to talk about the strategy. Just a reminder, for those of you who—or sorry, for those of you who are not very familiar with our business, we built our business originally on building a network of carriers to which we could connect global merchants, like Apple, Sony, Spotify, Netflix, and allow their consumers to charge their purchases to their phone bills. And that business was a niche business, and we became very successful and the dominant global player in that world.
From that basis, and using those merchants and our existing payments platform, we then moved into what we call the world of local payment methods. In other words, connecting those same global merchants to a whole bunch of payment types that are local to each country, primarily things like e-wallets, and so are the dominant payment types in large parts of the world, like Asia. So I'll sort of talk you through that sort of bit of background. So if I just turn to the highlights on your screen, you'll see that we've had a very strong half year over-year, so up almost 26% in local currency and 32% in constant currency. And that drops through to EBITDA, up 28% as well. We always have a larger second half.
We're slightly seasonal in the second half, but Boku has actually just been growing month-on-month, and so we tend to have a second half, and we expect to have a much stronger second half. That leads into the third bullet down there, which is we are now guiding the market to higher numbers than was the market consensus as of yesterday. As Jon said in his statement, we had a very strong July and August, so the strong trading in the first half has continued. I won't dwell too much on the cash, but we have very large cash balances on our balance sheet.
Some of that is merchant cash or cash on the way to merchants from which we collect from wallets or from carriers, and we pass it on to our merchants, so that sits in the balance sheet. If you can see the fourth bullet down, of the $113 million we had on our balance sheet at the half year end, $54 million is our own cash if we weren't trading. That's Boku's own cash. The rest is kind of merchant cash in transit. Just towards the bottom, we did sell a business about 18 months ago, an identity business, and we've received the final sale proceeds after the year end, so we've got another $5.6 million in the bank.
Just for information, we did embark, because we have quite large amounts of cash on our balance sheet, on a program to buy back our own shares annually, to match the awards that we make annually to our staff, the RSU awards. So we issue, effectively, shares to our staff that vest on a three-year cycle... Sorry, every three years. We issue them annually, and they vest after three years. So what we've done is effectively buy our own shares back to then issue those to staff when they vest. What does that mean? It means that we spend about GBP 4 million on buying those shares, and it means that the share count doesn't increase, so in other words, we don't dilute our shareholders by doing that.
If we could just turn to the next slide, please. Ultimately, our business is driven by the number of consumers, the number of users of our business that we can attract to use Boku. So, and that, and that key metric is, you know, the monthly active users, and so up nearly 30% to 61 million active users in the month. We only measure an active user based on that one month, so actually, if you took a sort of view of any user in the year, we're well over 100 million. And that is ultimately what drives our business. Those users spend money. That's what we call our TPV, our total payment value or volume processed.
That was also up strongly, and then we take a percentage of that value, on average, about 0.76% of the volume, the $5 billion that we processed is what became our revenue. And that take rate has gone up, which is interesting because the reason for that being that these newer payment types, what we call local payment methods, are actually at a higher take rate than the rate we were charging on average, for the carrier billing service, DCB. So, the business is growing well, growing strongly, and actually taking a higher percentage of that increased growth... Down the bottom, you'll see that we sort of. What are the drivers? Why have we got a whole load of new users? Well, it's because we've launched.
We've made a whole bunch of connections, over 50 connections this year to some of our global merchants, Netflix, Meta, Apple, Amazon, Spotify, et cetera. We've made those connections. Those connections bring new users, and therefore, bring the volume that we make our money from. And we have a network now that can reach a huge number of end users. In other words, we can reach about 7.5 billion consumer accounts around the world. So that's a substantial network that we've built, both with carriers and wallets. And we've built quite a substantial regulated payment capability.
These newer payment types require us to be regulated, and getting those licenses around the world, we now have quite a number, has taken a lot of time and cost, and it's quite a significant barrier to entry for anybody else wanting to break into what we do. If we just go on to the next slide, please. The carrier billing is our core business. It's not on this slide, but it's growing in sort of high single digits, and growing very nicely. We remain incredibly sticky once you've made a connection between a carrier and one of our global merchants, it essentially never gets turned off. We've never lost a merchant, and we've never had a connection unplugged.
But connecting those same global giants that we talked about, Apple, Sony, Spotify, Netflix, Google, et cetera, to these local payment methods around the world, primarily e-wallets at the moment, and in the future, we believe account to account is something that we launched a couple of years ago. And it's really taking off, and we've gone from almost very little this time last year to almost 20% of our revenues coming from these new payment types. So they've grown from $1.6 million a year ago to $7.2 million, so 350% growth, and this is really the new growth engine at Boku.
We think carrier billing will carry on growing in single digits, but on top of that, we've got this much, much faster growth in these newer payment types, and this is the future of Boku. And again, you'll see down the bottom how. Why, why have we grown that fast? Well, we've got big, substantial 100%+ increases in the number of people using these wallets globally. So, that was the strategy three years ago, to leverage the payment platform we already have and to leverage the relationships with, you know, the world's largest digital entertainment giants and to just effectively build them a network of local payments around the world. It's quite difficult to connect these disparate payment types around the world, and that's what Boku does. It aggregates and builds a network for global giants like Apple, Sony, and Spotify.
Let me hand over now to Jon and Stuart to talk you through the strategy.
Thanks, Keith. So as you can tell, the business results are pretty decent, but what is a bit more about the strategy of the company that we're following that will mean that those results will carry on into the future? This is a slide that we've used for a while, and it reveals something which is not entirely obvious, if most of the time you spend your life spending with Visa or Mastercard. The thing is, if you went back to 2010, about three-quarters of everything in the world that was bought online was bought with a Visa or Mastercard. And, you know, about a quarter was spent on, on a number of other sort of local payment methods.
If you roll the tape forward a decade, you can see that situation has changed immensely, and it's now the case that almost two-thirds of all payments for things online are from one or other different, local payment methods, and Visa and Mastercard's share has shrunk to a mere third or so. Of course, the absolute number has grown a lot, but the relative share of Visa and Mastercard has gone down. Now, what's the difference between the sort of purple part, which is the Visa or Mastercard piece, and the orange part? Well, I think the first thing to see is in that orange part, there's lots and lots of different, brands and products and payment methods, and the thing is, they're all different.
When it comes to connecting to them, it takes a special type of processor to do the job really effectively, and that is the job that Boku has really just sort of evolved into delivering. What Boku does is that we work with our global merchant customers, and we come up with custom integrations that are specialized into each of these different local payment methods. Now, something like 300, reaching, as you heard Keith say, something like 7.5 billion different accounts, obviously not necessarily 7.5 billion individuals, but some people will be having multiple accounts. You can reach, as I say, 7.5 billion accounts through each of these different local payment methods, and they're all types and shapes and sizes. A good chunk of them are our original core business.
That was mobile network operators, where you can charge things to your phone bill. But increasingly, it's things like mobile wallets. You may have heard of, say, a product called Alipay, for example, or WeChat Pay in China, seeing that cropping up on more and more, you know, cash registers here in the West as they try to provide international usage for Chinese consumers. But there's also a plethora of other things like OVO or GrabPay or Alipay or Toss or KakaoPay. I mean, there's literally dozens and dozens of them. And what Boku has done is put together a very big network comprising all these areas. And because they're all different, you know, Boku has to make a separate integration to each one. We optimize it and provide that as a single standard connection to our big merchants. And that specialization leads to better results.
Our core competition really is not other specialists who are concentrating only on doing local payment methods. Our core competition is a generalist, a card processor, who is used to integrating Visa and Mastercard, taking the spec, where someone else has done all the hard work of standardization. That someone else being Visa and Mastercard staff. And they just are used to just integrating the spec as given by these local payment methods. But Boku's specialized results or specialized approach means that we implement features that may not be generally available, and a great example of that would be the situation where we could implement one-tap checkout, so that rather than having to enter your password every time...
You know, imagine, you know, some of you may have had to do this on PayPal, for example, and it can be a bit of a bore to have to enter your password every time. It's so much simpler to be able to have a one-tap checkout in order to be able to charge your future purchases to the same stored payment credential. When you do that, then all of a sudden, it turns out that our merchants sell more stuff because it's just a lot more convenient, and it's not just a little bit more stuff, it's a lot more stuff. If you do this right, as you can see here in a couple of case studies on this chart, you can have anything up to 20, even 35% increase in volumes.
We don't very often get the chance to compare our performance to our card processor competitors, because normally our merchants just are making fresh connections, ones they haven't done before. But there have been a couple of instances where we have taken over from companies like Worldpay or Adyen, and these are the type of results, the uplifts that we can give. And not surprisingly, when our customers are yielding $ millions of extra sales, it really makes us quite a preferred provider. Now, I mentioned that this is important to global merchants.
You know, with the popularity of these local payment methods all around the world, for companies like a Netflix or Apple or Meta, striving to provide their services to consumers wherever they might be, it's really important for those consumers to be able to pay using their preferred local payment method. So I don't know, if you take, a country like Indonesia, you would expect, as a consumer, to be able to pay with OVO or DANA or GrabPay. If you're in, you know, a country like, like China, you would expect to be able to pay with Alipay and WeChat Pay. And so clearly, our merchants have that same impulse. They're trying to provide access to the local payment methods that their consumers expect.
Now, most of Boku's largest customers came to us, obviously, for direct carrier billing. There are a couple, like Amazon, for example, where we never provided a payment service for mobile network operators, but they chose us just on the strength of the network that we've already assembled. And this Amazon process has now, which we talked about last year, has now moved into production. We're now live. We were live with 9 wallets at the end of the half, but by the time I speak to you now, that's increased to 12 wallets in 7 countries. You know, originally, that was concentrated in Asia, but now it also includes wallets in Africa, for example.
And so these, you know, new local payment methods are being adopted by most of our largest customers, and I'm confident that we'll be able to color in more of those squares, currently white, green, at some point over the course of the coming months. Now, one of the things that's really compelling about the Boku story is that growth doesn't have to come from necessarily going out and finding lots of new merchants and lots of new logos. Growth can come effectively in two important ways with our existing customers. Firstly, it comes from taking our existing customers and connecting them to an ever wider proportion of our overall network. And as you can see, most customers here only use that network relatively modestly, and that's increased those orange blobs on that square.
The way to read this chart is the gray blobs represent potential connections within the network. The orange squares represent those where the merchant has actually activated a connection to a particular local payment method. About 50 of those, just under 50 of those, went live in 27 countries over the course of the six months, so we're really at quite a pace, expanding our business by doing these new launches with these important customers. But perhaps more significant is the growth that we can get by going deeper within our customers' stack. A great example of that would be with Meta, for example. So, we've been providing payment services to Facebook for Facebook Games for a number of years, but, you know, with the best in the world, you know, Facebook Games was not the core business of Facebook.
That was selling ads, and, you know, that is now, you know, the majority of our business. But we were able to take our existing payment integration and not just broaden it to more geographies, but deepen it into other divisions within Meta. And so that now, the vast majority of the payments take place through Boku on the Meta platform, are used to buy advertisements for small businesses or sole traders who want to be able to advertise their products on Instagram or on Facebook itself. And the same opportunity exists in many of our other customers, to be able to move into ads or to cloud computing or indeed into e-commerce.
And of course, with Amazon, that's the, you know, the ambition as well, is not to stop at Amazon Prime Video, but also to deploy the Boku payment service ever more deeply through the divisions of Amazon itself. So that gives you a sense of the business strategy. We're a specialist payment provider. We operate in a way very different to the card processors, who try to get scale through standardization. We are prepared to customize, but we do specialize in working with the world's largest companies, and we've got an enviable catalog of the world's tech giants, who have all signed up with us.
Things are going well, as Stuart—as sorry, Keith has said, and I now want to just sort of illustrate that a little bit more by some of the growth in monthly active users and the total payment volume, things that you've already seen from Keith. And finally, hand over to Stuart, who will take you through how he sees things and his vision and outlook as to how the business is going to expand under his leadership from next year and beyond. Stuart?
Thank you, Jon. Hi, everybody. Thanks for dialing in. I mean, look, the first thing to say is that I'm thrilled to be back at Boku at such an exciting time for the company. You know, whereas most businesses are out there desperately trying to find a clear strategy and product market fit, well, that's not a problem I have to solve here. So I think it's worth saying up front, that a new CEO in this context does not constitute a new strategy. The strategy we have is compelling, and the strategy we have is working. And how I like to view it, really, going forward is, you know, we are building here a global and meaningful network of non-card-based payment methods.
You know, and as Jon showed you early on in the presentation, you know, we're catching a tailwind here of what is a global long-term trend. You know, so the macros here are, people want to pay locally, and, and Boku's representing global and international merchants, and we can provide that international, international connectivity to local payments. So it's super exciting. You know, the way that I would think of it going forward, is that the local payment methods, it's really still early days, and you can see the growth is phenomenal already, but we're really in the foothills of this journey. You know, for the next 18-24 months, just by adding more wallets and those wallets maturing for our existing customers, you know, we are going to grow this business in a meaningful way.
Add to that, the opportunity that exists by connecting, in addition to wallets, and connecting into the banking system with account-to-account payments, you know, and we suddenly have something that has significant global reach. And not only that, we can add the capability not only to do kind of digital content that we did with our carrier billing business, but it throws us into, as Jon alluded to, into much, much bigger target markets with e-commerce, with advertising, with invoice and bill payments. You know, this suddenly becomes a meaningful play, and long run, you know, a meaningful alternative to a Visa and a Mastercard rail. So I'm really excited to be back. It's great that you could all join in to hear about the business's performance.
I can't wait to get going, and I'm really excited to take you forward on this journey with us. So I think that's the end of our presentation, and I'll hand it back to Tim, who's gonna collate all the questions.
Well, thank you very much, Stuart, and thank you, Keith and Jon. We do have time for questions, so if you've got anything, please do use the question and answer function at the bottom of your screen. Type it in, and as I say, I will answer them. As I say, I did have a few that have been sent to me, particularly during the course of today. The first one is just a financial question on share buybacks. Is the share buyback program still ongoing? And would you consider... if it is, would you consider it going further than just covering incentives and to cover option exercises?
Let me take that one. Yes, it is. In fact, we extended it in June for another year and increased the headroom up to about GBP 10.5 million, is the maximum we can spend. But the original idea, just for everybody's benefit, as I mentioned earlier, is that we effectively just buy enough shares to satisfy the RSU awards in our company. Obviously, we first of all award everybody RSUs every year-
Yeah.
all staff, and they vest three years later. Obviously, we're a growing company. We're now heading towards about 450 people. We were about 150 when we floated, so obviously, that number's going up. And so I think that number will increase, as the RSU awards we need to satisfy increase. We're not planning to go beyond that just for the sake of it, if you like. The only exception to that is we signed a large multi-year deal with Amazon last year.
Mm-hmm.
As part of that, there is their chance to earn warrants in the business, up to about 3.75% of the business. To do that, they have to put huge volumes through us, something like $20 billion of TPV, and we would make about $200 million of revenue. So let's hope they do that. But let's, as they start to earn along that, earn those shares, by putting business through us, then we would probably buy those as well, and that's why, that's one of the reasons why we give the headroom. But beyond that, we're not just gonna buy in the market. The general feedback from our major investors was that they liked the share buyback program.
They didn't particularly want dividends or any other use of our cash, because they don't; we're not seen as a dividend stock, and so giving dividends out would actually send the wrong message. So at the moment, we're fine where we are. And as I say, we look like we've got slightly more cash on our balance sheet than we actually have, because not all of it is ours. We've got but it, we have got about $50 million of our own cash.
Okay. Which neatly brings me on to, to the next question. You said, you know, not dividends, and, you know, there's those sort of constraints on the, the share buyback program. Is, M&A likely to be on the agenda in the, in the future? And if so, are there any particular areas where you might like to acquire something?
... Yeah, I can take that one, Tim. Look, I think very much M&A would be a servant to strategy. We don't have an active intent to go out and acquire companies. You know, it's quite hard and painful, and it grinds your business to a halt when you do M&A, and so we would only do it if it was a fairly meaningful thing. So, you know, large M&A, possibly, but that wouldn't be kind of covered by the cash, even the cash balances that we have. So, you know, frankly, we have a pretty ambitious and full organic growth strategy that we're gonna focus on.
If there were tactical M&A opportunities to buy capability or whether we need to use cash to, you know, spin up an entity or get a license in a certain market, then we would use the cash for that type of growth. But not M&A for M&A's sake, that's not the strategy.
No. Understood. Understood. And looking at the business going forward, obviously, you know, local payment methods, you know, at the moment, Boku is very focused on online sales and, you know, an enviable list of global merchants. Are there other sectors that you can target? Is this the platform usable for physical goods, for example?
Yeah, I think the thing that really restricted us to digital with carrier billing was A, the kind of commercials of the product, and B, that it was a non-regulated payment method. So, you know, what we've been doing over the last couple of years is busily, you know, collecting licenses in various jurisdictions so that we can connect to wallets, and we're now in the space of regulated payments. So, frankly, you know, it's not unthinkable that we would broaden our reach from digital into physical. You know, already, as Jon alluded to, we've moved out of sort of games and music and video downloads into online ads. You know, online ads can be paid on invoices. You know, as a post-paid mechanism, it can take us into business-to-business payments on invoice stuff.
Account to account is basically mainstream payments, just not on a card rail, so, you know, the sky's the limit. You know, we're focused on what we see ahead of us in terms of growth, but actually, the assets that we're creating as part of this investment opens up a huge amount of opportunity in the longer term.
Okay. And looking at that opportunity, the question and notes, you know, various announcements we've made about connections in, you know, countries all over the world, whether that's in Asia, in Africa, you know, are there any parts of the world where, you know, you're still weak that needs further growth? And then are there any parts of the world where there is more focus than others, where there's a greater opportunity, at least in the short term?
I'll say a few words, and then I'll pass it to Jon for a comment. I mean, look, our traditional, you know, geographies where we've done very, very well is in Asia Pacific.
Yeah.
You know, that's where the growth of the, of the wallets has, has come from. But actually, we're not, we're not just focused on Asia Pacific, the, the whole wallet phenomenon is a global thing. You know, if you think about new emerging wallets, in Europe, for example, BLIK in Poland, or Satispay in Italy, or Bizum in Spain, or Swish in Sweden. You know, there is a global thing happening here that also now includes bank-to-bank transfers in Brazil, in Colombia, and now in the US. So, you know, it's a global thing. It's probably fair to say, you know, we do quite a bit in the Middle East, but, but we are slowly starting to make some inroads into, into Africa. So we are looking global, but we, we, generally speaking, go where our customers want us to go.
Jon, would you like to add anything?
No, I think you covered it. We started in Asia, and now it's the rest of the world, including developed markets, so don't think of us as a, as an emerging markets play. I mean, we've just gone live with TWINT in Switzerland, for example, and it's going incredibly well. Soon, as Stuart mentioned, BLIK in Poland, and, and, you know, these are, you know, mainstream, you know, markets and countries, and the big prize is something like FedNow in the US. So Boku is... You know, I don't think we ever were an emerging markets play, but you shouldn't think of us like that now at all.
Okay. Thank you. Thank you. Well, that's covered the questions that people sent in. I think the presentation's been very comprehensive 'cause we haven't... We've kept all the audience, but we haven't got that many questions coming through. This was designed to be, you know, a short run-through of the presentation, to say that the team have been giving to investors during the course of today and will be for the rest of the week. So I'd just like to thank Jon, Keith, and Stuart. Jon, in particular, this is your last results presentation before moving aside on the board. And Stuart, very much look forward to you taking the reins in the new year and doing the next one with us.
But, thank you very much to everybody who's joined us this afternoon. If you have got any further questions, please get in touch, boku@investor-focus.co.uk, and we'll always, try and answer your questions and, and come back to you. So thank you very much for your time, and enjoy the rest of your evenings. Thank you.
Thanks, everyone, and thanks, Tim.
Thank you.
Thank you.