Welcome to this Boku's second-ever Capital Markets Day. We're thrilled to see so many people here in the room, also a big welcome to those people who are dialing in or connecting through the magic technology of webcast. It's really good to have you on board and to have so many people coming here. We are lucky to have a big, you know, set of speakers here, both from a wider set of people within the Boku management. Previously, many people here will, I'm sure, have had the experience, I wouldn't say the pleasure, but the experience of meeting with myself and the pleasure of meeting with Keith. We've also got the opportunity to introduce you to a wider spectrum of the Boku management team as well.
In attendance here, certainly a man who has gone above and beyond the call of duty by dealing with a small foot injury, Adam Lee, who is our Chief Product Officer. Adam has been with us for over a decade and has been one of the key people to help Boku get to where it is today. Another person with many years of service at Boku is Mark Stannard, our Chief Business Officer, who will also be giving us an update.
Somebody who has not been with us quite as long, but who is also a key member of the management team, is Chris Newton-Smith, who's been with us, I think now for three years, who's our Chief Operating Officer, and he will also be joined in his session by our CTO, Keegan Flanigan, who also is a tenured Boku veteran. It turns out, in fact, that people, once they come to work at Boku, like it here, and quite a lot of them stick around for quite a long time. Just in terms of Keith, as I'm sure you know, Keith has been with us since IPO. Initially as a non-executive director, but he moved...
He liked it so much, he came over and got into the trenches as an executive director, where he's been helping us for the last three years or so. We're also incredibly lucky to have speakers from two of our customers, and I really want to say that this is something for which I can see Lex here, and I want to give him my personal thanks 'cause just to be clear to many of the people listening here, you know, Spotify and Netflix don't do this type of thing very often. It was...
It took, you know, quite some, you know, work for Lex to have to battle with his investor relations team, and it really says, you know, something, you know, very nice from those organizations that they were prepared to do that and to speak here at this Boku event. Lex, just to be clear, is prepared to, you know, to take questions later on, but those questions must be confined to statements around the Boku-Spotify relationship. He's being strictly sort of a guardrail to not go off into wider Spotify investor relations questions. I'm sure I can respect your tolerance as far as that is concerned in terms of any questions you might have. Some words of admin before we get too far in.
You'll notice that we haven't distributed copies of the materials on your seats. Copies of the materials are available on our website to be able to look at and are available for download as we speak. When we do the questions and answers, there'll be a roving mic, but for those of you who are dialing in, you are able just to enter your questions on the chat function of the webcast. We're planning to have, you know, two sessions of questions, one before coffee and one sort of after coffee. We will sort of moderate the questions through the chair and then have the appropriate guest speaker or Boku executive to answer those questions. Without any further ado, then, I just would like to maybe just run through our agenda for the day.
I will give a sort of brief introduction. You've seen enough of me, I'm sure, over the time, so I shan't be sort of bothering you for too long. I shall hand over to Adam, who will be describing a little bit more about what are the means of payment that Boku operates in? What are local payments? What are the opportunities that exist in that part of the payments ecosystem?
He will hand over to Lex, who will say a few words about the Boku-Spotify relationship, and before handing back to Mark, whose job is to say, "Well, this is why we think what we do at Boku is special, why merchants are happy to give us their business, in contrast to those of our competitors, you know, other perhaps more well-known companies, and what is it we think we do well." We'll then stop for some Q&A and have the opportunity to ask the questions of those speakers. Break for coffee. When we come back from coffee, we'll go straight into Chris and Sir Keegan, who will just give you a bit more insight into, as it were, how the sausage is made.
This type of stuff is quite difficult. They will explain some of the range and the scope of the things that Boku does and why it's difficult for others to replicate the sort of system and the sort of processes and the technologies that we have put together over our decade or so in existence. Chris and Keegan will hand over to Kristen. Kristen, for what it's worth, is dialing in from Amsterdam. Once again, just a signal of the genuine thanks that I have to our customers. Kristen is a late-minute stand-in for the original speaker who was meant to be talking from Netflix, who unfortunately suffered some sickness.
Kristen, who is the Global Head of Consumer Payments for Netflix, was glad to be able to stand in, but she couldn't make the journey over here. She'll be dialing in from Amsterdam. Finally, the bit you've probably all been really waiting for, which is the numbers. Keith will be providing both a recap of our numbers for 2022 as publicized in the trading update, and also providing some more sort of guidance as to how do we think things can evolve over the medium term and what the mix and makeup of the growth in our business is going to be. Before we then end with some more Q&A. My introduction. Now, Boku is a Local Payment Method processor, but why does anybody want to access Local Payment Methods?
I mean, surely to goodness, everybody's got a Visa or Mastercard. All you need to do is just accept Visa or Mastercard, and you'll be fine, won't you? No, you won't. The funny thing is that if you look around the world today, already, payments on Visa and Mastercard only account for about a third of all e-commerce that takes place globally. 2/3 of all the online payments in the world are taking place across a fragmented universe of different local payment methods. This is true in many different parts of the world. You could go to India, for example, and if you went to India, you would see that there are 62 million Visa and Mastercards in India. That is out of an adult population of 900 million people. 720 million people have got bank accounts and thereby have access to UPI.
If you want to sell to India, do you sell to the 62 million cards, or do you try to access the 720 million people that use UPI? The same story is true in a whole plethora of different countries as well. You can see on the slide here in Indonesia, in China, where it's wallets like Alipay and WeChat Pay, which will be taking the predominant role, pushing out the major payment cards. It's also true in European countries like Poland, for example, where BLIK accounts for 80% of e-commerce payments in that marketplace. There are other countries where the ratio is closer, but in country after country right around our world, more people and more spending takes place on local payment methods than take place on the global Visa and Mastercard rails.
The reasons given here by, you know, Luca Maestri or the CFO of Apple, why did you start accepting local payment methods? Because it gave us access to a new class of users. If it's Netflix who was publicizing the fact that they were able to grow their user base through the acceptance of alternative payment methods. Adding new payment methods, local payment methods, helps our customers to grow. It does other things too, but if you don't provide support for the full spectrum of available payment methods, if you don't provide support in the payment method that your customers prefer, then you're going to find you sell less stuff. That's really why people come to Boku to help them to get access to those new users.
To do that, we have prepared what we believe to be the world's best local payment method network. This diagram is an illustration of the size of our network. Each square represents a connection on our local payment method network, and the size of the square is proportional to the number of users or the number of accounts that that local payment method has. As you can see, there are something like 7.7 billion accounts that can be reached by connecting to Boku. That is delivered across more than 400 different customized connections that we make. Those local payment methods are of all types and breeds. They span Direct Carrier Billing, but also e-wallets and real-time Account-to-Account-based payments. As you can see, there are so many of them, we broke Excel.
I mean, Excel is incapable of displaying as many squares as would needed to be done to do true justice to our system. Our basic proposition is we simplify access to these very fragmented ecosystem of local payment methods. Our basic proposition is connect to Boku, with that one connection, you are able to access this huge variety. It's one contract, it's one settlement, process is undertaken. Because we do it well, the principle is that you'll be able to get more users, higher acceptance rates than you would if you were to connect through one of our competitors. The reason we think that we're able to do better is partly because we don't take the specs out of the box.
Boku customizes each of the connections that we make to our various issuers, sometimes going back to them and asking them to add new capabilities, sometimes adding new capabilities within our own technology stack to make sure that they work in the way that our merchants want them to work. That's a capital of connections that we have built up over a decade of connections that work in the way that our merchants want to do so is a key differentiator. For investors, another aspect of this is that we also are prepared to make customized connections back to our merchants. Each of the connections we make to Google or to Apple or to Netflix or indeed even to Spotify are different, and they're customized in some respects to the requirements of that particular merchant. What's the results?
A customized connection will lead to a situation where our customers are able to grow faster. They are acquiring users at a faster rate than they would have done. Those users are able successfully to complete payments better than they would otherwise. The fact that we're prepared to customize our approach for merchants means that we should be cheaper to do business with than our competitors because it takes less effort if we integrate to you than vice versa. All of that also means that we can deliver a consumer experience that is in the branding of our customers, that is a simple frictionless experience for the customer and therefore can deliver, you know, better customer satisfaction.
How irritating is it sometimes when you can go through a wonderful web experience provided by the merchant, and all of a sudden you're ripped off to this sort of different page, you're entering sort of numbers left and right, six digits. It's annoying. You don't get that type of annoyance when you have a Boku integration. As I say, I think this stuff is hard to do and it's hard to replicate. Our platform represents the culmination of more than a decade of investment, which in total, in total has exceeded $150 million. And those integrations are tough to replicate. You know, you don't wake up one morning and integrate to Amazon, for example.
It's a multi-year process to go through procurement. The fact that we have this incumbency, these connections to the major digital platforms around the world, is one of the things that is very hard for anybody to try to replicate. What is also hard to replicate is getting the payment licenses and the authorizations that we have, which enable us to move the money around that our merchants need. As I say, I don't know if you've recently tried to apply for a payment license in the Philippines. It definitely isn't the sort of thing that you can wake up in the morning and get... you know, successfully have a license in the afternoon. It takes years of effort. It takes years of experience.
Boku has the capability now to do regulated payments in 54 countries with a whole suite of different licenses in different jurisdictions. We deliver that through an infrastructure which has something like 150 different bank accounts in different countries. We have entities in 34 countries. This is once again, things that are hard to replicate. They represent real barriers to entry. These are the, if you like, the easily describable assets that we have. It's also worth saying that there's something about the way in which we work, which also means that it differentiates us from our customers, we hope. We are optimized for working together with global merchants. This type of customized approach that I talked about works with big companies who have requirements to go into many jurisdictions and to connect many different types of payment.
You know, we're good at providing customized solutions to big merchants. That we have people, we're less than 400 people, but those people are located in 24 countries around the world. It means that we can often bring the local expertise because we have somebody in the market. It means that if something needs testing, we've got somebody who is able to run a test in the physical jurisdiction. Very often, our merchants do find this incredibly helpful. What does it mean? What it means in practice, as you may have seen from the RNS that we put out this morning, is that we see a clear pathway towards the doubling of our revenues. It's... I don't want to steal all of Keith's thunder and sort of give you an excuse to leave.
Keith will be going through this in more detail later on. Essentially, as you can see from the shape that we're presenting here, the engine of growth for Boku in revenue terms is around wallets in the short term, and in the medium term, it's around account-to-account based payment systems. That's not to say that Direct Carrier Billing is shrinking. Not at all. The Direct Carrier Billing business is continuing to grow, but it is growing at a more modest rate than the sort of triple-digit rates that we are seeing across wallets and account-to-account based real-time payments. Just to summarize, we are approaching a market that is large and growing. We do so with a differentiated proposition, which is about quality. It's hard to replicate, and we think that it will deliver for our customers genuine commercial results.
If the growth is coming, as I say, from these local payment methods, we thought that the next useful thing for us to do would be to describe those local payment methods in a bit more detail. With that, let me pass the floor to Adam Lee, who will make his way gambling to the station. Well, there you go. Adam, over to you.
Thank you. Thank you. I'm here to talk about the question of why local payments, and that is the core of our business. I think to try and understand why Boku sees such a big opportunity with local payments, it's helpful to remember just what made Boku come into being in the first place. You know, we came into being because we solved a major payment problem in digital entertainment. When content had previously been printed onto physical media like CDs, DVDs, and game discs that were sold through physical retail, and that distribution model moved online, and all the content became transformed into in-app purchases, streaming subscriptions, paid downloads. That was fine if all of your customers could register their credit cards online. For the millions of customers that couldn't, that was a potential lost sales opportunity.
That is, of course, unless you had an alternative. At the time, the best alternative for someone who didn't want to use their credit card was to go to the store and buy one of these, a gift card. You purchase a gift card, bring it home, scratch off the back, transpose the long code into your account, tops up your account with credit. When the credit burns down, you go back to the store and buy another card. Pretty horrible experience, not hard to imagine how this is not going to be ideal for sales. Digital merchants definitely wanted something better. Along comes Boku with this other idea, Direct Carrier Billing, DCB. You can't register your credit card online, register your mobile phone number instead. If merchants connected to Boku were allowed to actually charge their wireless bill. Super convenient.
It's a new form of payment that sits there, right there in your phone, buried inside your SIM card, ready to use. This form of payment, DCB, proved to be so convenient and delivered so many new paying users that today it actually makes up 15% of all sales on app stores worldwide. This was a global problem solved by networking a bunch of local payment connections. So it is with this that we discovered the power of LPMs, the power of local payments. We weren't gonna stop with just DCB because in spite of its demonstrable advantages over gift cards, there were some limitations when competing against credit cards. First off, DCB was more expensive, took longer to settle, which meant that it wasn't the preferred payment method amongst merchants. DCB wasn't exactly regulated e-money, so it was restricted solely to digital entertainment.
Digital entertainment is a big market, $300 billion a year. It's just a drop in the bucket compared to the broader B2C payment market of 13 trillion. Wanting to expand Boku's reach and deliver more benefits to our merchants, we began to closely follow a new form of local payment called the mobile wallet. A mobile wallet was an app that you can download, put onto your phone, and load money directly onto it. Unlike DCB, the money doesn't funnel through your wireless carrier. The beauty of this is that all you need was your smartphone. I mean, you can go to the app store, download your local wallet app, install it, quick registration, and boom, you're ready to actually load money and perform payments. Unlike DCB, the funds loaded in can actually be used for any type of purchase.
The way you add money in is not unlike a prepaid phone. You can use a cash agent, a bank transfer, but once loaded in, you can then do things like order a cab, order groceries, food delivery, book a hotel, shop for insurance. Those are just some samples of things you can do just within the app. Of course, you can just walk around with your phone and actually buy stuff at the point of sale. Restaurants, cafes, scan the QR code, pay for lunch. Scan a QR code, pay for your haircut. In fact, you can even scan a QR code and tip the street busker at your train station. Of course, you can also use these mobile wallets to do your e-commerce shopping, whether it's your favorite e-commerce website, favorite e-commerce app.
Something that we like to point out is you can also use it to shop with Boku merchants. Download your favorite PlayStation game, subscribe to a streaming service like Netflix or Spotify. I mean, for Boku merchants, these mobile wallets present a pretty notable benefit. First off, it doesn't cost as much as DCB. Pricing is closer to that of a credit card, so is settlement timing. Of course, just like a credit card, you can actually use the funds in the mobile wallet for any kind of purchase, which means people tend to load up more money, which means higher balances, which means more spend. Because it's actually freed from being trapped within digital entertainment, these mobile wallets directly compete with credit cards in that big B2C space, $13 trillion.
In that battle against credit cards in this B2C space, it's actually winning. With better convenience, better security, better functionality, today, mobile wallets are more popular than credit cards worldwide. That became an imperative for us to prioritize adding these mobile wallets into our network so that Boku merchants that are already integrated into Boku can readily access them. Using the same teams and the same processes that we use to network all the Direct Carrier Billing connections, we've now integrated dozens of the most popular mobile wallets around the world. You know, the expansion of this sort of payment method can't be understated because we're not just delivering better benefits and better functionality to the merchants. We're actually delivering new sources of customers, new sources of growth.
segments like Chinese consumers who previously their use of DCB were limited to just Chinese merchants. Now Boku merchants can actually tap into the Chinese merchants. I'm sorry, Chinese consumers in the Chinese market through Boku. You know, that sort of thing gives us sort of years of opportunity and growth. Still, looking at local payments and looking ahead, even more developments are happening around the corner. I'd like to point out, the biggest emergence right now is real-time payments or Account-to-Account. A real-time payment is the ability to instantly move money from one bank account to another quickly, cheaply, and securely. What does that exactly look like? Why does this matter? Let me try and walk through an example. UPI is one of the biggest real-time payment schemes in the world.
I'm in India, normally I pay with a wallet. I open up one of these wallet apps, maybe Paytm. As you know, to make a payment on a wallet app, I have to preload it with a cash balance. With UPI, because the money moves so quickly, I actually don't have to preload my balance. I can just make the payment, the money gets drawn from my bank account, and settles instantly. That eliminates the need for me to actually manage this balance. That's a convenience for the consumer and a huge benefit for the merchant because now the merchant is closer to the source of funds. They don't have to worry about whether or not there's enough money in the wallet. You're actually allowing the customer to draw directly from their bank account. What does this mean? Like, how popular is this?
UPI was introduced in 2016. Today it has 260 million active users, driving 68% of all digital payments in India. Some of you might be thinking, well, real-time bank payments, we kinda have something like that here in the U.K., you know, Faster Payments. I use Faster Payments maybe to pay my friend back, pay my rent money to my landlord. You know, why would I use real-time bank transfers for something like lunch? You have to imagine what happens when you have instant bank transfers that are so convenient that every e-commerce site and every point of sale allows you to make a bank transfer instantly with nothing more than just a quick QR code scan.
Just to bring that example to light a little bit more vividly, I was in India earlier this month, and one of the engineers took me across the street to buy a cup of chai. It was 10 INR, approximately 10 P. He sees this QR code, takes out his phone, scans it, 10, bang. The payment confirmation was audibly confirmed through a little speaker. The person selling the chai never had to stop what he was doing. He just heard the confirmation and just carried on. There was no fumbling around with a point-of-sale machine, which we think is so advanced. You know, we're sitting here at the restaurants, people come here, POS, and you tap your card. This guy didn't even have to pull his phone out. 10 P instant bank transfer on the street using nothing more than a phone.
This is the potential future of local payments. Because we believe in this, we've been investing globally, not just in India, but around the world in our own local integrations, our own local banks, our own local entities, our own local licenses, so that any Boku merchant that wants to receive real-time payments from anywhere in the world can do so on the same integration, on the same platform, with the same ease and simplicity they've come to expect from us. You'll also notice that some of the markets that we cover are markets that we have previously not prioritized for mobile wallets because they were maybe card-dominant markets, U.S., U.K. , Europe. We're actually getting a lot of interest from merchants in these areas, merchants that are interested in diversifying away from cards.
Sure, there are going to be segments where, you know, cards are pretty entrenched, and there's going to be some resistance. Incumbents are going to try and protect their margins. Do keep in mind that real-time payments isn't just for B2C. It's actually for B2B as well. It just so happens that many of our merchants have pretty significant B2B divisions. It's no secret that we've seen a lot more recent growth in Facebook, not because of Facebook Gaming, but because of Meta Ads. Yes, we do provide them with real-time payments to support that business. It's really not that difficult to imagine the journey to go from, say, Amazon Prime to AWS.
This journey from B2C to B2B brings us into a marketplace that's actually worth $49 trillion, dwarfing even B2C. I don't want to go for too long. To wrap up, why local payments? Local payments is where the innovation is. It's where the growth is. It's where the future is. With that, I'd like to introduce Lex Ledger from Spotify, who can tell you a little bit about how local payments factor into Spotify's business.
Okay. Thanks very much, Adam. Hi, everybody. Good to see you all, and thanks to Jon and team for having me here at the second Capital Markets Day here at the London Stock Exchange. I'm Lex Ledger, not a supervillain, before anybody asks. I do actually look after the payments business globally for Spotify, and I've been there for around three years. Jon asked me to come here and just talk a little bit around Spotify kind of context, how we think about payments, and how that really relates to the partnership we've got with Boku. Taking it right back to the start, Spotify launched with one single product, one single subscription in one market in Sweden around 15 years ago. Things have really sort of grown very significantly since then.
Thinking about Spotify today, we've really focused on geographic expansion. We launched into an additional 80 markets in 2021, so really enabled the world to the point today where we're at 184 markets around the world, so pretty much everywhere you kinda can be. At the end of the year 2022, we had 489 million users, of which 205 million subscribed to our premium service, offering a number of different plans and propositions, so things like Family, Student, and Duo, as well as our standard premium product. You know, something we really started talking about more recently is the Spotify machine. Really thinking about the sort of different ways we monetize and look at revenue.
I've just sort of talked a little bit around the recurring subscription journey. That's something we've seen very substantial growth in. Our advertising business last quarter accounted for circa 15% of revenue. More recently launching into Marketplace and à la carte, meaning kind of one-time payments. They're the kind of horizontals from a revenue point of view. As we think about the different verticals that we're now operating in, you know, the music business, clearly that is the core engine of Spotify, where we now have over 100 million tracks available. Podcasts launched in 2018.
We're now the sort of global leader there with more than five million podcasts available. That's where we really started to see the business diversify, where we went from the world's largest music platform to now the world's largest audio platform. Really excitingly, we launched audiobooks last year, and this third vertical will see us further diversify. I guess what does that all mean from a payments point of view? A little bit how we think about payments. It's absolutely a critical enabler for revenue flowing across the Spotify platform, both for our business but also for the creators on our platform. These are some of the things that we really try to focus in on.
Investing in our payment infrastructure is absolutely essential in order to scale the business, in order to prepare for those new monetization lines as we move into new verticals, and ultimately to power the growth that we're all looking to achieve with our ambition. Lifecycle optimization, sort of Jon touched on it a little bit. This is something we're really forensic about, so using payments data and insights to drive optimization right through the funnel, whether that's turbocharging new acquisition and sign-ups, retaining users in terms of reducing churn, or focusing in on payment fees to optimize and underpin profitability. We also look to innovation, so we look to basically new things that we can launch in the market, and I'd certainly say there's been a huge amount of innovation.
I think UPI, good example from Adam there in India, something we're seeing real success with. I guess very much relevant to our Boku partnership and really central to that is making sure we got the right payment mix. This is something that I get asked about a lot. Is payments just a hygiene factor, or can you really differentiate through payments? This is one of those areas you really can differentiate. Ensuring you've got the right payment mix out there, is sort of super important from a product market fit point of view. Thinking about alternative forms of payments, as we would call them, different sort of names out there, these are things that we look to really achieve, and this is why we prioritize launching and investing in new payment methods.
They allow us to reach new customers, so we increase our target addressable market. That's really, really, really important for us in emerging markets in particular. We're able to match consumer preferences and demand, so, you know, we're very much focused on allowing users to pay the way they want to with their chosen payment method. It really helps us to access challenging markets. You know, some markets are highly regulated, very complex from a payments point of view, and having a diverse range of payment methods can really help access the market. I'll sort of come back to UPI as an example there in India and the sort of huge growth of Pix in Brazil. You kind of have to have those really, I think, to be in those markets and look to drive success.
I guess then on to our partnership with Boku. Yeah, I think, you know, we launched back in 2012, our first Direct Carrier Billing connection, and really it's been more than a decade of partnership since then. You know, a huge kind of successful partnership that we really sort of cherish and we've worked on together over, as I say, more than a decade. Taking us to today, we're actually operating with Boku across a whole range of different payment methods in 23 different markets. That's around 60 carrier connections. In addition to that, we've been really focusing in Southeast Asia on launching wallets. As sort of Adam was discussing, that's really sort of now a big sort of trend in Southeast Asia that we've been investing in.
Yeah, as I say, it's really key for us to keep pace, have the right choice of payment methods, for our users to use, increase that target addressable market, and then we focus on optimization post-launch. I guess I just really wanted to finish on a couple of kind of real-world experiences with Boku just to try to bring it to life a little bit. I was recently chatting with our engineering team in Stockholm, and, you know, they were really sort of championing an example where we launched some wallets in Southeast Asia, in Thailand and Vietnam. Boku, through their active performance monitoring of those payment methods with us, picked up a couple of bugs in the Android checkout.
Not only did they do that, they sort of showed us the videos, they helped us to debug it, and they monitored the fix afterwards and verified it. You know, that kind of proactivity that we've seen from Boku is exactly where we want to be. I sort of say, you know, happy engineers equals a happy partnership for me. They're not always the most cheery bunch. As a second example, you know, again, back to that differentiation point, you know, we've launched some DCB connections in South Asia, we saw the intake pretty much overnight move to those being the dominant payment methods. You know, if you provide those payment methods, the users will come. As sort of Jon said, you know, they don't all necessarily have credit cards and traditional payment methods.
In terms of, you know, financial inclusion and inclusion within Spotify, that's something we're really focused on as well. Really just to finish, you know, the world is getting sort of quite choppy from a geopolitical point of view, from a sort of global economies point of view, and having a partner that is flexible, is proactive, really understands our business well, is absolutely critical as we go through the next few years. Okay, that's me.
Thank you, Lex.
Okay. Over to Mark.
Thanks to Lex there. I'm gonna try and maybe give some additional context to some of the great examples there that Lex was discussing. If I can get into my notes. It's not looking good. Here we go. First of all, I'm Mark Stannard, the Chief Business Officer. I've been with Boku for nearly a decade and a half now, actually, since the company launched, and I, you know, I often joke that it shows a lack of ambition being at the same company for such a long period. Sometimes people say, "Well, actually it's not the same company because it continues to evolve and change." That's my excuse anyway.
Really kind of what Lex was saying there earlier about, you know, coming from the U.K. or Europe or North America, you know, to us, cards seem completely dominant and, you know, we look at really the growth of card payments over the last decade. We've really seen an increase of over 300% in the last decade. You would really begin to say to yourself, "Well, you know, what's the big deal with all of these local payment methods?" Actually, if you look at what's happened in comparison to local payment methods, cards have actually in 2010 represented 3/4 of all online payments. Fast-forward 10 years, and it's just 1/3. That means these local payment methods are not a nice-to-have, they're an absolute necessity.
As you can see, local payment methods are highly fragmented, and traditional card processors are really built for standardization. Major card processors continue to focus primarily on the card area that you see there, whereas Boku is focusing 100% on the fast-growing local payment method area, and that really does give Boku a huge competitive advantage in this area. You know, when you look at payments, really, card acceptance generally is actually quite easy because a card processor has to plug into two companies, Visa and Mastercard, and the card schemes deliver hundreds of issuing banks within their network. Visa and Mastercard provide the technical, functional, operational, and business standards that really everybody takes for granted in the payments world. Put simply, Visa and Mastercard make it simple for card processors and their merchants to accept payments from hundreds of issuing banks.
When you're dealing with local payment methods, there is no Visa or Mastercard to create the standardization. As you can see, there's an ocean of local payment methods, and that ocean is getting bigger by the day. Each of these logos represents a different local payment method. GoPay, PayPay, Paga, really the list goes on. Each local payment method must be integrated individually with different technical standards, different functional standards, different reporting standards, and different reconciliation standards. Merchants want to take advantage of the opportunity offered by local payment methods, but oh my gosh, this is incredibly complicated and difficult. How can merchants take advantage of the growth opportunities offered by local payment methods when the market's so fragmented and complex?
Thankfully for some of them, they're already plugged into Boku, which is a company that's already been doing this for more than a decade. Boku built its own standards across over 400 Local Payment Method connections, first with DCB, then by adding digital wallets, and more recently, the Account-to-Account payments, all onto a single network. Boku removes the complexity in Local Payment Method acceptance by offering merchants a single API, which has a single contract, a single integration, a single settlement process, and single operational standards. Merchants can take advantage of the growth opportunities offered by Local Payment Methods because Boku is removing all of the complexity for them. Essentially, we're building a Visa network for the 21st century. Why is Boku, rather than a traditional card processor, best placed to accept Local Payment Methods?
Well, with Local Payment Methods, you require a very different beast to get you to your destination. Card processors are effectively trains that are rolling over the network that's been built by Visa and Mastercard. They provide a smooth journey over those rails for the card processors and their merchants, but they can only travel to card users. What about the other 2/3 of users that we've seen that actually want to accept merchants? These are people that Mastercard and Visa's rail network does not get to. That's why with Boku we can help the merchants reach the Local Payment Methods directly. Unlike cards that have dedicated rails for the complexity, effectively, with Local Payment Methods, you're going off-road. Consequently, there are different success factors for winning in card payments and in Local Payments.
For cards, scale and standardization are key to winning. For local payment methods, customization and specialization are key to winning. Why is that? Well, as we keep saying, the card processors are relying constantly on Visa and Mastercard to remove all the complexity, and that makes card processing a commodity play. Card processors generally win on price. For local payment methods, Boku removes the complexity. That makes LPM aggregation a value play, and Boku wins on quality. The different success factors mean that you have to have a very different engagement model. Essentially, unlike a major card processor, Boku really acts as an advisor. We're going in, and we're working with the merchants. We wanna understand what their objectives are and their requirements, and then we will advise them on where to go. We actually build bespoke tools for those merchants as well.
We've actually built specific functionality, for example, for Spotify to accept local payments. We've built specialist functionality for Apple or Microsoft. For example, we do daily recon for those companies with 150 local payment connections that removes, you know, hundreds of people hours for them to do the reconciliation every month. These are key features why they work with us. It's not just actually the way we plug into the merchants, but it's the way we plug into the local payment companies as well. Typically, the way a card processor will work is they will just get the connection they're given, and they will plug it in. Well, why would they do anything differently? That's the way that business has been, you know, since the nineties.
With local payment methods, Boku goes in there, we look at the local payment methods, we redesign them, we re-engineer them, and we completely change the way they work so that the merchant can accept them with the functionality that's required. What's really key to this is that very often the local payment methods can't actually change the way they work. They're actually, the magic is happening within the Boku stack. Our local payment connections are very, very different to those offered by a major card processor for the same connection. Great. That's all inputs. Who cares, frankly? Really what it comes down to is, you know, what's the benefit to the customer? I think you can see here that the, you know, the financial uplift for the customer is absolutely huge.
I mean, essentially, large merchants will move from one card processor to another card processor if they see a 1%-2% increase in their conversion rates. Boku's delivering between 20%-40% uplifts to these merchants when they're moving from card processors to Boku to use local payment methods. Okay, the next question is then, well, you know, 40% of what? 'Cause 40% of not very much is still not very much. These are some of the biggest local payment method connections in the world, and as you'll see, just from two local payment connections that we've upgraded to, we've delivered nearly $50 million in additional annualized revenue for our merchant partners. This is huge. One of the questions that we've been getting as well is really around Amazon.
What's interesting about Amazon was that Amazon had never used Boku for DCB. Amazon went out to the whole world to find a local payments partner. They'd spoke to all the major card processors, they spoke to all of our competitors, but they ended up coming to Boku. You know, why is that? Well, firstly, they got a referral from another major tech company that Boku worked with, and they put a lot of credence in that referral because that major tech company was also incredibly demanding. The second one as well was the functionality. Effectively, our competitors helped sell Boku because everybody else kept saying that subscriptions are impossible on digital wallets. They obviously hadn't seen our connections into Spotify and Netflix.
Again, it's great when your competitors sell you because they say that they can't do something that we're already doing in market. The other one as well was the reach. What was interesting was that actually, Amazon thought they'd probably need to have two to three partners globally to get the reach that they required. When they actually saw not just the depth of functionality that Boku could deliver, but the size of the network was so large and was actually growing so quickly, they realized they could effectively double down with a single partner and really go in on that particular relationship. The other part to this is adaptability as well. Amazon had very, very specific requests because of the way their payments architecture was designed to emulate cards.
Boku effectively did a reverse integration into Amazon and built out completely new functionality to support them, which made it very, very simple for them. It was incredibly challenging for us. It was very difficult for us. It made it very, very simple for Amazon. There's not just growth in terms of the new merchants that we can bring onto the network. There's a huge amount of opportunity for growth in our existing merchant base as well. Just to take a step back sometimes because, you know, Boku's got a merchant list really to kind of die for. Over the last few years, we've managed to onboard Apple, Meta, Sony, Netflix, Google, Microsoft, Spotify, and now Amazon.
Every single one of those companies has a contract with Boku, has an integration with Boku, apart from Amazon, they're all currently processing transactions with Boku as well. As you can see, each one of these hexes represents a payments connection on the Boku network. The orange ones are connections that are live with that particular merchant, and the gray ones are connections on the network that the merchant can launch to. There's a huge amount of opportunity and upside growth in us just plugging in our existing merchant base into new connections. Importantly as well, it's not just the huge revenue opportunity to go wider with the existing merchants.
By moving on from DCB into digital wallets, as Adam said, you know, we're going from digital entertainment to consumer payments and then into A2A, we're able to go into B2B payments. It means we can go deeper with those existing merchants as well. A great example is, as Adam picked up earlier, is really around Meta. Boku's relationship with Meta over the past decade or so, more than a decade, had really been around Facebook Games, which is sub 1% of their entire turnover. Now, with the digital wallets and the A2A, we're actually helping Meta sell advertising in all of these different markets, and that's their core business.
You'll see that by going into all of these merchants here and really driving deeper, you know, just these eight merchants alone, their 2022 revenues is over $1.3 trillion. Yeah. By going deeper into those into those merchants, the revenue opportunity for us is truly transformational. Thank you.
Thank you for that, Mark. Perhaps if you would like to, grab a seat.
Sure.
and you, Lex, and you, Adam. We're now happy to take any questions that we might have from the floor. Does anyone have any questions for our distinguished panel or even for me? Tim Metcalfe. If you could just speak into the mics 'cause we've got people on the.
Oh, sorry.
Please.
Hi, good afternoon. In terms of when you're evaluating, who to partner with in terms of payment processing, could you just talk through sort of, kind of the evaluation process? Is there a bake-off that you do with two or three of them, and then in terms of kind of the differential in performance and making that decision? And then I guess in terms of other sort of, if the merchant say it's like Meta and in terms of the products that are being put through, that payment stream or that connection, how much sight do you do you get ahead of time that actually that's going to be sort of, kind of the direction of travel going forward?
Tim Metcalfe, for whom was that? I'm assuming from the first thing you said, that might be a question you want to direct towards Lex. Is that right?
Yes. Yes, please. The second one is really, I guess, to the Boku team.
Okay. Lex, how do you choose us? Do you bake us off?
Yeah. I mean, actually, we run a really, really rigorous process when it comes to partner selection. We work with a number of different partners for a number of different use cases. We'll sort of say that we have a partnerships team. We work across a whole range of people within Spotify from finance, tax, engineering, legal, procurement. My team sort of owns that process. Yeah, we look at things from different lenses. We look at kind of the coverage that that partner can give us. We look at their kind of ability to tap into, you know, what's happening in payments innovation. Are they investing, and where are they investing? We look at strategic alignment. We look at cultural alignment. We look at things like ESG as a topic.
We obviously look at things like pricing, which comes into it. Given, you know, we're essentially largely a technology company, powering the platform, we look at actually how, you know, how easy it is to integrate with that partner. How, you know, are they willing to reverse integrate as the sort of Amazon example sort of came up there. You know, our engineers spend quite a lot of time. We really look across a whole range of lenses when we're selecting a partner. With our existing partner set, we also then look at how we actually allocate business. In terms of the sort of bake-off comment, where there is kind of two partners or more doing the same thing, then we would tend to allocate business based on the performance.
Essentially who's getting us the best approval rates, success rates, the best costs. You know, we'll do a lot of A/B testing around that. That will ultimately drive where we put the traffic. As I said before, very much driven by data, above everything really.
I forgot what your second question was, Tim Metcalfe. I think it was something about line of sight or how much line of sight do we have.
Yeah. In terms of the merchants and in terms of direction of travel, in terms of where you can help them in particular geographies with particular type of products.
I mean, I'll take that, and then maybe some of my colleagues would want to speak. Engaging as we do with big companies, you know, if there's one thing that defines big companies, they're big. They have very defined planning processes that typically work on an annual cycle and sometimes over longer cycles. For Boku to be successful, we must adapt our way of working to be aligned with the way that our customers work. Typically, they will plan a year in advance what the activities are that they want to undertake. In that respect, we have a very good line of sight. Now, things don't always plan, you know, work out. You know, does the plan always respect, as it were, first contact with reality? Not necessarily.
We have a pretty good idea about the things that we need to be able to do, and sometimes that plan will be generated by us making suggestions about certain geographies. Sometimes it will be that the merchant themselves is looking to try to target a new country and will come to us to see whether we can help. Yeah, in general, one of the things that is interesting about our business is, you know, not only is there a high degree of predictability on the business that we've launched because a lot of it is recurring revenue, but there's a high degree of forecast ability when it comes to understanding the new rollouts that we're doing with different merchants. Once again, I don't know whether, Mark, I mean.
Yeah.
have a lot of this engagement.
One of the other advantages we have is that we're incredibly adaptable. If you look at generally the way most of the major PSPs work, around about, you know, a huge percentage, probably more than 90% is of their tech team's focus is on applying the card mandates for Visa and Mastercard because if they don't do that, they just get switched off. We're 100% on the local payment methods, and this has happened numerous times, a big merchant will turn around, and there'll be a scramble that, you know, someone senior in one of the regions needs X payment method very, very quickly. We're able to deploy that usually in two-three months. You know, that's completely unheard of in the payment space.
The more we deliver on those, the more we get relied upon to kind of do that, so it becomes this virtuous cycle.
Anything to say from your side, Lex? I mean, the people pay more attention to what you say than what we say. Do you have a good line of sight into things? Do you?
Yeah. I think so. I mean, Spotify moves very quickly, and it's really important that we stay flexible and agile. It gets back to that point around having partners that are flexible, pragmatic. They spend time understanding our business. I mean, we spend a bunch of time with Boku and others really trying to communicate where we're going in terms of our strategy. I'd say it's very important to be able to move quickly. Yes, we do get that demand from regions. You know, payment methods gain traction very quickly, coming back to that UPI example in India. You know, yeah, we need to be able to sort of move rapidly. Yes, we will share strategic roadmaps with our partners and certainly Boku. Yeah, that flexibility is really key.
Thank you. I think we had a question. The first one that caught my eye was at the back, the gentleman standing up.
Thank you, Jon. Just two quick ones really. For example, in India, where we mentioned the UPI, does it mean that market does not require Boku?
Not at all. For large companies, accepting UPI is actually quite challenging. The proposition that Boku has in India is that we have an authorization from the NPCI, or sorry, from the Reserve Bank of India, and a connection and dialogue with the NPCI, the organization that runs UPI. Without that authorization, you can't. You're not authorized to get the money out. You have a very significant challenges. A merchant wanting to operate will need to connect with a payment processor who has the right license and the right capability to be able to move the money to the place where they would want it to be.
Just taken more broadly, the reason why Boku exists is that global merchants find it difficult, and once again, maybe Lex would care to comment on this, find it difficult to connect to each individual of the payment methods more generally. Having somebody like Boku do that heavy lifting, as Mark described, to connect to multiple payment methods, is precisely the value that we provide. I mean, another way of asking the question, and I'm gonna just smack it straight at you, Lex. I don't know what you're gonna say, is why don't you do it yourself? Why do you even bother to come to people like us? You're a tech company. You don't need someone like us. You could do all this stuff. Why do you use us?
Yeah. No, it's a good question. I mean, I'd say, you know, we're not a payments company. We're not a fintech company. That's not our core business. I think, you know, we would like to work with experts that are fintech experts and, you know, payments companies. I think, you know, as you sort of say, the reason for that is it's a regulated environment. It's highly sort of fragmented, particularly when you think about the alternative payments landscape. You know, when you're looking at traditional card payments, that, you know, is largely ubiquitous. If you're only working with card payments, you're leaving a huge amount of potentially untapped target addressable market on the table, and that's, you know, not somewhere we want to be.
If you want to get into, you know, access your full range of potential customers, you need to have local payments there. Yeah, as I say, we're not in the business of being a payments company. If we can work with, you know, one or a small selection of, you know, really high-class partners that can aggregate a lot of that pain away, whether it's getting licenses or, you know, dealing with the reconciliation and settlement of all of that. Also product updates. You know, some of these payment methods go down quite often. What do you do around sort of resilience in terms of having two or three payment methods in that market? Yeah, that's sort of some of the thinking that goes into it from our side.
Thank you.
Thanks, Lex.
Jon, are you counting my second question as your question, or can I take my second question? Thank you. In terms of, for Mastercard and Visa, I know, you know, the kind of transaction charges are 1.5%. Amex obviously higher. When does the merchants kind of accept payments through Boku, how much do they pay?
It depends on the payment method. I mean, the majority of the cost is coming from the payment issuer. For Direct Carrier Billing, as Adam said, the charges could be materially higher. You know, high single digits or maybe even more in some places. This is one of the things that does actually restrict the use of Direct Carrier Billing to the particular verticals you operate with. I'm sure that's a fairly careful balancing act that people like Lex have to make about, you know, here's the charge, and are we getting a commercial return on that higher payment. For wallets, the prices are cheaper for the merchant all in.
Interestingly enough, because Boku typically would be undertaking the settlement on those transactions, and therefore the merchant is asking us to do a bigger job, not just the technical integration, but also to provide the settlement, our own fee would be classically a little bit higher. Yeah, we it does vary a bit by depending on the payment method, and the majority of the fee is governed by the underlying payment method itself.
Thanks.
Question at the back here.
Yeah, sorry.
Hi, Christian.
A question for Lex. Just in terms of how you allocate your local payment volumes, how big is Boku and how many other potential local payment aggregators are you working with?
I'm not gonna get into specifics on percentages 'cause that's not something we sort of share out publicly. Just to sort of say we work with, as I say, a range of partners. Not all of them are overlapping in terms of capability, so we obviously want to have redundancy and resilience in place, certainly in key markets for key payment methods. That's very common for merchants to do that strategically, and then, as I say, allocate, you know, traffic if you like or allocate volume based on performance. I think, you know, one of the things I will say about Boku is, you know, they are quite uniquely placed in some cases with some payment methods. I think, you know, again, that's sort of another driver of why we would work with Boku.
You know, particularly around that sort of Direct Carrier Billing space, there aren't necessarily huge amounts of competitors that can do that at scale. Yeah, I'm not gonna get into percentage splits.
Thank you. Any other questions in the room? Yanis, and then Will.
Hello. Hi, Jon. Thanks. A question on your cost structure and the investments that will be needed. First on the R&D and kind of infrastructure side, and second on the market-.
Do you know what? I'm gonna cut you off here 'cause this is much better done to Keith in the second Q&A section. Sorry to chop you off.
Okay, well, okay. Let me slightly rephrase it.
Rephrase it to be something else. Honestly speaking, I think that.
There's something I don't understand. It's slightly. It feels contradictory to, I think, something that Mark was saying about how what you do is so complicated 'cause you have to individually connect on the supply side, each connection one by one. You making your own protocols, whereas the card processors are kind of free riding on Visa or Mastercard. I'm just trying to square that with the fact that the card processors seem to be investing so much more, you know, like Adyen is gonna hire 1,000 engineers this year. Why is there such a difference when if you're doing the complicated stuff, they're doing the simple stuff, why does that difference exist? It also follows if what you're doing is so complicated and the card processing is so simple, why don't you add that on?
You know, I know it's not your core competency the same way Adyen's core competency is Visa, Mastercard, but they've added on local methods 'cause why not? Why don't you add on cards if you've done the heavy lifting for the difficult stuff?
Yeah. I think It's also a case of getting good performance on local payment methods is about challenging the spec and having an iterative process. I can't really talk to why Adyen is hiring so many people, but they're hiring a mixture of engineers and salespeople. I guess they're looking to do things with their volume. It's not really for me to say. I can definitely say that the reason Boku, almost by principle does not want to be involved with cards is we see that that is somehow, you know, creating for us, you know, a conflict of interest between this change that we see in the overall marketplace, between the growth of local payment methods and the relative decline of cards.
For Boku, there are many excellent card processors, and I frankly don't think that we're in a good position to be able to compete with people who have got sort of decades of experience, including you mentioned Adyen, who is a fine company, who does an exceptionally good job in terms of processing cards. I don't think we've got anything where we could pick a niche and compete with them and to be better. Where we can be better is by having these customized integrations to Local Payment Methods. It is a mindset question. I think another way of putting this, and this will be expanded on perhaps later on in the session, but if I just describe how we work.
You know, classically, if you deal with Visa or Mastercard, you don't negotiate with Visa or Mastercard what the spec is. As Mark says, they tell you what you have to do, and they tell you what changes you have to make every year, and they can chunk up about three-quarters of your engineering resources every year, keeping up with these mandates, as they're called, that come down from Visa or Mastercard. You don't have a mentality that says, "Oh, Visa, if you change this, it would be better for Spotify." What we do is that we do go back to all of the large payment integrators we look at. They give us their spec, and we say, "Do you know what? That's not a very good spec. It doesn't actually do what our customers want. Spotify want to be able to do recurring transactions.
They want their customer to be able to have a seamless way of being able to subscribe and to have a free trial. "Your specification doesn't support that." If we can build the technology into our stack to do that, we will. If not, we will go away and negotiate individually with the payment issuer to get them to change. That might mean that we're slower. That might mean that it takes us more time to do an integration that does it right. When you come to the sort of scoring systems that Lex is talking about, it's chalk and cheese. If we're able to deliver a wallet in, I don't want to say a particular country, but that provides the ability to properly to support subscriptions, we're gonna get selected.
That isn't what you get out of the box with most of these payment methods. That mentality is one that takes us more cost to integrate each individual payment method. We've developed the skills that allow us to do that at scale across 400 or so different local connections that we have. As I say, if you're looking at Adyen, I'm sure they've got other problems or other problems that they're hiring against. They're going into face-to-face transactions. They're keeping up with the Visa or Mastercard mandates. They've got what have you. What they're not doing is going back and iterating on each of an individual payment method and getting it to operate in the way that we do. Will, I think we're probably all good. Carry on.
Just a quick one for Lex, I believe. The slide that came up, which had the orange squares and gray squares. From the merchant perspective, what's the reason that you don't just turn on all the connections that you could do that are available on Boku's platform? I mean, is it you're offered those by a separate partner that you currently work with, and turning it on would cannibalize that agreement that you have by moving to Boku? Or is it simply those are markets that you don't, you know, deploy a whole heap of sales and marketing spending to unlock? What's the reason?
It's a good question. I think you answered some of it yourself. Thinking about user experience, it's generally not good practice in most markets to just sort of clutter the checkout with loads of options. It can be confusing. You know, we try to use research insights. We talk to partners. We talk to, you know, other players in the ecosystem to try to understand what the optimal mix is in terms of offerings. We wouldn't necessarily just blast the checkout with loads of different options just for the sake of it. I think they have to be kind of relevant, have a reasonable amount of share, be relevant to our users. We will test, we'll turn some on, we'll turn some off again. I think that's part of it. Part of it is we do get some coverage elsewhere.
Yeah, I mean, you know, there are some things to do on our side, I suppose, to launch a payment method. We might do some comms around it. We might do some marketing. We might have, you know, a partnership with a mobile carrier on a broader base. That might drive some of our decision-making as well. Really it comes down to just having the optimal mix on the checkout. There are a few exceptions in markets where it's great to have as many as possible. You know, China's one of those which we're not in. That's kind of quite well widely publicized. There are a few exceptions, but yeah.
There's a question here. I'm taking all these questions from the floor. Rosie, do we have any questions coming through on the webcast? 'Cause I probably ought to do that before we close this session. One more from the floor. Down to you, sir.
Thank you. For Lex. How easy would it be for you to decouple from Boku if you and Jon had a falling out?
I don't think we'd decouple if we ever fell out, which I don't think would happen. I would say moving between payment partners is challenging. Particularly where you've got, you know, a big recurring base of subscribers. It's not necessarily the case of one-time payments where, you know, you can redirect traffic more easily. I think you need to think about, you know, your existing customer base paying on a regular basis, certainly with our subscription product. Moving between payment partners is not necessarily a sort of, you know, two or three-day job. It would be a very substantial-
Yeah.
piece of effort for most merchants, I would say. Yeah, I mean, that's certainly not something that's on our agenda, so not something I'll spend too much time thinking about.
I was hoping it wouldn't be, but it was just what I'd go.
So was I.
Just trying to get an understanding. Jon, for you.
I think we just have just the last couple of questions. There'll be another opportunity to ask questions, but I just wanted to take the couple from the webcast. Tim, you are our webcast questioner.
Indeed. Thanks, Jon. Yes, we've got a couple of really clarifications from those online. First, could you give a little bit more color, and the questioner knows that this varies between merchants and local payment methods. Give some more color on the actual timescale involved in terms of man-hours and weeks or months in actually creating a connection for a merchant with a typical local payment method in an emerging market.
I mean, the answer is months. It does depend also. It depends also whether it's the first time we've been in that country. The first time we've been in that country, and we need to set up banking infrastructure and licenses, then you're talking, you know, it's probably over a year to be able to get something in a new country. Any integration, given the methodology that we have, the way in which we challenge the specifications, as I was talking about earlier on, it will take months for us to get there. You know, in extremis, as you heard Mark say, we can redeploy resources very quickly to make sure that they are undertaken.
With the testing and the integration and the quality that we want to deliver, it's never something that you're going to do in a fortnight with just a hackathon, with somebody working, you know, drinking lots of coffee. You know, these things have to work. These are payment processing, and they need to be right, and they need to be properly tested, and they need to be compliant.
Our merchants aren't particularly forgiving.
No. There was another question. Was this Tim or was that it?
Yes. Thanks. The second one was based on a slide in Mark's presentation. Mark, you talked about the increase that in revenue growth from integrating via Boku with Local Payment Methods rather than a card processor. Could you just explain in a bit more detail why that's the case? Which is the question that I didn't really understand.
Yeah. Sure. The standard integration didn't support tokenization. What tokenization is enabling the payment to go on file. Typically, you know, the way, you know, the iPhone works or an Android phone works, you register your payment credential, and then you're able to charge against that payment credential. In this country, most people would use a card. It doesn't matter whether it's a subscription transaction or a single transaction. The payment is initiated within the merchant UX, and if they're subscriptions, it just all happens in the background. Typically, wallets have not worked in that way. What Boku did was they redesigned the wallet so that it emulated how a card worked.
It meant that there was more opportunities, there was more revenue lines that the merchant could launch because now they could do subscription billing for their subscription services, not just simply one-time transactions. It also meant that the acceptance rates, you know, the conversion of when the transactions were happening markedly jumped up. We also ended up with an incredibly high retention rate as well, which was along the card lines as well. It was mirroring what cards did, which for a lot of Local Payment Methods is not usual, essentially. It's really all of that work that we're doing in there. That was the kind of the uplift of the secret sauce that we was doing under the hood. That's the reason why that revenue grew.
Adam, maybe you would, as well as just delivering a one tap or no tap, which is helpful, but maybe to talk about Spark for retention perhaps just as.
I mean, I think when, you know, the fundamental business model in digital entertainment is acquire and retain, you know, whether it's a subscription or it's a game account. You want the payment to be as invisible as possible. It's merchant-initiated in the background. The last thing you want is churn and involuntary churn. Involuntary churn happens when there's an error because there's insufficient funds or there's invalid eligibility. Being able to remedy that either by providing instructions to the consumer or by having sort of automatic failovers happening in the background, where if this funding source doesn't work, we automatically charge the second one. Or if this funding source is temporarily out of service, we instruct the consumer with specific instructions on how to remedy it. That sort of helps provide that boost in retention.
Even when there is an error, that doesn't mean that they necessarily churn out. We give ourselves several opportunities to try and recover and put them back into the game.
I think, thanks to everybody for the questions. My thanks to the speakers. A particular thanks to Lex and to fielding these questions. Also thank you for your answers, because I was worried on one or two occasions. Anyway, these are a sort of direct bunch of people, and they've asked you some direct questions, and thank you for your direct answers. If we could give us a round of applause to people, I'm sure they would appreciate it. There is coffee and tea now available at the back, and we need to be back here in half an hour.
I really do, you know, I will start promptly at quarter to, because we have our guest from Netflix dialing in, I don't want to be late for her, 'cause as I say, she has made special arrangements to carve out time in her schedule to be able to talk to us here today. Thank you very much. Everybody, thank you very much for coming back after coffee. Much appreciated. The best, as they say, is yet to come.
What we're going to do now is I will be shortly asking sort of two of my colleagues, Chris Newton-Smith and Keegan Flanigan, sort of give you a bit more of an insight into the complexity that is has to be undertaken in order to deliver the, you know, the, the things that we talked about earlier on, the differentiated payment methods. We will have Kristen from Netflix, who will tell us a bit more about the relationship between Boku and Netflix. We're gonna stop for Q&A immediately that Kristen has finished her presentation because there's been obviously quite a lot of interest and attention in asking questions to our merchants. We'll stop and do a Q&A session there, which I will moderate.
Kristen, who, you know, has taken literally a break from her busy schedule, unexpectedly having to stand in for somebody else, we'll allow her to get back to her day job. Finally, perhaps the bit that you've all been waiting for, we'll have Keith who'll be running through more of our medium-term figures. We'll have a final Q&A session after that. Without any further ado, let me hand the floor to Chris Newton-Smith, Boku's Chief Operating Officer. Chris.
Yep. Great. Thanks very much, Jon, for that introduction. Again, thanks for coming back to listen to Keegan and myself and the rest of the team after the break. I'm the Chief Operating Officer at Boku. I've got to get my clicker going. Here we go. You've heard earlier today from Mark about why Boku wins. He talked about our SUV, which enables us to travel off-road into the new uncharted territory of local payment methods. Between our CTO, Keegan, and myself, what we'll do is we'll take you under the hood of that off-road SUV and tell you a bit more about the key building blocks that enable us to deliver the services and capabilities we spoke about to our merchants. That's really driven by three key components.
First is our network, which combines technical integration to more than 400 issuers, regulated payments capabilities in more than 54 markets, and comprehensive settlement capabilities to move money around the world. Secondly, our best-in-class services, who work closely in partnership with our merchants globally through our team based in more than 24 countries. Finally, our scalable, reliable, and secure platform, which is integrated into the world's largest merchants. Let me start with the network. We heard today already that there is no defined scheme or rails for local payment methods, unlike what exists for credit cards. We really are working in our technical teams to create that scheme based on serving the requirements of the world's largest merchants.
This means that we're setting the standards for this new network, and we ensure that LPMs who join the Boku network meet or exceed the requirements of our global merchants. This means that each LPM integration that we carry out is a project that's led by a Boku technical expert, who works closely with the LPM to ensure that we deliver a high-quality integration. This means that our technical expert works with the team from the LPM on design, integration, and testing. We don't just take the specification from the LPM and implement it. We build technology on our side, and we push for changes by the local payment method to ensure that we're able to deliver a high-quality connection.
We found that LPMs are generally willing to make these changes because they want to tap into the volume that our large merchants can bring to their network. These kinds of changes that we make both on the Boku side and also on the LPM side, enable us to deliver an improved network for all of our merchants. At the end of the day, better connections then make it more compelling for merchants to choose and work with Boku. Now, we've got more than 10+ years of experience, and having already delivered more than 400+ connections, it really means that Boku and our teams are the experts in integrating mobile payments. This experience that we've built up is a real competitive advantage that other PSPs can't replicate.
At the end of the day, card processors are really not used to that level of complexity when it comes to integrating new payment methods. On top of that, when we come to test our new local payment methods, the ability to test locally in all of the different markets that we serve around the world is quite unique. We've built out an end-to-end testing capability that allows us to successfully test in all the different markets that we serve around the world. Finally, it's not just about launching and testing. We focus very closely on continuous optimization to ensure that we're improving conversion and authorization rates for our merchants on an ongoing basis. This means that we continue, after we launch, to work closely with both the LPMs and the merchants, and to identify additional improvements and changes that we can make.
Next, I'd like to tell you a bit more about our unique network of payment licenses. Now, providing merchant acquiring services for Local Payment Methods is often locally regulated, and this means that an LPM payment processor like Boku needs to have a combination of payment licenses, registrations, and entities across many different markets, and ultimately, is very unlike how credit cards operate. Acquiring these licenses is hard, and it takes time. We've been building our network of licenses for more than 10 years. One example which we actually heard about already a bit earlier in the presentation is in India, which is a new license that Boku has been granted recently, and we're one of the first international PSPs to be authorized in principle as a payment aggregator. This application process alone took us more than two years to complete.
We've made significant investments in compliance, information security, and risk and fraud to make sure that we meet and exceed the requirements of both the regulators and our merchants. Having built up this capability, it means that we're well prepared to acquire additional new licenses since we've already got a proven track record of meeting these requirements in many different markets around the world. On the next slide, I'd like to provide you with a graphical overview of our current regulated and transactional footprint around the world. As you can see here, we've deployed our capabilities for regulated payments in more than 54 markets around the world. I think it's important to understand that this is actually a multi-year time to market advantage that Boku has over any new entrant who wants to provide payment services for local payment methods.
I'd like to tell you a bit more about settlement operations. As we've built out our network of local payment methods, we've had to build out the settlement operations for these LPMs from the ground up. What we found as we've worked with different LPMs around the world is that each LPM has different reporting, integration, and settlement capabilities. As we heard earlier today, it would be hugely complex for a global merchant to go out by themselves to try to integrate to all of these different LPMs. What we do instead is we consolidate this complexity into unified settlement and reporting for our global merchants. This saves our merchants significant costs and makes it simpler for them to add new LPMs in the future, as any new LPM that they want to add will be delivered through the same standard Boku solution to that merchant.
These kind of capabilities include settlement, which means that we're reconciling the funds that we receive from LPMs against the transactions that are processing through our network. We need to make sure from an accounting perspective that we can segregate funds when needed, and that we comply with all of the taxes in each of the local markets that we operate. Finally, from a treasury perspective, we've built the capabilities to ensure that we can move funds through our network and are able to pay our merchants from the right entity and in the right currency while providing competitive foreign exchange services. Credit card processors get most of these capabilities from their schemes such as Visa and Mastercard, while Boku's really had to build this up ourselves to support our LPM network.
We've now built a global network that can move funds from hundreds of connections to global merchants daily where they want it, in the currency that they want, and combined with providing them with consolidated global reporting. Next, I'd like to talk briefly about how we help our large merchants to accelerate their launches of local payment methods. We've really designed the entire Boku proposition to serve large merchants well and to make sure that we can meet and exceed their needs. We really enable these large merchants to get to market faster with LPMs, with a large number of local payment methods, and at a lower cost of engagement. One of the ways we've done this is we co-develop our deployment programs with each merchant. We can adapt our program to the merchant standards through our expert program management teams.
We often build out these roadmaps with merchants up to two years in advance. Often launching one or two new LPMs isn't enough for our global merchants. Our merchants want to launch at scale. We've developed what we call the wave delivery model. What that means is that we group together new local payment methods into a coordinated program for each of our large merchants. We find that LPMs are actually competing to deliver on time and to be part of these programs because it enables them to win business from our global merchants. This approach is very different to how credit card processors work, who often focus much more on scale and standardization. Instead, Boku really delivers a full suite of services, which includes advisory, project management, technical, testing, and customer services.
We really see ourselves as the experts in local payment methods, and we keep learning and developing our expertise as we deliver these projects and add new connections to our network. We really focus on sharing that expertise back with our merchants. This is backed up by our more than 250 engineers and experts across 24 countries. Now I'd like to hand over to our CTO, Keegan Flanigan. Keegan's gonna tell us a bit more about the platform which underpins Boku's network and enables us to deliver these tailored integration features and services for the merchants. Keegan, I'll hand it over to you.
Thank you. One of the key ways we deliver for these big merchants is by having a very extensible platform. We've built a platform with a series of built LEGO-like building blocks in the middle that allow us to create custom and reverse integrations that are tailored to those merchants' needs. This allows us to give them the best-in-class experience but also limit the amount of investment that they have to make. That simplifies their connection to the over 400 different issuer connections we have into a single integration. With that, we've significantly reduced their work, and we create very sticky and long-lasting partnerships with those merchants.
It's built on top of our 10+ years of experience in DCB, first off for Meta and then later for Apple, and then we've reused those building blocks to deliver solutions for Spotify, Netflix, and many others. One of the key things that the merchants measure us on is reliability. For merchants, when payment issuers go down, that means that they're losing money. They're not making that revenue, and their users get mad. Reliability and redundancy is a key element to what we deliver. Our platform is built in the cloud and is built with, onion-like layers of redundancy across hardware, so, applications, and even the AWS regions that it runs in.
This means that we can mitigate the impact of any issues to our merchants, we can have a really high success rate with our transactions. One of the key things we do is we have multiple different data centers in different AWS regions, and we can move traffic between them in very little time, which mitigates the impacts of even Amazon outages for the merchants. To deliver on that reliability, the other thing we need to deliver is scale. We've measured our platform to over 400 transactions per second in live, and we've tested it to more than twice that, and we endeavor to keep that Headroom so that we know that we can handle anything the merchants can throw at us, including promotions, game launches, spikes through the holidays.
This is very important for the merchants. Each of the AWS regions is actually able to independently handle that full load, so even if one were to go down, we can still handle all of it. That enabled us last year to deliver over 1.2 billion successful transactions. Finally, the one of the big things merchants are really concerned about these days is security. You hear in the news about all the data breaches and leaks, this is an increasingly important thing that merchants are measuring their vendors on. The Boku platform is ISO 27001 certified, which is a security standards that helps us implement security policies and infrastructure to ensure that we deliver that most to our merchants.
Over the past few years, we've accelerated the investment into security to make sure we stay ahead of the continued threats, and we, to make sure we always stay on top of it, our merchants and partners have put us through more than 50 different questionnaires and audits last year alone. All that together is very hard to deliver and it delivers an excellent experience to the merchants. With that, I'll hand over to Kristen from Netflix to tell us more.
Hi, everybody. Am I rolling? Great. I see my head. I see my bobbing head on the screen from afar, so it looks like we're in the right spot. First off, thank you to the Boku team for having me here today, and my apologies that I can't join in person, but I guess we're all used to watching videos and can handle this just fine. My name is Kristen Morrow-Greven, and I'm the Vice President of Payments at Netflix. I'm heading up our global team of payment, fraud, operations, and product experts that works together with teams like Boku to ensure that our subscription payments are working seamlessly for new and existing members all around the globe.
This presentation will be in the theme of Wednesday, which is one of our Q4 breakout hits that brings the joy of The Addams Family to our members all around the world. You'll see some images from that show, and if you haven't seen it's definitely a great one. Of course, finding stories that entertain the world is really crucial to our success, but it's not the only thing. At least in my team, we like to talk about payments being critical for growing our business. When we do it well, we can reach new members, and we can even cater to their local needs. If you flip to the next slide, I'll just talk through the slides that I'll cover in the next 15 minutes.
I'm gonna give a brief business overview of Netflix, then I'll talk about how we view payments as a growth lever for the business. I'll move on and talk about our rationale for partnering with Boku, then I'll walk through the evolution of our partnership that's seven years strong and growing. Of course, there's some time for questions at the end as well. If you want to move to the next slide, I'll jump right into it. 2022 was a huge year for us, and I'm gonna tell you a little more about it because we can't just talk about payments when you're talking to Netflix. We've had six of our top 10 most popular English language TV seasons ever. Some of the names you've heard of are Stranger Things Season 4, Wednesday, of course, featured here in this presentation.
There was Monster: The Jeffrey Dahmer Story, which I don't recommend watching on a full stomach. Bridgerton Season 2, and Inventing Anna, both personal favorites of mine. Of course, since I'm talking to folks in the U.K., the somewhat controversial title, Harry and Meghan, the documentary, multiple part, show that got a lot of people talking for sure. Of course, we had four of our top 10 most popular English language films ever in 2022. There was The Adam Project, Gray Man, Purple Hearts, and Sea Beast for the kids. Of course, we love to talk about our global content because Netflix has really discovered a niche in bringing stories from around the world to consumers around the world. We're really proud about seven of our top 10 most popular non-English films ever.
Two of my favorites were Troll from Norway and All Quiet on the Western Front from Germany, which just did really great with some nominations for awards in the U.S. awards cycle. A lot of great content in case you're looking for something in your Netflix queue. Let's shift a little bit to talk about payments, and you can move to the next slide for this one. I like to think of our payments team as being the engine of Netflix. Really serving as a business enabler to drive growth and maintain stability for our more than 230 million subscription members. We face three major challenges.
I didn't plan this with the Boku team up front, but a lot of the words you just heard are words that resonate to me because they're part of the challenges that we face. When we're working with the right partner, these challenges really become opportunities. First off is reach. I would say, although credit and debit cards historically worked great for our very simple subscription business, we know that reaching customers all around the world is critical if we want to continue growing. It's not necessarily gonna be about cards. We believe that those next 230 million subscribers are not gonna look like the first group. They like simplicity. They might be mobile-centric. They might not have the same access to cards and bank accounts. They might just wanna have an easier user experience.
They might not like the cumbersome sign-up flow that's required with cards. Payments are really a tool to reach those customers where they are. On the next slide, I'll mention the simple fact that not all payment methods are the same. It's our role to find a seamless and secure payment experience, which helps customers gain trust in Netflix to provide their financial details when they're signing up. It also makes it easy for them to complete the sign-up flow to access our content, which is really all they care about. The user experience for paying with card has been essentially stagnant since the beginning of e-commerce. If anything, there's even more friction with the introduction of 3D Secure in many markets. We're always looking for ways to reduce this friction without compromising the safety and security of our members.
On the next slide, we've got scalability. Even as a large global merchant with a pretty sizable engineering organization, we're looking to maximize potential for reach with minimal effort, not only for the initial launch of a payment method or in a new market, but to ensure we don't have unique connections around the globe that need to be maintained again and again over time. When we can reduce complexity in our underlying architecture, we can free up resources for other projects more quickly, and we really like to remain quick and agile. Onto the next slide. This brings us to our partnership with Boku.
Quite simply, Boku helped us to accelerate a resolution of these three Netflix payment challenges. They have been able to give us concrete solutions for reaching new customers, providing a seamless and secure user journey, doing this all at scale, which has been really critical to our success. I thought I'd talk a little bit about some of the key metrics that we've improved with the Boku partnership over the last few years. First off, we've leveraged Boku for new DCB and wallet connections. With that, we increased conversion in our sign-up flow for customers who had never been members before. We actually AB test every change that we make in our sign-up flow from a new word, new content on that page to a new payment method.
That allows us to pinpoint how new experiences and new payment methods drive incrementality and really judge, you know, what new is coming from that change. Second of all, we optimized performance of the new payment methods to reduce customer churn. At Netflix, we love to acquire new members, but we find it equally important that these customers stay members on our website, and we hope that our content keeps them engaged. That's the most important thing. We gotta master that first. We wanna ensure that payments aren't a reason that someone leaves the service, and that is the payment optimization challenge that we face, and Boku's been an excellent partner on that front. We've been laser-focused on payment performance optimization, and happy that Boku has taken this journey with us, even in some of the newer payment methods like wallets.
Of course, fraud and abuse is top of mind, and we don't wanna let bad actors into this service, and that's another thing that we've partnered on very closely. Finally, we wanna future-proof our service by exploring new payment trends and commerce behaviors, and we like to be early adopters whenever we can, which we think will help us to evolve and shape any sort of new products at the foundational level. Boku has supported this need through exploration of new alternative payment methods, such as the recurring use case for Account-to-Account or bank-based payments. That's a really exciting thing for us and something that we really value as a payments team. Moving on to the next slide. Let's show exactly how this Netflix-Boku partnership has evolved over time.
For those of you who have seen Wednesday, you'll know that this group here, even though they don't look like the friendliest of teams, they went through quite a journey and had quite a strong partnership in the show. Onto the next slide, we'll get down into the details. Our partnership actually began in 2016, which was shortly after we had launched Netflix everywhere around the globe. At that point, Asia-Pacific was the region where we probably needed the most help. Credit cards, debit cards weren't working, our growth was really slow, and by the way, our content wasn't so great either. At that point, conversations with Boku began, and we realized that there was a gap that we could fill.
On the next slide, you'll see that by 2018, we had tested out a few DCB connections in markets where we knew we wouldn't disrupt our emerging strategy to bundle Netflix with TV and mobile network operators. You'll see those countries highlighted above in purple. That was about four DCB connections in three countries at that point. Just really small steps because we weren't quite sure what this was going to bring. Of course, if I were there in person, I would quiz you all to see how good your geography skills are, you get a pass this time since I'm not there. If you move to the next slide, 2020, we recognized that DCB was incremental even when we had these telco bundles. We had several more DCB tests kick off between 2018 and 2020.
We were about reaching 14 DCB connections by the end of 2020, and that covered 10 countries and, yeah, you'll see those kind of spreading out, the purple spreading out there. Finally, I think the big jump of growth has really happened in the last two years. By 2022, we had explored the world of wallets to the next degree, and we expanded DCB across a number of more mature European markets, which was a really big leap of faith for us. By the end of last year, we were operating with Boku solutions in 20 different countries, which included 32 DCB connections and nine different wallets. That's pretty exciting. On the next slide, I can only say that we're really thrilled about what's next to come.
On top of DCB and Wallet, we're looking to accelerate bank-based payments, which are growing really quickly on top of all of the Open Banking and Faster Payments trends, particularly in the European Economic Area, but absolutely beyond in markets like LATAM and Asia Pacific. TWINT and Satispay here in Europe are at the top of our list for the first half of this year, and we've got many others to follow. It's an exciting time, and we're looking forward to doing that journey with Boku. On the next slide, I just wanna sum it up and say that we are absolutely thrilled to have initiated this partnership with Boku, to be able to engage deeply on our strategic needs and to continue to be thought partners on all topics payments.
We're really looking forward to deepening the partnership, particularly as the Netflix business model evolves and we start to introduce new revenue streams, which some of you may have heard about in the news. Our growth has taken a new trajectory, and we're really excited to see how payments are gonna be able to enable that even further and even faster. Thank you so much for your time. There is, I think, a few minutes for questions, so if there's any questions from the audience, maybe someone can help field those for me.
Okay. Thanks very much, Kristen. I've stepped to the podium, and I'm sure that we will have some questions, let me just first ask the floor if there's anybody who would like to ask you a question. Don't be shy. You weren't shy earlier. It's not like a cup of coffee has given you. Any questions? One at the back. Frazer.
I just wonder if you could comment on the range of partners that you use and what you've found particularly differentiating about working with Boku.
Yeah, that's a great question. We have so many different partners around the world that we look at. I would say we have not traditionally looked at partners for alternative or local payment methods, so our connection with Boku is really a first there. We have obviously PSPs, gateways, and processors in many regions. We have both global ones and local ones that we use. We use a partner for our retail gift cards offering as well. Quite a diverse range. I would say Boku is quite unique in that it has all of the entities that it has, which enables it to really bring those local payments to us, and those connections with the telcos, those relationships that exist, it's really something that's quite unique in our partner landscape.
Thank you. Anything else? Question here. You need a mic? Got it.
Earlier in the presentation, you were talking about how Boku might move from B2C to B2B. Obviously with Netflix's new advertising, model, could you talk about what considerations you take into account whether you choose Boku for that or not?
Absolutely. Really very early days for our advertising plan. We just launched back in November in a handful of markets, and we're gonna continue expanding that throughout 2023. I would say we've got bigger challenges right now with advertisement than the payments bit of it. We've really got to make sure that we've got enough people signing on to the plan to make it attractive for advertisers and that we really can kind of get the right formula there. Right now, we've partnered with a third party. I think it's public news, it's Microsoft, and Microsoft is managing our whole ads platform with obviously a pretty sizable team on the Netflix side to build up the strategy for advertisements.
Right now, we're very happy with that setup, and we're not thinking about managing our own buying and selling of ads on our website. That being said, I would say never say never at Netflix, and we've got a lot of learning to do, and we love to, you know, iterate on these types of big strategic bets and keep challenging ourselves to get better and better. I would say it's absolutely not off the table that advertisements expands into the payment space, and that we need to think through how that goes. At the moment, that's not on the roadmap.
Okay. Any other questions in the room for Kris? Damindu?
You mentioned as part of the partnership there that Boku has also been helping you with bad actors, I suppose, fraud side. Could you elaborate a little bit more on that from a payments angle?
Sure. I'm probably not in best position to do this 'cause I've got a fraud team that gets down into the details. Essentially, what we're doing, every time we turn on a payment method is trying to ensure that only the good actors even get into the platform. Of course, we've got a lot of retroactive responses that we can take when we see fraudulent behavior, which we generally identify as strange cross-border streaming patterns or accounts that have multiple PINs set on them that show that someone's reselling the account maybe at a different price and doing some price arbitrage. These are the types of things that we've been thinking about, particularly in our more emerging markets, where the pricing might be different than in the more mature markets where we have a better content offering.
Boku has been a great partner there, just helping us to discuss these patterns. I think they're able to look across their whole portfolio of merchants to help us with pattern identifying and pattern matching, and that allows us to react more quickly when something happens. Again, it brings revenue into our system, but it's not the best revenue, right? It's people that are taking advantage of other sort of product gaps that we might have. Boku has simply been part of that discussion with us to help close those product gaps and allow us to prevent more bad actors in the system.
Okay. Question here. Thank you. Just quickly, in terms of the expansion of Boku's connections over the last couple of years, is it Boku replacing other PSPs, or is this greenfield expansion with new connection possibilities going on?
For the most part, it's all greenfield. In the early days, when we were just doing DCB, like I said in the presentation, we had some direct connections with the telcos for bundles with their deals. You can imagine like the British Telecom or Sky deal to get your mobile phone and/or your cable and Netflix alongside of it. We had some direct connections there where Boku is then going in parallel to those existing connections. In terms of all of the wallet connections that we're using them for, both in Asia-Pacific and in Europe, that's completely new connections for us. Those are payment methods that we never offered before.
In some cases, they might be offered by some existing partners, but we felt more trust in the Boku connection just from a, kind of product maturity perspective and, you know, time in the market. Yeah, all new for us.
Okay. One other question that I maybe would ask you directly, Kristen, is that sometimes people say, "Well, you know, Netflix is a great tech company. Why on earth don't you do it yourself? Why would you need anyone like Boku at all?
It is a great question, and we are constantly talking about the build versus buy conundrum. I would say in the early days, we really did like to do it all ourselves. The first alternative or local payment methods that we offered were things like, direct debit in Europe. Trying to think of any other good ones. We actually, you know, cards was really our bread and butter, so we didn't have that many alternative or local payment methods in the early days, and we did like to build it ourselves because that made us control a lot of the information, and we felt like we could be very robust with the architecture and comfortable with any changes that needed to be made.
In terms of the Boku connection and kind of the evolution of Netflix's business, it feels like as we grow bigger as a company and grow in complexity, we actually appreciate even more, leveraging a partner that we can trust for those scalable connections. While it's almost not so intuitive that it's that flip side, that now we're looking for that aggregator connection. That's really how it's panned out for us. Only because, you know, we've got more and more connections that we need to maintain for other payment use cases. We've got a more complex business, particularly as we have things like a live streaming coming up and maybe monetization of games, things like that, where we really need to keep things simple.
For that reason, Boku and its ability to reach all of these payment methods in all of these markets has really helped us solve a big problem.
Okay. Well, I think we'll probably let you get back to your day job. I want to just on behalf of Boku, and I'm sure on behalf of all of the investors here, to thank you very much for taking time out to speak to us. I know that you had to sort of step in at short notice to cover one of your colleagues. A particularly heartfelt thanks from me, Kristen. Thank you very much indeed.
Absolutely. I'm glad I could be here, if just virtually, hopefully next time I'm there in person.
Thank you very much.
Have a great session. Bye.
Thank you. Now I'm just happy to introduce you perhaps to the session that you may have been, waiting for longer than any others, but where you actually get to see the numbers. Probably needs no introduction, but anyway, let me introduce my colleague, Keith Butcher, the CFO.
Hi, everybody. Nice to see you all here. Thanks for coming. I'm gonna run through, just quickly recap the trading update. In other words, our 2022 performance. We put some trading update numbers out. We haven't got the full numbers out until next month. Then I'm just gonna talk to you about what we think the art of the possible is over the next few years. Just to recap on the 2022 trading update, as you may be aware, we report in U.S. dollars, we had a strong FX, headwinds against us. If you look through the payments that those FX headwinds, I think you'll think we had a decent set of results, in fact.
Revenue's up 14% on a constant currency basis, and EBITDA will come in north of $20 million, about 30% odd EBITDA margins. We have very strong cash balances at the year-end, $116.3 million. For those of you don't know our business, we collect funds in from carriers and from local payment methods and pass it on to our merchants. Some of that cash is cash in transit, but about $50 million of it is Boku's own cash if we stop the business. That will be our cash. A strong cash position, which we're using. In fact, we're doing a very sort of limited share buyback program.
It seemed a sensible use of our cash to buy back our own shares in the market, really to cover the RSU awards we make to staff on an annual basis. As they vest, we will have bought enough shares to cover those, so we won't dilute ourselves any further. Just worth flagging again, this multi-year Amazon deal that we signed, I think validation of the investment we've been making over the last few years into the local payment methods. The fact that Amazon, just to remind you, was the only all of the world's largest digital merchants use us for carrier billing except Amazon. For them to choose us for the newer payment types, effectively in a sort of competitive tender against all of the world's other payments companies is huge validation of where we're at.
We're very pleased about that, and it's probably worth flagging that we probably incurred about $1 million of spend in 2022 that we wouldn't otherwise have incurred, really building out what we needed to do to get the Amazon contract across the line. A lot of that spend is now baked in, and so we don't need to make a huge amount of additional investment spend to deliver on the Amazon contract. Also worth looking at the underlying metrics of our business. At the end of the day, we charge a percentage of the transactional value we process. Broadly, the more volume we process, which is driven by the number of users that we have, is really at how we grow our revenues.
if you look at the two key metrics on there, monthly active users up 28%. The number of users ultimately drives the business. the take TPV, if again, if you look through the FX effect, up 20%. the amount of volume we process through our platform was up 20%. those metrics, again, as I say, look more clearly through to the underlying performance of the business. Only in U.S. dollars did it look slightly different. worth pulling out a few of those numbers. 52.3 million active users in the month of December. We count an active user as just being active in the month. that's quite a conservative view.
If you took an active user as somebody who'd transacted in the last 12 months, we've got well over 100 million sort of active users. That's quite a conservative method of measuring. 66.7 million new users. These are enormous numbers of people sort of using Boku for the first time in a, in our year. That's how we drive our business. Our take rate is simply, you know, the percentage we make off that process value. $8.9 billion going through our platform. We made on average about 0.73%. That gives you our $63 million of revenue. I'll come back to what we think our take rate will do in the future in some of the future slides.
Again, just perhaps worth talking about some of the other sort of achievements in the year. 150 launches in the year, probably doesn't mean that much to you, but that's actually a lot for us, accelerating in the second half. The fact that quite a lot of these were for the newer Local Payment Methods, about 50 of the 150 for those newer payment methods, and about 30 for bundling, just shows that we're actually accelerating the rollout. It's probably just worth saying as well that some of the points that were covered by the guest presenters and by the other presenters, you know, we are very sticky. We are making connections primarily into, well, greenfield or white space. We're making new connections that help our merchants attract new users to their sites.
In reality, not only do we not lose merchants, nobody bothers to unplug those connections. Once you've made those connections, they're highly sticky and a recurring revenue stream for us. We're always building on that base. We grow our business by retaining that incumbent base, which grows, and we grow by making new connections. We have a very good line of sight of how our revenues will grow because we kind of all the connections we make this year will ultimately drive primarily next year's revenue. We're very sticky, and the base of carrier billing is what we sort of built our business on. This is what's really starting to drive the growth.
The new users, the new payment types, the local payment methods that we've all been talking about here now starting to accelerate at a high rate from a low base. 8 x increase in volumes and 3 x increase in users. This is the future of the business or certainly the engine of growth that we see going forward. I just wanted to go back and sort of talk briefly about our operating model or the leverage inherent in our operating model. You know, for those of you who don't know, Boku took a long time to be an overnight success. It took about 10 years and $100 million of sort of losses to get to break even.
That's because, you know, every connection is a somewhat painful process of connecting a merchant to a carrier or now to a Local Payment Method. Every one of those connections can take months, as Jon said, maybe six or nine months. You're building them one at a time, and it took us many, many years to finally get to break even broadly as we floated the business back in 2017. As you can see here, you know, between 2016 and 2020, we went from making a $12 million EBITDA loss in 2016 to making almost $20 million in 2020. If you looked at the revenues, growth in the same period, it was almost one to one. Virtually every, almost every dollar that we grew in revenue dropped through, certainly over 80% odd dropped through.
Because we'd gone through this investment phase, the costs of running a platform are relatively fixed. There's no real cost of processing an incremental transaction, and the sort of overall OpEx of this business can remain flat. That's, you know, that shows the art of the possible in this business. Obviously, what we did about two or three years ago, two and a half years ago, is we started to flag that we were, instead of just carrying on in carrier billing where we are the dominant player and making sort of high EBITDA margins and incremental growth, we felt there was an even bigger opportunity in Local Payment Methods. We're gonna take some of that EBITDA growth and reinvest it into building it out.
What we've really done is built that over the last, you know, all the things that Chris talked about, building out daily settlement, bank accounts, regulator capabilities. These are substantial investments that perhaps have gone slightly unseen. We're heading towards about 400 people in the business. You know, the old sort of before this, we were down about sort of 250. You could probably argue that 150 of the people are sort of building out these new capabilities. I guess that platform remains scalable. You can see the impact on our EBITDA as it started to flatten, which we flagged at the time.
We now think that sort of investment phase is coming to an end, so that certainly, we won't stop, but we certainly don't need to keep adding the number of heads we've added over recent years. We start to see our OpEx base flatten. The platform always has been able to cope with substantial numbers of increased volume going through it at minimal additional cost, so that has a huge scalability baked into it. The LPM investment phase is coming to end. Let me just say what this might look like if we take a sort of mid to long-term view on our financials. We think over the mid to long term, we can double our revenues. I want to just talk you through how we might get there.
Number one is at the bottom, carrier commerce, carrier billing. If you take the left side of the chart, which is where we are now, still the bulk of our revenue is coming from carrier billing. What we're starting to see is strong growth coming through very quickly from these newer local payment types, but still the minority part of the business. What you're seeing is wallets we've seen a good take up on, and that's the middle purple bar. That's starting to happen quite quickly. That will be a big driver of our future growth over the next few years. We also think Account-to-Account, which at the moment is quite small, will be a big driver of our business. This is the more business-focused area that we talked about.
What we're really trying to say is over the medium term is this business will evolve. We can see a way to doubling our business, but the vast majority of that growth will come from the newer payment types. Carrier billing will still grow. It's a great business, but we can build on that solid base and double the business. I guess, you know, that's the beauty of what we think we can achieve here and what we've already seen is that, you know, the 10 years of building out the sort of carrier billing business to get to profitability, within sort of two and half years we've built out the capabilities for local payment methods. We've got four or five of the world's largest merchants, including Amazon, signed up for it.
We're already seeing decent revenue. We've got a much quicker transition and at a much lower cost to sort of open up this new market for us. We've really leveraged those two things. One, we had all the world's largest merchants apart from Amazon, and we've got a platform that scales. Leveraging those two things gave us a big advantage in moving into this new world. What does How does that revenue growth look in terms of geography? The majority of our business, again, if you look at the left-hand side, Asia's our biggest region at the moment.
Mostly we're solving problems, you know, for as the Netflix example explained, we are solving taking non-card payments in large parts of the world, primarily in places like Asia, in Europe. We see that will continue to be the largest part of our business and will grow strongly. We also think we can see significant growth in Europe and from Africa, in EMEA. The top sort of purple bar we can see significant growth there. Also, as we start to roll out A2A, we think we can actually see revenues, decent revenue growth in Americas. Currently, we have very little revenue from there. The profile of our business will change. Asia will still be the strongest, but we'll start to be more regionally spread. How does that look by merchant?
Obviously I can't tell you by specific merchant, but, you know, I guess the key point here is we can see the pathway to doubling our business without really the need to go out and find huge numbers of new merchants. As Mark told you, we've got a chance to expand both geographically and sort of within the divisions of the businesses. These are the world's largest merchants. There's plenty of opportunity in there for us to build a business from that base. I wouldn't just say it's those seven or eight key merchants. There's probably 30 or 40 merchants that we've got that will be the bulk of that, where we can see the bulk of our business. A key point is this is not really very speculative.
We don't have to go out and find tons of new merchants to get to these kind of numbers. It's also perhaps worth saying, you know, we've talked about the Amazon contract, which we think is, you know, very important for us. Please don't think that all of this growth is Amazon. This is a mix of all of our merchants. You've seen the sort of two examples we had. Indeed, we think our merchant concentration will actually be reduced. We think it will actually be more evenly spread, you know, as we take a midterm view in terms of merchant concentration. Don't think it's all Amazon, but obviously Amazon is a part of that growth. That's, you know, that's kind of the pathway to doubling our revenues in the midterm.
A couple of things I wanted to pull out on sort of the cost side and the take rate side. Take rate in the business, as I said before, around about 73 basis points, so that's the % we take of all the process value. All of our revenues are variable, so we don't have any one-off revenues. Everything we charge is a percentage of the value we process. I think people have assumed that these newer local payment methods will be at a lower take rate. We've always charged, or we've always had a slightly different pricing model, depending on whether we just do the connectivity or whether we actually move the cash, what we call our settlement model.
In some cases, we just do the technical connectivity, and in other cases, we also receive the cash into our 150 bank accounts around the world, and sometimes we will settle to the merchant in a different currency. They want us to convert it and settle in dollars or euros or what have you, and we can make some FX fees there. On average, all of the new contracts we've signed for these local payment methods are at a higher take rate than our average. I think that's logical because all of the volume we're putting through these local payment methods is settlement volume. In other words, in every case, we're receiving the funds into our bank account and settling them. We settle them daily, which is a big change from carrier billing, where we did it sort of broadly monthly.
It's one of the reasons we had to make investment into our platform to sort of cope with that. That's now largely done. We should see our take rates go up primarily because this is settlement model business. I think the OpEx side of things, what do we think that looks like? As I said, we've gone through a heavy investment phase over the last few years. We are still hiring this year, but we see that starting to flatten. Clearly we're not immune to things like wage inflation, so we probably won't be able to keep our costs totally flat as we did back in 2016 - 2020. Certainly the number of heads needed to run this business is certainly flattening significantly, and we can start to see that operational gearing come back through again.
The, you know, the headcount will start to slow. The platform itself can cope with double the volume of is currently processing at sort of really minimal additional cost. We've built out Most of the regulatory infrastructure we've got is probably in place. I wouldn't say there's gonna be other licenses we need here and there. Generally we've taken a you know, we've broken the back of that as well. The OpEx base will start to slow. Gross margins will remain high. We're a 97% gross margin business. The operating leverage should return. You know, I think intuitively if this business doubles in revenue, I think it's fairly obvious that the cost base will not, does not need to follow that. We certainly don't need to double the number of heads.
It's a scale platform business. We think we can get from the sort of 30% EBITDA margins we're currently doing, up into the sort of 50% EBITDA margins. We'll see not only a growth in revenue and a growth in EBITDA, but a growth in EBITDA margins. You'll see an exponential growth in EBITDA if we get this right. You know, those kind of margins are not dissimilar with other payments business. The Adyen's out there in a sort of 55% range. These businesses are platform business and are scalable. If we can get the revenues up, I think this is what will flow through. Just to sort of recap, we think we can double our revenues. We think most of that will come from the newer payment types, most of that growth, which is growing very fast.
I think you've seen there's a substantial opportunity out there, and I think we seem to be well-positioned to take advantage of solving problems for the global merchants in reaching these fragmented payment types all around the world. They're highly sticky, our merchants, so we're, we can be confident that the existing connections we've got and their recurring revenues are stable. We're, we're likely to see a take rate increase as we grow the business into this area because of we will be handling all the cash and OpEx will flatten, so we think there's, you know... If we, if we can get to a doubling of revenues, this business should see a significant increase in EBITDA margins. That's really the story we wanted to present. That's the end of my bit.
I'll hand you back to Jon to recap. I think we're gonna stay up here on stage.
Keith, why don't you go across, I shall be short. Whether I'm sweet, I shall leave to others to decide. Essentially, what we hope to have been able to demonstrate in the course of this presentation that this thing that we've been calling the big pond, this moving out of Direct Carrier Billing, the small pond that we had essentially grown to be by far the largest player, that that big pond is a huge and growing market. Hopefully you've been able to, you know, see that Boku's approach of following a highly customized set of connections to the correct issuers and signing up the world's largest merchants, that is delivering a quality service which hopefully you'll be able to see is appreciated by merchants who, quite frankly, are prepared to talk about it. You know, this...
Without wanting to spell out, you know, the bleeding obvious, Netflix and Spotify don't do this very often. I mean, we haven't been doing sort of press releases because they don't let you do press releases about this thing. It's, you know, genuinely a mark of the, you know, favor in which they hold us that they're prepared to go out of their way to be able to come and to make themselves available to investors because we ask them. You know, I obviously very appreciate that, but I think it's also a signal of the fact that, you know, merchants do appreciate the service that we provide. We've always been cautious, or we've been particularly cautious in terms of financial projections we're putting out there. We understand that, you know, the game here is not to overpromise.
The sort of, you know, data that Keith is putting out about, you know, seeing a pathway to being able to double the size of our business over the medium term, the sort of data we're putting out there about, you know, the near doubling of our EBITDA level profitability or margins is, you know, is really something that we think is, you know, well within the bounds of achievability. We do think that, you know, there is a point to all of this, and the point is to achieve much greater returns for our investors now that we're at the point where an investment phase, which has been going on for the past couple of years, is broadly moderating. We're going to start seeing the operating leverage come back through.
That was really, I suppose the highlights, if you like, or the summary. You know, we've got it's working, people like it, and it's gonna make loads of cash. If you remember nothing, that's the thing that you need to remember. But I now wanted, 'cause we thought it would be sensible to give investors the opportunity to not only question, you know, merchants, but also as many of the management that you would like. If I could ask my management colleagues to join me and Keith Butcher on the podium, one last session where you get the chance to ask questions of me or, as I say, any of my colleagues. More than happy to have your questions. Any? Or have we? Oh, Tim Metcalfe, please.
Maintaining the connections with the LPMs, the cost of maintaining them versus the cost of maintaining the connections to the various carriers, is it broadly sort of as stable as they would be, so therefore the operating leverage that you saw with the DCB volume increase and the operating leverage that gave you is sort of what we could expect with LPMs?
I mean, I don't know. Perhaps I defer to Chris. I mean, there is maintenance work to do, but why don't you talk to that, Chris?
Yeah, no, I would say...
Adam? Well, go for it, sorry.
Yeah, I can start maybe, Adam. I would say, in the big picture, broadly similar, effort to maintain them. I would say some of the wallets, in the early phase are relatively new themselves and so perhaps require more rapid updates or changes. I think over time, you'll start to see the maturity will come in, and it will be kind of similar to what we experience with carriers today as well. I don't know if you want to add to that, Adam, or?
Yeah. Usually the most intense period is if you're introducing a new use case or a new application. Oftentimes this is the case is we bring digital subscriptions or recurring payments into a wallet and that, you know, demands more attention, more optimization to make sure those recurring payments perform. You know, once you kind of optimize for a particular use case, it starts to settle down and eventually it does stabilize. It's not the same amount of investment year after year continuously.
Any commentary, Keegan, on the difference between DCB and wallets, which I think was basically the question. Is it, is it tougher with carriers or is it tougher with wallets?
It's generally been roughly equal. I think they have different challenges that they face. Like, Chris said that some of these, wallets are much earlier in their life cycle. Some of them we've gotten to within a few years of them even starting to exist. And so there's a bit of a, you know, a leveling off as they, as they mature. A lot of the effort is really in getting them up to that maturity level. Once they're there, the in-life cycle can last a very long time.
Okay. Jan, did I see a question from you?
One quick and boring clarification one from Keith and then, and then maybe a more interesting question. Just, Keith, the $1 million that you said you spent getting the Amazon thing ready, just on Amazon, was that a headcount investment or was that integration investment? What was the $1 million?
It was a bit of everything, you know, I would say all of this stuff was on the roadmap anyway. Just that Amazon kind of dragged it forward, if you like. It certainly had very high requirements in terms of, you know, certain measurements and what they wanted to see in our business, how we measured, how we did security for all those kind of things. Perhaps that would have happened anyway. It wasn't anything we weren't going to do, but it definitely dragged it forward slightly. My point was, in terms of the EBITDA this year, we didn't know about that at the start of last year, that was kind of extra investment that we made during the year.
They didn't use anyone for DCB before you or they used? Did they have no DCB?
No, as a matter of fact, they are live with DCB with Bango in Japan, but that's the only market that they use DCB in.
Okay
which is kind of like a historical thing, which is, you know, good for them, but they haven't expanded it outside Japan.
Okay, got it.
I mean, that process went on for about a year. If you like, for about a year, we knew that Amazon were signing with us, but they wouldn't, and they kind of decided that we were the preferred partner, but we had to have certain things in place. All sorts of stuff, things like, you know, specific reporting, all sorts of things that they wanted before they would sign, which we had to kind of make a one-time investment in. The flip side of that is, you know, certain people have asked me, "You signed this Amazon contract. Do you now need to go out and spend millions of dollars to deliver it?" The opposite. We've kind of spent it all.
We've got everything in place, it's just a question now of just plugging them in one at a time as they want to roll this thing out.
Sure. Okay. On the. Sorry.
I was just gonna add, it's worth noting that a lot of the investments we made for Amazon can be reused for all our whole platform and entire merchant base. It wasn't like we were doing just a ton of specific stuff. We built more capabilities into the platform and from a security perspective, from a reporting perspective that we can now reuse for other merchants.
Got it. On the, on the growth opportunity, I think, Keith, I've kind of got how you can maybe double your revenues from the same merchants, but also in the same activity. It sounds like you could probably double your revenues by doing digital entertainment just by switching on wallets and Local Payment Methods. In terms of going beyond digital entertainment, going to, advertising. I get that. What about beyond that? What about e-commerce? And what about the digital merchants that you don't seem to have many of, which are the marketplaces and the platforms? You know, digital marketplace and platforms that have sub-sellers like eBay and Etsy and even Uber, you know, 'cause they have to pay the Uber drivers digitally, I guess.
Are you not worried about that 'cause you've got so much space to grow with digital entertainment and advertising? Do you think at some point you're gonna have to ramp up product innovation to adapt your product for e-commerce?
Wanna take that, Adam?
Sure. I mean, we are starting to diversify into other sectors, transportation being one. You know, oftentimes it's a function of how global the merchant is. If it is a hyper-local merchant, they typically use a local company, a local gateway. But if it is like an Uber that covers multiple markets, like Careem that covers multiple markets, yeah, that might be a target for us naturally. Travel. Online travel is also a very global thing, right? Whether it's booking, whether it's Expedia, those are natural targets for us. Physical commerce tends to be more inclined to local, but non-physical tends to be a bit more global.
Okay. Thank you.
Thank you. Chris?
Just one thing to add actually is that we are already supporting ride hailing companies already. One of the use cases for them is actually for the drivers to actually pay the money to the because it's a cash economy where in a number of the markets for them to actually pay the company that they are working for. It's a big regional company called inDrive, which is, you know, kind of dominating in the Middle East.
I think there was a question here.
Hi. Just two questions. First one is just around the settlements. I mean, what is the key driver for, I guess, one of the merchants to use your sales for settlements, and what efforts are being done to really sort of encourage more of that, so to really drive that basis point? Then the second question is on the local payments growth. It seems like you're being able to achieve all of that organic, but is there scope to accelerate that expansion with acquisitions?
Yeah. I'll take that. At the risk of being trivial, I mean, the main benefit of the merchant wants is they want the money. You know, that's easily said, but hard to do. I mean, if you think about what, you know, Chris and Lex were saying, I mean, they don't want the money in Indonesia. They don't want the money in the Philippines. They don't want it in Singapore. They want it in, you know, Amsterdam or Stockholm, getting that money back requires you to have, you know, banking infrastructure, requires you to have the appropriate licenses. One of the hard problems to solve, frankly, is getting money out and to deal with the taxation situation and having the right licenses to enable you to move money around borders.
I would say that, you know, a significant part of our differentiated offer is precisely around the fact that we have these licenses and capabilities. It really isn't the case that you can just sit there at a terminal and move money out of, I don't know, Indonesia and take it back to, you know, to euros in Stockholm. You need to have the right infrastructure to do so. So, you know, a key reason why people are coming to us is because we have those capabilities in place. You asked us, you know, how are we encouraging more people to use the settlement service, and the truth is that almost all of our merchants do use it. You have to be very big with very big infrastructure to just operate on the transaction level basis.
It's really a kind of a special case, but a big special case of those organizations that have large handset businesses and consequently have already got preexisting relationships with mobile network operators. That made it relatively simple for them to leverage the fact that they had those relationships with mobile network operators that meant that they could just move a bit more money through existing channels. Basically, nobody is building new channels. The direction of travel is definitely towards more settlement. When it comes to wallets, it's essentially all settlement business. That's one of the reasons why Keith was saying that the average take rate is gonna go up, is because the percentage of settlement business within our overall mix is going up over time. I've forgotten your second question.
Around M&A.
Around M&A. I think there are constraints, and most of those constraints are around valuation. Most of the things that we would want to buy would be organizations that are private, whose numbers aren't particularly great, and whose valuations are, shall we say, not marked to market on a daily basis like a public company. I think we've got some distance to go before we'll find deals that are deals that we would want to undertake. Having said that, we've got a decent amount of cash. As you heard Keith say, we're spending some of that cash on our share buyback, but we definitely wanna keep some of our powder dry because at the minute there is the possibility to be able to accelerate our posture, partly through perhaps acquiring companies with the right type of assets in particular.
We don't need to customers to acquire merchants. As you see, we've got, you know, we've got merchants to die for. Could we accelerate by getting access to licenses more quickly? That's definitely something that is a piece of friction that we may be able to acquire our way into doing more quickly. Could we acquire to be able to get access to high-quality connections to relevant payment methods? That also. There definitely are areas that we would keep our eyes open to. Don't imagine there's anything particularly soon. I think valuations in the private markets need to, shall we say, normalize with those of the public markets. You know, I think there's just a lag because for as long as people have got money, they can believe what their last round valuation was, but they don't...
can't believe it when they need to raise some more.
Thanks.
Frazer, again at the back.
I noticed on the slide that there were some of the new deals, I think it was 30 were bundling deals. Has the nature of those changed? I assume that's bundling people like Netflix with an operator or? Is that now DCB or is that Local Payment Methods starting to come in there as well or?
No. These are methods, where we would bundle together with mobile network operators, and we do this for a number of our largest customers, notably sort of Apple, Amazon. I was gonna say Apple and Amazon. That's a merger that pre-announced that no one told me about. The naming consultants can pay me their fee later. Yeah. It's with telcos. You know, we've moved very much to a percentage of the revenue generated through it, so we include it now in that carrier commerce line.
Has the momentum picked up there and are there market share shifts or not?
I mean, honestly speaking, we've, I think we're sort of placing a bit more emphasis on it than we did in the past. It's growing. It's growing faster than Direct Carrier Billing. I'm not sure that I have a firm view about market share. We've been sort of exclusively providing the Apple bundling program for quite some time, and we think we're probably picking up market share in the Amazon side of things as well, but I don't want to make too many sort of overt claims. It's picked up, and the volumes have picked up quite a lot in the course of the last year. Question here from Guy.
I'd like to see more subscription revenue, more of the TPV coming from, monthly or annual recurring subs. Where are we now on that, roughly, and where do you think that can go on a three-five year view?
In terms of repeatable business, we look back, it is approximately 97%. That is not necessarily saying that 97% is actually a subscription where there's the same amount every single month. The best analysis that we have of that. And the reason for that is if you take within app stores, people may use their phone number or a wallet as a, you know, record it as or register it as the means of payment. They might do some payments one month, and then not do any payments for a while, and then come back and do payments later. We call that repeatable payments, and literally 97% of our transactions are against a stored payment credential.
In terms of actual subscriptions, where you're only doing one transaction a month, that's about half of our volume, something like that, give or take. We have to make some inferences. Honestly speaking, we think that the correct figure, you may disagree, but we track the repeatable level. Once you've captured the payment credential, you've captured the spending that that person is doing on that area. If, say, for example, it's on the Sony PlayStation, if they've captured a Boku-supplied payment method as being the way in which they'll pay, everything they buy through the PlayStation is going to be back on Boku. They might not buy every single month for the same amount, but it's still going to be Boku payments. As I say, that is essentially all of our payments.
I guess the proof is, to some extent, you've seen the numbers on there. If you look to the monthly, you know, every single month, this sort of ticks up. Whilst some of it may be the same people coming back every month on a subscription basis, when you have 100 million active users, you know, it, you know that a certain proportion will always come back. In its own ways, it's equally as predictable as a true subscription. I think, you know, if you look at our numbers historically on a monthly basis back 10 years, it's just very, very predictable. You can kind of put a ruler on it.
I understand people say, "Well, it's not the same per people." The truth is that when you have a huge user base of 100 million active users, you know that a certain proportion of them will come back every single month. It's highly predictable.
Damindu?
Just related to Guy's question. I'm looking at the technical documentation for my second favorite payment company, Stripe, and it's describing that Pix payments can't support recurring subscriptions. Obviously, people like Netflix wants to go into those markets. Is that a problem that the platform can solve now or in the future?
Should I throw that ball at you? He's basically saying Pix doesn't support subscriptions.
Oh, Pix.
Yes.
Maybe if you answer the question more sort of generically in the context of these sort of Real-time payments. Do they support? Do they not? How's the market moving?
Yeah. you know, one of the advantages around mobile wallets is because it is a separate balance from the direct debit balance, that the amount of sort of security and regulations that it's subject to is a little bit less restrictive than a bank account. That's why it's been a little bit easier for us to use mobile wallets for recurring subscriptions. That's not to say that you can't use a bank account for recurring subscriptions, but typically it requires the banking scheme to put out rules around, you know, what kind of mandate do you have to collect from the consumer? How do you store it? What are the boundaries of that mandate? When UPI first came out, it didn't support recurring subscriptions.
Now it does, as long as you follow the rules. You have to create, you know, create this mandate. What's the charge amount? How many times can you charge? Do you send a notification to the user before you charge? How long does that mandate last before it expires? It's just a matter of time before Pix is gonna put out their own set of rules. That's, you know, that kind of complexity actually is welcome for us because, you know, we're kind of built to handle that and take that lift off the shoulders of our merchants.
Yeah.
Someone like Netflix or Spotify will turn to you to take care of that complexity like...
That's right.
Users
Earlier in the presentation with Kristen from Netflix, she had mentioned that she is very interested in bank payments supporting recurring subscriptions. That is something that we're in active discussions with them on because that's something that's not readily available from other PSPs.
It has complexities around needing to send messages to pre-warn people that that money is going to be taken. I mean, you're quite right. Because it is evolving and it is complex, it plays very much to our strengths. Anything else? Question out, eh? Do we have anything that's come through from the webcast?
Jon, yes, I do have one that's just been typed in, and I'm not sure whether this can be answered, but I'll read it out anyway. It's a two-part question. Could you give any more color on how you define midterm in terms of the financial aspirations? Secondly, could you add a bit more context on how you come up with the doubling of revenue target? Is it based on the pipeline of connections you have, or does it assume that you maintain your current rate of adding connections and current average transaction values?
Do you want to take it, Keith?
Yeah, sure. Look, it's difficult for us. We're not trying to put financial forecasts out beyond two years. We have most of the analysts are forecasting this year and next year. You know, we've been quite careful not to put scales on those kind of things. I think broadly, you know, midterm, probably four-six years is, you could take it. I think what the key point here is, we believe we will get there. Once we get there, this is what the EBITDA profile will look like. You know, whether that takes four years, five years, six years, I'm not gonna say, and we're not gonna guide out five years. I think it's reasonable to think we can get there.
to the first part about how we get there, I think we try to cover it on those, you know, on those slides. I don't want to go through it again. I do think, You know, it's going to come from all the things we talked about, the new payment types largely being sold into our, you know, incumbent, very large merchant base with some new stuff coming as well, of course. I think and I do think we try to give that line of sight. I think we have good visibility over it. I don't think it's unreasonable if you look at the sort of growth trajectory we've been on, to think we can get there over a sort of medium-term period.
Just to give further color to that, this is not just some kind of stuff we sort of dreamt up on the back of an envelope and did a bit touch of extrapolation and slapped it on the screen. I mean, we have gone through a pretty rigorous exercise, merchant by merchant, effectively sort of business sector by sector, the product types that Adam was talking about earlier on. It's a pretty robust plan. It's not just something that's sort of extrapolated on the back of an envelope or anything. It's a rigorous plan. If there's no other questions at all, well, I would be delighted. Well, first of all, want to thank everybody for their attention, for sticking through to the bitter end. There's more. There are drinks next door and nibbles that you can have.
I'll be glad to sort of, as it were, drink and join with me with some nibbles, just down the side. I also want to say, you know, thank you to the Boku team that has spent a long time sort of organizing this, particularly to Deepa, who has done a sort of sterling job working with everything, and Leila, who has been acting as sort of liaison to some of our merchants, who I think certainly they were stars of the show, and she is the person who's done quite a lot of work in terms of interfacing with them and giving them the confidence to be able to come and talk here today. Thanks to Leila. Thanks to Deepa.
Thanks to our technical team from BRR, and hopefully we'll be able to get this in a position where we can stick it up on the website if people want to go back and re-look. Just for reflection, the Netflix and Spotify people, you had to be here to see it, that we haven't got permission to be able to record and to replay that forever. With that, thanks everybody, and thanks also to my colleagues. Hopefully, you got out of it what you wanted. Let's go and have a glass of wine and a few nibbles. Thank you very much.