Okay. Good morning, everybody, and welcome to Boku's 2026 interim results presentation. I am Stuart Neal. I am sure most of you know me already, and I am joined this morning by my CFO, Rob Whittick. Firstly, apologies for the minor delays. Some gremlins in the machine, but hopefully we are now good to go, and you can see and hear us nice and clearly. Before we get into the numbers, which I am sure you are dying to do, let me just give you a couple of contextual headlines of the period. Firstly, I would say H1 was a period of significant strategic progress, and combined with underlying double-digit revenue growth and 29% EBITDA profit margin. So resilient financials and strong strategic progress. On that note, we are very happy with the strides that we are making towards our channel strategy.
We have continued to expand our network and build out the money movement and treasury capabilities that we have talked to you about before. We did note in our trading update in July that there were some minor headwinds in the first half of the year that we do believe were contained to H1, and mostly, candidly centered around delays to launches that we are now happy to say have gone live. In fact, if you take our full year guidance for this year, which is a range, and look backwards three years, we have delivered a CAGR of somewhere between 18% and 20% of the top line. Again, solid financial performance, good strategic progress. Let me just remind ourselves why we are doing this.
The market opportunity, the structural tailwinds behind local payment methods are real, and actually the market is playing out exactly as we hoped and predicted that it would way back in 2024. Boku has created a broad and deep network, including licenses all around the world, that provide a moat to our business that will protect us against the march of AI. In fact, we see AI in particular as an opportunity for our business, and I will talk about that as we go through the presentation. Again, the theme of the strategy is focused around growth. How do we diversify our revenue streams, both from a direct logo acquisition perspective and also through our much-discussed channel strategy? I will come back to all of this, but in the meantime, let me pass you over to Rob, who will walk you through our H1 financials. Rob.
Thank you, Stuart. Good morning, everyone. Let me start with the key metrics for the first half. This slide sets out our performance both on an underlying and a headline basis. Our underlying growth excludes $3.4 million of launch phase pricing recognized in the first half of 2025, which we flagged at the time would be non-reoccurring in nature. Excluding this gives a clearer view of how the business is performing on a like-for-like basis, so I will refer mainly to underlying growth this morning. In terms of the key numbers, we delivered underlying revenue growth of 11% and an adjusted EBITDA margin of 29.4%. At the same time, we remain debt-free and the business continues to generate cash. We closed the first half with $84.6 million of own cash after returning $23.6 million to shareholders through share buybacks.
Whilst these results were affected by some isolated factors, it does represent a resilient performance against those headwinds. Looking in more detail at the key operational metrics supporting this performance, total payment volumes increased by 16% to $8.6 billion. Importantly, that growth was delivered despite one-off headwinds of around $200 million related to some of the isolated factors we have talked to. The biggest drivers of the TPV growth came from bundling and payment connections made in prior periods. As we explained at our CME, payment connections between LPMs and merchants remain the cornerstone of our revenue engine. Each one unlocks the potential for more users and more volume. During the first half, we delivered 47 new connections for 14 new and existing merchants across 24 different markets.
Many of these were with LPMs that were already on our network, which in turn drives up the revenue per LPM. We also added 10 new LPMs to our network, further extending our reach to consumers across the world for our merchants. At the same time, our bundling platform helped merchants serve 51 million subscribers during the period, a 21% increase compared to a year ago. Finally, our blended take rate was 77 basis points compared to 81 basis points on an underlying basis in H1 2025. This was driven by growth in the first half being weighted towards lower take rate products, including bundling. With a number of our H2 launches now live in markets that combine large, fast-growing LPM volumes with currency conversion opportunities, we do not expect the take rate to reduce further in the second half.
As we set out in our 2025 Capital Markets Event, we continue to expect revenue growth to be mainly driven by volume expansion, with blended take rates trending down over time. Turning then to revenue, which came in at $66.5 million, up 11% on an underlying basis. As Stuart has mentioned, our growth was impacted by a number of isolated factors, which affected both our DCB and Digital Wallet and A2A products in different ways. Starting with DCB, where revenue was up 3%, this was delivered despite the suspension of two connections by local authorities in one country. Importantly, this suspension did not relate to any issues with our platform. We have no remaining exposures in that country, and we are not aware of comparable situations across our portfolio.
In terms of how this impacts our future growth, we have assumed that the associated revenue has been permanently removed, hence lowering the base from which we grow. Excluding those two connections, DCB growth was 5%, reflecting steady demand from both existing and new merchants. Moving on to Digital Wallets and A2A, we saw revenues increase by 15% on an underlying basis. Growth here was primarily impacted by delays to market launches for one of our key merchants. Under that merchant's existing dual sourcing policy, we had anticipated a share of volume in one market would reduce. At the same time, we expected the same dual sourcing policy to result in increased volumes in other markets during the first half. The issue we faced was that those offsetting launches were delayed into H2.
In terms of where we are now and how that impacts future growth, we retained a material proportion of the volume in the original market, and it continues to grow in absolute terms. All of the markets that were delayed in the first half have gone live, with some yet to complete the testing phase. Importantly, we continue to expect revenue from those markets to more than offset the revenue lost in the original market. This has quite a different impact when compared to DCB suspensions on the future growth of the business, as we expect to be a net beneficiary of this merchant's dual sourcing policy. Finally, I would note the merchant's decision to dual source is unrelated to our service. It was taken some time ago and reflects their own approach to managing single-supplier risk.
Turning to bundling, which now represents almost 14% of group revenue and was up 39% in the period. This significant growth reflects increasing levels of demand from our merchants as they continue to seek ways to acquire and retain subscribers. More broadly, our non-DCB products now represent 47% of group revenue, up from 43% a year ago on an underlying basis, and 35% in 2024. This reflects the clear progress we are making on product diversification. As Stuart will come on to explain, our channel partnership and direct sales strategies will further support our diversification ambitions. Having invested in our transformation agenda over the last two years, we're now seeing the resulting cost efficiencies and productivity gains. Headcount at the end of June was marginally below the year end, having grown through 2025 as we invested in the team.
It was the annualization of these 2025 hires that primarily drove a 13% increase in adjusted operating expenses. This investment, in turn, is benefiting our margins. As we saw, our adjusted EBITDA increased 7% on an underlying basis, despite the headwinds to revenue described earlier. This translated to an adjusted EBITDA margin of 29.4%, which is only modestly below our guidance. Turning to the bridge from adjusted EBITDA to operating profit, as in previous years, the largest items are share-based payments in respect to our various staff share schemes and depreciation and amortization charges, which include $3.8 million related to internally generated intangibles, an element of which relates to accelerated amortization following a routine review of useful economic lives. Looking in more detail at cash, we generated free cash flow of just over $11 million in the half.
As you can see on the chart, this is after adjustments for our own working capital movements and capitalized investment in software development as we continue to focus on building the platform of the future. Our group cash balance, which includes merchant and issuer balances, closed the period at circa $187 million. This represents a reduction of $59 million compared to the year end and is due to a combination of factors. Firstly, share purchases of $23.6 million in the period. Secondly, the unwind of December balances, which are typically higher due to seasonality, and finally, reduced settlement volumes as a result of dual sourcing in one market. Turning then to own cash, which we consider to be more relevant measure of the cash available to the group after excluding merchant and issuer settlement balances.
We closed the half with $ 84.6 million of own cash, a reduction of circa $ 18 million from the year end, which is primarily explained by the share repurchases in the period, offset by own cash generation. This meaningful cash position, coupled with our debt-free balance sheet, continues to give financial strength and flexibility. On capital allocation, our primary focus continued to be organic growth, with investment concentrated on our strategic priorities. Alongside that, we will continue to assess opportunities for capital returns where appropriate, including the use of share buybacks. In summary, a first half with real strategic progress and a resilient financial performance despite some isolated headwinds. As announced in July, we expect performance for the year to 31st of December 2026 to comprise revenue of between $ 135 million and $ 142 million, and adjusted EBITDA of between $ 38 million and $ 42 million.
Trading since the period end has been in line with those expectations, and we remain confident that we will hit these targets. With that, I will hand back to Stuart.
Thank you, Rob. Yeah, sure. Resilient financials, indeed. Before we get into Q&A, I just want to cover off a few of the key aspects that are driving our strategic progress that we talked about in the first half. Just as a reminder of the four components of our growth strategy. First and foremost is about deepening our merchant partnerships. Put simply, that means doing more with our existing customer base. Diversifying revenues means opening up to new merchants, new opportunities, new geographies, and new products. That all requires a certain amount of scalability within our organization, both from a people, a process, and a technology perspective, and then finally, capitalizing on the latest technologies, building an innovation agenda across the business. Let me get into each of those in a little bit more detail. Deepening merchant partnerships.
The biggest driver, single driver of our current revenues is our ongoing relationships with some of the world's largest tech companies. We're fortunate enough to work with these logos, and really the driver of our business is helping those companies to grow by either connecting them to more local payment methods on our network, or by creating new bundling programs and new opportunities for them to add subscribers to their networks. In the first half of this year, we benefited from the connections that we put live in 2025, and you'll recall, those that were there, that we talked about this cohort concept back at the Capital Markets Event in October, and that holds true right to today.
The 47 brand-new connections that we made for our existing customer base in the first half of this year will continue to grow and add value well into 2027 and beyond. I referred at the beginning of the presentation to the huge global opportunity that sits within the local payment method space. We have created a phenomenal network with over 200 payment methods connected already and 10 more added in the first half of this year. We really want to make that network available to far more merchants globally. A big part of our focus going forward will be about expanding our network population, both through our direct sales initiative, which is now up and running, and also by working with channel partners all around the world.
To help execute on this plan, we have added strength to our leadership group in the form of Peter Klein, who joined us in the summer. Peter's role, first and foremost, will be to increase the pace and execution around our commercial delivery. I just want to double-click a little bit on channel and why we think channel is so interesting to the business. This diagram is a nice way to lay out the ecosystem from a channel perspective. It is an effective and efficient way for Boku to target thousands and thousands of individual merchants that, candidly speaking, we would not be able to onboard directly ourselves, but who already have a relationship with either a payment processor, a card processor, an orchestrator, some third party that is managing that relationship. The basic principle behind the channel partnership strategy is the channel partner handles the merchant relationships.
Everything from Know Your Customer through to AML and sanctions and onboarding is all managed by the channel partner. Boku's role in this ecosystem is to manage the supply side. Boku does what we do best, which is manage the portfolio of local payment methods that we are already connected to. It is not that this has come out of the box. We have had to do quite a bit of work throughout the first half of this year to create a brand-new risk screening and onboarding model so that we can get all of our local payment method partners comfortable with the fact that they can fully rely on the fraud screening and onboarding processes of the channel partner. We did announce that Stripe is the first of what we hope will be a portfolio of channel partners that we will work with.
Just to give you a slight sense on the scale of this, Stripe already has 5 million merchants connected to their platform. This is significant, and hopefully, that illustrates exactly why we are so excited about the channel opportunity. I have talked about, for the last two or three years, actually, the importance of building scalability into our platform. We have continued to do our work around that. As we move into more regulated waters, certainly in Brazil and in India, where we are plugging directly into the banking network, there is a requirement for automation, for segregation of funds.
It's a far more complex environment than direct carrier billing was, so we've had to build the internal capabilities to be able to handle that complexity. To also support our global expansion and to help our merchants to drive their cross-border commerce agenda, we have continued to expand out our banking and our treasury footprint. We've added more banking and liquidity partners to that network, and we continue to build internal capabilities to help drive our advantage in that space. Slightly less glamorous but equally important, we have retired a legacy platform that came with an earlier acquisition of the business. This is all part of an ongoing agenda to make our boat go faster, make ourselves more efficient by having one slick, scalable platform.
Finally, and really importantly, we want to build innovation into our products and into the way that we operate as an organization. You would have seen that we established an innovation hub in Singapore back in 2025. That team is looking at pretty exciting technologies, stable coins for settlement, digital deposits for managing Boku's own funds. They're looking at payouts and dynamic FX products. So very exciting things are coming out of our innovation hub. We're also looking at AI very seriously. So you would have seen the announcement that we promoted David Oliver to our leadership team. Dave's role is to make sure that everything we do across the organization has an AI-native lens over it. So building AI into everything that we do, from product development through to process and internal efficiency gains.
Finally, and really excitingly, we announced this morning that Karim Ahmad will be joining the company as our brand-new Chief Product Officer. Karim comes with a huge amount of experience across the industry, and really excited to have him join the team. That's, again, a signal in our focus around driving innovative and exciting new products. Talking of leadership teams, it probably hasn't gone unnoticed that we've had a number of new additions to the Boku executive. In fact, all of the faces at the bottom of this chart have joined within the last six months. This really gives me now the leadership team that I'm super excited about, that will help us drive this ambitious agenda that we have for the company and take the company forward over the coming years.
So very, very excited to have both Peter join us in the summer as Chief Commercial Officer, and as I said this morning, we announced Karim's appointment, and hopefully, you'll all get to meet those individuals over the coming months. So let me summarize before we open it up to Q&A. Solid double-digit revenue growth on an underlying basis at 29% EBITDA, resilient financial results. Significant strategic process, particularly around the go-to-market front and also reinforcing and adding to our strength on the leadership team. The market only gets more exciting. We saw this and predicted it, and it's coming to fruition. We have a really good position with the network that we've created and the organization that we have and the customers that we have. We have a right to win in this space.
Finally, we are reiterating our guidance that we gave back in July of that revenue range and EBITDA numbers that Rob just provided you with a second ago. Thank you again for attending, and I would now like to open it up to some questions.
Thank you. We will now begin the Q&A session. As a reminder for participants, Georgina Powley from Headland shared the conference call dial-in details to sell-side analysts a short while ago. If you wish to ask a question, the call details are in your inbox. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Tom Like from Canaccord. Tom, your line is open. Please go ahead.
Thanks, Stuart. Thanks, Rob. Can I ask a question? Three for me, if that's okay. Firstly, you mentioned improving the density and economics of the network. Just any more color would be helpful here. Do most wallets only have a handful of merchants connected, or are there some older connections where you've scaled to most of your merchants? Secondly, the new CCO has obviously been in the seat for a couple of months. He came from Mastercard. Are you able to share any sort of learnings, observations that he's provided being in that seat for two months? Then the third one, just on bundling, it's now becoming obviously a bigger part of the P&L. Can you give any more color on the number of merchants who are utilizing bundling and how that offering might evolve over time? Thank you.
Do you want to take the first one, Rob?
Yeah.
And I'll take the second two?
Network, Tom, your observations are right. We have over 200 LPMs, and we've talked historically about how we maximize the merchant reach. Obviously, doing that by putting more and more of them onto multiple LPMs is an obvious route for us and an obvious route for them. So that when we talk to network density, and I mentioned earlier, we have more revenue per LPM. That is because we're increasing the number of connections from merchants into each of the LPMs that perform well.
Okay. I think the second question was around Peter, and obviously Peter's not here to talk for himself, but I guess I will give you my take on it, and I hope Peter will get to speak to everybody at some point in the future. Peter came from Mastercard. I mean, he has a very broad set of experiences across banking and money movement, and his role at Mastercard was candidly trying to build a non-card rail within a card network. Not one for taking on easy challenges. The reason Peter came to Boku is that he can create a global non-card rail, but from outside of one of the card networks. Peter's observation from the outside looking in was that we had this incredible set of assets and a unique opportunity, particularly with our customer base, to really win in this space.
And maybe we needed to believe it a bit more ourselves. We needed to tell our story a bit more broadly. Whereas we are excited about this and we know exactly what we're sitting on in terms of incredible assets, we haven't necessarily told the world about it enough. Peter's initial observation is we need to shout a bit louder in the market. That's really useful insights from him. The final question I think, Tom, was around bundling. Bundling is really taking off, and maybe it's linked to the sort of unbundling, if you excuse the pun, of the whole subscription economy. We've now got, whereas everything might have been historically bundled inside Netflix, it's exploded into a much greater number of subscription services, and they're all looking for growth, and they're all looking for distribution.
Whilst historically Boku has been running half a dozen big global bundling programs with global merchants, we are getting a lot more inbound of people coming to us looking for help with distribution. The simple model, as it stands today, is we work with suppliers, so mobile operators, Digital Wallets, who are sitting on populations of tens of millions of consumers who are all potential customers for the subscription services businesses. Our merchants, who are the subscription businesses, are just looking for us to hook them up with our issuing partners and also provide that platform that this type of service can sit upon. It is becoming increasingly popular, and you can see that in our numbers.
Great. Thanks so much.
Thanks, Tom.
Thank you. Our next question comes from Tintin Stormont from Deutsche Numis. Your line is now open. Please go ahead.
Morning, guys. Can you hear me?
Loud and clear.
Hello.
Hi, Tintin.
Sorry, three questions for me. Hi. Morning. Three questions for me as well. First one, how should we think about the opportunity with Stripe in terms of TPV? If you give us a bit more color in terms of the geographies you're in with them, the number of merchants, and your kind of line of sight in terms of the TPV related to that, and maybe how this can grow into next year. Secondly, in terms of the geographies that have recently launched, you talked about confidence that this can offset the volumes you're losing in the other geography. Are you able to give us more color in terms of the initial observations you're seeing in terms of volume development in those new geographies?
Lastly, just in terms of dual sourcing as a general risk with any other merchants in any other geographies, if you could make any sort of comment around that.
Should we do a sandwich? I will do the first one and the third one, and you do the middle one. On the Stripe, I guess the first thing I would say is we have a channel strategy. We do not have a Stripe strategy. Stripe happens to be the first channel partner that we have formally signed up with of a global scale, I should say. Yes, we are super excited about it. We do not want it to become the only game in town for Boku because there are lots of other opportunities, including within channel. We are excited about Stripe. They are a tech-first, incredibly impressive organization, 5 million merchants spanning the globe, so who would not be excited by that? We are being cautious, right? We are still in the testing phase.
We have got one country live with three that are technology tested that are due to be switched on a bit later in the year, a handful of merchants with test volumes. It is really, really early to be trying to predict what kind of volumes we might expect to come through this. I would say we are cautiously optimistic and excited about the partnership. In the near term, we are not making any assumptions in our numbers that this is going to be transformative in the next 12- 18 months. As it becomes more obvious to us, then we will do what we can to update you. At this point in time, I would just assume it is kind of low-level testing until we know otherwise.
In terms of connections, Tintin, obviously Stuart has just talked to the Stripe connections. The other connections that I have mentioned have gone live were obviously the connections that were delayed from H1. We are cautiously pleased with volumes to date. We do need to finish testing in a couple of those markets. At this stage, we are happy with where we are, and we look forward to concluding testing and making sure that we progress through the end of the year in a positive manner.
Thanks, Rob. Then finally, on the dual sourcing point, let me just categorize this slightly differently. Every merchant dual sources, and at a most basic level, a merchant might dual source between cards and local payment methods. That is one type of dual sourcing. Within local payment methods, they might dual source on a country-by-country basis. Boku does not have the broadest coverage in certain geographies, and therefore, it would be impossible for us to do LPMs in those territories, and therefore the merchant might decide to dual source. I think what was different about this specific case is that because of the nature of that merchant's activities, they were able to dual source on a specific connection. The technology was thus that they could run the first transaction of the day over Boku and the second transaction of the day over a different partner.
It is really about risk management and, candidly, a little bit of supplier management on behalf of the merchant. As Rob has indicated, we believe firmly that we will be net recipients and beneficiaries of this strategy. We do not worry about dual sourcing. We do not see it as existential. It just means we have to make sure that we are super competitive and that we provide the best products and services in the market. I hope that answers the questions, Tintin.
All clear. Thanks, guys.
Thank you.
Thank you. Just as a reminder, if you would like to ask a question on today's call, please press star followed by one on your telephone keypad now. We will just have a brief pause for any additional questions to be registered. Our next question comes from Mahir Bidani from UBS. Your line is now open. Please go ahead.
Hey, Rob, Stuart. Thanks for having me on. I wanted to ask a question around the cross-border settlement volumes. You guys noted that they were growing 9%. Just how do you expect those to ramp over time? Is that currently coming from a single customer and you are expecting to expand those over time with other merchants? Then another question on agentic commerce in terms of how you think Boku will be positioned going forward as the space evolves, and how any initial customer conversations have helped you arrive to those conclusions. Also what sort of products you would expect Karim to potentially be working on top of Boku's stack.
I think the last one is challenging to give. I think Karim might even be dialed in, so I do not want to be giving him his first set of objectives before he has started. There is a massive set of opportunities in this space. I think agentic is one of, but certainly not the only game in town. There are so many different potential use cases for agentic. Simple things in payments. It is always the boring stuff that matters, right? It is how do I reconcile, how do I monitor my network? How do I look at ways to optimize conversion rates? These can all be enhanced and embellished by AI capabilities, so we are really scratching at the surface.
The sort of secondary piece to that you are seeing happening quite a bit in the card world is how do I create an agent that can buy on my behalf? There are a whole host of kind of different challenges and opportunities in that space. These are the sort of areas that we will be looking at.
In terms of cross-border growth, obviously, there are elements of organic growth, just fundamentally in Boku as we've talked about today. Additionally, we have some legacy LPMs that did the currency conversions for us, and we are gradually taking that currency conversion in-house. So two areas of growth that we expect both to continue over the coming months as we look forward.
Yeah, I think that's fair. We think about this as a portfolio. There will be big markets where actually cross-border currency conversion is not required, but there will be significant domestic volumes for us to get involved with. But then, when you start to go into more emerging markets where there are bigger challenges in doing cross-border commerce, that's where we can really add value to our customers, and we can start to push on that kind of cross-border growth opportunity. Then there was a third.
It's done. Agentic and Karim.
Agentic and Karim I did. Hopefully, Mahir, that's answered your questions.
Yep. Yeah, that's great. Thank you very much.
Thank you.
Thank you. We currently have no additional questions on the phone lines. I'd now like to hand back to the management team for any written questions.
We have one from Hannes at Jefferies, or three questions, sorry, from Hannes at Jefferies . The first is, "Given we're in September, how should we think about the rest of the year in regards to low end and high end of the guidance on growth?" The second is, "On margins, how should we read the 1% headcount decline year to date? It feels we're now entering the phase of margin expansion. Should that be 100 basis points or 200 basis points per year?" And the final question is, "Great win with the channel partnership. How should we think about TPV and revenue contribution in 2027?
I'll take those.
Yep.
Rest of year, we gave the range to remind everyone what we said. We gave a range, $135 million- $142 million. $135 million assumed that none of the connections that we had talked to in the particular merchant relationship went live. We have said today that all of those connections have gone live. Some are still in testing. At this stage, as you've heard, we are sticking to the guidance. But clearly, the fact that the connections that were delayed have all gone live is a positive step forward. At this stage, though, we are sticking to the guidance we've given. Then really, in terms of looking forward in terms of margins and indeed revenues and TPV, we obviously have a new team, as Stuart has articulated, particular focus around the Chief Commercial Officer and the Product Officer.
We'll work together as a team now over the coming months as part of the budget process to work out how the longer-term or medium-term forecast looks, and we'll come back to you in March with the full-year results to talk to that. At this stage, given the change in the teams and what's in front of us, we will just give the guidance we've given for 2026 and come back in March 2027 to talk to 2027.
Okay. I think we are out of questions. Thanks everybody for attending, and thanks again for your ongoing interest and support in Boku. I looked forward to catching up with you, Rob and I. For those of you on the roadshow in the next couple of weeks, we will see you then. Beyond that, we will be back in touch in January with our full-year trading update. Thanks very much and have a great day.