Bango PLC (LSE:BGO) (H1 2026) Earnings Call Highlights: ARR Tops $20 Million as Profitability ...

Negative Points

• Payments segment headline revenue declined 5% year-on-year due to the restructuring of low-margin routes, and further low single-digit variation is possible as restructuring completes.

• Subscriptions revenue growth was only 13% due to lower one-off DVM revenue, reflecting timing and mix of new business, which may cause quarterly fluctuations.

• D&A is set to peak in fiscal year 2027, which will continue to weigh on reported profitability in the near term before declining.

• The company remains in a net debt position of $8.7 million, and deleveraging to net cash is not expected until beyond fiscal year 2027.

• Growth in active users to 100 million is dependent on the timing of customer launches, which tend to be seasonal and can cause lumpy growth.

• The share price has been dull, and institutions have been ignoring Bango, reflecting market skepticism despite improving financials.

• There is a lag between ARR growth and reported revenue growth, as revenue is recognized over the contract life, which may mask underlying progress in the short term.

• The payments business still faces a seasonal H2 weighting, but the restructuring may reduce that seasonality, potentially leading to lower H2 revenue than historically seen.

• Expansion into new verticals such as banking, retail, and connected TV is progressing slower than telcos, as those sectors are less familiar with bundling and have less pull from content providers.

• The company has no plans to move from AIM to the main market, which may limit its appeal to certain institutional investors.

Q & A Highlights

Q: Given the success in signing up new DVM licenses, when do you forecast that active users will reach 100 million? A: CEO Paul Larbey explained that growth in subscriptions depends on when customers launch services, which tends to be seasonal (around product launches, sports seasons, or Christmas). He highlighted the massive opportunity, citing Turkcell's 50 million customers as an example, and noted that new customers take time to ramp up. The ambition remains, and Bango is investing in DVM capability to make bundle launches easier and faster.

Q: The 119% net revenue retention suggests meaningful expansion within the existing DVM customer base. What's driving that expansion, and how do you think about the runway for growth within the installed base? A: CEO Paul Larbey said it's a combination of factors that vary by customer. In Turkcell, growth is driven by users adopting 5G bundles with 5-7 subscriptions each. In other operators, it's driven by adding new content providers. He emphasized there's significant headroom, noting that even if every customer only had one subscription, there's substantial room to grow, and the revenue model scales with that growth.

Q: Matt, when is net debt forecast to be cleared and turn to net cash based on internal forecasts? A: CFO Matthew Wilson explained that in fiscal year 2027, meaningful deleveraging will occur as cash EBITDA increases, exceptional costs fall away, and working capital normalizes. Analyst forecasts point to net debt of around $2 million by the end of fiscal year 2027, showing clear deleveraging from current levels.

Q: On AI, are you seeing AI drive revenues and lower costs in practice today? A: CEO Paul Larbey identified three key elements: (1) AI services like Gemini are the fastest-growing category of subscriptions on the DVM; (2) Bango is a heavy user of AI tools internally, with Amazon asking them to speak at a summit about their advanced R&D usage; and (3) AI is embedded in the product through chat interfaces and agentic workflows that automatically drive subscription adoption.

Q: What level of recurring revenue can the DVM ultimately support before growth becomes increasingly dependent on winning new customers? A: CEO Paul Larbey highlighted the enormous headroom, noting that Turkcell and Proximus alone have 53 million customers. If half had three subscriptions each, that's 75 million subscriptions. He emphasized that the model scales as customers grow, and this year, growth from existing customers is dominating, demonstrating the right revenue model is in place.

Q: When will the growth in DVM ARR reflect in growing group revenues? A: CFO Matthew Wilson explained there's a natural lag between ARR growth and reported revenue because ARR is a point-in-time measure while revenue is recognized over contract life. ARR growth provides increasing revenue visibility going forward. Group reported revenue is currently masked by the deliberate reduction in low-quality payments revenue, but the core payments portfolio is growing and driving profitability.

Q: On amortization, what does the profile look like over the next five years? Is there a significant step down in annual P&L charges? A: CFO Matthew Wilson confirmed that D&A is set to peak in fiscal year 2027, then will start reducing in line with capitalized development costs, which continue to come down year-on-year.

Q: Lots of companies are moving from AIM to the main market. What are Bango's thoughts on this? A: CEO Paul Larbey said the Board continually evaluates the best listing venue for Bango, especially given recent AIM rule changes. However, the focus remains on execution and delivering results, and there are no plans to move as of today.

Q: On payments, where revenue is normally heavily weighted to H2, why does this no longer appear to be the case? A: CFO Matthew Wilson clarified that payments revenue is still weighted to H2. However, the restructuring of low-margin routes, which were predominantly H2-weighted, will cause a slight reduction. Fundamentally, there should still be a weighting towards H2 within the payments business.

Q: On payments, who took over the payment routes that Bango exited as nonprofitable, and how will they make profit from them? A: CEO Paul Larbey explained that those routes have simply disappeared. If a route isn't working for Bango, it's likely not working for the telco either and is borderline for the merchant, so they've been turned off completely.

Q: Is there any ambition to grow the payments segment and why? A: CEO Paul Larbey confirmed absolutely, but selectively. Bango will pursue growth that maintains high-quality revenue with blue-chip merchants. Recent examples include new deals with LMT in Latvia and Telin in Hong Kong for Google Play services. The focus is on removing volatile, lower-quality revenue.

Q: Do subscriptions ever pay upfront cash ahead of the service? A: CFO Matthew Wilson explained the DVM revenue model has two components: a one-off setup fee and license revenue covering the contract period. The mix is increasingly shifting toward license revenue, which is more sustainable and provides greater visibility, reducing reliance on one-off revenues.

Q: Between the growth drivers of payments and DVM subscriptions, is it possible to get payments business from DVM partners and vice versa? A: CEO Paul Larbey said it generally happens the other way around. DCB is an established market, so operators aren't launching it for the first time. Existing DCB customers like Turkcell and KDDI, who trust Bango and understand the platform economics, naturally extend the relationship into bundling.

Q: Matt, on financing, do you face any issues in financing the debt or rolling it over in a higher interest rate environment? A: CFO Matthew Wilson said no. Bango has two debt sources: a shareholder loan from NHN at a fixed rate that starts amortizing quarterly from year-end, and a revolving credit facility with NatWest where the interest margin is linked to leverage, so costs will come down as the business delevers. The facility has under two years to run.

Q: On share price, what excuses have institutions in ignoring Bango? A: CEO Paul Larbey said people wanted to see results

For the complete transcript of the earnings call, please refer to the full earnings call transcript .