Bango delivers strong H1 growth as subscription revenue, EBITDA and ARR surge

you put that together, significant increase in profitability, adjusted Ebitda up by 34%, and at a cash Ebitda level, we did more in the first six months of this year than in the entire of last year. So that growth is increasingly translating into into profit and cash.

Welcome back inside our Proactive Newsroom and joining me now is Paul Larby. He is the CEO of Bango. And Paul, it's great to see you again. How are you?

Yeah, great. Thanks. Good to be with you again.

Yeah, good to be with you as well. So, uh first half results are out. Uh you're obviously pretty excited about them. Give me your your general thoughts on what you saw.

Yeah, I mean, I think you see a a few clear messages coming out in in the results is that the quality of revenue is improving, recurring revenue has passed that 20 million mark, up 31% year on year. The payments business, the restructuring of that lower lower quality revenue is complete is progressing ahead of plan and will complete this year. You bake into that the structural cost savings that we did in fiscal year 25, which means all the last two years admin cost are down 23% and CAPEX down 31%.

You put that together, significant increase in profitability, adjusted EBITDA up by 34%, and at a cash EBITDA level, we did more in the first six months of this year than in the entire of last year. So that growth is increasingly translating into into profit and cash.

Yeah, absolutely. You won eight new uh digital vending machine customers so far and so what what's sort of driving all this growth?

Yeah, the growth in the growth in subscription is coming actually both from existing and new customers. And if you think of the revenue model we have, the revenue model we have scales as our customers grow, it scales as they bring in new users in for bundling and as those users who are bundling take on more and more subscriptions. And on top of that, the the operational leverage baked into that platform means a lot of that growth drops straight down to the bottom, right? There's minimal incremental cost to support that top line growth.

And historically, a lot of the growth has come from adding in new customers as we've been been building this business up and they join at the sort of the base license tier. Well what you see very clearly in the first half of results is the bulk of the growth is actually now coming from existing customers who are really starting to ramp through those subscription tiers. We maintain zero churn and that growth is really evident if you look at the net revenue retention of 119%.

Those eight new customers will now add further growth as they launch and fundamentally every new customer we add to that install base creates more opportunity for future growth.

When you talk about the digital vending machines, uh you have the machine itself. What you put in it is really up to the customer and that's the sort of the secret sauce a little bit about your company. So, uh talk to me a little bit about some of the different uses you're seeing for these.

Yeah, I think what's great is we're seeing digital vending machine and and the bundling capabilities that we can provide used to solve lots of different commercial challenges, rather than simply just to sell an entertainment subscription. You look at Proximus in Belgium, basically they replaced an in-house platform with the digital vending machine and went through I think quite a traditional sort of evolution that that many of our customers do and we deploy the digital vending machine, launch new services, migrate some of the services they've done onto the same platform,

so they can create those complex bundles, and then we scale and add new services.

You look at Turkcell, they're basically using quite big multi-party bundling, eight or nine different subscription services, a combination of the global leading SVOD services plus some local services, really to support their 5G proposition, giving customers a real way of using that 5G bandwidth rather than just marketing on the on the bandwidth itself.

MVNOs are increasingly using bundling to sort of differentiate their offer. KDDI with their Povo offering is actually using bundling to take a sort of a very loose month-to-month relationship which traditionally dominated in in pre-paid markets and convert that into a sustained 12-month relationship with a customer. We partnership with LinkedIn shows that subscriptions are not just about video and entertainment, it's about other services as well and basically all of these businesses are using bundling to to to attract customers, retain customers,

and and fundamentally to grow their business and engagement.

So you're looking at uh like uh expanding the opportunity for those machines as well and and keeping everything competitive?

Yeah, so we're expanding in three key ways. I mean, Telco remains our core, right? We have a great footprint in that market with seven of the eight largest telcos in the US. And you know, a great pipeline beyond that, right? We have over 100 telcos each with more than 4 million customers that were were actively targeted. You add into that on top of that the MVNOs like we talked about before and it's it's it's a great opportunity to grow into from an already impressive base.

Secondly, we're looking outside of Telcos. We've talked before about banks and retailers and employee benefits. Connected TVs I think become interesting. We announced a partnership with Red Squid to bring sort of subscription bundling onto the big screen itself. And fundamentally any business with a trusted recurring relationship with a customer can really use bundling to to support and and accelerate their growth. And finally, the functionality we build into the product allows us to grow faster. You know, the more we do about bringing partners on faster,

creating these bundles, allowing you to bundle between different content providers, and then using that data and and AI to help partners to grow faster and activate subscriptions faster. All of which fundamentally drives volume for the platform and as we talked about earlier, that ties in very nicely to our to our revenue model and that's that's where we can continue to differentiate.

Yeah, and how do you sort of see the role of payments?

Yeah, payments is a really important part of the business. It's an established and very highly cash generative part of the business. and our focus on that is not just on chasing that payments revenue for its own sake, it's on improving the quality and that means from a margin profile, it means from the blue chip merchants and and focusing really on the blue chip merchants. And so we're deliberately restructuring those some of those lower margin routes and what you see is actually the the profitability of that business actually increased slightly despite a lower top line as we

as we restructured some of those routes and it's really the cash generated from that payment business that supports and allows us to to continue to invest into the digital vending machine, but that business itself is pretty close to uh to to to get into a cash generative position and in fiscal year 27 we'll we'll have two cash generating engines in the company.

Yeah. Let's talk about that uh 27, got the rest of 26 and 27. that's some of the things that people will be expecting to see?

Yeah, so we'll see continuing growth. We should hopefully announcing some new customers that as they continue to launch services on the DVM. That growth in recurring revenue will continue from both existing customers as well as new customers joining the platform. Uh, we had eight DVM wins uh when we announced results from six at the end of the year. So hopefully some some additional wins to add into that that footprint that we're building with the digital vending machine.

And we continue to develop both across Telcos and new channels. So, all of that as we talked about, because of the leverage in the business drops straight to the bottom line, so should result in in continued improvement in cash EBITDAR and profitability and uh, yeah, we're excited about the future ahead.

All right, well keep an eye on it. Paul, thank you so much. Really good update as always and good to see you.

Yeah, great to be here. Thanks for your time.

All right, there's Paul Larby, the CEO of Bango.