Bango PLC (BGO.L) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Bango plc Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However the company can review all questions missed today and we'll publish all those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Bango plc. Paul, good morning, sir.

Good morning, and welcome, everybody, and thank you so much for your time this morning to go through our first half '25 results. So myself will walk you through an overview of Bango, highlights of the half, a lot more details on the financials. And then, I want to talk a little bit more about the DVM opportunity, in particular. At this time, I'm going to zoom in on what's happening in each geographical region from a telco perspective, just you can see the different dynamics of the geographies in which the DVM is gaining great success and then we'll end with a quick highlights and outlook. As always, these are more beneficial, I'm sure, if they're interactive. So please do submit Q&A as we're going. We'll sort of keep them to the end. I'll try and address them all again. And if there's anything you've submitted that we think we've answered, we'll sort of address those again if it's not clear. So just as a reminder, when we -- you'll see this, we'll cover as we go through the presentation. We have Bango in -- Bango has really, sort of, two distinct businesses. The transactional business, which is primarily the direct carrier billing business, that's where you can purchase something, pay for it on your mobile phone, here, the example obviously been PokeCoins in Google Play Store, but also physical goods from Amazon in Japan, for example. And then on the other side, the subscription business, very much focused on the Digital Vending Machine. That's really our market-leading platform for bundling of subscriptions, allowing anybody who has a subscription service to distribute that through a channel. Two very different business models, common technology platform in the middle. But On the transactional business, it's where it's a percentage of the retail price. And in the Digital Vending Machine, that's that SaaS model with that setup and one-off fee plus the license fee that generates that ARR that we've seen increase through the period. So two businesses, very much we'll cover both as we go through the deck. Underpinning both of those, if you step back and think of a very simple position, we're in the fortunate position where if you look at the customers, the companies that are connected to the DVM, it's sort of all the logos you would ever want to see, right, some of the biggest companies in the world, some of the biggest telcos, some of the biggest content providers and actually some of the largest of the West Coast technology providers all use the DVM to help them scale their business. And really, the fundamental and very simple value proposition is you connect once and you access many. And that doesn't matter whether you're on the payment side of the business on DCB or the Digital Vending Machine. By connecting once into Bango, we give you access to hundreds of people on the other side of that equation. So if you're a content provider, you get access to hundreds of telcos. If you're a telco, you get access to hundreds of content providers. And you can see there the speed and scale is really how we've been differentiating, especially on the DVM side of the business, where we can launch services quicker than anybody else in the market. Disney there in 4 weeks, NBA in 3 weeks and, with Verizon we launched over 40 in 20 months. So really that, that speed and scale is what the platform is really about. But as we go through the deck, you'll see it's going way beyond that and the value that the platform provides goes beyond that. But I think that's a good element to keep in your mind as we go through the rest of the presentation. We're all about being the place where people subscribe and our strategy for growth, as you'll see, if you read the RNS, is broken down into what internally we call the 4Es. So that's Expand, that's continuing that growth in the telco sector. Enhance is about looking at how we use the data we have in the platform to differentiate the content providers. That's one of those sort of strategies that's sort of more in the sort of mid- to long term. We're very early in that enhancement at the moment, where we're looking at what data we have and how we can add value to the content providers because ultimately, we'd like to monetize both halves of the marketplace, both the reseller as well as the content provider. Explore is all about looking at new verticals. You obviously announced at the back end of last year, Continente in Portugal, actually retailer, lots more pipeline developing in those markets, and we certainly see great interest. And I'll share a little bit later some survey results we've done with different content providers and so you can see the sort of verticals that they're looking to move to after telcos. And then Extract, that's about making sure we manage that payments business for cash and profit. And you'll see in the first half, we obviously finished the migration and integration of the DOCOMO digital business. So that's well and truly behind us now, and Matt will talk about the financial impact of that a little more as we go through the rest of the deck. So just in summary, and I'll turn it over to Matt. You see a great set of financials for the half. You see both the total revenue and the transactional revenue continue to see good growth around 30-ish percent CAGR over the past 3 years. Matt will talk a little bit more about the dynamics of that transactional business between those high cost of sales routes and the core revenue, but the core business really continuing to see good growth at around 10%. DVM business, again, continuing to scale, 49% growth CAGR over the period. And that sort of top line growth, coupled with the optimizations we've made in a cost perspective, see that increasing level of EBITDA. So significant EBITDA growth year-on-year from first half '24 into first half '25. Well, that DVM business is really driving that growth in the ARR business. That's up 20% year-on-year. Net revenue retention, that's a measure of the growth in existing customers. That should be our -- our aim is that also should be above 100%. It's naturally a little bit lumpy, especially in the small business depending where customers are. But keeping that above 100% shows that existing customers are growing, and we continue to have no churn once networks and customers are live. And that's a really, really solid part of the business is this continuous growth, because of the way the license structure is tiered as we manage more and more subscriptions for our customers. Momentum is building in the funnel. We had seven new DVM deals in the first half of the year. We added another one, obviously, we saw with MTN at the back end of last week, and the funnel is really, really well populated for 2025. And our focus is really getting those deals through the funnel as fast as we can, so we can get them live, get them integrated and get them launched. And that's really what will sort of continue to drive that growth of the business moving forward in addition to the growth in existing customers. So with that, I will turn you over to Matt to run through the financials.

Super. Thanks, Paul. Good morning, everybody. Welcome to the earnings call for Bango's first half results, 2025. Overall, a solid period, reflecting both the financial discipline and the continued execution of our growth strategy. We've made strong gains in recurring revenue. Our gross margin has expanded and our operating expenses have reduced. All three of those pillars helping deliver a 66% increase in adjusted EBITDA. Thanks, as always, to the Bango team globally for making this happen, and I'm pleased to now walk you through the highlights for the period. Starting with the top line. Revenue grew 5% to $25.2 million and building on a consistent trajectory of growth since 2022. It's important to also highlight the quality of that growth. Our annual recurring revenue increased 20% year-on-year to $15.6 million, and net revenue retention remains strong at 108%. That tells us two things. One, new customers continue to come on board; and two, existing customers continue to spend more. And couple that with the fact that churn across live DVM customers continues to be 0, and it highlights the attractiveness and sustainability of the DVM model as it embeds itself deeper and deeper into the global subscription economy. Moving to the next slide and looking at our transactional business. Revenues held steady at $16.4 million, in line with last year. On the surface, whilst flat, if we look deeper, I believe the underlying picture is a stronger one. In June, I introduced the split of core transactional routes against those higher cost of sales routes acquired from DOCOMO Digital. Both channels have shown different trends in the first half, but the underlying health of transactional payments remains strong. Our core transactional business, which is both more profitable and strategically more valuable, grew 10% year-on-year, adding $1.2 million and rounding off a strong first half. That sales growth was unfortunately offset by the volatility we've seen in the high cost of sales routes as we guided to in June. It's important though to stress with those routes operating at low single-digit margins, the impact on adjusted EBITDA of those movements is minimal. We continue to actively manage these routes with a clear ambition of improving their profitability even if that means stepping back from some lower quality revenue. Overall, with the migration from DOCOMO from the Frankfurt data center now complete, the transactional business is back on a firmer footing, providing stable cash flows and still growing in its core areas. Moving to DVM and one-off. Revenue increased 15% to $8.9 million, reflecting strong momentum in both new customer wins and expansion with existing customers. As Paul mentioned before, we secured seven new DVM customers during the period, including our first in Korea, our first telco in Japan, and further expansion in the U.S. and Europe. The number of active subscriptions managed by the platform has also more than doubled to over 19 million. This underlines the scalability of the DVM model and why we are increasingly being recognized as the standard in subscription model. Turning to Slide 11 on costs. We continue to be very focused on discipline and efficiency. Our core administrative expenses, which is a better indicator of the controllable costs in our business, decreased by $2.2 million over the last 12 months, equivalent to a 9% reduction. On a cumulative basis over the last 2 years, those expenses have reduced by nearly 20%. Despite the FX headwinds in 2025 from a weaker U.S. dollar, we expect to maintain that year-to-date cost reduction for the full year with a further reduction in fiscal year '26. Isolating some of the movements in the statutory reporting, we incurred $1.8 million of cash exceptionals. This includes $1.3 million of one-off restructuring costs to deliver our efficiency initiatives as well as $0.5 million data migration and asset write-down charges associated with DOCOMO Digital. We expect exceptional costs to continue in the second half, but to cease in fiscal year '26. D&A increased by $1.2 million year-on-year as past R&D investments comes online and begins generating revenues. We have not reached the peak yet in the D&A cycle, as it catches up with historical spend, but this will naturally come down as we reduce our CapEx spend going forward. And one can see from the bottom chart, this continues to come down. Consensus estimates forecast a 7% reduction in CapEx this year and a further 14% in fiscal year '26. So putting it all together across the P&L, gross margin improved by 350 basis points to 84.3%, driven by strong core transactional performance, savings from procurement initiatives and an increased weighting of higher-margin DVM activity. The strong performance across recurring revenue, gross margin, and operating efficiency drove a 66% increase in adjusted EBITDA versus the prior year period, reflecting the benefit of higher-margin revenue and disciplined cost control. Adjusted EBITDA margin rose from 17% to 27%. Finance charges increased, reflecting the current debt profile as well as lease interest from our new head office in Cambridge. That's a strategic investment to support growth and talent retention for Bango in the future. While we still reported a net loss of $3.2 million, this narrowed by $1 million versus last year, clear evidence that the operational leverage is delivering. And absent anything unforeseen, we would expect to report positive profit for the year in fiscal year '26. On cash, the story is very much one of investment and transition. As the DVM matures, we continue to put capital into R&D, though at a lower level than last year. Working capital movements and one-off exceptionals from the efficiency initiatives and the refinancing this year, impacting cash generated from operations as expected. We made a big step forward with the refinancing of the capital structure in June, securing a $15 million revolving credit facility with NatWest and an enhanced loan facility with NHN. That significantly strengthened our balance sheet and gives us flexibility to keep investing whilst driving efficiency. Net debt increased to $7.3 million for the half, in line with our expectations, and we ended with $4.6 million of cash on balance sheet. Finally, looking ahead, our priorities are clear: reduce net debt, continue to expand margins and deliver recurring revenue growth. With the refinancing in place, liquidity is strong and net debt will start to reduce in Q4 as the efficiency savings and seasonal inflows materialize. Strengthening the balance sheet was a key focus in H1. And with that delivered, attention turns to driving profitability. Gross margins are improving, core administrative expenses are falling and R&D CapEx is declining as the investment cycle peaks. Those efficiency gains will keep showing through in adjusted EBITDA and particularly cash EBITDA as we look forward to 2026. On the top line, the DVM pipeline remains strong and transactional revenue has a natural weight into the second half. Clearly, the timing of new DVM launches will be a key driver of the full year results, but the momentum we've built so far gives us confidence. Overall, we're currently on track to deliver revenue and EBITDA in line with expectations. And I'll now hand over to Paul to walk you through the DVM opportunity.

Thanks, Matt. So I thought this is a good place to start. Just a reminder, we've shown this before about the way that bundling itself is evolving. It's moving from -- on the very left, what we call sort of a Basic Bundle that's where one particular content service is tied to a particular mobile or telco plan, into really the area of sort of Multi-party bundling, where there's more choice, you can pick, you can add perks, you can upgrade and downgrade subscriptions all the way through to we see with Optus and SubHub where you have that sort of almost that marketplace or that app store for subscriptions that we call Super Bundling. And as a reminder, the Digital Vending Machine supports all of these different models, but the value that we add really increases as you move out of Basic Bundles into those Multi-party Bundles. And that's where we're seeing some great success at the moment. And we'll talk a little bit about more about the capability we're adding into the vending machine to make those even easier for telcos who are looking to launch those services moving forward. If we step back and look at the market size, you can see that the market is continuing to grow. The overall subscriptions market is continuing to grow. You see that has a CAGR of around 6%, where we see actually an increasing portion of that is being bundled particularly through telcos. So the CAGR for the telco bundle piece is close to 10%. So the bundling growth is faster than the overall subscription market growth. And then the final 80% of CAGR, that's that evolution from a Simple Bundle into the Multi-party or Super bundling, and that's growing much faster. So you see the subscription market is growing, an increasing portion is being bundled through telcos and those telcos are increasingly moving to more complex bundles. And that's really where the Digital Vending Machine starts to add significant value. So that's the market that we're operating in. On the other side of that, you have obviously the content providers. And back in June this year, we published a survey. You may have saw if you follow us on LinkedIn or any of our material, we published a report called Gravity Shift. And Gravity Shift basically interviewed 200 senior execs from all sorts of content owners and with all sorts of different subscription services to really understand what their plans were for us for sort of secondary channels or distributing subscriptions through channels. And you see over 90% of those are looking to use these additional channels. So rather than just go direct to consumer, looking to grow their base by distributing subscriptions through a channel like a telco. And when you look into the channels they're looking to use, you can see it's not just telcos, it's moving into retailers and banks as well. And that's a significant step-up in both retailers and banks. And I think that's largely because we're seeing more and more telcos already having launched these services. So the subscription brands are looking for alternative channels. And that very much aligns with what we see from a sales perspective and in the pipeline is that moving to retailers as well as financial services products. And you can see the reason why they want to do, why they want to do this, and it's largely complexity. It's complex. It takes time. How can I simplify all this? And that's really what the Digital Vending Machine does is take that complexity, we make it simple. And as you've seen from some of the examples I gave earlier, we're making very quick to launch these new services. And the speed and scale is really what is -- as I said at the start, what it's been about so far. And you can see all the examples there. You can also see what Verizon has seen and the benefits that the telcos are seen in terms of reducing churn and the ambition that the telcos have to get more and more of their customers using bundles, because for them, it's the best way to grow revenue and reduce their churn. But back in February this year, we launched, what we call, the world's first super bundling subscriptions hub, and that's going way beyond just optimizing that connectivity to the entire life cycle of a product. And we continue to innovate all these ways. It's all about from onboarding and having test partners or content providers and telcos who come into the platform and self-certified. It's about having a pre-canned user interface. We call that the CX. That went live with Altice in the U.S. this year. That's our version. If you're a customer, that's your way of accessing the Digital Vending Machine through this user interface, which the telco can put their own brand, their own colors and choose their own layer, all through a configurable product and very much into these offers, the creation of these offers and how do you define these offers, how do you publicize them, how do you distribute them, and how do you manage the complexities that come with those offers in terms of rules, upgrades, downgrades, what happens if you cancel one product, what was the impact on another product. All that complexity we've been sucking into the Digital Vending Machine. And that does two things. It really allows these offers to be launched a lot more quickly, but it also makes customers very, very sticky. It means, we're not doing the connectivity. We're doing a lot of that complex logic that was historically sometimes done in the telco's back office system. So the value that the telco -- well, the Digital Vending Machines deliver is increasing all the time, and that's providing the ability to launch services more quickly and making it a sticky relationship with the telco. So talking about telcos, I thought it would be good to look at different geographies, because the dynamics we see globally are very, very different. So I thought it would be useful just to do a bit of a world tour of what we see. But before we do that, let's step back and look at what drives growth. So we drive growth in two ways. We drive growth by winning new DVM customers, the logos, the likes of MTN that we announced last week. And then by existing customers growing and existing customers growing two ways. They grow by getting existing of their customers to take on more bundles and more offers in effect, moving from maybe having one subscription to two or three as a user and then by them getting new consumers to adopt bundles and bring those into the bundling. You see that the Verizon quote and the demand to get 50% of their customers into that MyPlan bundling. So those are the way that we grow in DVM, it's new logos and then new more subscriptions, and that's either from new customers or from existing customers taking more and more subscriptions. So we look at the U.S. and Canada, I think this is by far been our largest market. And that makes sense, because it's actually the largest market for digital subscriptions by revenue. So it makes sense that it will be our largest market. It also is a market where a lot of telcos and particularly regional cable operators are struggling as people look to cancel their cable package, TV package, cord cutting that's called if you look around in the press, people basically taking a broadband-only subscription and then getting their entertainment through third-party services. And so it's a natural next step for those guys as they look to differentiate and reduce churn that they look to third-party subscription bundling as a way of compensating that. The U.S. is really made up of about 10 major national telcos. There's sort of tens of midsized and really thousands of small regionals. So it's quite a diverse market. Likewise, somewhat similar in Canada, although a little more concentrated, we have sort of three nationals and sort of tens of regionals. And we've built a really good position in that marketplace. We have 6 out of the top 8 in the U.S., including the DISH announcement that we made last week and the Altice announcement earlier in the year. In Canada, we do bundling for all three of the nationals as well as a number of the regionals as well. And so really, we have a really strong position there. So in the U.S. and Canada, really, the growth in terms of new logos and new wins is largely going to be with those smaller regional telcos. So for that, that's where the all-in-one super bundling solution makes sense for having that user interface, that sort of zero-touch access is a way of bringing on these smaller telcos with less and less work and less and less effort so they can launch more quickly. And then really, the big growth in U.S., Canada is going to come from existing customers. So that 6 out of the top 8 as they look to step through the tiers bringing on more customers. And that's where that offer management functionality really makes sense, allowing us to create these complex bundles. We're at the start of a new sort of football season, sports bundles are always very popular and big drivers. You saw that in the DISH announcement. And that's really one way of sort of ensuring getting these services launched more quickly so we can drive more and more subscriptions through the platform. Shifting south, we got to some of the Latin America. That's a region very much dominated by large telco groups. It's one of the largest bundling markets for SVOD. There's more SVOD bundled through telcos in that region than in the other regions. And local language content is particularly important. That's provided sometimes by the global players like Netflix, but also by specialist players like the ViX service from Televisa. If you look at where we are in that market, we've been doing simple bundles in that market for quite a while, particularly with Amazon and as well as some other partners. And so we have sort of bundling connectivity to 80% of the telcos in that market. The DVM is being very heavily used by Liberty Latin America across the region. And then, we work with TelevisaUnivision to help them scale their local language service mix across the different telcos. You can see we have a great embedded base, and it's a case of building on that base and converting those simple bundles into DVM and multi-party bundles. That's really where the new logos will come from is that conversion from the simple bundling we do at the moment into the more complex bundling solutions where the DVM really adds great value. It's a big prepaid market. So some of the top-up features we've been developing where we can really manage the top-up and again, take that top-up complexity out of the telco system, manage that in the DVM, allows us to launch prepaid bundles a lot quicker and also makes it a very, very sticky solution with customers. Closer to home, if we look across EMEA market, obviously, Europe is very much dominated by a few large telco groups. Middle East is really -- there's very limited complex bundling at the moment in the Middle East. It's very much still, very much a DCB focused market. We're seeing signs that starting to evolve, but it's certainly one of the least developed markets. And in Africa, there's huge demand, but the economics are very, very different. And you can see that in the chart at the bottom, you look at what the price of our network premium subscription and more ARPU between the U.S., South Africa and Nigeria, you can see it changes pretty rapidly. So from $25 then to $10 in South Africa down to sort of $5. So the unit economics in Africa are very, very different, but the demand and the volume and the number of subscribers is very, very high. So where are we in those regions? Obviously, in Europe, BT/EE, and Liberty Global were some very early DBM customers. We're seeing them both of them increasingly look to use the DBM more in sort of a marketplace type office, almost moving out of multi-party into sort of super bundling. You'll have seen that with the Telenet Marketplace announcement as well as what EE are doing with some of the marketplace work. And last week, we got our first win in Africa, I'd say, with the MTN Group. They operate across 16 different markets in that region. We'll start with the rollout of a global SVOD in South Africa, and then we'll expand into other markets. And then each market will add on more content providers. So there's certainly lots of opportunity for us a really good entry into a market that has say very different economics versus some of the rest of the world for everybody, both the content provider and telco. And obviously, we're in the middle of that. So our strategy really is to continue with Europe all the work in the groups. We're starting to see a long last the large telco groups move out of the studying phase into the execution bundling. We had a win in the first half with an operator in the Benelux region. We're starting to see other opportunities drop through the pipeline. Obviously, we want to drive customers in Africa. So big numbers of customers there, big demand. So we want to get those services launched and deployed to as many countries as possible as quickly as possible. And that's where eDisti is quite helpful with some of these marketplace solutions like the likes of Telenet are doing is to bring in other merchants more quickly. So the eDisti solution we have really plays well into those marketplace offers. Finally, in Asia Pacific, obviously, again, a very mixed market. We sort of broke it for simplicity on here into sort of two, you have the mature markets Japan, South Korea and Australia, very high disposable income and really a big adoption of digital services and the subscription economy in general. And then growth markets like India and Indonesia, et cetera, with the sort of a rapidly expanding sort of mobile-first digital customer and price sensitivity is really, really key in those markets. And that actually drives more. So the more -- and so vaguely, the more price-sensitive markets are, the more creative of these bundles are that are put together for customers. So generally, that works in our favor. So where are we at the moment? We obviously have a strong DCB position across that market, particularly in Japan. And obviously have Benefit One, that employee benefits provider, we announced a few years ago. We added the first telco in Japan for DVM in the first half of this year. And really, what we want to do with digital benefit is exactly what we did with DCB in Japan, is establish that position, that beachhead position and grow from it. And that's the way that market historically works. You build up that position, you build that position of trust, become known as a company in that region and then business continues to grow. And likewise, very similar in Korea. So that's why we were really pleased to get our first win in Korea with KT. And actually they launched their first AI subscription service only a few days ago at the back end of last week. In the growth markets, which include, we launching both gaming in Indonesia as well as with the social media platform in India. So very much more of that simple bundling some level, but certainly with ambitions to grow into that multi-party. Multi-party, that's really how we'll sort of grow in this region. It's capturing the prepaid users in the growth markets and looking at AI subscriptions in these developed markets and basically building a reputation in those countries like Asia and Japan and Korea. So we replicate what we've done in DCB with Digital Vending Machine. So finally, before we shift to Q&A, just a brief outlook if we look at sort of the transactional business, then we've obviously completed that migration as we've talked about, DOCOMO Digital integration now fully behind us. We have that volatility in those high cost of sales routes that Matt talked about, but the core business really continues to grow well. And then additionally, you'll see the gross margin increase with some of the cost of sales reduction activities that we've undertaken. So business, as Matt said, is very much moving into that sort of strong cash generation business and more than we're very pleased with the growth level that we see in the core transactional routes. In DBM, seven new customers in the first half, we now have probably 6 out of top 8 service providers in the U.S. First customers in Korea, first telco customer in Japan, new Western European customers and our first DVM customer in Africa, literally that we announced back end of last week. Put all that together, you see some great DVM growth, the ARR growth, in particular, that net revenue retention showing the growth from existing customers. All of that, coupled with the cost savings that we've been implementing, delivering good EBITDA growth in excess of 60%, and we're really on track to deliver revenue and adjusted EBITDA in line with market expectations and really moving into 2026, where all those cost savings, you get a full year of benefit, even more revenue growth as those DVM wins this year start to move into the growth phase. And you can see we're in a business that set a significant cash generation with a very different-looking P&L in 2026. So with that, I'll stop and turn back and we'll go back for Q&A.

Perfect. That's great. If I may just jump back in there. Thank you very much indeed for your presentation this morning. [Operator Instructions] I would just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can all be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But Sukey, at this point, if I may hand over to you just to chair the Q&A with the team. And if I pick up from you at the end, that would be great. Thank you.

Thanks, Jake. I'll start by apologizing for the dub of the hazard horn, which you could hear earlier in the call, that was announcing the sandwich fan. It's not a new bundle theme [indiscernible] random enjoyed. And as always, we're really keen to hear from investors and anyone who's interested in Bango. So on bangoinvestor.com, we have a Q&A functionality. So thank you to everyone who's been using that. It's proving very effective. And to everyone who's submitted their questions today, we appreciate those. So let's dive straight in. I'll start with one for you, Paul. We've had lots of questions about announcing deals and news flow ranging from there's not enough to there's too many and comments about the lack of commercial details in announcement. So could you provide a comment on this, please?

Yes, sure. So I guess the one thing I've learned is, as far as communications go, you can never please sort of everybody and people digest information in different ways. So if it doesn't meet the way that you personally like it, I apologize for that, but everybody is different. So what we try to do, especially with RNS is, is basically, I would say, they almost split in two. With deals that are very large initial revenue. For example, remember, a couple of years ago, we had that one of the top 3 telcos in the U.S. with the starting ARR was sort of $2 million. We announced that on a no-names basis. So generally, we're giving the commercial -- we're talking about the commercials, we will be restricted from talking about the operator that is launching those services as part of the contract. So that's one category for announcement where it's very large immediate revenue, and that's generally announced on a no-names basis. And the second category, which is where I think most of the wins fall into are where deals that have huge potential, but generally start off a lot smaller, right? MTN and the announcement being a great example of that, huge potential, but obviously starting with South Africa and more particular SVOD provider in South Africa. And those will be announced as soon as we can. So we're restricted often by the timing from the partner that we signed the deal with. And we will generally announce those as an RNS reach, if we think they are particular interest to investors. So if you look at the two, we did last week, DISH and Sling TV, I think that's a really, really interesting stuff. Firstly, they're one of the top 8 operators in the U.S. So that's 6 out of the top 8 and DISH is obviously one of those. So it's very relevant for that. But also, it's an interesting model, because they have DISH TV. They have Sling TV, which is also a content provider. And then they have Boost Mobile, which is our MVNO. So very different elements of the group. So for us, that's quite an interesting model to see how that evolves, because they sit on both halves of the Digital Vending Machine, depending on which sort of part of that overall group that you're talking to. So for me, that's really interesting. And then MTN obviously was the entry into a new market, right, into Africa and our office customer win in Africa. So we thought that was relevant and interesting to investors. And then, there'll be others which we don't see, where we did a press release with Telkomsel in Indonesia, an announcement with a partner Magyar to launch Netflix in Hungary. And those are announcements where they're just sort of deal wins. We do general press releases of those, because we benefit commercially from that, right? The only reason for announcing deals is not just for investors, it's also to generate the commercial momentum as well. And so those two we didn't announce as RNSs, because we didn't think they were as interesting for investors and want to keep the news flow as far as RNSs go, a bit more focused on the deals that we think we are interested. So that's the model we follow. And I say, if you want to find out more, you will have seen on the previous slide, there's tons of ways you can keep in touch with what we're going on. RNS reaches are just one small part of it and say again, those we do as and when we acquire and when we think it's interesting.

As a related follow-up, the releases last week had a very positive impact on share price. It's increased recently. There were a number of comments about what the Board is doing to increase the share price.

Yes. I think if you look last week, obviously, I think some good news that most of the investing last week was all retail driven. That tends to be very news flow driven. And I think hopefully, the retail market saw to the same way we did is the opportunity with both DISH and MTN in terms of what those can deliver to the business over time, right? Those are both deals that will grow and grow over time. Just a reminder, the Board and all employees are very big shareholders overall. We're all invested and interested in the share price. In terms of what actions we've taken, I think we appointed Canaccord as a second broker. We've seen some great traction from that, both in the U.K. as well as in the U.S. One of the reasons we picked Canaccord as the second broker was because of their reach into the U.S. market. We obviously added West to the register a year or so ago, and we have great interest from other investors. And this is the start of what proved to be a very long 8 to 9 days where we're meeting not just existing institutional holders, but well in excess of 20 non-holders. So we've got a very, very busy 8 to 9 days. So there's certainly interest from institutions. And I would say more demand than certainly, I remember for many years, and we have a busy 8 to 9 days ahead of that.

Moving on to DVM specifically. How many DVM customers are there? And can you comment on where they are in the implementation phase?

Yes, sure. So they're all in different phases of implementation phase. So I think we ended last year with 27. We added 7 in the first half. We've just added another one with MTN, I guess 35. And with some of these, it depends on the count or when you count the group or each individual countries, we're counting MTN as a group in that particular number. And they're all very much in sort of different phases. And obviously, some are very much in that growth phase where they're starting to move through the tiers. Other is in that implementation phase. We were asked on a call this morning what's the driver for that implementation phase. And really it's twofold. The technical implementation is sort of a matter of weeks. You get these things into live generally a matter of weeks. The complex part or the things are delayed are two things. Firstly, it's the commercial agreements between the telco and the content provider. And secondly, it's fitting this into the telcos' marketing plans. And those two tend to be the driver of launches. That's why we like things like football seasons and Christmas and things like that, because they are very hard deadlines that are removable. So the DISH launch is a great example of that, very hard deadline in time for the new football season. And so we actually saw those things move very, very quickly from contract signature to launch, because there was that very, very hard deadline. So certainly, so much of it is outside of our control, but the bit that is the technical piece is sort of a matter of weeks.

Related note, is near-term growth driven more by new partners or expansion of existing ones? And the reported reach, what's the conversion rate into active subscriptions?

Matt, you want to take the first part?

Yes, I'll take the first part. So as I mentioned in the presentation, we're in the privileged position here of being able to have growth coming from both new partners and existing customers. And you can see that in both the metrics that we're reporting. Obviously, important to strike that balance, but we're not dependent on one particular lever. So the net revenue retention of 108%, the key there is it continues to be over 100% shows that the customers are growing as they scale the license tiers. When a customer scales the license tier will obviously be dependent on the commercial contract with that partner. So that can be quite lumpy. So I wouldn't focus on is net revenue retention 159% or 108%. The key is that it's over 100% that shows that the existing customers are growing. And then the ARR growth of 20% year-on-year also supports the any addition of new logos. So we've got both pillars driving that overall growth, and we're not dependent on any one, which is a great position to be in.

And in terms of how that converts into number of subscriptions, it's very, very low. I don't think there is a standard answer for that. Hopefully, you saw some of the geographic differences that I talked about in the presentation. And it's largely, I would say, driven by the telco sort of marketing campaigns, so things like start of football season, back-to-school, Christmas. And generally when we sort of see the growth rate increase and then maybe after that campaign, it drops back to a more normal level until the next level. So it's very -- it's hard to predict and very, very driven by the telcos marketing campaigns. What we're trying to do in the product is make as much information available to the telcos so they can really target those marketing campaigns and make them a lot more direct. And that's the bit that we can influence and that's what we're focusing on.

There's a question about beyond telcos. How are the non-telco partners progressing?

Well, as you see, hopefully, you saw from the survey, right, there's definitely now an increasing interest from the content providers to move into those verticals. Now a lot of the telcos are in progress. And banks and retailers are the two that sort of come at the top, and we see a good pipeline in both of those. We also have some other more interesting and different verticals that we're talking to customers as well. We'll see whether they're going to -- which of those is going to be successful. For us it's, telcos remains a priority. That's where the bulk of the subscriptions that bundled go through. Banks and retailers absolutely are probably the next two, but there are others as well. So you'll see more as we go throughout the year, but our primary focus is on the telco. And you can see outside of the U.S., there's lots of green space and white space for us to expand into and bring new logos onto the platform.

In terms of scaling DVM growth, which regions are the focus? I know you touched on it in the presentation, which regions are the focus for new partner wins in the next 12 to 18 months? And then, how do you see the competitive landscape evolving and the biggest risks within that?

So I think for sure, new part of wins we see sort of outside the U.S. where a lot of it is done. I think, there's also a question about we've done 6 of the top 8, what about the last 2. I think they're certainly not out of reach. One of those doesn't really do that much bundling, so maybe less of a criteria. So there's still a little bit to go in the U.S. But really, the growth in terms of new logos we see will come in sort of Asia and Europe in particular and Africa, we'll see how that goes and sort of how that expands.

And the MTN South Africa announcement, which was issued last week, are the margins comparable to other markets? Or are they lower given that subscriptions are less expensive in these regions?

So I think, it depends on MTN margin, because DBM is a high-margin business. So DBM is and will always remain a high-margin business. But obviously, economics and the deal structure are very different in that particular region, but there's very, very high volume. So the margins will remain high, close to 100% for the DBM license. But the way the deal is structured and the way the economics put together are slightly different just given the different economics that people like Netflix, telco and ourselves sort of feel in that region.

And are we expecting to roll out MTN in South Africa?

Yes, certainly, I think that's where it's going to start with an SVOD service in South Africa and then it will move into other countries. And then, each country will be adding more and more services. So great opportunity, certainly a lot of demand. It's a case of sort of rolling out in that region and getting what is quite heavy prepaid market live as quickly as we can.

Question on the pricing model. How does the pricing model work for both segments, transactions, and DBM? And are you intending to split out EBITDA reporting for both segments?

Sure. I'll take that one. So as we discussed in the past, the transactional segment is based on a percentage of end user spend and that percentage can obviously vary depending on the commercial arrangement or whether it be for physical goods or digital goods. For the DBM, this is a mixture of one-off integration fees initially and then each partner will then be subject to a recurring license fee stream. And that license fee revenue is basically linked to the number of subscriptions to the platform. And typically, we talk about customers scaling the license tiers. So each contract would have bundling for particular license fees dependent on the number of subscriptions. So as those customers grow and more subscriptions come up to the platform, then the license fee will also increase. And then, in terms of reporting segments separately, I completely agree with this. We've obviously got two very different business units within Bango, each that has their own sort of different drivers. And so, I think the intention definitely is to start reporting these separately from next year to provide better visibility on the overall business to investors.

And on the B2 -- different business in DVM and transactional. What's the competition we face for each of those?

Yes, sure. I think first thing, we talked about that transaction and that DCB business. A lot of the core deployments, I think most of our growth, while we're all launching new telcos and new merchants, the growth really comes from existing customers. And so competition has historically been from operators looking to do it themselves or to use an integrator, which the two global integrators are ourselves. So that's where that market sits. On the Digital Vending Machine on the bundling side, really our biggest competition is people looking to do themselves and that build versus buy business case is always the first thing we go through with any new customer. And really, as you move from simple bundles to multi-party and as you bring on more content providers, that equation bias is very much in our favor and it becomes very much a very simple buy decision about that. There are other companies in the market that have a product that does similar things. Amdocs being the most obvious one with own market -- own products. They are obviously a big OSS, BSS provider for telcos with a bundling or so, but other side. And so I think it's always good in the market for our competition. We're very different than Amdocs in terms of scale, size, pricing model, product capability, number of merchants integrated, et cetera, et cetera. And so, I think there is -- in some ways, it's great to have competition and they're great to compete against because we are so different.

How sensitive are the number of subscriptions we manage by DVM to changes in consumer spending?

Yes. I guess a couple of ways. Firstly, the license fee that we charge is not based on the retail price of a subscription. It's based on just the number of subscriptions. And secondly, actually, what we see is generally with a squeezing consumer spending, everybody becomes a bit more creative in terms of the offers that they get together. So it drives more discounts, more bundling. So somewhat ironically, that sort of works. It works in our favor because telcos get more creative. They want to protect their core telco pricing and really sort of put some really good offers into the market. So ironically, it's sort of almost the opposite that you would expect.

Question on operating profit margin is, following in the first half from FY '24, what are the expectations for operating profit and future margins?

Sure. So as you've seen in the results for this period, we've got a nice balance of growth coming from recurring revenue. We've got gross margins expanding, and we've got cost reducing, and that's really supporting, as I mentioned, the 66% increase in adjusted EBITDA. You've seen the adjusted EBITDA margin move from 17% to 27% off the back of that. So there's a high level of operational gearing in the business. So as revenue improves, that will all drop through. So whilst we've got an operating profit margin loss for this year, we can expect to be positive next year. And I see -- so just reading the Q&A, there's a separate question on when I mentioned we expect to be profitable next year on what basis. So just to be clear, bottom of the P&L, net profit for the year, absent anything unforeseen, we'd expect the benefits of everything that we've been doing over the last couple of years to show a bottom line profit in fiscal year '26.

We have a question about when Bango will achieve tangible growth?

I can take that one. I think obviously, delivering a 66% increase in adjusted EBITDA, I would suggest that, that was tangible growth. But look, I think as I just mentioned in the previous question, the nice thing that we're facing here is that we've got different pillars all supporting growth, so be it revenue, be it margin expansion, be it cost reduction. We're not dependent on any one single pillar. So we're seeing those all align now. And I think the real benefits will be apparent as we move into fiscal year '26, because we'll also move away from some of the legacy exceptional costs that obviously have been weighing on the bottom line as well. So as we continue to mention, the outlook for fiscal year '26 should be one of material cash generation.

You mentioned having no churn, which is great. How simple is it for customers to cancel contracts in either segment? Would you have advanced notice?

So yes, there were some advanced notice. I mean, I think the contractual cancellation is one thing. You then have the challenge of migrating the services from whatever system to the other. And what we've seen increasingly is on the DCB churn, there's very, very low churn. It's very rare that people -- it does happen, but it's very, very rare. On the DVM side, and that's why we're doing things like this offer management and this prepaid, not only to get services launched more quickly, but to embed the DVM more deeply in the telcos back office system. So while contractual churn, I think, is sort of one question, the actual practical churn is much, much harder than anything that's written in the contract. And that's really the value of the DVM and the more subscriptions that get on to it, more users that are using it, the bigger you are in the growth curve, the harder it gets.

Why does Bango have such a high cost structure?

Yes. So look, historically, we've obviously had the integration of the Document Digital acquisition, which has naturally made that cost base elevated. You can see in the numbers, and that's part of the reason why we've introduced this core administrative expenses metric, because that does show the level of core controllable costs, and that has been coming down, 20% cumulatively in the last 24 months and 9% this year. That naturally does get distorted by the things like depreciation and amortization rising and the exceptional costs. As I talked about before, those exceptional costs should cease next year so that we can remove that from the cost base. The D&A is yet to peak. Naturally, we've made a lot of investment historically, and so there is that lag effect for D&A to catch up, but we are approaching that peak. I'd like to say towards the end of next year, and you can see the R&D CapEx investment continuing to trend down. And so the D&A will follow that soon after.

Related to the quote around Verizon in the presentation, what is the timeline for Verizon to reach their targeted penetration of having all their subscribers under the model?

Yes, I think that's probably a better question for the Verizon results call. But I think the key element there is you clearly see their ambition, you see their ambition impacting other players in the market as we see more and more launches in that market. So I think the timing is always very, very hard to predict. I think its endpoint is inevitable quickly is the challenge and the answer to the question, none of us know is how quickly we'll get there. But clearly, there's a drive on our side. There's a drive from the content owner side and there's a drive from the telco side. So everybody is pushing in the same direction. So I'd say it's not a question of if, it's a question of when.

Thank you. That concludes the Q&A. So I'll hand back to Jake.

Perfect, guys. That's great. And thank you very much indeed for being so generous of your time then addressing all of those questions that came in from investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you afterwards. But Paul, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Yes, sure. Thanks again, everybody, for taking your time and for all the Q&A. We had loads come in there. And I think we've answered certainly all of them. I really do appreciate that level of engagement, and we want to keep that moving, right? That's why we launched our Investor hub, where you can register, receive updates and ask questions against RNSs and see our answers online and see answers to questions other investors have raised online. So I really encourage everybody, especially on the retail side to join that investor hub. It's a great way of keeping up to date of what's going on in the company, and you can see some other ways of doing that as well. But that investor obviously really should be, I think everybody's go-to place for asking questions or finding out more about what's going on in the company. And that's what we tried to do today, is lay out not just what happened in the first half, but what we're seeing in some of the different geographies and what we're seeing in terms of the future of the company. And I think if you look at the future, as Matt said, we've got sort of great top line growth in the transactional business in those core routes. The DBM growth continues to grow. Cost base is coming down, the R&D CapEx base is coming down, giving significantly improved profitability, no matter which line in the income statement we measure on. And that will result in significant cash generation and a reduction in that net debt in 2026. So I think come the end of 2026, the businesses will be in a very, very different shape than it is today. I think we're in a great position of the market. And I'm looking forward to what will be a busy 8 to 9 days talking to institutions. But during that period, please do engage with us on investor if you've got any questions. And thanks again for your time. And for those shareholders, thank you for your ongoing support.

Perfect. Paul, that's great. And thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Bango plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.