Boku — FY24 ahead of expectations

Boku (AIM: BOKU)

Last close As at 22/01/2025

GBP1.90

−2.50 (−1.30%)

Market capitalisation

GBP567m

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Research: TMT

Boku — FY24 ahead of expectations

Boku’s FY24 trading update confirmed that revenue and adjusted EBITDA were ahead of our forecasts, helped by strong growth in total payment volume (TPV) of c 18% (c 23% in constant currency, cc). Revenue was c 20% higher y-o-y (c 24% cc) and the adjusted EBITDA margin of c 31.7% was above the 30% minimum the company has committed to as it invests in scaling the business. We have upgraded our revenue forecasts for FY24–26 and our adjusted EBITDA forecast for FY24. We leave our adjusted EBITDA forecasts unchanged for FY25 and FY26, assuming the company invests any incremental margin in FY25 before allowing margins to expand from FY26. Also factoring in share buybacks in H224, we raise our diluted normalised EPS forecasts by 3.3% in FY24 and 0.5% in FY25 and FY26.

Katherine Thompson

Written by

Katherine Thompson

Director

Software and comp services

FY24 trading update

23 January 2025

Price 190.00p
Market cap £566m

Net cash/(debt) at end FY24

$177.0m

Shares in issue

298.0m
Free float 79.1%
Code BOKU
Primary exchange AIM
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs 4.4 11.8 20.6
52-week high/low 195.0p 152.5p

Business description

Boku operates a billing platform that connects merchants with mobile network operators and alternative payment methods in more than 70 countries. It has c 450 employees, with its main offices in the US, UK, Estonia, Germany and India.

Next events

FY24 results

18 March

Analyst

Katherine Thompson
+44 (0)20 3077 5700

Boku is a research client of Edison Investment Research Limited

Note: EBITDA and diluted EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Year end Revenue ($m) EBITDA ($m) EPS ($) DPS ($) P/E (x) EV/EBITDA (x)
12/23 82.7 25.8 0.06 0.00 42.1 20.2
12/24e 99.2 31.4 0.07 0.00 33.5 16.6
12/25e 112.2 35.8 0.08 0.00 30.3 14.5
12/26e 122.3 40.5 0.09 0.00 27.2 12.9

Higher payment volumes drive upside

Boku expects to report FY24 TPV, revenue and adjusted EBITDA at least 3.3%, 2.4% and 1.3% ahead of our forecasts, respectively. The business has seen good performance across all payment types, with continued strong growth in new users of digital wallets and account-to-account (A2A) connections. Monthly active users totalled 88.4m in December 2024, up 11% h-o-h and 31% y-o-y, driving 23% cc growth in TPV to $12.4bn Revenue is expected to exceed $99m, adjusted EBITDA is expected to exceed $31m with a margin of c 31.7%, and Boku’s own cash at year-end was c $80m.

Upgrading revenue, assuming margin re-investment

We have revised our FY24 forecasts to reflect the trading update, upgrading adjusted EBITDA by 2.7%. For FY25 and FY26, we have increased our TPV and revenue forecasts. In FY25, we expect Boku to reinvest incremental margin to support longer-term growth before allowing margins to expand in FY26. We maintain our FY25 and FY26 adjusted EBITDA forecasts, resulting in margins of 31.9% and 33.1%, respectively. The company plans to report FY24 results on 18 March, when we expect further detail on the contribution from digital wallets/A2A.

Valuation: Not factoring in longer-term growth

Boku is trading at a small premium to its peer group on FY24/25 EV/EBITDA multiples. Via a reverse discounted cash flow that uses our forecasts to FY26 and a WACC of 8.3%, we estimate the share price is factoring in revenue growth of 3% and average EBITDA margins of 30.9% for FY27–33, which in our view is extremely conservative considering the potential of the digital wallet/A2A market and the current level of profitability. A growing contribution from Amazon, continued adoption of local payment methods and new major merchant sign-ups would be the main drivers of longer-term growth and profits.

FY24 trading update

Exhibit 1 summarises the data released in the FY24 trading update. Boku reported revenue growth of c 20%, or 24% when measured in cc, ahead of our forecast for growth of 17%. This was due to higher-than-expected TPV growth of 18% (versus our 14%). The take rate of 0.80% was slightly below our 0.81% forecast but ahead of the 0.79% achieved in FY23; we expect this is due to the mix between payment types rather than pricing pressure. Adjusted EBITDA of at least $31m is ahead of our $30.6m forecast with a slightly higher margin of 31.7%. This is well ahead of the 30% minimum margin the company has committed to while it is investing in scaling the business.

The company closed the year with a cash position of c $177m, up 17% y-o-y. This was below our $198m forecast, although this had not taken account of H224 share buybacks totalling $9.1m. Boku’s own cash (ie, excluding merchant cash in transit) increased to c $80m from $70.4m at the end of FY23 and $75.2m at the end of H124.

Outlook and changes to forecasts

We have revised our forecasts to reflect the stronger FY24 performance and also factor in share buybacks made in H224 (four million shares costing $9.1m). While we have increased our TPV and revenue forecasts, we have maintained our adjusted EBITDA forecasts, assuming that in FY25 the company invests any additional margin in products and infrastructure before allowing margins to expand in FY26.

General disclaimer and copyright

This report has been commissioned by Boku and prepared and issued by Edison, in consideration of a fee payable by Boku. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

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