Boku reports positive trading ahead of full year results as APM focus starts to deliver

Boku, a London-listed specialist payments processor, has released a positive trading statement in anticipation of full-year results due later in the year. The company, which has roots in direct carrier billing, is now focused on offering local payment methods (LPMs) to an impressive client roster that includes major names such as Google, Apple, Microsoft, Disney, and Netflix. LPMs, including digital wallets like Alipay and PayTM, are commonly referred to as alternative payment methods (APMs) by the card industry.

According to CEO Jon Prideaux, APMs have become the primary growth driver for Boku, putting it in competition with APM specialists like PPRO and acquirers with strong APM capabilities like Checkout and Worldpay. Boku recently secured agreement to process APM payments for Amazon Prime Video subscriptions in Southeast Asia and Africa. As part of the deal, Boku issued some share warrants to Amazon.

Boku’s new strategy appears to be yielding early success. Total payment volume increased 9% to “at least” $8.9bn in 2022, with revenue expected to grow 2% (or 14% at constant currencies) to $63.3m in the full year with performance weighted to the second half. The take rate fell 5bps to 0.71%. 

Operational metrics also showed positive developments, with monthly active users up 28% in H2 to 52.3m and a four-point increase in the share of APM users to 7%. Encouragingly, 15% of new users opted for APMs, indicating a long runway for growth.

Boku must guard against margin erosion as volumes and customer numbers grow. In 2022, payment volume per user decreased 15% to $170, and revenue per active user decreased 20% to $1.21, though these figures are impacted by the strong dollar.

Management highlighted the firm’s strong cash generation, with adjusted EBITDA of $20m in H2, and its strong balance sheet. Boku is debt-free following the sale of its identity business to Twilio for $32.5m in February 2022.

In its own trading update, Bango, a smaller carrier billing specialist also listed on the London market, reported payment volume up 39% to $5.6bn in 2022 and revenue up 59% to $32.9m.