Interim Results

RNS Number : 7130A

Boku Inc

27 September 2022

 

27 September 2022

Boku, Inc.

("Boku" or the "Company" and, together with its subsidiaries, the "Group")

Interim results for the six months ended 30 June 2022

Strong performance across the Group

Boku, a leading provider of global mobile payment solutions, is pleased to announce the following unaudited interim results for the six months ended 30 June 2022.

Jon Prideaux, Boku's CEO, commented : "Our efforts on eWallets and real-time payments are being validated. In the first half the number of Monthly Active Users of these new payment methods increased 8-fold and value processed increased by 11 times. We launched into new merchant verticals, such as ride sharing, and into new territories such as Vietnam, Pakistan and Nigeria. We launched over 50 new connections with customers such as Netflix, Meta, Apple, Amazon, Spotify, Samsung, Sky and EA Games in the half. These new launches will build our revenues over the coming months and years. Post period end, we have had a number of pieces of very encouraging news. One highlight is a new contract with the world's leading ecommerce company, Amazon, with whom we've recently signed a multi-year agreement for these new payment types. Additionally, we have recently launched an existing major merchant into China for the first time on the country's largest eWallet, Alipay -- volumes on this connection are ahead of our expectations. Truly, the future is bright for Boku. Our strategy is working. No longer the big fish in the small pond of Direct Carrier Billing, Boku is starting to make waves in the Big Pond."

Group Highlights

·	The Group saw further growth in volume processed through its mobile-first payments network of Direct Carrier Billing ("DCB"), Bundling, eWallets and real-time payments in the first half of 2022, with total volumes up to $4.3bn.
·	Monthly Active Users ("MAUs") ** increased to 46.3m in June 2022, up 22% on a year earlier.
·	Total Payments Volume ("TPV")**** generated from the newer Local Payment Methods ("LPMs") - eWallets and real-time payments - increased eleven times compared to H1 2021, with new users of these LPMs up six times.
·	Boku's Identity division, as previously announced, was sold on 28 February 2022 to Twilio for a maximum consideration of $32.5m, leaving Boku as a pure play Payments business.

Following the disposal of the Identity division on 28 February 2022, the results of this division are shown as discontinued in the 2022 interim results and so we only provide here the continuing Payments division results. The prior period comparatives have also been adjusted and exclude the Identity division results.

Financial Highlights

·	Payments revenues for H1 2022 were $30.3m (H1 2021: $30.7m). The strength of the US dollar against major currencies has affected these results ( e.g. on average Japanese Yen down 12%; Euro down 9%; Pound Sterling down 6%; Korean Won down 9%). On a constant currency basis*, revenues would have been 7% higher than the same period in 2021.
·	Payments adjusted EBITDA of $9.5m (2021 H1: $11.2m) as currency headwinds impacted and we continued our investment in Boku's mobile-first payment network.
·	Group profit after tax of $28.0m (H1 2021: $1.7m), which includes the profit on the disposal of Boku's Identity division of $24.6m.
·	Group cash of $67.8 million at 30 June 2022 up from $62.4m at 31 December 2021 and $ 48.6 m on 30 June 2021. The Group is now debt free having used the proceeds from the disposal of the Identity division in February 2022 to pay off its debt, along with operating cash generation in the period (before working capital movements).
·	The average daily cash balance, a measure which smooths out the effect of carrier and merchant payments, was $63.3m in June 2022, up from $50.8m in December 2021, and $38.0m in June 2021.

Operational Highlights

·	Underlying Payments metrics continuing to grow:
o		46.3m Monthly Active Users of the Boku platform in June 2022 (June 2021: 37.9 million), a 22% increase.
o		28.8m new users made their first payment or bundling transaction with Boku during the first half of the year.
o		TPV**** of $4.3bn in H1 2022 up from $4.0bn in the same period last year despite currency headwinds.
·	Strong growth in the new Local Payment methods ("LPMs"):
o		Volumes processed from LPMs including eWallets and Real Time Payments increased eleven times compared with H1 2021.
o		MAUs of eWallets and real-time payments increased eight times to over 2.1m in June 2022 compared to the same period in 2021.
o		New users of LPMs increased o ver six times to 3.1m in H1 2022 (up from 0.5m in the same period in 2021).
·	Over 50 new launches in H1 2022 with existing and new merchants including Netflix, Meta, Apple, Amazon, Spotify, Samsung, Sky and EA Games, through Boku's expanded mobile-first network.
·	Boku has continued to invest in its regulated payment capabilities which now cover more than 50 markets. A recent highlight is the granting of a payments licence in the Philippines.
·	Mobile-first payments network expanded to over 7bn end user accounts, 42% of which are non-DCB.
·	Identity business sold to Twilio on 28 February for a maximum consideration of $32.5m.

*   Constant currency calculated by applying the monthly average foreign exchange rates in H1 2021 to the actual H1 2022 monthly results.

**   Monthly Active Users (MAU) data includes all users who successfully processed a payment or had an active bundle during the last month of the period.

***   Adjusted EBITDA (Earnings before interest, taxation, depreciation and amortization): Adjusted for stock option expenses, foreign exchange gains/losses and Exceptional items. See reconciliation per the income statement.

**** TPV is the US$ value of transactions processed by the Boku platform and includes transactions from DCB, Bundling, eWallets and real-time payments. Prior periods excluded bundling.

Enquiries:

Boku, Inc. Jon Prideaux, Chief Executive Officer Keith Butcher, Chief Financial Officer	[phone]
Peel Hunt LLP (Nominated Adviser and Broker) Paul Gillam/ Tom Ballard/ James Smith	[phone]
IFC Advisory Limited (Financial PR & IR) Tim Metcalfe / Graham Herring / Florence Chandler	[phone]

Notes to Editors

Boku Inc. (AIM: BOKU) is a leading global provider of mobile payment solutions. Its mobile-first payments network provides multiple mobile payment methods, including mobile wallets, direct carrier billing, and real-time payments schemes, reaching over 7 billion mobile payment accounts in 92 countries - all through a single integration.

Customers that trust Boku to simplify sign-up, acquire new paying users and prevent fraud include global leaders such as Amazon, Apple, Facebook/Meta, Google, Microsoft, Netflix, PayPal, Sony, Spotify and Tencent.

Boku Inc. was incorporated in 2008 and is headquartered in London, UK, with offices in the US, India, Brazil, China, Estonia, France, Germany, Indonesia, Japan, Singapore, Spain, Taiwan and Vietnam.

To learn more about Boku Inc., please visit: https://www.boku.com

Chief Executive Officer's Report

"After climbing a great hill we find that there are other mountains to climb… I dare not linger for my long walk has not yet ended" - Nelson Mandela

When Boku started in 2009, buying things and charging it to your phone bill was only used to do things like get a new ring tone or register a vote in a TV Talent contest - but at Boku, we have made this into a mainstream payment service. We realised that the Direct Carrier Billing ("DCB") technology was best used to help merchants acquire new paying users and hence customised our product to that end. Over the last two years alone, we've helped the world's leading digital companies - including Apple, Google, Sony, Microsoft, Spotify and Netflix - to acquire more than 100 million new users. And still there is plenty of room for growth; there are around 300 connections in our DCB network, the average merchant is only using 10% of them. When we started in DCB, there were many challengers, but Boku was able to emerge as the leading company in the field, the scale player. We could have simply sat back and rolled out more connections; we could have enjoyed the view from the top of the hill that we had climbed, but there was a bigger mountain to climb.

Another Mountain

That mountain is the wider local payment method market, comprising not just mobile network operators, but also mobile wallets and real-time banking payments. Whereas DCB is generally constrained to purchases of digital consumer entertainment, these other payment methods can be used to buy anything and everything. Local payments more generally are an enormous market and developing very quickly. This can be illustrated with some data and an anecdote:

First the data: On 16 November 2020 - less than two years ago - Banco Central do Brazil launched PIX. You don't see central banks featured in lists of top fintech innovators nor lauded in fancy founder photoshoots. But maybe one should be. Since launch, PIX has grown to become one of the leading payment mechanisms in the world, processing 1,930,514,219 transactions in June 2022. The equivalent figure for the UK's Faster Payments Service, launched in 2008, is 321,826,000. Adjusting for population, this means that each Brazilian adult made twice as many real-time bank payments in a month when compared to Britons. The US real-time bank system is called Fednow. It will be launched, a year ahead of schedule, in 2023.

The anecdote: There is an employee in our San Francisco office. He'd come over from Indonesia to study and now was working in the global epicentre of technology, Silicon Valley. He had recently visited his parents in Jakarta, having not been back for a couple of years due to COVID. He didn't have an Indonesian mobile wallet on his phone, so was relying on cash - but he had trouble buying things, even street sellers didn't want to take it, they didn't have change. They wanted to be paid with mobile wallets, not Visa or Mastercard, not even cash. This story is common. It's Western markets which are the laggards now.

Mobile-first Network

If you want to sell you have to adapt to local norms: in countries where local payment methods are popular, it's not enough to just put-up Visa, MasterCard and PayPal. But integrating local payment methods is hard. There are no simple standards. Getting the money out of the country is subject to regulation and you have to navigate complex local taxes. User interfaces are inconsistent. And once you've connected to one, you have to do all the work all over again to enable a second method. To get comprehensive coverage, there will be dozens to do.

This is where Boku can provide the solution. We are becoming a global local payment method provider, riding the wave of expansion in payment methods that operate in a single country.

Boku's mobile-first payment network spans more than 7.1 billion accounts in 92 countries, 3 billion of which are for the newer payment methods, eWallets and real-time payments. Merchants can access them all with one integration, one contract and one settlement, vastly simplifying the process of accepting these vital payment methods.

Strong Merchant Adoption

It's working. Merchants are adopting Boku's Local Payment Method offer, expanding their usage beyond Direct Carrier Billing. Perhaps the best way of illustrating this is by letting one of our customers talk about how we've been able to help them grow in Asia (against trends in other parts of the world). In a recent interview with Bloomberg, Netflix explained the reasons for their growth in APAC, where they'd put on more than one million new subscribers. The article said that it was because they "attract sign-ups through innovative payment methods, like allowing users to include their subscription fees in their monthly phone bills or pay via digital wallets." And went on to say that, "the number of new members signing up last year using alternative payment methods more than tripled from the previous year, and these measures have been adopted in other markets after their successful launch in Asia".

No merchant has done more to change the way consumers shop than Amazon. With the acquisition of Fortumo, Amazon became a Boku customer. We help them to distribute their Prime offerings through more than a dozen mobile network operators, but we hadn't directly provided payment services to them before. The recently announced agreement changes that. It is a material expansion of the relationship and a validation of our strategy. Boku was selected by Amazon on the strength of its wallet network. The multi-year agreement allows us to provide payment services to any Amazon division and it is boosted by an arrangement that grants Amazon market price warrants in return for achieving demanding revenue targets.

Truly Boku is making progress into the Big Pond: continuing to operate a strong Direct Carrier Billing payments platform but driving its growth further with newer payment methods - eWallets and real-time payments - validated by more big merchant wins.

Strong Balance Sheet

Boku completed the disposal of its Identity business to Twilio on 28 February 2022 for a maximum $32.5 million. The timing of this disposal was opportune and we recorded a gain on disposal of $25.2 million net of disposal costs.

With more than $67 million in cash at the end of the period, all debt repaid and strong underlying cash generation before working capital movements, the Company implemented a share buy-back programme in July in part to offset share awards to be made to employees. Boku's strong balance sheet gives the Company considerable optionality to pursue acquisitions that could help accelerate our efforts on local payments.

Strong Underlying Performance

Our performance in the first half of 2022 can be seen through two lenses. When viewed in Boku's reporting currency, USD, the results don't look that spectacular. The context is that the comparison is against a COVID inflated first half of 2021 and, in particular, the appreciation of the dollar by 15%, or more, against many of our trading currencies. Strip away these distortions and a much stronger picture emerges. Monthly Active Users ("MAU's"), including those from both payments and bundling have increased to 45.4 million up by 21% from last year's figure of 37.4 million. Total Payment Volume was $4.3 billion, up from last year's figure of $4.0 billion despite currency headwinds.

It's when you look at the performance of the newer payment methods that you can start to see the traction really showing through. MAUs in June 2022 on eWallets and real-time payments increased eightfold to 2.1 million up from 0.25 million a year earlier. The number of new users - a strong leading indicator - increased sixfold to 3.1 million over the half year, representing around 14% of all new users in the period. Growth is increasingly being driven by our efforts in these new business areas. 

Current Trading and Outlook

Our efforts on eWallets and real-time payments are being validated. In the first half the number of Monthly Active Users of these new payment methods increased by 8-fold and value processed increased by 11 times. We launched into new merchant verticals such as ride sharing and into new territories such as Vietnam, Pakistan and Nigeria. We launched over 50 new connections with customers such as Netflix, Meta, Apple, Amazon, Spotify, Samsung, Sky and EA Games in the half. These new launches will build our revenues over the coming months and years. Post period end, we have had a number of pieces of very encouraging news. One highlight is the recently signed agreement with the world's leading ecommerce company, Amazon, with whom we've signed a multi-year for these new payment types. Additionally, we have recently launched an existing major merchant into China on the country's largest eWallet, Alipay - volumes on this connection are ahead of our expectations. Truly, the future is bright for Boku. Our strategy is working. No longer the big fish in the small pond of Direct Carrier Billing, Boku is starting to make waves in the Big Pond

Chief Financial Officer's Report

The first half of 2022 saw good underlying growth in users and processed volumes in local currencies, however when converted into our reporting currency of USD, which strengthened against most major currencies, that strong performance was masked. We also successfully completed the disposal of our Identity business at a favourable time for valuations in February 2022 allowing us to focus on our core Payments business. As a result, the group reported a profit after tax of $28.0 million for the period, helped by the profit on disposal from the successful sale and we have significant cash balances at the end of the period.

Financial review

Group Income Statement to Adjusted EBITDA*

Following the disposal of Boku's Identity division on 28 February 2022 the income statement includes revenues and adjusted EBITDA relating only to the continuing Payments business. The prior half year comparatives have been restated accordingly.

Payments division (continuing)

Revenues for the continuing Payments business were $30.3 million (H1 2021: $30.7 million) up 7% on a constant currency basis and Adjusted EBITDA* was $9.5 million in the first half (H1 2021: $11.2 million) as significant currency headwinds impacted both revenues and adjusted EBITDA and we continued our planned investment in our mobile-first payments platform. Gross margins for the continuing Payments business of 97% remain high (2021: 96%). These results were underpinned by a 22% increase in monthly active users to 46.3 million (2021: 37.9 million).   28.8 million new users made their first payment or bundling transaction with Boku during the first half of the year.

We completed more than 50 new launches for DCB, eWallets and real-time payments in H1 2022 with existing and new merchants including Netflix, Meta, Apple, Amazon, Spotify, Samsung, Sky and EA Games through Boku's expanded 'mobile-first' network. These drove an increase in Total Payment Volume ("TPV")** to $4.3 billion (H1 2020: $4.0 billion) and that growth was higher on a constant currency basis.

Even more exciting is the exponential growth in the newer Local Payment Methods ("LPMs"), including eWallets and real-time payments, where v olumes processed increased eleven times and monthly active users increased eight times to over 2.1 million in June 2022, both compared to the same period in 2021. New users of newer Local Payments Methods increased o ver six times to 3.1 million in H1 2022 (up from 0.5 million in the same period in 2021).

Average weighted take rate (revenue divided by TPV) for Payments were broadly stable with 2021 rates at 0.7%. Our merchant relationships and connections remain highly 'sticky' and as a result, s ince IPO, Boku has not reduced its rates to any of its merchants nor has it lost a material merchant or connection.

Adjusted operating expenditure*** increased for the Payments business as per our stated strategy, as we invested in our expanded 'mobile-first' payments network, which now includes eWallets and real-time payments, with planned increases in operational headcount and sales and marketing spend as Boku moves into new markets. However, the operational leverage inherent in our platform business remains strong and, as a result, we expect Payments adjusted EBITDA* margins to increase again in 2024 and beyond.

Adjusted Operating Expenditure (Payments only)***

	Unaudited	Unaudited
	Period  ended	Period  ended
	30-Jun	30-Jun
	2022	2021
	$'000	$'000
Gross profit	29,379	29,450
Adjusted EBITDA**	(9,506)	(11,171)
Adjusted Operating Expenditure	19,873	18,279

Boku has continued to expand its regulated payment capabilities to cover more than 50 markets. A recent highlight is the granting of a payments licence in the Philippines.

The Fortumo brand has now been discontinued both internally and externally, and the Payments business now trades solely as Boku. As a result, the Fortumo brand name included in intangibles, which was separately valued as part of the Purchase Price Allocation ("PPA") work at the time of the acquisition of Fortumo in July 2020 has been fully impaired in the first half.

Identity division (discontinued)

Boku's Identity division was divested during the first half to allow the business to focus on its expanding Payments business.  Although the Identity business had seen good growth in 2021, we felt unable to provide the further continued investment we believed the business would need particularly given the investment also needed into the larger eWallet/RTP opportunity in Payments. As a result, the Identity business was sold to Twilio on 28 February 2022 for a maximum consideration of $32.5 million with Boku receiving the bulk of the consideration on the date of the deal with $6.5 million held back by Twilio for a maximum of 18 months subject to meeting certain criteria. Included in this total is an indemnity of $5.6 million against possible future claims for 18 months from the transaction date which expires at the end of August 2023. Management believes the likelihood of any claims under this indemnity to be extremely low and therefore that it is virtually certain that the full amount will be received. As a result, the full amount has been included in the profit from discontinued operations in the Income Statement. This deferred amount is included within non current assets on the Balance Sheet.

The funds received were used to pay down the remaining debt of $8.1 million from the earlier acquisition of Fortumo and the group is now debt free and had cash balances of $67.8 million at the end of June.

The sale was well timed from a valuation perspective and resulted in a Profit on disposal of $25.2 million net of disposal costs. This along with the Identity losses incurred in the two months of trading to 28 February are shown in the 'Discontinued Operations ' line on the face of the Income Statement.

Group Operating Profit from Continuing Operations

Group operating profit from continuing operations (Payments) for H1 2022 was $4.1 million compared to $4.6 million for the same period in 2021, as we impaired the carrying value of the Fortumo brand by $1.26 million. This can be broken down as follows:

· Other income of $0.4 million relates to income from providing ongoing accounting services to Twilio following the sale of the Identity business to enable a smooth transition. This amount has been excluded from adjusted EBITDA** as a non-trading, non-recurring item. (In H1 2021 'Other Income' of $1.08 million related to the difference between the fair value of contingent consideration relating to the acquisition of Fortumo as determined at 31 December 2020 and the actual amount paid to Fortumo shareholders. This amount was excluded from Adjusted EBITDA* as a non-trading, non-recurring item).

· Foreign exchange movements resulted in a small loss of $0.06 million (H1 2021: $0.07 million loss)

· Share Based Payments expense fell to $1.9 million in H1 from $4.6 million in H1 2021. The Share Based Payments expense comprises the IFRS 2 charge and related National Insurance expense. The current period includes a release of the National Insurance accrual as the share price was lower at 30 June 2022 than at year end. Boku continued with its policy of offering all staff share based awards annually. RSU and stock option charges are spread over three and four years respectively, and in line with their vesting conditions, from the date of grant.

· Exceptional Items in the period were $1.26 million (2021: $0.03 million) which relate to the impairment of the intangible relating to the Fortumo 'brand' which has now been discontinued.

· Financing expenses increased slightly to $0.52 million in 2022 (2021: $0.37 million). Although the loan taken to finance the Fortumo acquisition was repaid in full on 28 February 2022 from the proceeds of the sale of Boku's Identity division, the amortisation of the amount on the balance sheet relating to costs of setting up the loan were accelerated when the loan was repaid.

Profit from discontinued operations, net of tax

· Profit from discontinued Identity business of $24.6 million includes a $25.2million profit on disposal of Boku's Identity business to Twilio on 28 February 2022 net of disposal costs, and offset by the Identity trading loss for the two months to end of February 2022 and share based payments reversal (see note 4)

Net Profit after tax

· The Group reported a net profit after tax of $28.0 million for the period (H1 2021 : $1.7 million) primarily driven by profit from the discontinued Identity division of $24.6 million.

Balance Sheet and Cashflow

Group cash balances were $67.8 million on 30 June 2022 up from $62.4 million at 31 December 2021 and $ 48.6 million on 30 June 2021 . This includes proceeds from the disposal of Boku's Identity division on 28 February 2022 to Twilio, which were used to pay down remaining bank debt with Citibank of $8.1 million.

· The average daily cash balance, a measure which smooths out the effect of carrier and merchant payments, was $63.3 million in June 2022 up from $50.8 million in December 2021 and $38.0 million in June 2021.

· The Fortumo brand which was separately valued as part of the PPA work at the time of the acquisition of Fortumo in July 2020 and included in intangibles, has been written down from $1.26 million to zero ($1.44 million at 31 December 2021 less amortisation $0.18 million) as the Fortumo brand is no longer being used internally or externally.

· Intangible assets

	Unaudited	Audited
	Period ended	Period ended
	30-Jun	31-Dec
	2022	2021
	$'000	$'000
Goodwill	41,392	45,379
Fortumo brand, trade marks etc	-	1,441
Other intangibles	14,056	16,297
Intangible assets	55,448	63,117

· The reduction in goodwill and other intangibles relates primarily to the disposal of the Identity business in February 2022.

· We assessed our goodwill and other remaining intangibles for impairment and deemed that there were no other indicators of impairment and therefore no impairment exists at 30 June 2022.

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Group remain broadly consistent with the Principal Risks and Uncertainties reported in Boku's 2021 Annual Report. Since the 2021 Annual Report, the Board have been monitoring and mitigating the effects of global events on the Group's business, including the global macro-economic environment, inflation and the cost of living crisis across Europe but considers the risk to be insignificant. Boku charges a percentage of its merchants' transaction value, so as its merchants' increase prices, Boku's revenues increase. The average transaction value processed by Boku is approximately $10 and in previous difficult economic downturns it is large scale spend items like cars and holidays rather than the 'small luxury' items which have been cut. Boku is an international business operating in 92 countries so any risk is spread and to date Boku has seen no discernible impact from the macro-economic environment.

Going concern

In reaching their going concern assessment, the Directors have considered the foreseeable future, a period extending at least 12 months from the date of approval of this interim financial report. This assessment has included consideration of the forecast performance of the business, as noted above and the cash and financing facilities available to the Group. Considering all this analysis, the Directors are satisfied that, the Group has sufficient cash resources over the period of at least 12 months from the date of approval of the interim consolidated financial statements. As such, the interim consolidated financial statements have been prepared on a going concern basis.

Looking forward

We are encouraged by the first half progress despite significant currency headwinds, particularly the progress of our new Local Payment Methods where volumes and users have increased substantially. As recently announced, Amazon has signed a multi-year agreement with Boku to connect to these new payment types in multiple geographies. Similarly, Netflix has publicly stated that a combination of new DCB and LPM connections has driven their new subscriber growth in Asia which is offsetting falls in other regions. Both of these validate Boku's move into offering the new Local Payments Methods including eWallets and real-time payments via our expanded mobile-first network and so we look forward to the future with confidence.

Keith Butcher

Chief Financial Officer

26 September 2022

*	Adjusted EBITDA (Earnings before interest, taxation, depreciation and amortization): Adjusted for stock option expenses, Foreign exchange gains/losses and Exceptional items. See reconciliation to profit per the income statement
**	TPV is the US$ value of transactions processed by the Boku platform
***	Adjusted operating expenditure is Gross Profit less Adjusted EBITDA

Consolidated Condensed Statement of Comprehensive Income

Continuing Operations	(Unaudited) Period ended 30-Jun 2022 $'000		Restated (Unaudited) Period ended 30 -Jun 2021* $'000
Revenue	3	30,339		30,705
Cost of sales		(960)		(1,255)
Gross profit		29,379		29,450
Other Income (non-recurring)	3	385		1,080
Administrative expenses		(25,692)		(25,966)
Operating profit analysed as:
Adjusted EBITDA**		9,506		11,171
Other Income	3	385		1,080
Depreciation and amortisation		(2,718)		(3,168)
Share based payments expense		(1,898)		(4,592)
Foreign exchange gains		61		73
Exceptional items (impairment of Fortumo brand name)	8	(1,264)		-
Operating profit		4,072		4,564
Finance income	5	81		14
Finance expense	5	(518)		(370)
Profit before tax		3,635		4,208
Tax expense		(216)		(190)
Net Profit from continuing operations		3,419		4,018
Discontinued operations
Profit/(loss) from discontinued operations after tax	4	24,605		(2,288)
Total Profit for the year		28,024		1,730
Other comprehensive losses net of tax
Items that will or may be reclassified to profit or loss
Foreign currency translation loss		(3,978)		(863)
Total other comprehensive loss for the period		(3,978)		(863)
Total comprehensive profit for the period attributable to equity holders of the parent company		24,046		867
EPS - Total
Basic EPS ($)		0.0941		0.0059
Diluted EPS ($)		0.0921		0.0057
EPS from continuing operations
Basic EPS ($)		0.0115		0.0138
Diluted EPS ($)		0.0112		0.0134
EPS from discontinued operations
Basic EPS ($)		0.0826		(0.0076)
Diluted EPS ($)		0.0809		(0.0076)

*Restated due to discontinued operations see Note 4

**Adjusted EBITDA (Earnings before interest, taxation, depreciation, amortisation): Adjusted for share-based payment expense, foreign exchange gains/(losses), exceptional items and 'other income' in 2022 and 2021. See reconciliation to profit per income statement.

Consolidated Condensed Statement of Financial Position

	Note	( Unaudited) 30-Jun 2022 $'000	(Audited) 31-Dec 2021                    $'000
Non-current assets
Property, plant and equipment		4,735	5,670
Intangible assets		55,448	63,117
Financial asset at fair value through profit or loss	4	5,600	-
Deferred tax assets		2,908	3,105
Total non-current assets		68,691	71,892
Current assets
Trade and other receivables		83,111	82,557
Cash and cash equivalents	6	62,976	56,651
Cash and cash equivalents - Restricted cash	6	4,823	5,789
Total current assets		150,910	144,997
Total assets		219,601	216,889
Current liabilities
Trade and other payables		104,915	119,641
Loans and borrowings	7	-	1,125
Lease liabilities	7	783	1,335
Total current liabilities		105,698	122,101
Non-current liabilities
Other payables		876	1,700
Deferred tax liabilities		455	456
Loans and borrowings	7	-	6,688
Lease Liabilities	7	3,413	3,498
Total non-current liabilities		4,744	12,342
Total liabilities		110,442	134,443
Net assets		109,159	82,446
Equity attributable to equity holders of the company
Share capital		29	29
Share premium		249,550	246,883
Foreign exchange reserve		(6,692)	(2,714)
Retained losses		(133,728)	(161,752)
Total equity		109,159	82,446

Consolidated Condensed Statement of Cash Flows

	Note	(Unaudited) Period ended 30-Jun 2022 $'000	(Unaudited) Period ended 30-Jun 2021 $'000
Cash used in operations	8	(7,761)	(8,886)
Income taxes paid		(185)	(188)
Net cash used in operating activities		(7,946)	(9,074)
Investing activities
Purchase of property, plant and equipment		(104)	(205)
Purchased of software development		(2,677)	(2,348)
Proceeds from discontinued operations (net of cash disposed)	4	25,790	-
Proceeds from sale of assets		1	-
Interest received		81	14
Net cash from/(used in) investing activities		23,091	(2,539)
Financing activities
Payment of principal to lease creditors		(649)	(878)
Payment of interest to lease creditors		(130)	(116)
Issue of share capital on exercise of options and RSUs		315	1,031
Interest paid on borrowings		(76)	(191)
Loan settlement costs		(25)	-
Repayment of line of credit	4	(8,125)	(3,937)
Net cash used in financing activities		(8,690)	(4,091)
Net increase/(decrease) in cash and cash equivalents		6,455	(15,704)
Effect of foreign currency translation on cash and cash equivalent		(1,096)	1,622
Cash and cash equivalents at beginning of period		62,440	62,704
Cash and cash equivalents at end of period		67,799	48,622

Notes to the Consolidated Financial Information

1.  Corporate Information

The consolidated financial information represents the results of Boku Inc. (the "Company") and its subsidiaries (together referred to as the "Group").

Boku Inc. is a company incorporated and domiciled in the United States of America. The business office of the Company is located at 660 Market St, Suite 400, San Francisco, CA 94105, United States.

The Company's shares are quoted on the AIM Market of the London Stock Exchange ("AIM").

The principal business of the Group is the provision of mobile billing solutions for mobile network operators and merchants. These solutions enable merchants to accept online payments and avoid fraud, especially on mobile devices.

The Board of Directors approved this interim financial information on 26 September 2022.

2.  Basis of preparation and accounting policies

The condensed financial statements have been prepared using accounting policies consistent with international accounting standards. While the financial figures included in this half-yearly report have been computed in accordance with international accounting standards applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.  They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 31 December 2021 Annual Report. The financial information for the half years ended 30 June 2022 and 30 June 2021 does not constitute full financial statements and both periods are unaudited.

The annual financial statements of Boku Inc., (the "Group") are prepared in accordance with IFRS as issued by the IASB. The Annual Report and Financial Statements for 2021 have been issued and are available on the Group's investor relations' website: https://www.boku.com/investor-relations/reports-documents . The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 December 2021 was unqualified and did not draw attention to any matters by way of emphasis. 

The same accounting policies, presentation and methods of computation are followed in the condensed financial statements as were applied in the Group's latest annual audited financial statements , except for the income tax which is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year and those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2022 and will be adopted in the 2022 financial statements. There are deemed to be no new and amended standards and/or interpretations that will apply for the first time in the next annual financial statements that are expected to have a material impact on the Group.

In accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', the comparative income statement has been re-presented so that the disclosures in relation to discontinued operations relate to all operations that have been discontinued by the balance sheet date (see Note 4). 

Non-current assets held for sale and discontinued operations

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale.  Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier.  When an operation is classified as a discontinued operation, the comparative income statement is restated as if the operation has been discontinued from the start of the comparative period.

Going concern

The interim consolidated financial statements have been prepared on a going concern basis. The ability of the Group to continue as a going concern is contingent on the ongoing viability of the Group. The Group meets its day-to-day working capital requirements through its cash balances and has a bank facility that it can use.

The Directors have prepared cash-flow forecasts covering a period of at least 12 months from the date of approval of the financial statements, with the forecasts and projections, taking account of reasonable possible changes in trading performance. They show that the Group expects to be able to operate within the level of its current cash resources and bank facilities. Further information on the Group's borrowings and available facilities is given in Note 7.

Furthermore, in carrying out the going concern assessment, the directors have considered a number of scenarios, including changes in sales volumes and the timing of settlement of existing debts together with cost savings associated with these changes and the directors have the ability to identify cost savings if necessary, to help mitigate any impact on cash outflows.

Having assessed the principal risks and the other matters discussed in connection with the going concern statement, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and for at least 12 months from the date of approval of these financial statements.  For these reasons, they continue to adopt the going concern basis of accounting and deem there to be no emphasis over going concern, in preparing the financial information.

3.  Segmental analysis

On 28 February 2022, the Group sold its entire Identity segment (see discontinued operations note 4 below) and from 1 March 2022 considers it has only one continuing operating segment, the Payments business segment.

Revenue from continuing operations	(Unaudited) 30-Jun 2022 $'000	(Unaudited) 30-Jun 2021 $'000
Revenue arises from:	30,339	30,705
Provision of services

Income earned from performing accounting services to the buyer for the period 1 March 2022 to 30 June 2022 has been recorded as 'Other income' and amounted to $384,832. Prior year 'Other Income' relates to the acquisition of Fortumo and is the difference between the expected fair value of the Fortumo Earnout escrow amount as at 31 December 2020 and the actual amount paid to Fortumo shareholders in September 2021

4.  Discontinued Operations

On 28 February 2022, the Group sold its entire Identity business (Boku Identity Inc and its 100% subsidiary Boku Mobile Solutions IRE) to Twilio for a maximum consideration of $32.5m (including $6.5m of contingent consideration). Management committed to a plan to sell this segment early in 2022, following a strategic decision to focus on its core Payments business. The Identity segment was not classified as held-for-sale or as a discontinued operation at 31 December 2021 as it did not meet the required criteria.

As required, as at 30 June 2022, discontinued operations are excluded from the results of continuing operations and are presented as a single entry in the Income Statement as 'Profit from discontinued operations' in the income statement. The comparative 'Consolidated Statement of Comprehensive Income' has been re-presented to show the discontinued operation separately from continuing operations.

The financial information related to the discontinued operations for the period to the date of disposal (28 February 2022) is presented below:

		2 months		6 months
		Unaudited		Unaudited
		Period  ended		Period  ended
		28-Feb		30-Jun
		2022		2021
Discontinued Operations:		$'000		$'000
Revenue			1,153		3,519
Cost of sales			(719)		(1,690)
Gross Profit			434		1,829
Administrative Expenses			(1,541)		(4,117)
Operating loss analysed as:
Adjusted EBITDA**			(652)		(863)
Depreciation and amortisation			(238)		(574)
Share based payments expense (ER NI on RSUs)			(163)		(705)
Foreign exchange losses			(54)		(111)
Exceptional items (included in administrative expenses)			-		(35)
Operating profit/(loss)			(1,107)		(2,288)
Finance income			-		-
Finance expense			-		-
Loss before tax			(1,107)		(2,288)
Tax (expense)/credit			-		-
Net loss for the period attributable to equity holders of the parent company			(1,107)		(2,288)
Profit on disposal after tax			26,614		-
Costs of disposal			(1,408)		-
Share based payments expense reversed			506		-
Total profit on disposal attributable to the parent company			24,605		-

The net cashflows used in the Identity Segment disposed in the period, are as follows:

	Unaudited	Unaudited
	Period  ended	Period  ended
	30-Jun	30-Jun
	2022	2021
	$'000	$'000
Net cash used in operating activities	(1,106)	(1,586)
Net cash used in investing activities	(178)	(533)
Net cash from financing activities	570	2,163
Net cash (used in)/from discontinued operations	(714)	44

The following table details the assets and liabilities disposed of as in the Group Balance sheet:

Reconciliation of consideration received with the total profit and loss from discontinued operations:

		(Unaudited) 30-Jun 2022 $'000
Total consideration received in the year		26,161
Contingent consideration		6,500
Working capital adjustment		(144)
Total consideration		32,517

Assets and liabilities disposed of:
Assets
Goodwill	2,784
Intangible assets	2,278
Cash	371
Trade and other receivables	1,547
Total Assets disposed of	6,980
Liabilities
Trade and other payables	780
Other payables	297
Total liabilities disposed of	1,077
Net assets and liabilities disposed of		5,903
Taxation		-
Profit on disposal of discontinued operation after tax		26,614
Disposal costs in the year		(1,408)
Loss from discontinued operations in the year		(1,107)
Share based payments expense reversed		506
Total Profit from discontinued operations		24,605

The working capital adjustment was an agreed adjustment made three months after the disposal date of 28 February 2022 based on an updated Balance Sheet at that time.

The total consideration received in the condensed consolidated statement of cashflows ($25,790,000) is presented gross. The outstanding bank loan of $8,125,000 was paid directly by the buyer. The net consideration received was therefore $17,665,000.

Share based payments expense reversal in the period related to restricted stock units (RSUs) of Identity employees being forfeited on leaving the company when the Identity business was sold in February 2022.

The Sale and Purchase agreement with Twilio includes an indemnity of $5.6 million against possible future claims for 18 months from the transaction date which expires at the end of August 2023. Management believes the likelihood of any claims under this indemnity to be extremely low and therefore that it is virtually certain that the full amount will be received. As a result, the full amount has been included in the profit from discontinued operations in the Income Statement. This deferred amount is included within non current assets on the Balance Sheet.

5.  Finance income and expenses

	(Unaudited) 30-Jun 2022 $'000	(Unaudited) 30-Jun 2021 $'000
Finance income	81	14
Interest income from bank deposits
Total	81	14
Finance expenses
Interest on bank loans	71	181
Loan amortization expense	312	62
Interest on lease liabilities	130	116
Other interest payable (including interest paid for factoring)	5	11
Total	518	370
Net finance expenses	437	356

6.  Cash and cash equivalents and restricted cash

	(Unaudited) 30-Jun 2022 $'000	(Audited) 31-Dec 2021 $'000
Cash and cash equivalents	62,976	56,651
Restricted cash	4,823	5,789
Total cash	67,799	62,440

Restricted cash primarily includes money received but not yet paid to merchants (segregated funds, in transit), for Boku's licenced entities, cash held in the form of a letter of credit to secure a lease agreement for the Company's San Francisco office and a certificate of deposit held at a financial institution to collateralize Company credit cards.

7.  Loans and borrowings

	(Unaudited) 30-Jun 2022 $'000	(Audited) 31-Dec 2021 $'000
Current
Bank loans (secured) net of loan costs	-	1,125
Obligations under lease contracts	783	1,335
Total	783	2,460
Non-current
Bank loans (secured), net of loan costs	-	6,688
Obligations under lease contracts	3,413	3,498
Total	3,413	10,186

Principal terms and the debt repayment schedule of the Group's loan and borrowings are as follows:

On 17 June 2020 the Group entered into a Loan Security Agreement with a financial institution and borrowed $20,000,000 ($10,000,000 Revolver facility and $10,000,000 Term loan) which was used to part finance the acquisition of Fortumo on 1 July 2020. The outstanding term loan of $8,125,000 was repaid in full from the proceeds received from the disposal of the Identity segment on 28 February 2022, however the group retains the $10,000,000 revolver facility which is currently not drawn upon. This revolver facility expires on 1 July 2024.

The balance of current lease liabilities at period end was $783,276 (31 December 2021: $1,334,725) and non-current liabilities $3,413,087 (31 December 2021: $3,498,493) and relate to server leases and office leases.

8.  Cash from operations

	(Unaudited) 30-Jun 2022 $'000	(Unaudited) 30-Jun 2021 $'000
Profit after tax	28,024	1,730
Add back:
Tax expense	216	190
Amortisation of intangible assets	1,935	2,541
Depreciation of property, plant and equipment	1,021	1,201
Loss on disposal of property, plant and equipment	3	-
Finance income	(81)	(14)
Finance expense (includes interest on lease liabilities)	518	370
Gain on discontinued Operations	(26,614)	-
Foreign exchange loss/(gain)	855	(1,691)
Impairment of intangible assets	1,264	-
Employer taxes on stock options and restricted stock units (accrual release)/charge	(1,205)	697
Movement in bad debt provision	(15)	-
Share based payment expenses	2,352	3,326
Cash from operations before working capital changes	8,273	8,350
(Increase)/decrease in trade and other receivables	(6,238)	3,132
Decrease in trade and other payables	(9,796)	(20,368)
Cash used in operations	(7,761)	(8,886)

The share based payment expense has been split between the charge using the Black Scholes method for the period ($2,352,407) and the change in the accrual for employer taxes on stock option and restricted stock units (-$1,204,956). The total share based payment expense in the Consolidated Statement of Comprehensive Income includes $406,086 employer taxes paid via payroll to tax authorities.

The impairment of intangible assets relates to the full impairment of the Fortumo trade name which was discontinued in the period.

The increase in receivables includes a $6,355,972 contingent receivable in 2023 being the balance due on the disposal of the group's Identity business.

The foreign exchange loss relates to the unrealized foreign exchange only.

9.  Cautionary Statement

Boku has made forward-looking statements in this financial information, including statements about the market and benefits of its products and services; financial results; product development plans; the potential benefits of business relationships with third parties and business strategies. The Group considers any statements that are not historical facts as "forward-looking statements". They relate to events and trends that are subject to risk and uncertainty that may cause actual results and the financial performance of the Group to differ materially from those contained in any forward-looking statement. These statements are made by the directors in good faith based on the information available to them and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors underlying any such forward-looking information.

10. Post Balance Sheet Events

Share buyback programme

On 7 July 2022 the Board approved a share buyback programme to repurchase common stock with par value of $0.0001 per share in the capital of the Company ("Common Stock") up to a maximum aggregate consideration of 8 million and up to a maximum of 5 million Common Stock (the "Buyback Programme"). The purpose of the Buyback Programme is to hold the Common Stock in treasury for the purpose of satisfying future obligations in relation to the staff equity remuneration programme.

The Company instructed Peel Hunt LLP, the Company's broker, to conduct the Buyback Programme on its behalf within certain pre-set parameters,   including that the maximum price paid per Common Stock shall be 105 per cent. of the trailing 5 day average mid-market price and the programme will expire on 30 June 2023, or earlier, if either the maximum aggregate number of Common Stock have been purchased or the maximum aggregate consideration has been reached.

Amazon contract and warrants

On 20 September 2022 Boku Inc entered into a new multi-year commercial agreement ("Agreement") with a subsidiary of Amazon.com, Inc. ("Amazon") for Boku Payments to supply its digital wallet and other local payment methods to Amazon. The Agreement, has an initial three year term from launch with one year renewal periods, and covers the processing of payments for Amazon Prime Video subscriptions through Amazon's  primevideo.com  site for customers located in certain countries in South East Asia and Africa. Boku's revenue from Amazon will be based on a percentage of Prime Video transaction value that it processes.

Concurrently, Boku issued to Amazon warrants to subscribe for up to 11,215,142 shares of Boku's common stock ("Common Stock") representing up to 3.75% of Boku's existing issued share capital, of which 747,676 shares, or 0.25%, vested on the issuance of the warrants, and the balance vests based on Amazon achieving certain revenue targets over the next seven years. The warrant costs will be matched to and offset against revenues generated by Boku from Amazon. The warrants are exercisable at 81.20p, which was the 30-trading day volume-weighted average price of Boku's Common Stock immediately prior to issuing the warrants. The warrants will be exercisable for ten years from the issue date. The warrants may be exercised in whole or in part by Amazon.

Independent Review Report to Boku Inc.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with the London Stock Exchange AIM Rules for Companies.

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022, which comprises the Condensed consolidated statement of comprehensive income; Condensed consolidated statement of financial position; Condensed consolidated condensed cash flow statement; and the associated notes to the Condensed consolidated financial information.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 2, the annual financial statements of the Boku Inc (the "Company") and its subsidiaries (the "Group) are prepared in accordance with International Financial Reporting Standards as issued by the IASB. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the London Stock Exchange AIM Rules for Companies.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the Group to cease to continue as a going concern.

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report in accordance with the London Stock Exchange AIM Rules for Companies which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Group's 'annual accounts having regard to the accounting standards applicable to such annual accounts.

In preparing the half-yearly financial report, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange AIM Rules for Companies for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

BDO LLP

Chartered Accountants

London UK

26 September 2022

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 

END

 

 

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