Bango PLC (BGO) Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Bango PLC Full Year Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives 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 as usual, 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 for taking the time to join us this morning. And thanks for everybody who submitted questions in advance. And as Jake mentioned, you can submit additional ones as we go through the presentation today. We'll start with a quick highlights, and then I'll turn it over to Matt to go through the financials in more detail. And I wanted to basically to run through the DVM opportunity a little bit more from sort of end-to-end describing sort of the market opportunity, giving some customer examples, where we are today and the opportunity ahead. And then we'll wrap up with current trading and outlook before diving into the Q&A. So a lot to get through. So without further ado, a reminder of the segments that we operate in, and you will have seen we have renamed those and restructured those better to match how we operate the business internally as well as better to match the sort of the market dynamics of each sort of business. So we now have our Payments segment, which is exclusively sort of DCB and wallets. And that's where the telco act as a payment instrument, so you can buy something, whether it be digital goods or physical goods and charge it to your phone bill and the telco acts as a sort of payment instrument in sort of a credit card, for example. And on the other side, we have a Subscriptions segment, which is dominated by our Digital Vending Machine, which is really that platform that allows subscriptions to be bundled and resold by telcos. So it's a very different proposition from a telco perspective. Although telcos appear on sort of both halves in the Digital Vending Machine, they're actually reselling those and combining those subscriptions with their first-party products to create a really compelling user customer proposition. No matter whether you're sort of payments or sort of subscriptions, really, we act as a platform that bridges two worlds. It bridges some of the largest content providers in the world. And on the DVM, for example, there are over 130 different subscription services that are integrated into the platform with people who from a DCB perspective, want to act as a payment instrument or from a DVM perspective, we want to resell them. So we bridge those two worlds together. People who have goods to sell with different ways of sort of taking those to market. And that connect once and access many is a key part of the value proposition. But increasingly, especially on the DVM side, the ability to manage those subscription life cycles full cycle from start to end. including all intermediate steps and upgrades and downgrades and price changes is really a level of complexity that the DVM really makes simple. And that's really what we're all about is taking really complex use cases and making them particularly simple moving forward. Our strategy for growth is dominated around those -- these set of 4 Es. You will see that features very heavily in the annual report and in the RNS, and it's about expanding and creating to dominate the subscriptions in the telco channel. Enhancing is all about using the data we have in the platform so that everybody in the ecosystem benefits. Explore is about new verticals beyond telcos. And yes, we talked about a bank, we've won [ those, going ] to launch in 24 countries across Europe. That's part of that Explore vertical. And Extract is that payments business and managing that for cash and profit. And I think with the new segmental reporting, that really comes out sort of loud and clear here in the results. If we look at fiscal '25, then I think three sort of key messages. If you look at top line momentum, we had a record number of new DVM wins, 12 new customers versus an average of 9 for the prior 2 years, continuous growth in subscriptions, growth in ARR, no churn in live customers and the core payments business continues to grow as well. And if you sort of take that down into a profitability perspective, that quality of revenue, I think, has significantly improved, become a lot more predictable, but also with a higher gross margin because of the nature of that core growth in payments and the DVM growth. CapEx and OpEx continue to reduce as we've been talking about for some time. And you put those together, and that means we were cash EBITDA positive for the first time since the DOCOMO Digital acquisition, which is obviously a key milestone. And because of the platform nature of the business, you'll see that trend starting to accelerate and more and more drop down to that cash EBITDA line, and Matt will talk to a little bit about that later. And fundamentally, what we've done over the past year and have sort of been a year of transition is sort of building the structural efficiencies that allow that platform scaling moving forward. The continued benefit of the economics now we finished the migration of the Frankfurt data center. We went through a significant headcount reduction, which you see in the OpEx and CapEx reductions in '25 that will continue into '26. And at the same time, we continue to be the go-to place for bundling and increasingly we're becoming the de facto platform for subscription bundling and with 8 out of the top -- 7 out of the top 8 telcos in the U.S. I think that's an incredible place to be. And add on to that, that you have 130 content providers, including the world's largest video streamers. And really, I think the importance of the Bango Digital Vending Machine as a platform for the subscription bundling ecosystem is becoming increasingly clear. So a really, really, really solid year. So with that, I'll turn it over to Matt, and we'll walk through the financials.

Thanks, Paul. Good morning, everybody. I'm pleased to walk through the financial performance for fiscal year '25. So over the coming slides, I plan to focus on three areas: the increasing quality of our revenue, the progress we've made on profitability and generating positive cash EBITDA and the financial profile of the business, particularly with the introduction of segmental reporting. The key takeaway I want people to leave with this. This was a year where the model starts to become much clearer, both operationally and financially. So on the following slide, starting with the headline metrics, I'm pleased to say these show strong underlying performance almost across the board. We delivered 60% growth in active subscriptions, 30% growth in ARR. These are both core to long-term value and support the scalability of the proposition. Net revenue retention at 117% underlines growth within our existing customers. As a reminder, this compares ARR at the same cohort of customers at the beginning and end of the period, anything above 100% highlights year-on-year growth. Importantly, profitability improved both in terms of gross margin, plus 6 percentage points to 84% and adjusted EBITDA margin up 3 percentage points to 31%. We continue to maintain a rigorous focus on costs which dropped by nearly $3 million year-on-year. And critically, we achieved positive cash EBITDA, marking a key inflection point for the business. So while overall reported revenue is relatively flat year-on-year, and I'll come on to the drivers of that over the next few pages. The key point is the underlying mix and quality materially improved. So moving to the next slide. ARR grew 30% from $14 million to $18.2 million. As you'll see from the chart, growth is also balanced across both new and existing customers. To date, all live DVM customers have sustained or increased their subscription tiers, meaning an increasing commitment to the Digital Vending Machine over time. This is a core feature of the model. As our partners grow subscriptions, our recurring revenue grows with them. And there are three drivers behind that. First, existing customers expand as they bundle more subscriptions or recurring revenue increases. Second, new customers joining the platform add additional recurring revenue and strengthen that network effect. And third, our revenue base is very durable. So we've had 0 churn from live customers to growth compounds over time. And together, these factors create predictable and progressively expanding revenue base underpinning the platform's investment case. On to the next slide. This year, we've introduced a new segmentation to better reflect how the business operates and provide more clarity for investors. Bango previously reported transactional revenue and DVM and one-off revenue per the left-hand side of this chart. Transactional included all transactions charged as a percentage of the retail price. This predominantly included DCB and wallets, but also some older subscription-related revenue that adopted the same pricing model. All one-off revenue, regardless of whether it was DCB or DVM, was also included in DVM and one-off revenue. So going forward, we will now separate into two clear segment per the right-hand side. Payments will include DCB and wallets and any associated one-offs and subscriptions, which is DVM and subscription-related revenue and any associated one-offs. Whilst there are a couple of movements between the old and new categorizations, the overall net impact is small. Importantly, though, this now better aligns with strategy and also improves transparency for investors and how you should think about valuation. We will come on to this later. So moving to payments. As covered previously, the payments portfolio is a mix of what we refer to as core routes and high cost of sales routes. Both have different characteristics, which drives the overall segment's revenue and profitability. The core routes are higher margin, simpler cost structures and quarter strategy. They now make up more than 80% of the portfolio. The high cost of sales routes are a legacy number of routes acquired from DOCOMO Digital, these typically have more complicated cost structures and much lower profitability. There are some further detail in the appendix of these materials that highlights this further. Overall payments revenue reduced from $35 million to $30 million during the year. However, that headline drop does not tell the full story and the drivers here are deliberate. Growth in core routes was a healthy plus 5% year-on-year. The reduction occurred in the high cost of sales routes as planned. Importantly, this has minimal impact on profitability because of their low margin. We also saw lower one-off revenues, where fiscal year '24 was distorted by additional work relating to the DOCOMO Digital acquisition. Historically, the overall quality of the payments business has been less visible when merged with the rest of the group. However, the new segments of reporting highlights the underlying strengths, which I'll come on to later. And you can clearly see this on the next slide. Core routes increasing from 67% to 82% of the mix. And as a result, gross margin improving by over 600 basis points. Going forward, we will continue to optimize this mix, prioritizing profitability over the lower value volume. And moving on to the next slide. So moving on to the subscription segment. Subscriptions grew 22% year-on-year to $22.2 million. Underlying subscription-based revenue, so this is revenue that isn't one-off, grew 30% year-on-year, up by a 60% increase in active subscriptions. One-off revenue, which relates to DVM setup and onboarding fees was broadly stable year-on-year, becoming a lower part of the overall mix, and net revenue retention remained strong at 117%. This reflects the scaling nature of the platform. As customers on board, they expand and deepen over time. This is the clearest indicator of scaling platform economics. And that scaling can be shown clearly on the next slide, if we look at various cohorts of DVM customers. To the left-hand chart breaks down the number of DVM customers by ARR quantum. You can see clear movement into higher ARR bands over time, particularly in the above $2 million bracket, which is highlighted in yellow. And on the right-hand side, one can see cohorts launched in earlier years are also all continuing to grow with each vintage expanding. This reflects the typical life cycle. Onboarding, launch, scaling, monetization. So growth is not just new logos, it's about existing customers also scaling significantly over time. Moving now on to costs. So last year, we launched a number of further efficiency initiatives, which delivered. $3.8 million of underlying cost reduction. Overall, these costs have reduced $10 million over the last 24 months, and we expect to see further reductions in fiscal year '26 from the annualization effect. Key point is these are structural changes, not one-offs, and this is what underpins the increase in profitability. As well as OpEx R&D investment continues to reduce down to $13.6 million, a $4 million reduction over the 2 years. Investment is now more focused, targeting at reducing friction in the subscription life cycle and accelerating time to market for bundles. So importantly, we're becoming more efficient while still investing in the platform. Looking at cash flow. The main use of cash, as I just mentioned, remains investment in R&D. Net debt increased to $9.2 million, reflecting the planned working capital movements and the one-offs from the exceptional items during last year. However, with cash EBITDA now positive, we expect leverage to reduce going forward. And importantly, we're moving from an investment phase into a cash-generative phase. And the balance sheet is materially strengthened following last year's refinancing. So bringing everything together at group level, gross profit increased with margin improving over 6 percentage points to 84%. Adjusted EBITDA grew 7% year-on-year to $16.4 million. That was despite a $1 million reduction in other income, which relates to the recovery of costs from the DOCOMO Digital acquisition. Below EBITDA, the increase in D&A reflects prior investment coming through. We expect to peak in the D&A cycle over the next 12 to 18 months, at which point it will begin to reduce. Exceptional costs related to the efficiency initiatives launched during last year, including workforce reductions and the simplification of the group's corporate structure. Exceptional costs have been elevated in previous years following the acquisition. They are expected to significantly reduce now going forward. So we touched on the introduction of segmental reporting earlier, the separation is important in understanding both performance and valuation and is a key milestone for Bango. As the slide will show, we now operate two distinct complementary engines. Payments is our cash-generative business, high EBITDA margins at 46%, low CapEx, generating nearly $11 million of cash EBITDA. Subscriptions is our growth engine, recurring revenue and expanding margins. It became profitable in fiscal year '25, and whilst it remains investment led, it is expected to become cash generative next year in fiscal year '27 with a move to positive cash EBITDA. Believe this clearer separation helps investors better assess the growth, margin and cash profiles of each segment. So to summarize fiscal year '25, we delivered higher quality revenue growth driven by ARR and subscription and solid growth in our core payments portfolio. The DVM is showing growth in new customers and existing customers and churn of live customers remains at 0. We improved profitability, both through gross margin and cost reduction and we've reached positive cash EBITDA. So I'm pleased to say the business is now structurally stronger with clearer visibility and solid foundations for growth. I'll now hand over to Paul to talk through the DVM opportunity and the growth ahead.

Thanks, Matt. I thought it would be useful to step back just to think, and some of this you may have heard before, but I thought it's good just to look at the ecosystem and the drivers from all the different parties included. But if we start with consumers, right, other individuals, why do consumers want bundling. And one of the big drivers there is sort of cost pressure and up to 23% report that they're spending more on subscriptions they can really afford. When you drop to Gen Z, that rises pretty dramatically. And to put it in context, on average, most people in survey say they have around six subscriptions. I think they're probably underestimating it a little bit and spend in excess of $70, sometimes up to $100 per month. So it's becoming an increasing portion of our discretionary spend. And that's because more and more services are moving towards a subscription services. It's not just video and gaming and music, is everything from coffee to food delivery to newspapers, everything is becoming a subscription service. And that creates that certain level that we've described before in the press of subscription fatigue and that's one of the things bundling helps address because it makes it significantly easier for customers to manage those subscriptions. In a recent survey we did, we saw that up to 31% of respondents said they were done with standalone subscriptions, and they're not going to take any more standalone subscriptions. They're only going to subscribe when it's just part bundled or sold alongside something else. And that's significantly increased from what it was sort of a year or sort of 2 years ago, which is sort of making bundles a new normal and almost half of people expect at least some level of video subscriptions to be included in their Internet or their TV plan. So there's sort of not only an expectation, there's a desire for simplicity and a desire to get a better deal, which is continuing to sort of increase, driving more and more consumers to watch closely. And if you ask, who do they want to do the bundling, and this has been pretty static over the last few years. And if you sort of telcos, to me, telcos is TV cable, it's sort of mobile network operators. You put that together, it remains a dominant channel that people are looking to -- for their subscription services. And again, that makes sense because we've always bought our content from telcos. Historically, it was packaged as part of a set-top box. Now it happens to be delivered by third parties, but it still makes sense for the telco to sort of put it all together. You can see that up to almost 2/3 of people will be more loyal to the telco that helps them save those money on subscriptions and half will look to switch, right? So it's a big, big driver and a big thing on consumers' mind when they're thinking about who they want to do that bundling. You move faster, you see retailers and banks. And I think that very much forms part of that sort of loyalty aspect. So where with MNOs and telcos, it's a lot about bundling, it's about churn reduction, it's about generating ARPU. If you start moving more into a loyalty angle, then the retailers and banks, it's a really strong play for both retailers and banks as well. Flip aside, where content is always king. What are the content providers looking for and why are they wanting to bundle? And that's because they're having to spend an increasing amount of marketing costs to get access to consumers. They've done the sort of the easy bit, if you like, with their first level of marketing. They have the customers that we're going to subscribe anyway. As they try to expand further into that market, having additional marketing channels like telcos, like banks, like retailers who are marketing their services to their customers is additional way of bringing on new people to the platform and driving down those -- the direct marketing costs. And churn continues to be a problem and churn in services continues to rise as people get more cost savvy and start to switch between services and turn services off when they finish a particular series, for example, and the ability to bundle that into a service and reduce that churn is a big value added to any content provider, especially when they're driving more and more towards profitability. And on top of that, a lot of them are already in direct, right? So it's a channel that already exists and is becoming increasingly significant. 37% of Americans sort of have their total 1.9 of their subscriptions bundled through some else. So it's becoming an increasing share of that market. It helps them drive down the marketing costs and it fundamentally reduce the churn. So it opens up new markets at a lower cost and keeps create stickier customers, which all drive profitability, and that's really what the content providers are focused on... And why did telcos want the bundling? Well the telcos is a growth lever. It's a way of strengthening loyalty. It's a way of reducing churn, stopping people switching, being able to sort of step people up some of the telco tiers by bundling on third-party services on the side. You can see on the churn side alone, sort of Verizon saw a 60% to 70% reduction in churn, selling to the marketplace has seen a 26% reduction in churn. These are significant numbers, right? The cost of a new customer acquisition is several hundred dollars and starts to become really significant. So that reducing churn is a big element. And on top of that, you put the loyalty upside and then you put the increased ARPU, it's a really compelling value proposition for telco that's really struggling in a very capital-intensive, very competitive market where it's hard to differentiate. And the telcos that are differentiating are the ones that are bundling third-party services. Bundling is in existence already and it takes in many different ways. I put some sort of examples down here. You can see the sort of these sort of fixed bundles with multiple services together. So as an example there from Rogers in Canada and an example from Comcast in the U.S., putting multiple streaming video services together as part of one of their packages. You have sort of the subscription marketplaces, the likes of the Optus SubHub and the Telenet marketplace, which is more a la carte allows you to pick the different services that you want and add those and really sort of pick the ones that are more relevant to you and add those on to your service. You get things like sort of super bundling where packages get increasingly large. You look at what Charter is doing with the Spectrum packages, there's a whole host of different services bundled into there. It really is sort of almost a supermax bundle. Moving sort of cross-category, so somebody bundling a subscription delivery services for a retailer along with sort of a Disney SVOD subscription. So that cross-category bundling continues to increase. And you have what Verizon is doing, Verizon with their myPlan and it's very much more of a perk-based selection. So you select the perks that are more relevant to you and incorporate those as part of your plan. So lots of different ways of taking bundling to market and the Digital Vending Machine basically sits behind all these and makes these easy to operate and easy to manage. And that's fundamentally what the Bango platform does is make these complex customer propositions really simple to take to market. I thought it would be useful just to talk through quickly a few real-world examples. You have here a Tier 1 customer. This is in the millions of number of subscriptions. And you can see the red line indicates the growth in the number of subscriptions. You can see it's pretty sort of steady. It's generally driven by people converting on to a mobile plan. And as they convert on to the mobile plan, they start to take perks as part of that. And so they gradually -- as people's plan refreshes, it sort of creates a very sort of linear sort of growth. And you see that more or less all the way through that red line, apart from that little step up in the middle. And that step up in the middle is where we migrated existing and existing service that they had into the Digital Vending Machine. And I think we've talked about this before, many telcos, when we deploy the Digital Vending Machine have at least one or two services that maybe they've integrated directly or integrated with somebody else. And what happens is over time, those migrate on to the DVM because then you can bundle them as part of the other services because the only way you can create these cross content bundles is to have them all in the same platform. And so that migration element is becoming increasingly common. And it's a pretty standard part of our DVM deployment. We'll deploy the DVM, launch new services, then look to migrate the existing ones later. you see here is there are pretty large tiers. So the customer has pretty large tiers. So there's not many -- this is over 4 years. There's only a couple of tier increases over that 4-year period, but it tends to be more significant in terms of the increase. This is a customer that's grown -- increased their ARR about 5x over 4 years, and that's largely because of these sort of large tiers. So it takes a while to move through those tiers, but the tier is pretty large when you do. Lost at the example, almost the opposite end of the scale. This is sort of a smaller customer. We're now talking hundreds of thousands of subscriptions. You can see we've added around sort of 5x growth in ARR over 15 months. And if you look at the red line, I think the red line is really interesting. You sort of see the services initially deployed and launched being tested, they're looking at marketing campaigns, looking at how they take the services to market, doing AB tests. You get to about month 8. They're happy with the proposition. They start to launch more aggressively in month 8 and then launching more aggressively in month 10, and that's driven a very significant increase in the number of subscriptions once it goes into that sort of full-scale marketing mode. So this really for me is a sort of a marketing-driven growth. And you can see because it's a smaller customer, the tiers tend to be smaller. You can see we've crawled -- climbed to a tier almost every month for the past sort of 6 months or so. And again, this is a customer that's seen a 5x growth in ARR, but in 15 months, but admittedly at a smaller scale. So these are real-world examples of the success that customers are having using the Digital Vending Machine for bundling subscriptions as part of their first-party telco services. And then if you look at why are we winning in bundling. And I think the first part is the DVM is the only end-to-end full subscription life cycle bundling product. There are a lot of people who offer services will integrate as a services as sort of one-off bespoke work. This is the only product that does it out of the box. And increasingly taking on more of the functionality that the telco maybe did in their back office system as part of the DVM. So the ability to combine multiple services together, handle all the price change, handle the upgrades, handle the downgrades, handle what happens if somebody wants to swap one of the perks in for something else. So all of those -- these use cases are really, really complex. And that's the investment we've been doing in the platform is to make those simple and to make those automatic. So they really gives that telco the ultimate flexibility in the consumer proposition and removes any restrictions that they may have from what is in most telcos cases, a very legacy and inflexible billing system that's a core part of their infrastructure. Speed and scale has always been a big part of it. You can see that we can launch these services, bring them to market very, very quickly. There's a couple of examples there. As you start to sort of offer more complex services, that end-to-end life cycle I talked about very much links into speed and scale because now not only are we launching single connection very quickly, we're launching very complex bundles with multiple partners together. Each partner potentially has a subscription with multiple tiers, really bringing those two together to make sure we can launch more complex solutions at speed and scale, again, is a core part of the investment. And then finally, I think we're becoming increasingly synonymous with bundling. We're very well-known across the industry. There's a nice network effect I think we talked before about how Continente was referred to us by Disney. We've -- in the past couple of weeks had already 2 referrals from another content provider who's referring telcos into Bango as part of their ongoing proposition. So there really is a nice network effect and the expertise we have, the ecosystem knowledge, the place we have as that platform where everybody comes to connect creates a growing sort of growing momentum behind it in terms of subscription bundling. And more and more, we're becoming the place that people go to for subscription bundling. We look at the opportunity ahead, the circles in the top right, look at that sort of a top-down sort of market assessment. We have a digital subscription market that's continuing to grow around 6%. An increasing portion of that is becoming bundled primarily through sort of telcos. The telco bundled subscription, which is obviously a key part of our addressable market is growing even faster. And increasingly, those services are being bundled in a more complex way. And at that point, the value of the DVM becomes clear, right? And that's a big move from sort of simple bundling where you're just connecting one service to really complex bundling where you're bringing multiple services together. And in that, that's where the value of the Digital Vending Machine is super clear. And if we start to look a bit more sort of bottoms up rather than top down, you can sort of see the growth in existing customers. The cohort analysis that Matt showed, I think we clearly talk through how customers continue to grow. Examples I just went through show again how customers continue to grow. So there's significant headroom for existing customers to continue to grow. We have 0 churn in live customers. We continue to maintain a net revenue retention above 100%. Now outside of the telco market, we have over 100 other telcos that are being targeted. Each of those telcos have greater than 4 million customers. So there's hundreds of millions more customers that are an addressable market for us as part of the Digital Vending Machine. Now admittedly, it's very geographically dispersed. The U.S. we [indiscernible] 7 out of the top 8, while there's still opportunity there in some of the smaller telcos, you can see the opportunity very much is sort of global. So big opportunity within the telco vertical. And then we have the interest in other verticals as well. So we've talked about the banking and retail sectors before. One of the customers in '25 that we signed was a bank which operates across 24 countries in Europe. And very recently, we've seen an increasing pipeline in connected or smart TVs as those sort of device manufacturers that historically sold as a bit of hardware as a one-off device look to generate a recurring revenue stream and an ongoing digital relationship with the customer beyond the initial device sales. So that's be a market that will be interesting to watch and see how that develops over the coming months. If you put that together, I mean, we talk about sort of the market position in, and this is the platform that we've been invested in, and we've invested, as you'll see, a significant amount of capital in sort of building a platform that creates this position. We have 130 content providers on one side, all the telcos, retailers and banks on the other. And we take out that technical complexity by having that deep integration right into those telcos core services. So if you think of a telco we're integrating into the identity and the billing services, these are core services and the integration into those services creates a very high barrier to entry. So there's a level of technical complexity that continues to sort of differentiate us and becomes harder to copy. And when you add on sort of the established relationship, those network effects, the fact that we're powering the world's largest companies, the level of knowledge we have and the people we have and all of that baked into the platform and the functionality of the platform creates an even deeper barrier to entry. And then when you take the data that you can generate from all those relationships and look at how everybody can optimize the way the system works, then it really becomes almost an incredibly powerful platform. And that really is the value of the DVM is the platform that bridges these two worlds together and increasingly, it is becoming the de facto platform for those. There's always different ways of connecting services together, but it's not just about connecting services, it's about connecting them in a complex way and increasingly a very personalized way and driving those services to be as successful as possible. And that's the platform that we have and that's the moat that we continue to build. So let me skip and Matt, I'll just talk through the sort of the current trading outlook, and then we'll move to the Q&A. But Q1 has gone off to a really good start in 2026. We have 3 DVM deals already this year. The revenue grew by 13% in Q1. And then you see that we have that increasing revenue visibility because of the core payments growth, because of the ARR base and because of the net revenue retention always be no more 100 -- the predictability and visibility of that revenue continues to increase. So 13% growth in Q1, getting the benefit of not only that quality revenue growth, but also the cost savings and the annualized version of those cost savings that we did in fiscal '25 come through, which drove adjusted EBITDA to be 39% positive. And then in Q1, we're positive cash EBITDA again. So not only last year, we were positive for the entire year, we're positive already in sort of Q1. As we talked about before, the subscriptions business, we're expecting to be cash EBITDA positive in fiscal year '27. So when you get to the end of fiscal '27, you have sort of 2 cash EBITDA businesses, one of which is generating a significant percentage of revenue as cash EBITDA, the other of which is generating significant revenue growth. So you can see the two businesses together form a very nice combination. So with that, why don't we move towards the Q&A. And Jake, I'll turn it back to you.

Perfect, guys. That's great. And thank you very much indeed for your presentation this morning. [Operator Instructions] But just while the team take a few moments to review those questions that have been submitted already, 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, we have received a number of questions that were both pre-submitted ahead of the event as well as those that have come in throughout your presentation this morning as well. So thank you to all of those on the call for taking the time to submit their questions. But guys, at this point, if I may just hand back to you to address those questions where appropriate and if I pick up from you at the end, that would be great.

Yes, sure. So we have quite a few questions submitted in advance. So what we've tried to do is group them into themes, and we really do appreciate the engagement and the questions have been asked. But we've tried to group them into themes, and I will try to answer each in themes. And some themes there's one question and some themes there's multiple questions. But we wanted to sort of put them all together and be able to sort of address them all and address as many of the questions as we can on the call and the others, obviously, will follow up with offline afterwards. So before we get to the questions that people are submitting and thanks for those that continue submitting online, let's go through the few slides we've got on the questions that were submitted in advance. On the left, you see the question that was submitted verbatim. There's been zero editing from us. So that's exactly the question as we received it. And what we've done as I say is group them into themes. So there's a question first on the DOCOMO Digital acquisition and was it the right thing to do given the focus. It's been a little bit of a distraction and given the focus on subscriptions. And I think -- I guess I'll give you my answer and I'll let Matt. But I think in my case, absolutely, yes. It was one of those once-in-a-lifetime opportunities to acquire a business where it was sort of a pure cost synergy. So you're not relying on any revenue synergies to make the business case makes sense it was a pure cost synergy acquisition. Now yes, it's been more complex than we thought, but that was sort of reflected in the purchase price, right? There was really a very minimal purchase price for this business. So it's not one we had to invest a lot of capital to acquire the business. The cost to us has been that swollen cost base over that interval. That's now behind us. The migration away from Frankfurt was completed last year. You see already in the segmental financials, the level of cash that payments business is generating. And now that payments business has scale. We're the largest provider for Google DCB, the only provider for DCB for Amazon for physical goods and the sole provider for DCB into NTT DOCOMO, which is the largest operator in the largest market in the world. So for me, absolutely was the right thing to do. It's given us a real scale in that payments business and allows it to turn into the cash engine that it really is.

Yes. I guess the only other point I'd add to that is then we've actively reshaped that portfolio, right? So we've reduced the exposure to the lower margin routes that came with the acquisition while continuing to grow the high-margin core. And you can see the impact of that clearly in the numbers, as Paul mentioned. So you've got a business now where it's generating nearly $11 million of cash EBITDA and multiples can be assigned to that, right, to provide a sense of valuation. So I think the acquisition gave us scale and reach, but we tend to optimize the quality of that revenue, and you can see the benefit of that in the cash EBITDA figure being generated today.

And then there are a whole host of questions, I think as you might expect, talking about share price, market value, market perception, investor sentiment, et cetera. And I think it's fair to say there is a clear disconnect between the market value and the value of the business and the state of the business as it stands today. I think Matt showed pretty earlier the financial progress we've made in fiscal '25 alone. But I think it's a multiyear journey. If I look back at what's happened over the past few years, we've done the DOCOMO digital acquisition that gives us that scale in the payments business. We talked about that. Yes, it was more difficult and a bit more complicated than we thought, but absolutely the right thing to do to give us that payments business with scale. And at the same time, we built the Digital Vending Machine business. And just if you step back and look at the Digital Vending Machine business, that has 130 content providers connected to it on one side, many of whom are referring customers to us. It includes the likes of Netflix and Disney and Microsoft and Google and Amazon and all the big companies and all the big subscription providers in the world. And on the other side, some of the largest telcos where we have 7 of the top 8 telcos in the U.S., presence in Japan, now Africa and Korea. We announced with Mobile Vikings in Belgium last week. Latin America continues to be a good market. So it's a global footprint, really strong footprint in the U.S. with 7 out of the top 8 telcos, 130 operators -- content providers on one side. I think that's a platform business that anybody would die for. And if you were setting up a company and you were building a company that was looking to create that and you said, look 4 or 5 years on, if you can have 7 of the top telcos in the U.S. and 130 content providers, I think we'd all take that. I think admittedly, it's been we've been a bit off with forecast and a bit aggressive with forecast, we take that. That's ultimately my responsibility. But I think if you step back and look at the progress the business has made, both on the payment side with that acquisition now that complexity is behind us and the position we have with the Digital Vending Machine, the business is in an incredible position. And hopefully, the segmental reporting will really help drive and close that disconnect between the market valuation and the business valuation.

Yes. I think on -- we touched on forecast a little bit there. And yes, I can speak to myself for the last 12 months. I think following the integration of any acquisition, forecasting is naturally difficult. I think we're coming through that now and in a much stronger position to help guide. And I think if you look at that Digital Vending Machine business, which don't forget, started in 2020, it's reaching the maturity. New logos and new revenue was a greater proportion of that revenue mix historically. Now what we're seeing, and you can see that clearly in the ARR growth is the existing customers are becoming a bigger share of that pie. And the existing customers, revenue is based on subscriptions they generate that we can monitor in real time. So they become a lot easier to predict future revenue from those customers. So you become less exposed to frustrations in the sales cycle for new customers that we've talked about before. So I think the key point on forecasting is the predictability of that revenue is becoming easier and easier and easier once those customers come into the pool.

The other thing I'd add on, there's a few comments here about sort of investor coms. We've spent quite a lot of time really trying to up the level of investor coms -- we introduced Investor Meet a few years ago now. That's the platform we're on now. We introduced our Investor hub website, which anybody can answer questions through. And if you ask a question for that, either Matt or I will respond to that and we get an answer accordingly and some of those are published online as well. And we really do value that sort of ongoing engagement. And then on the sort of institutional side, and I think it's fair to say we're operating in a difficult market where a lot of the institutions have seen outflows. We added Canaccord as the second broker, again, to give us broader coverage in the U.K., but also access to those U.S. institutions. We have a pretty intense roadshow over the next 3 or 4 days. These not new investments in the company and not decisions that these institutions make overnight. It's an ongoing process. And part of what we've been doing is getting the clarity of the story and the segmentation is the next part of that in terms of helping the institutions really understand, again, that disconnect between the valuation and the value that we believe is inherent and built in the business. Next slide on -- quite a few questions on outlook for DVM and the subscriptions growth and the potential within there. And I think hopefully, I've just covered a lot of this. I think just to step back, we saw 6% growth in the number of subscriptions on the platform last year, record new number of customers. We have 0 churn of live customers that keeps that net revenue retention well above 100%, big growth in ARR. Looking to expand beyond sort of telcos with that bank across 24 countries in Europe, that's super exciting. And we have that sort of fundamental sort of network effect and that within the platform. So the more it moves forward, the more sort of momentum it has. So I think our ambition, our drive, the visibility we have into the opportunity for the DVM remains completely unchanged. It's an opportunity we're super excited about. These things take time to build. But I'd say 7 of the top 8 telcos in the U.S., I think, could not be better evidence that we've built the right platform and ultimately, it's becoming the platform for bundling.

There's a comment here on the contracts that we referenced trading update, you want to go?

Yes, that's a good one. So one of the -- we mentioned, I think, and we referred to it again in the results, there was a number of contracts that slipped out of fiscal sort of '25. So these were deals were very well advanced. In one case, in particular, we had sort of agreed sort of paperwork. And the customer decided they were going to pause and they put basically a pause on those right at the end of the year, which is sort of why we were slightly under the expectations on EBITDA, et cetera, for fiscal '25. And they deferred to the next fiscal year. The next fiscal year started a few weeks ago at the beginning of April. So those discussions are ongoing and moving forward. And I think this has been one of -- you've heard me say one of my ongoing frustration is the length of the sales cycles and especially telcos, which traditionally slowly when you have a group function and regional operating companies, it adds another level of complexity. And then I think, obviously, to be prudent and again, talking a little bit about forecast, I think we're cognizant of the macro environment that we live in at the moment. The Middle East is not really, sort of a big impact directly on our business, but it would be naive, I think, not to think there's going to be a bigger macroeconomic impact. And that can have one or two things. It can firstly drive people to look at different create more value and get more value from the subscriptions, that squeeze on consumer wallet, and that's ultimately positive for the DVM as a business, but it could also potentially lengthen what are already long sales cycles. Now we haven't seen that already in Q1, which you see from the results of Q1, but I think it's something that's on our mind.

Yes. I completely agree.

Another one on competitive market opportunity and the competition in that market and the threat of AI. And I think there's been lots written about the threat of AI. And I think we see AI as really a key part of what we do on a day-to-day basis for many reasons. Firstly, it's a potential huge new subscription service, right? Less than 5% of ChatGPT's, monthly active users are monetized. That will only increase. That's likely to be through a subscription. That's a great opportunity for us to build as a business. So it's sort of a positive from a sort of a subscription market perspective. We use AI incredibly intensively internally everywhere from sort of code generation to testing through to marketing, through to finance through every function has AI embedded in it makes us more efficient. So that's one of the reasons we've been able to do, some of those efficiency improvements that have driven down both OpEx and CapEx over the past couple of years that will continue into sort of '26. So we're using to deliver more features to the market faster and deliver better value and more output from the capital that we're investing into that Digital Vending Machine platform. But fundamentally, if you look at where that platform is embedded and where it's integrated, it's a point of sort of deep trust. And so it creates a very high barrier to entry. When you're talking to a telco's core billing and identity services, it's a position of trust and the history we have and the nature of the product and how the product is integrated and the ecosystem that sits around that, it's established relationships, it's trusted relationships. It gives a really defensible more position. So it's not just about the technology and the platform, which only continues to increase in value, it's about all the trust and the ecosystem and the network alongside. Anything to add on that one?

No. Your covered it.

This one's for you, I think.

Yes. So a few questions coming here through on capital allocation and levels of investment. So a few points I'd make. So I think focus here remains on discipline ultimately to drive shareholder value. We take a balanced approach to allocation, but clearly, there's a clear hierarchy in place currently. So firstly, we -- I mean, as you can see from the levels of CapEx investment, we prioritize investing in the platform, right, where we see high return opportunities to drive growth and expand the ecosystem. You're seeing the benefit of those coming through with the level of subscriptions growth and the ARR growth that we reported at the end of last year. And as Paul just discussed on the last slide, obviously, that investment is acting to naturally build the moat around the business and give it that defensible market position. I think secondly, in terms of sort of uses of capital allocation, obviously, priority is to maintain balance sheet efficiency, including reducing leverage over time. So this will be particularly apparent in the next 12, 24 months. And finally, any surplus capital generated beyond those priorities, then could be considered for other options. But I think given the opportunities we see to invest in the platform today and focusing on reducing leverage, those remain the best uses of capital to today.

Thanks Matt. And there's quite a few questions on governance and leadership. So I'll sort of give the key points to sort of answer some of the concerns or questions that have been raised in the pre-submitted questions. So firstly both founders are still active in the business. So the questions about the role that Ray and Anil are playing. Both are active in the business, both remain significant shareholders in the business, right? You can see that very clearly on our website. So both very much invested in the future and the future growth and the future opportunity of Bango. There was a couple of questions on stock options and aligning stock options with the interest of shareholders. And I think maybe there's some misunderstanding, I'd encourage you to take a look in the annual report and now has a full rem policy included in there that will be subject to a vote at the AGM this year. But there's a lot of detail in the annual report about the mechanisms and the compensation structure that the rem sort of put together. But actually, the stock options are exactly aligned with the interest of shareholders. So price in 2024, all options were issued at the market value. So basically, unless the market value increased from the point of which the stock option was interested, it is not worth anything. And that very clearly aligns employee and shareholder interest. In 2024, we changed that slightly following advice from some consultants and consultation with some major shareholders, which is more of a nominal value stock option, but at a very much reduced quantity and that reduces the dilution impact. And you see that a little bit on the share-based payment charge that's on the P&L. But from that point onwards, all director options have basic performance conditions. And so if we don't meet the performance conditions, the options don't bet and the options disappear. Those performance conditions are targeted around share price increase and revenue growth. So that very clearly aligns the interest of directors and shareholders. And as directors, we very rarely exercise options unless they're coming to exploration, you'll see that because all those option exercises are notifiable. So it's not like there's lots going on that you don't see. Every director share option exercise, you get an RNS for. I'd say the interests are very much aligned. And on top of that, there's been a whole flurry of sort of directors share purchases outside of the option scheme over the past month. So I want to make sure that everybody clear that really the interest shareholders are very much aligned with the interest of everybody in Bango, right? We're all here to build a great company and employees join Bango not just for a salary, actually to get a capital gain from the stock options in the future, and that's a key part of our employee proposition and employee retention scheme. A couple of questions on financial reporting. Do you want to take this one?

Yes. Look, I think the segmentation is clearly about realizing the value of each business, right? And I think this is a key milestone for us introducing this, but the strengths of each underlying business have been masked in the past by being part of the group. To reiterate, we've got two very complementary businesses here. We've got very cash-generative payments business showing very high margin, throwing off nearly $11 million of cash EBITDA. And the subscriptions business, again, we're going through key stages of this evolution became EBITDA profitable in fiscal year '25. And whilst we've got negative $8.7 million cash EBITDA today, because of the fixed costs and the operational gearing in this business, that very quickly will turn positive. And we've guided here to this segment becoming cash EBITDA positive in fiscal year '27. So this is going to help investors assess the different growth margin and cash profiles for the benefit of the business.

Okay. So I think we've come to the end of the pre-submitting one. So thanks to everybody who submitted online. We'll get through as many as we can on the call. And then for those that we don't get through, we'll submit afterwards. But do you want to walk us through and guide us through the Q&A because there's quite a few in there.

Yes. Thank you. Please continue to submit questions as we go through. A question, can you please advise on total headcount, including any contract/temporary headcount?