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When we last wrote about Bango in June 2010 we concluded it was in the right place at the right time (see HotViews archive). We still think the AIM-listed mobile web payments and analytics specialist has great potential but this has yet to be adequately reflected in its financial performance. Bango’s H1 results show revenue is down 23% on the same period last year at £8.7m. Profitability is improving though as low margin end user revenue declines and higher margin content provider revenue increases (up 13% to £0.9m). Gross margins are now 15.3% (up from 11.4%) and the company is just £100k short of breaking even on an adjusted EBITDA basis (compared to a deficit of £0.26m last year).
There’s no doubt that Bango’s strategy – growing its smartphone business while managing the decline of the legacy business – is the right one. Its agreements with RIM and Opera to provide mobile operator billing for their App Stores bode well for the future – indeed, Bango is confident of securing a third App Store customer before the end of the year. The Analytics business is also growing, reporting a three-fold increase in transaction volumes in the period. Developments such as the optimization of the payments platform for Android, the launch of a Cloud based offering and HTML5 based products (which will enable Apple users to download apps using Bango Payment), also have great promise. We're optimistic that by the time we report on Bango’s full year results that potential will be more clearly reflected in the figures.
