Edison Investment Research Limited
London, UK, 20 March 2024
Edison issues outlook on Boku (BOKU): Making the complex simple for global merchants Boku's strategy to widen its offering within the local payment method (LPM) market accelerated FY23 revenue growth to 30%, with 15% growth from the core direct carrier billing (DCB) business and supplemented by 153% growth from eWallets and real-time payments. EBITDA grew 27% y o y as the company continued to invest in building out its LPM network from a technological and regulatory perspective. With all major merchants using or planning to use Boku's wider portfolio of payment methods, the company should benefit from faster growth in the non-card payment market and be able to leverage the investment it has made in its mobile-first platform to drive growth in earnings and cash generation.
Boku is trading at a small premium to its peer group on FY24/25 EV/EBITDA multiples. Via a reverse discounted cash flow (DCF) that uses our forecasts to FY26 (which are more conservative than the company's mid-term targets would suggest) and a WACC of 9%, we estimate the share price is factoring in revenue growth of 4.5% and average EBITDA margins of 35% for FY27-33, well below the company's targets. In a DCF factoring in meeting the targets by FY27, we estimate the shares could be worth 251p. A growing contribution from Amazon, continued adoption of LPMs and new major merchant sign-ups are the main triggers to achieve this, in our view.
All reports published by Edison are available to download free of charge from its website www.edisongroup.com About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first company in-market 17 years ago, Edison has more than 100 employees and covers every economic sector. Headquartered in London, Edison also has offices in New York, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Katherine Thompson +44 (0)20 3077 5700 tech@edisongroup.com Learn more at www.edisongroup.com and connect with Edison on: LinkedIn www.linkedin.com/company/edison-group-/ Twitterwww.twitter.com/Edison_Inv_Res YouTube www.youtube.com/edisonitv Dissemination of a CORPORATE NEWS, transmitted by EQS Group. |
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