London, UK, 26 March 2019

Edison issues outlook on Boku (BOKU)

Boku has built a platform that helps merchants to transact with consumers safely and simply in a mobile-first world. The first application enabled by this platform, direct carrier billing (DCB), continues to perform well, with 100%+ volume growth translating to 45% revenue growth and an EBITDA margin of 17.9% in FY18. The recent entry into the identity verification market broadens Boku's addressable market and leverages the strength of its existing carrier relationships. In our view, the current share price does not capture the growth potential of the business.

While Boku trades at a premium to peers in FY19 on EV/EBITDA and P/E multiples, strong forecast growth in revenues and earnings puts it at a discount to peers in FY20 and FY21. Share price catalysts to reduce this discount would include evidence demonstrating progress towards our revenue targets for the Boku Identity business (such as new customer wins or extensions to existing agreements) and major merchants signing up for and rolling out carrier billing.

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