In the world of e-commerce, it is easier than ever to buy everything from washing machines to video games. But consumers are becoming increasingly impatient. They want to make purchases directly and effortlessly.
Boku, a small technology company with large connections, helps them realize that ambition.
The group has developed a way for people to pay for music, video games, movies and hundreds of apps through their phone bills.
For consumers, this means that they can buy all kinds of digital services with just one tap on their mobile phone.
Boku helps users pay for access to TV hits such as The Good Place, starring Ted Danson
There are also significant advantages for companies, because the ease of buying stimulates customers to buy.
The group will almost certainly also benefit from the corona virus, because if consumers have to stay at home, they will watch, listen and play online more often – and for many that means via their mobile phone.
For example, a recent trade update from Boku showed an increase in sales in many Asian countries as people’s movements were limited – and there should be more positive news when Boku reports the year’s results later this week.
Still, the shares have fallen from 86p to 59p this year. The decline reflects neither current trading nor future prospects and the stocks should bounce back in time.
Boku was only established in 2009, but now some 190 mobile phone networks, including operators such as EE, Vodafone and O2, are using its technology.
This massive network has persuaded online giants such as Apple, Google, Spotify and Netflix to sign deals with Boku so their customers can sign up for new subscriptions, access the latest games and watch TV series faster than ever.
The system seems to work for all parties, and Boku’s one-tap phone bill is used by more than 18 million people in 65 countries, including the UK, Germany, Japan and South Korea, as well as emerging economies such as Indonesia and Thailand.
Deal: Online giants like Apple, Google, Spotify and Netflix have made deals with Boku
Looking to the future, CEO Jon Prideaux has great ambitions for this company. Not content with having the mobile billing divisions go from lossy to very profitable, he’s determined to put more strings on the Boku arc.
In 2018, he acquired Danal, a California-based company that enables companies such as Paypal, Experian and Western Union to ensure the identity of customers who access their services via mobile phones.
Many companies do this by sending a six-digit code via SMS, which customers then have to tap into a website.
Today’s impatient consumer finds this annoying, but Danal is removing that step. The US company is at an early stage, but it has already notified the US tax collector, the tax office, as a customer and new names come on board all the time.
In recent months, Prideaux has also switched to the so-called mobile wallet. In the West, most non-cash payments are made with debit or credit cards.
In Asia, about half of all transactions are done with mobile wallets, with users storing money on their phone, such as the digital equivalent of a leather wallet.
Many mobile wallet operators are located nationally, so users can only buy goods from domestic companies.
Prideaux has partnered with its major international customers, such as Spotify and Netflix, so that Asian consumers can also use their mobile wallets to purchase these services. Boku has only recently joined this division, but the early signs are encouraging.
Last week, the group signed a deal with South Korean game developer Pearl Abyss, the company behind Black Desert, a game that has won fans around the world.
Pearl Abyss customers can now purchase and download games using the single-tap mobile phone or eWallet, choosing which payment mechanism works best for them.
There should be further similar developments this year as Prideaux acquires more customers and partners with more wallet providers.
Boku floated on AIM at 59 pence in 2017 and was initially a stock market darling, rising to £ 1.84 in the summer of 2018. But then the shares tumbled.
American venture capitalists, who had supported the group before the IPO, took a profit and some investors were concerned about the acquisition by Danal, as the company was making a loss when Prideaux bought it.
Over time, however, the intention is to expand the services that Boku offers so that the group collaborates with more large companies, offering them more ways to communicate with their customers and thereby becoming increasingly profitable.
Midas verdict: Boku shares have fluctuated in recent weeks. But the current price of 59 cents is undeserved. For investors willing to buy in today’s volatile market, these stocks look like a bargain.
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