MIDAS STOCK TIPS: Turn a profit while technology company Bango maintains cash flow

In 2019, consumers worldwide spent nearly £100 billion on subscriptions of any kind.

Last year that more than doubled to £210bn and experts suggest total spending will exceed £450bn over the next three years.

Individual corporate fortunes can wax and wane. But overall, the so-called subscription economy is thriving as more and more companies offer their wares through monthly payments.

Music and movies led the way. Now, though, we can subscribe to online yoga and language classes, toilet rolls, cheese and chocolate deliveries, even dog TV designed to keep Fido entertained while his owners are away.

As the list grows longer, it becomes difficult to remember what you bought, how much you paid for it, and whether you still want it. Bango helps to make the process easier.

Based in Cambridge, Bango is a smart technology company that makes it easier for businesses to charge for goods and for customers to pay for them.

Founded in 1999 by entrepreneur Ray Anderson, the company initially focused on developing tools for consumers to pay for music and video games through their mobile phone bills.

Anderson is still chairman of Bango, but the company has expanded significantly as citizens around the world increasingly use cell phones for almost every aspect of daily life, from shopping to binge-watching Ted Lasso.

Bango’s customers include Amazon, Google and Microsoft, but also major telecom companies, from Vodafone to Samsung to the American AT&T.

Last year alone, Bango processed more than £7 billion in payments from consumers around the world, from Tokyo to Frankfurt to New York City.

The company also bought its main rival, Japanese company Docomo, in a deal that is expected to boost sales and profits. Now Bango has a new division that allows consumers to see all their subscriptions in one place and makes it easier to add, cancel, upgrade or downgrade one by one.

Customers: Bango’s services are used by Amazon, Google and Microsoft, but also by major telecom companies, from Vodafone to Samsung to the American AT&T

For cell phone companies, the service helps attract and retain customers as they can offer discounts or special offers along the way.

For businesses, Bango’s network of telecom customers gives them access to millions of potential new subscribers and advanced data so they can make personalized recommendations to consumers.

The service, known as super-bundling, has been adopted by several companies, including Verizon, one of the largest phone groups in the US, and leading Australian player Optus. Others are expected to follow.

A recent survey found that 88 percent of major phone companies here and in the US plan to offer super-bundling in the near future and Bango is the dominant player in the market, described by customers as a leap ahead of the competition .

Other companies are interested in Bango’s technology, such as Japanese employee benefits specialist Benefits One, which uses it to provide benefits to millions of employees.

A first-half trading statement last week was upbeat and brokers expect Bango to deliver substantial growth, with sales expected to increase 73 percent this year to $49 million (£38 million) and another 16 percent in 2024 to $57 million.

Bango was loss-making last year, but is expected to make a profit of $3.4 million this year, rising to $14 million next year.

The company, which reports in dollars because most of its contracts are denominated in US currency, also won the first-ever King’s Award for Enterprise for International Trade earlier this year.

Midas verdict: Bango shares cost £1.89, up from over £2.50 at the start of the year. The decline reflects more dissatisfaction with tech stocks than Bango’s own growth potential. Supporting brokers believe Bango shares could reach £3.15 as subscription business grows and the group turns a profit. To buy.

Traded on: GOAL ticker: BGO Contact: bango.com or 01223 617 387