Shares in payment platform provider Bango (LSE: BGO) have slumped by 16% today after it released an update for its most recent full year. Encouragingly, Bango has reported an increase of over 100% in its end-user spend exit run-rate, with the figure climbing to £67m and being in line with the company’s expectations despite unfavourable currency movements.
However, with Bango experiencing faster than expected growth in developing markets, its end user spend margin was lower at 1.8%. The company expects further growth in end user spend during 2016 from its newer markets, where smartphone adoption is still increasing. And with its switch to recurring fees from upfront platform fees likely to have a positive impact on end user spend, it appears to be relatively well-positioned to continue its growth.
With Bango having a low fixed cost base, it has the capacity to process in excess of 10 times the current end user spend. It believes that it has a clear path to profitability and while it could prove to be a strong long-term performer, it looks set to remain highly volatile and risky during an uncertain period for the wider market.
Meanwhile, software specialist Fusionex (LSE: FXI) is also down by 16% today despite releasing results that are ahead of expectations. For example, revenue leapt by 35% versus the prior year, while net profit jumped by 28% versus the prior period. A key reason for such strong growth is the expansion of its partner network, with over 30% of its revenue coming from this space. And with Fusionex also reporting better than expected performance from its flagship big data product GIANT, as well as further investment in the product, it remains highly confident in its long-term future.
With Fusionex expected to grow its bottom line by 11% in the current year, it continues to offer upbeat near-term prospects. However, when the company’s valuation is taken into account, it appears as though its growth potential is already factored into its share price. For example, Fusionex trades on a price-to-earnings growth (PEG) ratio of 3.7, which indicates that it lacks appeal at the present time.
Also reporting today is software and hardware provider Servelec (LSE: SERV). It finished 2015 with a strong order book, improving pipeline and increased cash position versus the prior year, with its performance being relatively resilient despite challenges in the oil and gas markets. In fact, its health and social care division helped to offset softer performance from its automation unit, which experienced a slower than expected increase in sales for the year.
Looking ahead, Servelec expects the delayed projects in the oil and gas space from 2015 to boost its automation division’s performance this year, while its health and social care unit continues to offer a robust outlook. This is set to lead to a rise in earnings of 11% in the current year and with Servelec trading on a PEG ratio of just 1.5, it appears to be a relatively appealing buy for the long term.
Clearly, its shares are likely to be volatile due to the company’s exposure to the oil and gas industry. But for long term, less risk-averse investors Servelec could hold significant appeal.